Pricewaterhouse Coopers LLP v Celestial Nutrifoods Ltd

Judgment Date08 April 2015
Date08 April 2015
Docket NumberCivil Appeal No 132 of 2014
CourtCourt of Appeal (Singapore)
Pricewaterhouse Coopers LLP and others
Celestial Nutrifoods Ltd (in compulsory liquidation)

[2015] SGCA 20

Sundaresh Menon CJ


Chao Hick Tin JA


Chan Sek Keong SJ

Civil Appeal No 132 of 2014

Court of Appeal

Insolvency Law—Winding up—Liquidator—Whether leave of High Court needed for appeal against order granted under s 285 Companies Act (Cap 50, 2006 Rev Ed) —Whether such order interlocutory in nature—Whether High Court erred in granting such order—Section 285 Companies Act (Cap 50, 2006 Rev Ed)

The appellants (‘the Appellants’), Pricewaterhouse Coopers LLP (‘Pw C’), Mr Tan Boon Chiok and Mr Tham Tuck Seng, were the auditors of Celestial Nutrifoods Limited (‘Celestial’), a company in compulsory liquidation, for the financial years (‘FYs’) 2004 to 2009. The respondent (‘the Respondent’) was Celestial's liquidator. The Respondent brought an application in the High Court under s 285 of the Companies Act (Cap 50, 2006 Rev Ed) (‘s 285’) to compel the Appellants to disclose documents in their custody, power or control relating to Celestial's trade dealings, affairs and property (including those given to the Appellants by Celestial's subsidiaries in the British Virgin Islands and the People's Republic of China (‘PRC’)). The Respondent said that he needed the documents for a proper analysis of Celestial's consolidated financial statements and year-end balances. These documents would enable him to reconstruct the financial records of Celestial and investigate various suspicious transactions which he had uncovered. The High Court granted the Respondent's application. Dissatisfied, the Appellants appealed.

The Appellants argued that first, they would not be able to provide the Respondent with useful information and documents, and secondly, that the order granted by the High Court was oppressive. The Appellants argued that the order was oppressive because: (a) the Respondent's true motivation in bringing the application was to seek discovery to bolster his case in respect of a potential claim against them; (b) it required Pw C to submit their working papers; (c) there was a real risk that the Appellants would be exposed to civil and criminal sanctions in the PRC; and (d) the order was too wide as it covered all documents in the Appellant's possession, custody or control relating to Celestial and spanned the entire period during which Pw C was engaged as Celestial's auditors.

The Appellants also filed a summons for leave to appeal. But when the summons was heard by the High Court, the Appellants' counsel took the position that an appeal to the Court of Appeal lay as of right and that leave was not required. The High Court therefore did not grant leave to appeal. The Respondent therefore raised a preliminary issue of whether the Court of Appeal had the jurisdiction to hear the appeal. His point was that leave should have been obtained and without it no appeal could be filed. In other words, the Appellants were in error in not pursuing the summons for leave to appeal.

Held, dismissing the appeal:

(1) A disclosure order made under s 285 was undoubtedly an interlocutory order, it being made in the course of a winding-up proceeding. This was made clear by an earlier decision of the Court of Appeal in Jumabhoy Asad v Aw Cheok Huat Mick[2003] 3 SLR (R) 99 (‘Jumabhoy’). The holding in Jumabhoy continued to apply even after the 2010 amendments to the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed). First, an order under s 285 did not undermine the substantive rights of the parties as it merely required a party to disclose documents or be orally examined. Secondly, an order under s 285 did not dispose of the entire subject matter in the proceedings: at [27] and [32] .

(2) An order made under s 285 is not akin to pre-action interrogatories for which it was made clear by the Court of Appeal in Dorsey James Michael v World Sport Group Ltd[2013] 3 SLR 354 that leave need not be sought. There were significant differences. First, pre-action interrogatories were taken to seek relevant information for the specific purpose of commencing an action. But s 285 served a wider purpose in enabling liquidators to get documents and/or information for the purpose of determining the reasons for the company's demise. It applied irrespective of whether the liquidator was seeking information for the specific purpose of commencing an action. Secondly, an application made under s 285, unlike that of an application for leave to administer pre-action interrogatories, was made in the wider context of ongoing winding-up proceedings: at [33] and [34] .

(3) Section 285 was couched in very generous terms and should not be interpreted in a restrictive manner. The order under s 285 was not limited to eliciting such information as would reconstitute knowledge which the company once had or had been entitled in law to possess: at [41] .

(4) A two-stage test should be used in deciding whether to make an order under s 285. First, as a threshold, the liquidator had to show that there was some reasonable basis for his belief that the person could assist him in obtaining relevant information and/or documents, and that they were reasonably (and not absolutely) required. Second, the courts had to balance conflicting interests, and in particular, ensure that the order made was not oppressive: at [43] .

(5) The liquidator satisfied the first stage of the two-stage test. The Appellants were the auditors of Celestial for several years before the suspicious transactions happened. They were likely to have with them documents that could shed light on the circumstances of the suspicious transactions: at [50] .

(6) There was no merit in the Appellants' argument that the order granted pursuant to s 285 was oppressive. First, it was legitimate for a liquidator to avail himself of s 285 to investigate whether a claim existed, and if so, to sue the party responsible. Secondly, the mere fact that the working papers were Pw C's property could not, in and of itself, form a basis for resisting the liquidator's application under s 285. The papers should be disclosed so long as they contained information that was of relevance to the liquidator's investigation. Thirdly, the court was not convinced that the Appellants would expose themselves to civil and criminal sanctions under PRC law. Fourthly, it was not uncommon for the courts to grant orders compelling parties to disclose all documents in their possession, custody or control relating to the insolvent company in question: at [57] , [62] , [65] and [67] .

Aberdeen Asset Management Asia Ltd v Fraser & Neave Ltd [2001] 3 SLR (R) 355; [2001] 4 SLR 441 (folld)

Atlantic Computers plc, Re [1998] BCC 200 (folld)

Au Wai Pang v AG [2014] 3 SLR 357 (folld)

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Blenwel Agencies Pte Ltd v Tan Lee King [2008] 2 SLR (R) 529; [2008] 2 SLR 529 (folld)

BNY Corporate Trustee Services Ltd v Celestial Nutrifoods Ltd [2014] 4 SLR 331 (refd)

Bozson v Altrincham Urban District Council [1903] 1 KB 547 (folld)

British & Commonwealth Holdings plc v Spicer and Oppenheim [1993] AC 426 (folld)

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Cloverbay Ltd v Bank of Credit and Commerce International SA [1991] Ch 90 (refd)

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Dorsey James Michael v World Sport Group Pte Ltd [2013] 3 SLR 354 (folld)

Gold Co, Re (1879) 12 Ch D 77 (folld)

Greys Brewery Co, Re (1884) 25 Ch D 400 (refd)

Jumabhoy Asad v Aw Cheok Huat Mick [2003] 3 SLR (R) 99; [2003] 3 SLR 99 (folld)

Kong Wah Holdings Ltd, Re [2004] 2 HKC 255 (folld)

Korea Asset Management Corp v Daewoo Singapore Pte Ltd [2004] 1 SLR (R) 671; [2004] 1 SLR 671 (distd)

Ling Kee Ling v Leow Leng Siong [1995] 2 SLR (R) 36; [1996] 2 SLR 438 (refd)

Lion City Holdings Pte Ltd, Re [2003] 3 SLR (R) 493; [2003] 3 SLR 493 (folld)

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Companies Act (Cap 50, 2006 Rev Ed) s 285

Companies (Winding Up) Rules (Cap 50, R 1, 2006 Rev Ed) rr 49, 52, 55, 56, 57

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 26 A r 1, O 57 r 16 (10)

Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) s 34 (1) (c)

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) ss 34 (1) (a) , 34 (1) (i) , 34 (2) (d) , 34 (2) (e) , 36 (1) , Fourth Schedule, Fifth Schedule para (e)

Bankrupt Law Consolidation Act 1849 (c 106) (UK) s 117

Companies Act 1862 (c 89) (UK) s 115

Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) (HK) s 221

Corporations Act 1989 (Cth) s 597

Insolvency Act 1986 (c 45) (UK) s 236

Alvin Yeo SC, Lin Wei Qi Wendy, Goh Wei Wei, Chong Wan Yee Monica and Jenny Tsin (Wong Partnership LLP) for the appellants

Blossom Hing, Ang Yao Long Ronnie and Alphis Tay (Drew &amp...

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