Rodeo Power Pte Ltd and others v Tong Seak Kan and another

• Court: High Court Appellate Division (Singapore)
• Judge: Woo Bih Li JAD
• Judgment Date: 05 January 2023
• Neutral Citation: [2023] SGHC(A) 1
• Citation: [2023] SGHC(A) 1
• Docket Number: Civil Appeal No 43 of 2022
• Published date: 10 January 2023
• Plaintiff Counsel: Mary-Anne Shu-Hui Chua and Tio Siaw Min (Joseph Tan Jude Benny LLP)
• Defendant Counsel: Harish Kumar s/o Champaklal, Josephine Chee Fei and Low Weng Hong (Rajah & Tann Singapore LLP),Benjamin Yim
• Subject Matter: Civil Procedure,Interpleader,Appeal
• Hearing Date: 24 November 2022

Woo Bih Li JAD (delivering the grounds of decision of the court): Background

This was an appeal against the decision of a judge of the General Division of the High Court (“the Judge”) delivered on 4 February 2022 in an oral judgment (“Oral Judgment”) for four interpleader summonses in respect of competing claims to shares in various companies.

The background to the appeal is as follows. The respondents, Tong Seak Kan and Kensington Park Holdings Limited are judgment creditors (“the Judgment Creditors”) of a judgment debtor, Jaya Sudhir a/l Jayaram (“Sudhir Senior”), pursuant to a judgment in Suit No 724 of 2014 (“the Suit”) on 30 January 2019. The Judgment Creditors took steps which resulted in the Sheriff of Singapore (“the Sheriff”) seizing the following shares in various companies registered in the name of various persons on the basis that the beneficial owner of these shares was Sudhir Senior (collectively, “the Seized Shares”): 100,000 shares in Al-Rafidian Holdings Pte Ltd (“the Al-Rafidian Shares”); 1,000,000 shares in Straits Grid Pte Ltd (“the Straits Grid Shares”); 57,700,002 shares in Rodeo Power Pte Ltd (“the Rodeo Power Shares"); and one share in Summit Energy Pte Ltd (“the Summit Energy Share”).

In response, four parties filed formal notices of claim for the Seized Shares. The parties and their respective claims were as follows: Gorpal Singh Darshan Singh (“Gorpal”), for the Al-Rafidian Shares; JS Energy Holdings Limited (“JS Energy”), for the Straits Grid Shares; Straits Grid Pte Ltd (“Straits Grid”), for the Rodeo Power Shares; and Rodeo Power Pte Ltd (“Rodeo Power”), for the Summit Energy Share. We refer to these four parties collectively as “the 4 Claimants” and JS Energy, Straits Grid and Rodeo Power collectively as “the 3 JS Energy Claimants” who were claiming the shares in Straits Grid, Rodeo Power and Summit Energy Pte Ltd respectively. We will refer to these three latter companies collectively as “the 3 Target Companies”.

JS Energy is the parent company of the 3 Target Companies (as set out in Figure 1 below, which is derived from Annex A of the Judgment Creditors’ Points of Claim). However, we should clarify that although Annex A stated that Rodeo Power is the sole shareholder of Summit Energy, the affidavit of Mr Ng Beng Loon (“Mr Ng”) dated 25 March 2022 (“Mr Ng’s Affidavit”), filed on behalf of the Judgment Creditors, stated that Rodeo Power holds one share in Summit Energy and another company, Summit Financial Pte Ltd, holds one share in Summit Energy. Before us, counsel for the Judgment Creditors, Mr Kumar clarified that the corporate structure as described in Mr Ng’s Affidavit is accurate. We thus set out the correct representation of this structure in Figure 1 below. Figure 1

At this stage, we stress the importance of the sole share in JS Energy (“the JS Energy Share”). JS Energy is a company incorporated in the British Virgin Islands and is the ultimate parent company of the 3 Target Companies. The JS Energy Share is registered in the name of Sudhir Senior’s son Johnathan Jaya Sudhir (“Sudhir Junior”) who explained that he had purchased the share from Sudhir Senior. The validity of that purchase is in question. However, that share was not seized by the Sheriff and Sudhir Junior did not file any formal claim to it or in respect of any of the shares in the 3 Target Companies although he would be controlling them through the JS Energy Share if he were the beneficial owner of that share. We add that any explanation that he gave was on behalf of the 3 JS Energy Claimants. Sudhir Junior was not a party in the interpleader proceedings below. These points will be repeated later as they are crucial, and the relevant parties had overlooked them.

In view of the 4 Claimants’ claim, the Sheriff filed interpleader summonses in the General Division of the High Court on 29 October 2020. On 11 May 2021, an Assistant Registrar (“the AR”) gave directions on these summonses for the claims to the Seized Shares, with the Judgment Creditors being the plaintiffs and the 4 Claimants being the defendants. The Judge gave her decision on 4 February 2022 in favour of the Judgment Creditors on the basis that Sudhir Senior was the beneficial owner of the JS Energy Share and the Al-Rafidian Shares.

The 4 Claimants sought leave to appeal thereafter. This was allowed on two bases. First, there appeared to be an error on the face of the record in relation to the AR’s directions on the JS Energy Share. Although there was a dispute as to whether Sudhir Junior or Sudhir Senior was the beneficial owner of the JS Energy Share, that share had not been seized by the Sheriff and Sudhir Junior had not filed a formal claim to it. As already mentioned, Sudhir Junior was not a party to the interpleader proceedings. Second, there appeared to be an error on the face of the record in relation to the Judge’s decision on the Al-Rafidian Shares as well. The Official Assignee of Singapore was not notified of the interpleader proceedings even though Gorpal appeared to be an undischarged bankrupt pursuant to two Malaysian court orders. The grounds of decisions for leave to appeal are set out in Rodeo Power Pte Ltd and others v Tong Seak Kan and another [2022] SGHC(A) 16 (“the Leave GD”).

The appeal

We turn now to the substantive appeal that was before us. Having considered the parties’ arguments, we allowed the appeal of the 3 JS Energy Claimants and set aside the Judge’s decision in respect of the JS Energy Share. For the avoidance of doubt, we also set aside the seizure of shares in each of the 3 Target Companies.

We were also of the view that the Judge’s decision in respect of the Al-Rafidian Shares was irregularly obtained because we subsequently learned, after the leave to appeal was granted, that Gorpal’s assets vested in the Director General of Insolvency of Malaysia (“DGI”) and DGI should have been, but was not, notified of the interpleader proceedings below. However, we noted that there was no existing application to set aside the Judge’s decision in respect of the Al-Rafidian Shares and thus concluded that that portion of the decision still stood for the time being.

We now set out the grounds of our decision.

JS Energy Share

The Judgment Creditors’ primary submission in relation to the JS Energy Share was that the parties had proceeded on a certain premise in the proceedings below. This was that a decision on the nature of the purchase of the JS Energy Share by Sudhir Junior from Sudhir Senior (ie, whether the purchase was a sham transaction), would effectively resolve the issue of the ownership of the 3 Target Companies. Counsel for the Judgment Creditors, Mr Kumar, thus sought to persuade us that the Judge’s decision on the JS Energy Share was dispositive of the claims of the 3 JS Energy Claimants for their respective shares in the 3 Target Companies. We should add that the opponents of the Judgment Creditors for the shares in the 3 Target Companies were the 3 JS Energy Claimants as Gorpal was only involved in respect of the Al-Rafidian Shares.

Mr Kumar also submitted that the Judgment Creditors’ case had always been that Sudhir Senior was not only the direct beneficial owner of the JS Energy Share but that he was also the direct beneficial owner of the shares in the 3 Target Companies. Mr Kumar sought to justify this by pointing us to excerpts from Mr Ng’s Affidavit which stated that Sudhir Senior beneficially owned and controlled the 3 Target Companies “through” JS Energy. For context, Mr Ng’s Affidavit was filed on behalf of the Judgment Creditors for the seizure of shares in the 3 Target Companies following the conclusion of the Suit.

Preliminarily, we found Mr Kumar’s two positions, as set out at [11] and [12] above, to be contradictory. In so far as Mr Kumar argued that the decision on the JS Energy Share was dispositive of the claims in the shares of the 3 Target Companies, that was contrary to the argument that Sudhir Senior was the direct owner of the JS Energy Share and the shares in the 3 Target Companies. The decision on the JS Energy Share could only be dispositive of the “ownership” of the shares in the 3 Target Companies if the focus was on that one share in JS Energy and it was accepted that through that share, control of the 3 Target Companies was achieved. However, if the argument was that Sudhir Senior also beneficially owned the shares in the 3 Target Companies directly (see Figure 2 below), then the decision on the JS Energy Share alone could not be dispositive of the shares in the 3 Target Companies. The court would have had to make separate findings as regards the beneficial ownership of shares in each of the 3 Target Companies. Figure 2

In relation to Mr Kumar’s argument that Sudhir Senior was the direct beneficial owner of the shares in the 3 Target Companies, we were of the view that this was never the basis of the case of the Judgment Creditors and that they had in fact proceeded on a different basis in the proceedings below, ie, that Sudhir Senior was the beneficial owner of the JS Energy Share and it was through that share that he was controlling the 3 Target Companies.

First, there was no basis previously for the Judgment Creditors to assert that Sudhir Senior was the direct beneficial owner of the shares in the 3 Target Companies as the only information available to them was the company searches that were made through the Accounting and Corporate Regulatory Authority. These searches only revealed the corporate structure and some financial information of the 3 Target Companies but not who the beneficial owner was, unless the beneficial ownership was revealed from the searches. For example, Rodeo Power’s audited financial statements for the year ended 31 December 2014 had a note stating that Rodeo Power...