Media Development Authority of Singapore v Sculptor Finance (MD) Ireland Ltd

CourtCourt of Three Judges (Singapore)
JudgeSundaresh Menon CJ
Judgment Date07 November 2013
Neutral Citation[2013] SGCA 58
Citation[2013] SGCA 58
Publication Date02 December 2013
Docket NumberCivil Appeal No 139 of 2012
Plaintiff CounselKenneth Lim Tao Chung, Goh Zhuo Neng and Cai Chengying (Allen & Gledhill LLP)
Defendant CounselBlossom Hing, Mohan Gopalan and Joanne He (Drew & Napier LLC)
SubjectCredit and Security,Charges
Judith Prakash J (delivering the grounds of decision of the court): Introduction

This appeal was brought by Media Development Authority of Singapore (“MDA”) against the decision of the High Court judge (“the Judge”) in Originating Summons No 713 of 2012 (“the Application”) to grant an extension of time to Sculptor Finance (MD) Ireland Ltd (“the Applicant”) to register two charges under the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”). The Judge’s decision is reported as Sculptor Finance (MD) Ireland Ltd v Media Development Authority of Singapore [2013] 2 SLR 311 (“the GD”).

The said charges (“the Charges”) had been granted to the Applicant by RSM Group Pte Ltd (“RGPL”) and RGM Media Singapore Pte Ltd (“RMSPL”) over their respective assets.

On 5 October 2012, the Judge allowed the Application. It is significant that the grant of extension of time was made subject to two provisos: First, in the event that either RGPL or RMSPL was wound up subsequently, its liquidator would be at liberty to apply to set aside the Judge’s orders within 12 weeks of his appointment or such extended period as the court may order (“Winding Up Proviso”). Second, that the extension of time would be without prejudice to the rights of any person claiming any interest in the property charged pursuant to any of the Charges if such interest was acquired before the time of registration of the relevant Charge (“Preservation of Rights Proviso”). It should be noted that orders similar to the Preservation of Rights Proviso are commonly made when an application to extend time to register charges is granted.

After hearing and considering the submissions of the parties, we dismissed MDA’s appeal. These are our reasons.

Background Parties

Both RMSPL and RGPL are incorporated in Singapore. RMSPL is wholly owned by RGPL. RGPL is in turn wholly owned by One North Entertainment Limited (“ONEL”), a company that used to be listed on the Australian Securities Exchange. RGPL, RMSPL and another company, RGM Entertainment Pte Ltd (“RGME”), are part of the same group of companies.

The Applicant is an investment fund incorporated in Ireland. It obtained the Charges under a Deed of Charge dated 3 August 2011 (“the Deed”). There were seven chargors under the Deed. Apart from RGPL and RMSPL, these were RGM Film and Television Services Inc, a company in Delaware, RGM Media Film Television Investments Limited, a company incorporated in the British Virgin Islands, and three Australian companies – RGM Media Limited, RGM Artist Group Pty Limited and Biosignal Australia Pty Limited (“the Australian chargors”).

MDA is a body corporate established under the Media Development Authority of Singapore Act (Cap 172, 2003 Rev Ed).

Events leading to the grant of the Charges and the Application

In 2010, MDA agreed to advance money to RGME and RGPL to carry out film production and related work.

First, MDA entered into an agreement dated 25 June 2010 (“the Fox Agreement”) with RGME and another entity, Redline Management Pte Ltd (“Redline”). RGPL became a party to the Fox Agreement by way of a novation agreement between RGPL, MDA and Redline dated 16 September 2010. Subsequently, MDA advanced S$10m to RGPL under the Fox Agreement.

Second, on 16 September 2010, MDA entered into an agreement (“the Sony Agreement”) with RGME and RGPL. Under the Sony agreement, MDA advanced S$5m to RGME’s bank account for RGPL’s use towards a film production fund and agreed to advance another S$5m once certain conditions specified in the Sony Agreement were satisfied.

Both the Sony Agreement and the Fox Agreement contained negative pledge clauses.

Between August and December 2011, the Applicant and two other investment funds, Sculptor Finance (AS) Ireland Limited and Sculptor Finance (SI) Limited (collectively, “the Sculptor Entities”), subscribed for A$4m worth of convertible bonds issued by ONEL (“the Bonds”). RGPL and RMSPL granted the Charges to the Applicant to secure all monies owing to the Sculptor Entities under or in relation to the Bonds. The Applicant held the Charges on trust for the other two Sculptor Entities. The Charges were in the nature of fixed and floating charges over the chargors’ assets.

Pursuant to s 131(1) of the Act, the Charges had to be registered with the Accounting & Corporate Regulatory Authority of Singapore (“ACRA”) within 30 days of creation. The Charges were created on 3 August 2011 and should have been registered by 2 September 2011. However, they were not registered by that date. The Applicant claimed that it did not register the Charges because it did not have advice on Singapore law when the Charges were created and was not aware of the need for registration. The Applicant appointed solicitors in Singapore in May 2012, and that was when it discovered that the Charges had to be registered and that RGPL and RMSPL had not procured such registration.

The Applicant conducted a LawNet search on 31 May 2012 and became aware that MDA had taken proceedings against RGPL and RGME. It also learned that ONEL had filed a judicial management application in respect of RGPL on 4 May 2012 in Originating Summons No 421 of 2012 (“the JM Application”), based on an unsatisfied statutory demand for A$11,310,488.04. The Lawnet searches did not disclose any registered charges over RGPL’s and RMSPL’s assets.

On 27 June 2012, ONEL announced that its Board of Directors had approved the disposal of the whole of its interest in RGPL to a company named Special Solutions Pty Ltd (LFF). On 2 July 2012, ONEL announced on the Australian Stock Exchange that it was placed into voluntary administration in Australia. On 26 July 2012, the Applicant filed the Application.

The JM Application was first heard on 5 July 2012 but it was adjourned because ONEL’s counsel needed to take instructions on whether to proceed with the JM Application. On 28 September 2012, ONEL sought leave to withdraw the JM Application. The Applicant contested this and asked for the hearing to be adjourned instead. It stated that the outcome of the Application could be prejudiced if the statutory moratorium which was in place pursuant to the JM Application was lifted and an application for winding up was filed against RGPL. The Judge did not accept the Applicant’s arguments and granted ONEL leave to withdraw the JM Application.

MDA filed a winding-up application against RGPL on 28 September 2012 in Companies Winding Up No 158 of 2012 (“the CWU”). The Application was granted on 5 October 2012 and the Charges were registered on 16 October 2012.

Events that occurred after the Judge’s decision

On 23 October 2012, Woo Bih Li J ordered that RGPL be placed in liquidation. Sim Guan Seng and Victor Goh (“the Liquidators”) of Baker Tilly TFW LLP were appointed as liquidators.

On 8 February 2013, the Liquidators filed Originating Summons No 41 of 2013 to seek, inter alia, a 12-week extension of time to apply to set aside the Judge’s order. The Liquidators explained that thus far they had been unable to obtain sufficient information, including regarding the circumstances and the financial health of RGPL and RMSPL when the Charges were created, due to a lack of co-operation from RGPL’s directors. The Liquidators were granted until 8 May 2013 to apply to set aside the Judge’s order. On 21 May 2013, on the further application of the Liquidators, they were given an extension of time until 14 days after this appeal was disposed of to apply to set aside the Judge’s order.

The decision below

In deciding to grant the Application, the Judge found that the Applicant had shown that its omission to register the Charges was due to inadvertence. MDA had argued that the Applicant failed to particularise its explanation for not registering the Charges in time and that the Applicant’s claim of inadvertence should not be believed given that the Applicant knew that the charges granted by the Australian chargors were registrable and did register those charges. It knew or should have known of the registration requirements in Singapore. The Judge disagreed with MDA, and found that the authorities established that if the Applicant or its employees were not aware of the need for registration, this would be sufficient to show inadvertence for the purposes of s 137 of the Act (the GD at [15]). In the alternative, it would be just and equitable to grant the Applicant relief. RGPL and RMSPL had both statutory and contractual obligations as chargors to register the Charges and it would not be just and equitable for the Applicant to be prejudiced by RGPL’s and RMSPL’s failure to do so (the GD at [19]).

Although the Judge found that, at the time of the hearing, there was a real possibility that RGPL would be wound up, winding up was not inevitable or necessarily imminent (the GD at [20]–[21]). In any event, the fact that liquidation was imminent did not preclude the court from granting an extension of time to register the Charges (the GD at [23]). The Judge was also satisfied that the creditors of RGPL would not be prejudiced by the extension of time if it was made subject to the Winding Up Proviso. If RGPL was eventually wound up, the liquidator would be empowered to set aside the registration of the Charges. The Judge considered that if the Application was dismissed, the Applicant would suffer prejudice because it had lent a substantial sum of money on the basis that it had obtained good security in the form of the Charges and would lose its security due to RGPL’s and RMSPL’s failure to comply with their obligations to register the Charges (the GD at [24]). The Winding Up Proviso would preserve the position for the parties (the GD at [25]). The fact that two months had lapsed between the time the Applicant was made aware of the need for registration and the filing of the Application did not militate against the grant of an extension of time (the GD at [25]).

The parties’ cases MDA’s case

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  • Media Development Authority of Singapore v Sculptor Finance (MD) Ireland Ltd
    • Singapore
    • Court of Three Judges (Singapore)
    • 7 November 2013
    ...SGCA 58" class="content__heading content__heading--depth1"> [2013] SGCA 58 Court of Appeal Sundaresh Menon CJ , V K Rajah JA , Judith Prakash J Civil Appeal No 139 of 2012 Media Development Authority of Singapore Plaintiff and Sculptor Finance (MD) Ireland Ltd Defendant Kenneth Lim Tao Chun......

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