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

• Jurisdiction: Singapore
• Judgment Date: 24 January 2013
• Date: 24 January 2013
• Docket Number: Originating Summons No 713 of 2012
• Court: High Court (Singapore)

Sculptor Finance (MD) Ireland Ltd

Plaintiff

and

Media Development Authority of Singapore

Defendant

[2013] SGHC 23

Tay Yong Kwang J

Originating Summons No 713 of 2012

High Court

Credit and Security—Charges—Charges not registered—Winding-up application brought against chargor—Chargee applying for extension of time to register charges—Whether court should exercise discretion to allow extension of time to register charges—Section 137 Companies Act (Cap 50, 2006 Rev Ed)

Sculptor Finance (MD) Ireland Limited (‘the Applicant’), together with two other companies, subscribed for convertible bonds (‘the Bonds’) issued by One North Entertainment Limited (‘ONEL’). ONEL was the sole shareholder of RGM Group Pte Ltd (‘RGPL’) which, in turn, was the sole shareholder of RGM Media (Singapore) Pte Ltd (‘RMSPL’). Pursuant to a deed of charge, RGPL and RMSPL each granted charges to the Applicant to secure all moneys owing in relation to the Bonds (‘the Charges’). The Charges were not registered within 30 days of their creation as required under s 131 (1) of the Companies Act (Cap 50, 2006 Rev Ed) (‘the Companies Act’) as the Applicant was not aware of that requirement until it appointed Singapore lawyers in May 2012.

Approximately two months later in July 2012, the Applicant filed Originating Summons No 713 of 2012 (‘OS713’) seeking, inter alia, an extension of time to register the Charges pursuant to s 137 of the Companies Act, without prejudice to any liability incurred by RGPL or RMSPL in respect of the default in registration and the rights of any person acquired before the actual registration. The Media Development Authority of Singapore was a creditor (‘the Creditor’) of RGPL. It opposed the application in OS 713 and filed a winding-up application against RGPL in September 2012.

Held, granting the application:

(1) The Applicant did not need leave of court to commence OS 713 as an application for an extension of time to register a charge was not a proceeding against the company or its property within the meaning of s 227 C of the Companies Act: at [10] .

(2) The ground of inadvertence under s 137 of the Companies Act was made out as: (a)the Applicant had sufficiently particularised its explanation for omitting to register the Charges; (b)the court was not persuaded on the facts that the Applicant had known about the requirement for registration; (c)as per In re The Mendip Press (Limited)(1901) 18 TLR 37 (Ch D) and In re Heathstar Properties Ltd[1996] 1 WLR 993 (Ch), not being aware of the requirement for registration suffices as inadvertence for the purposes of s 137 of the Companies Act; and (d)the present case should not be distinguished from In re Kris Cruisers Limited[1949] Ch 138 and PDManufacturing International Pte Ltd v ING Bank NV[1999] SGHC 236 as there was, in all three cases, the common and crucial element of inadvertence in the sense of an oversight and/or a mistake as to the requirement for registration: at [15] .

(3) The ‘just and equitable’ ground under s 137 of the Companies Act was also made out as, even if there was a practice in the industry for the lender and not the chargor to undertake registration, the legal responsibility ultimately still lay with the chargor: at [19] .

(4) While winding up was not necessarily imminent or inevitable, it was nevertheless clear on the facts that it was a real possibility: at [21] .

(5) While liquidation was a relevant factor, it did not necessarily preclude the court from granting an extension of time as was confirmed in Re Braemar Investments Ltd[1989] Ch 54: at [23] .

(6) It was just and equitable in all the circumstances to grant the application subject to the liquidator's rights to set the registration aside in the event of winding up. If the winding-up application was eventually granted, the liquidator could apply to set aside the registration and void the Charges. There would be no prejudice to the other creditors of RGPL. In the alternative scenario that the winding-up application was dismissed, there would also be no prejudice to the other creditors of RGPL since s 131 of the Companies Act, which voids unregistered charges, does not come into play if there is no winding up. If the application was not granted, the Applicant would suffer prejudice since it had lent a substantial amount of money on the basis that it was secured by the Charges. It would be prejudicial for the Applicant to lose that security merely because RGPL and RMSPL failed in their statutory and contractual obligations to ensure that those Chargers were fully enforceable especially in the event of winding up: at [24] .

(7) The Applicant's delay of about two months was relevant but did not carry much weight in the overall balance: at [25] .

(8) The court therefore exercised its discretion to allow the application with costs to be borne by RGPL and RMSPL, subject to the liquidator's liberty to apply to set aside the orders in the event of winding up. This condition would preserve the position for both parties: at [25] .

Ashpurton Estates Ltd, Re [1983] Ch 110 (distd)

Barrow Borough Transport Ltd, Re [1990] Ch 227 (folld)

Braemar Investments Ltd, Re [1989] Ch 54 (folld)

Heathstar Properties Ltd, Re [1966] 1 WLR 993 (Ch) (folld)

Kris Cruisers Ltd, Re [1949] Ch 138 (folld)

LH Charles & Co Ltd, Re [1935] WN 15 (Ch D) (folld)

Mendip Press (Ltd) , Re The (1901) 18 TLR 37 (Ch D) (folld)

Ng Wei Teck Michael v Oversea-Chinese Banking Corp Ltd [1998] 1 SLR (R) 778; [1998] 2 SLR 1 (folld)

PDManufacturing International Pte Ltd v ING Bank NV [1999] SGHC 236 (folld)

Power Knight Pte Ltd v Natural Fuel Pte Ltd [2010] 3 SLR 82 (folld)

Public Bank Bhd, Re [2001] 6 MLJ 330 (refd)

Resinoid & Mica Products Ltd, Re [1983] Ch 132 (distd)

Companies Act (Cap 50, 2006 Rev Ed) s 137 (consd) ;ss 131 (1) , 131 (3) , 132, 227 C

Media Development Authority of Singapore Act (Cap 172, 2003 Rev Ed)

Blossom Hing and Mohan Gopalan (Drew & Napier LLC) for the Applicant

Kenneth Lim Tao Chung, Goh Zhuo Neng and Cai Chengying (Allen & Gledhill LLP) for the Creditor.

Tay Yong Kwang J

:

Introduction

1 Originating Summons No 713 of 2012/P (‘OS713’) was an application by Sculptor Finance (MD) Ireland Limited (‘the Applicant’) under s 137 of the Companies Act (Cap 50, 2006 Rev Ed) for an extension of time to register with the Accounting and Corporate Regulatory Authority (‘ACRA’) the charges created by RGM Group Pte Ltd (‘RGPL’) and RGM Media (Singapore) Pte Ltd (‘RMSPL’) under a deed of charge dated 3 August 2011 in favour of the Applicant (hereinafter referred to as ‘the Charges’).

2 The Applicant sought the following orders in OS 713:

(a) that time for lodgment of the Charges be extended for a further 30days from the date of the order;

(b) that the omission to register the Charges be rectified;

(c) that the order shall be without prejudice to:

(i) any liability already incurred by RGPL or RMSPL or any of the officers of RGPL or RMSPL in respect of the default in lodgement for registration; and

(ii) 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 the actual registration of the relevant Charge; and

(d) such further or other relief, orders or directions deemed fit.

3 The Media Development Authority of Singapore, a creditor (‘the Creditor’) of RGPL, was represented at the hearing before me. After hearing counsel for the Applicant and the Creditor, I granted the Applicant's application and ordered that the costs of the application be borne by RGPL and RMSPL. I also made...