Tanoto Sau Ian v USP Group Ltd
| Jurisdiction | Singapore |
| Judge | Goh Yihan JC |
| Judgment Date | 19 April 2023 |
| Docket Number | Originating Applications Nos 156 and 218 of 2023 |
| Court | High Court (Singapore) |
[2023] SGHC 106
Goh Yihan JC
Originating Applications Nos 156 and 218 of 2023
General Division of the High Court
Companies — Members — Meetings — Beneficial shareholders seeking to requisition extraordinary general meeting — Whether beneficial shareholders were “members” who could requisition extraordinary general meeting — Section 176(1) Companies Act 1967 (2020 Rev Ed)
Companies — Members — Meetings — Beneficial shareholders seeking to requisition extraordinary general meeting — Whether estoppel or extended doctrine of res judicata could override requirement that only members could requisition extraordinary general meeting — Section 176(1) Companies Act 1967 (2020 Rev Ed)
Companies — Statutory derivative action — Bringing statutory derivative action for permanent injunction — Whether applicant honestly or reasonably believed that good action existed — Section 216A(3)(b) Companies Act 1967 (2020 Rev Ed)
Companies — Statutory derivative action — Bringing statutory derivative action for permanent injunction — Whether proposed action prima facie in interests of company — Section 216A(3)(c) Companies Act 1967 (2020 Rev Ed)
Companies — Statutory derivative action — Proposed action being application for freestanding injunction without underlying cause of action — Whether statutory derivative actions limited to causes of action — Section 216A(2) Companies Act 1967 (2020 Rev Ed)
Res Judicata — Extended doctrine of res judicata — Raising issue in later civil proceeding instead of prior civil proceeding which was different in nature and purpose — Whether later civil proceeding collateral attack on prior civil proceeding
Held, granting the application in HC/OA 218/2023 and dismissing the application in HC/OA 156/2023:
Whether the Requisitionists could be recognised as “members” pursuant to section 176(1) of the Companies Act
(1) The Requisitionists were not “members” of USP Group who could requisition an EGM for the purposes of s 176(1) of the Companies Act. Pursuant to ss 19(6) and 19(6A) of the Companies Act, in the case of a public company, a member was essentially a person whose name was entered into the register of members kept by the public company under s 190 of the Companies Act. In the present case, it was clear that the Requisitionists' names did not appear on USP Group's Register of Members: at [24] to [26] and [28].
(2) Furthermore, in the case of a public listed company whose book-entry securities were deposited with the Central Depository (Pte) Ltd (“CDP”), ss 81SJ read with 81SF of the Securities and Futures Act 2001 (2020 Rev Ed) provided that its members were those whose names appeared as account holders or depository agents in a register maintained by the CDP. More importantly, only those who directly held an account with the CDP (which included the various brokerage houses in the present application) were deemed as members. Sub-account holders, such as the Requisitionists, were not deemed to be members: at [27].
(3) There were no other means for the Requisitionists to be recognised as “members” pursuant to s 176(1). First, in light of the intentional step taken not to enfranchise indirect investors in the way done in the UK Companies Act 2006 (c 46), the Requisitionists could not be deemed as “members” for the purposes of s 176(1) of the Companies Act by making the Requisition Notice on behalf of the brokerage houses and with the relevant authority letters. Second, there was nothing in USP Group's constitution that would have enabled the brokerage houses, who were the members, to nominate the Requisitionists to exercise membership rights, including the right to requisition an EGM pursuant to s 176(1): at [34] to [36].
Whether USP Group was estopped from challenging the status of the Requisitionists as “members”
(4) USP Group was not estopped from challenging the status of the Requisitionists as members because an estoppel would effectively allow the parties to apply a meaning of s 176(1) contrary to its correct interpretation. Whether an estoppel could apply in the face of a statute would depend on the content of the statutory provision concerned. There could not be an estoppel against a statutory rule which was imperative in nature, ie, a rule which was made for the benefit of someone other than the person against whom the estoppel was asserted, and which the parties could not otherwise avoid. In contrast, if the statutory rule was non-imperative in nature, ie, a rule of private law that was to be observed between individuals, then an estoppel could apply to prevent one party from asserting his right against the other: at [38] to [41].
(5) Applied to the present case, s 176(1) of the Companies Act, which limited the rule to requisition a meeting to “members” only, was an imperative rule. It was not only for the benefit of the persons seeking to convene an EGM but more broadly affected the company and its shareholders as well. Accordingly, the Requisitionists could not be allowed to circumvent the clear statutory wording in s 176(1) by arguing for an estoppel that was premised on USP Group's mistaken conduct: at [43], [49] and [52].
Whether the extended doctrine of res judicata prevented USP Group from arguing that the Requisitionists were not “members”
(6) Moreover, while USP Group's bringing of OA 218 was very late in the day, it was not an abuse of process pursuant to the extended doctrine of res judicata that prevented USP Group from arguing that the Requisitionists were not “members” under s 176(1). The extended doctrine of res judicata was applicable where some connection could be shown between the party seeking to relitigate the issue and the earlier proceeding where that essential issue was litigated, which would make it unjust to allow that party to reopen the issue. Ultimately, the court would exercise its discretion in such a way as to strike a balance between allowing a litigant with a genuine claim to have his day in court and ensuring that the litigation process would not be unduly oppressive to the defendant. In this regard, the court would be mindful of the considerations which led a claimant to act as he did. While it was said that fairness or oppressiveness was the decisive factor, other factors that the court might consider include: (a) whether the later proceedings were in substance nothing more than a collateral attack upon the previous decision; (b) whether there was fresh evidence that warranted re-litigation; (c) whether there were bona fide reasons why an issue that ought to have been raised in the earlier action was not; and (d) whether there were some other special circumstances that justified allowing the case to proceed: at [55] to [57].
(7) First, OA 218 was not a collateral attack on the decision in OA 894. The threshold for abusive conduct was very high. To find that a later civil proceeding was a collateral attack on a prior civil proceeding, it was relevant, though not determinative, to consider the nature of the two proceedings and the degree of overlap between them in terms of the issues and the supporting evidence that ought to be properly raised. A court was less ready to find that a later proceeding was abusive if it was different in nature and purpose from the earlier proceeding that was raised in comparison with it. It was likely that, in such case, the proper process to impugn the orders or judgment in the earlier proceeding was not by way of an appeal or some other process, but through a new proceeding: at [58].
(8) Applied to the present case, even though USP Group sought to take the position in OA 218 that an EGM should not be convened because it was invalidly requisitioned, it did not violate proper process to ventilate this issue by way of a new application, instead of filing an appeal against OA 894. This was because the main substance of OA 894, which had concerned a request for an extension of time, might not have fitted well with the broader position that USP Group was taking in OA 218. There was a likelihood that USP Group's position in OA 218 would not have found its proper forum in OA 894 to begin with: at [59].
(9) Second, there were special circumstances that justified allowing OA 218 to proceed. Primarily, the issue of whether the Requisitionists were “members” within the meaning of s 176(1) was not without merit, and it was clear that OA 218 involved a real issue of concern that a court should legitimately decide. Moreover, the question of whether the Requisitionists were “members” involved the public interest, since the effect of any exercise of a member's right to requisition a meeting would affect all other members as well: at [60].
(10) Third, and more fundamentally, it was doubtful whether the extended doctrine of res judicata would apply to allow the parties to deviate from a statutory provision that was imperative in nature. Given that the effect of the extended doctrine of res judicata was substantially the same as an estoppel, to allow the extended doctrine of res judicata to apply to obtain an outcome that was disallowed through the conventional estoppels would be legally incoherent, despite the admittedly different juridical bases of the doctrines: at [61].
(11) Accordingly, the declarations sought by USP Group in OA 218 were made, stating to the effect that the Requisitionists did not have standing to requisition the EGM pursuant to s 176(1) of the Companies Act, such that the Requisition Notice was invalid: at [63].
Whether permission under section 216A of the Companies Act should be given to Tanoto to bring an action in the name and on behalf of USP Group for a permanent injunction against the Requisitionists
(12) There were four legal requirements that a complainant making an application under s 216A of the Companies Act had to satisfy: (a) the complainant had to first have standing to bring the...
To continue reading
Request your trial