Pacrim

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 22 December 2010
• Neutral Citation: [2010] SGHC 368
• Year: 2010
• Date: 22 December 2010
• Published date: 10 January 2011
• Hearing Date: 13 May 2010
• Plaintiff Counsel: Lisa Chong (Lisa Chong & Partners)
• Citation: [2010] SGHC 368
• Defendant Counsel: Andre Maniam SC and Adeline Ong (WongPartnership LLP)
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 165 of 2004

Lee Seiu Kin J: Introduction

In this action, the plaintiff (“Pacrim”) seeks damages against the second defendant, Mainstream Limited (“MSL”) for its failure to transfer certain MSL shares submitted by Pacrim for registration in September 2003. The matter before me concerns an appeal against the decision of the Assistant Registrar (“AR”) on 14 April 2010 in which he held that Pacrim was bound by a scheme of arrangement (“the Scheme”) under s 210 of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”). I dismissed the appeal and upheld the decision of the AR. Pacrim has appealed and I now give the grounds for my decision.

With regard to the background facts, I can do no better than to repeat what the AR had set out in his grounds of decision (“GD”) given on 3 May 2010. They are as follows: 4 On 29 September 2002, Pacrim received the share certificates for 70m MSL shares from one Desmond Poh (“Poh”), together with blank transfers duly signed by him, as a pledge for a brokerage fee payable by Poh to Pacrim. The brokerage fee was in respect of an acquisition transaction brokered and arranged by the latter. Poh and Pacrim agreed that the payment of the fee would be deferred by one year but no later than 22 September 2003, failing which Pacrim would be entitled to transfer the 70m shares to itself or its nominees and to sell those shares to recover its brokerage fee. Pacrim subsequently released 20m shares to Poh for him to raise funds to pay part of the brokerage fee, leaving itself with only 50m shares. After the one-year restriction had expired, Pacrim submitted two transfers of 20m and 30m shares on 23 and 24 September 2003 respectively to MSL for registration. For various reasons (which are not material to the present application), MSL refused the registration. 5 MSL’s refusal led to the present proceedings commenced by Pacrim on 10 February 2004 (ie, Originating Summons No 165 of 2004 (“OS”)) against the first defendant, MSL’s company secretary, and MSL (the second defendant) for the orders that MSL register the transfers of the 50m shares and for damages to be assessed. The OS was heard and dismissed by the High Court at first instance on 3 August 2004 (see Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another [2005] 1 SLR(R) 141). On 18 April 2004, Pacrim filed a notice of appeal against the High Court’s decision. 6 While the appeal was pending, MSL was placed under judicial management on 22 April 2005. Subsequently, in 2007, a scheme of arrangement (“the Scheme”) was proposed for MSL. The purpose of the Scheme as set out in cl 2 of the Scheme was as follows: 2. Purpose 2.1 The purpose of this Scheme is to resolve and satisfy Scheme Claims that Scheme Creditors may have while at same time trying to ensure the continued validity of the Company as a going concern. 2.2 The Company proposes and agrees, subject to the acceptance by the requisite majority of Scheme Creditors at the Court Meeting (or adjournment thereof), and the approval by the Court of this Scheme pursuant to Section 210 read with Section 277X of the Act, to implement this Scheme. 7 Clause 1.1 of the Scheme in turn defined a “Scheme Creditor” as “any Creditor of the Company having a Scheme Claim, other than an Excluded Creditor [defined as Ferrier Hodgson]” and a “Scheme Claim” as:

… the total amount of any claim for which the Company is or may be liable or indebted (whether actual, contingently or otherwise, whether such claim arises in contract, tort, restitution or otherwise, and whether liquidated or unliquidated, or sounding or resulting in damages or equitable compensation or otherwise) to that Scheme Creditor in respect of or arising from any and all acts, omissions, agreements, transactions, dealings, matters and events whatsoever effected, occurring or otherwise taking place on or prior to the making of the Judicial Management Order on 22 April 2005, which have not been paid, satisfied, extinguished, abated or otherwise diminished.

8 In other words, the Scheme sought to compromise and satisfy all Scheme Claims which arose from any act or omission or any event whatsoever that occurred on or prior to the making of the judicial management order on 22 April 2005 so as to save the company from insolvency and to ensure its survival. This compromise was to be achieved by way of a combination of cash payments and debt-to-equity swaps. On 10 July 2007, the Scheme was approved by all the Scheme Creditors who attended and voted at the meeting convened. The Scheme was subsequently approved by the High Court on 21 August 2007 pursuant to s 210 of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”) and took effect on 23 August 2007 when a copy of the court’s order was lodged with the Accounting and Corporate Regulatory Authority. After the successful implementation of the Scheme, MSL survived...