Tan Ng Kuang Nicky (the duly appointed joint and several liquidator of Sembawang Engineers and Constructors Pte Ltd (in compulsory liquidation)) and others v Metax Eco Solutions Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 03 March 2021
• Neutral Citation: [2021] SGCA 16
• Year: 2021
• Docket Number: Civil Appeal No 146 of 2019
• Published date: 09 March 2021
• Hearing Date: 20 January 2021
• Plaintiff Counsel: Seah Zhen Wei Paul and Chin Wan Yew Rachel (Tan Kok Quan Partnership)
• Defendant Counsel: Rethnam Chandra Mohan and Chia Ming Yee Doreen (Rajah & Tann Singapore LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2021] SGCA 16
• Subject Matter: Appeals,Civil Procedure

Judith Prakash JCA (delivering the grounds of decision of the court): Introduction

On 20 January 2021, a sitting of a five-judge coram of the Court of Appeal was convened to hear arguments on what had been put forward as an important point of law to be decided for the first time in Singapore. At the end of the hearing, at which only the appellants presented arguments, the appeal was dismissed summarily. In the normal case, these grounds would contain the legal reasons for that dismissal. This is not a normal case. The purpose of these grounds is to explain why we do not think it appropriate to deal in substance with the question of law presented to us and to express our strong disapproval of how the matter came before us.

As a brief indication of how this situation arose, we set out below a substantial extract from the official minute sheet of the hearing of the appeal. It should be borne in mind when reading the minutes that the appellants who are the three joint and several liquidators of a company in liquidation had filed their Appellants’ Case and other documents necessary for the appeal in the normal course. The respondent, which is a company claiming to be a creditor of the company in liquidation, had on the other hand not filed a Respondent’s Case or any other document. Its counsel, however, were present for the hearing of the appeal.

MINUTE SHEET
….
Hearing Date:	20 January 2021
Coram:	…
Subject:	Insolvency Law – Administration of insolvent estates
Counsel:	Seah Zhen Wei Paul and Chin Wan Yew Rachel (Tan Kok Quan Partnership) for the appellants;
	Rethnam Chandra Mohan and Chia Ming Yee Doreen (Rajah & Tann Singapore LLP) for the respondent.
1001 hrs:	[The Court of Appeal delivers the standard allocution for hearings conducted by Zoom]
1002 hrs:	The Court seeks the respondent’s clarification as to why the respondent did not file any documents in the appeal.
1002 hrs:	Counsel for the respondent, Mr Mohan, addresses the Court. Mr Mohan explains that the respondent had entered into an agreement with the appellants in respect of the respondent’s involvement in the appeal. One of the terms of the agreement was that the respondent’s counsel was not to file a respondent’s case. Nevertheless, the respondent’s counsel had prepared for the appeal and was ready to assist the Court with any queries the Court might have.
1004 hrs:	The Court seeks the appellants’ clarification as follows:
	‘Your clients are officers of the Court, as liquidators. How is it that as officers of the Court they can enter into an agreement to ask a fellow party not to file papers to the Court?’
1005 hrs:	Counsel for the appellants, Mr Seah, addresses the Court. Mr Seah explains that the agreement reached was that, if the Court should so direct, the respondent would be at liberty to assist the Court. The spirit of the agreement was ultimately that parties would be available to assist the Court.
1007 hrs:	Counsel for the appellants, Mr Seah, addresses the Court on the appeal.
1113 hrs:	The Court seeks the respondent’s clarification as to whether the agreement entered into between the appellants and the respondent was in the nature of a settlement.
1113 hrs:	Counsel for the respondent, Mr Mohan, addresses the Court. Mr Mohan confirms that that agreement was in the form of a settlement.
1113 hrs:	The Court stands down.
1129 hrs:	The Court delivers its order as follows:
	‘The appeal is dismissed. Our reasons would have been evident from the questions that we put to Mr Seah in the course of his submissions. We will nonetheless issue our grounds of decision in due course setting out our views more fully. We are gravely concerned by the discovery that we made as to what had led to the unsatisfactory manner in which the case was argued before us. It appears from what was said that there has been a settlement between the parties, as a result of which, or as part of which, the liquidators also prevailed upon the respondent that its counsel should not make submissions before us. This seems to us to make a mockery of the fact that a five-judge coram was convened to deal with what was presented as an important and unresolved question of law. The liquidators seemed anxious to secure a ruling in their favour. This raises a number of questions and before we decide what, if any, sanction is to be taken in relation to all concerned – the liquidators, the counsel and the solicitors, officers of the court – in allowing the matter to proceed in this way, we invite the parties and counsel to make disclosure of all facts and to offer any explanations within seven days. We reserve the question of costs in the meantime.’
1131 hrs:	Counsel for the appellants, Mr Seah, addresses the Court. Mr Seah confirms that he will respond fully to explain the position to the Court. Mr Seah also expresses his apologies to the Court if there has been any misjudgement or falling short of the duties of an officer of the court.
1132 hrs:	Counsel for the respondent, Mr Mohan, addresses the Court. Mr Mohan explains that the respondent had accepted the appellants’ offer because it was in their interest to do so, in light of the appellants’ insolvency. Mr Mohan further explains that in acting for the respondent, his purpose had been to assist the Court.
1134 hrs:	The Court delivers its order as follows:
	‘We invite parties to make full disclosure and to offer the explanations that they each wish to make, and we will consider at that point what further steps, if any, we should take.’
[emphasis in original omitted; emphasis added in italics]

The explanations that we requested were duly delivered. Having studied them, our initial assessment that there had been improper conduct on the part of the liquidators and both sets of counsel was, regrettably, amply confirmed. We explain this conclusion below. First, for context, we will set out the background of the appeal.

The background SEC and Metax

The appellants, viz, Nicky Tan Ng Kuang, Brendon Yeo Sau Jin and Lim Siew Soo, are the joint and several liquidators (“the Liquidators”) of Sembawang Engineers and Constructors Pte Ltd (in compulsory liquidation) (“SEC”). SEC is a Singapore-incorporated private limited company which was placed in compulsory liquidation on 7 August 2017. Prior to its liquidation, SEC was involved in providing engineering and construction services.

The respondent is Metax Eco Solutions Pte Ltd (“Metax”), a subcontractor in the construction industry.

Sometime in late 2010/early 2011, SEC and Metax entered into a contract for Metax to supply goods to SEC. On 25 July 2011, Metax wrote to SEC purporting to rescind the contract.

On 12 November 2012, SEC commenced HC/S 965/2012 (“Suit 965”) against Metax for the wrongful repudiation of the contract, claiming damages in the sum of $3,657,037.42. Metax counterclaimed against SEC for, inter alia, a sum of $2,134,196.66. Suit 965 was heard over eight days by Justice Vinodh Coomaraswamy (“the Judge”) in February 2015. Parties then put in written submissions which were to be followed by oral closing submissions on 25 September 2015. Before this could happen, SEC’s financial situation deteriorated.

On 13 September 2015, SEC applied to the High Court for leave to convene a meeting with its creditors to propose a scheme of arrangement. SEC’s application was granted and a stay was ordered by the court in respect of all pending, contingent or fresh actions or proceedings against SEC. On 25 September 2015, because of the possibility of a scheme of arrangement, the Judge adjourned the hearing of Suit 965 to 24 May 2016. Eventually, SEC failed to persuade the majority of its creditors to approve the proposed scheme.

In the meantime, on 17 February 2016, SEC had applied to be placed under judicial management. A judicial management order was made on 27 June 2016. Consequently, the hearing of Suit 965 was postponed several times and finally to 30 October 2017.

On 7 August 2017, SEC was ordered to be wound up in HC/CWU 90/2017. As at the date of the winding-up order, SEC had about 746 creditors with total claims of approximately $190,764,861 in book value, and contingent claims of approximately $176,754,837, whereas the estimated realisable value of SEC’s assets amounted to approximately $24,288,507.

On 8 September 2017, Metax filed a proof of debt with the Liquidators for the sum of $2,728,692.46.

Events leading up to the Liquidators’ application in SUM 79

On 16 October 2017, the Liquidators applied for a stay of proceedings in Suit 965. On 23 October 2017, the Judge granted the Liquidators’ application and ordered a stay of the hearing of Suit 965 until 23 October 2018, in order for the Liquidators to take stock of SEC’s affairs.

On 18 July 2018, Metax’s solicitors wrote to the Liquidators’ solicitors, requesting an update regarding the adjudication of Metax’s proof of debt and whether the Liquidators intended to proceed with Suit 965. On 26 September 2018, the Liquidators’ solicitors replied suggesting that in lieu of an oral hearing, it would be sensible to request the Judge to determine Suit 965 on the basis of the written closing submissions which the parties had already filed. Metax was not agreeable to this proposal. Thus, the Liquidators then had to decide whether to go ahead with the oral closing submissions, a course that would not only expose them to legal fees payable by SEC but would also incur the risk of SEC being ordered to pay Metax’s costs which costs would stand in priority to other...