The Central Provident Fund Board v Libra Group Limited

CourtDistrict Court (Singapore)
JudgeClement Julien Tan Tze Ming
Judgment Date09 April 2021
Neutral Citation[2021] SGDC 69
Citation[2021] SGDC 69
Docket NumberCPF Notice No.: L18871/2019
Hearing Date14 January 2021
Plaintiff CounselDPP Amanda Sum (Attorney-General's Chambers) (instructed) and Ms. Felicia Tan
Defendant CounselMr. Chan Wei Meng and Mr. Chua Yong Quan (Drew & Napier LLC)
Subject MatterCriminal Procedure and Sentencing,Attorney-General,Powers,Companies,Schemes of arrangement,Moratorium
Published date17 April 2021
District Judge Clement Julien Tan Tze Ming:

The defendant company, Libra Group Limited (“LGL”) faces three charges for failing to pay the Central Provident Fund (“CPF”) contributions of its employees, offences under Section 58(b) of the Central Provident Fund Act (Cap. 36) (the “CPF Act”). On 17 September 2019, LGL applied for moratorium protection under the now-repealed Section 211B of the Companies Act (Cap. 50, 2006 Rev. Ed.) (“Section 211B CA”), to pursue debt-restructuring by way of a scheme of arrangement. The High Court granted the moratorium order on 14 October 2019, for a period of six months. Subsequent orders were made to extend the duration of the moratorium order. As at the date of this judgment, the moratorium order remains in force.

LGL was first charged for the CPF offences on 2 July 2020. From the outset, LGL’s position was that these proceedings fall within the ambit of the moratorium in Section 211B(1)(c) of the Companies Act. Therefore, the CPF Board (“CPFB”) ought to have been precluded from commencing or continuing these proceedings in breach of the moratorium. CPFB takes a contrary position, maintaining that the proceedings can continue. Originally, the hearing was fixed on the basis that LGL was seeking a stay of these proceedings, on account of the moratorium. However, in its written submissions, LGL instead sought the withdrawal of the CPF charges or the adjournment of the proceedings until the restructuring of the company is completed. Either way, this judgment seeks to address the issue of whether criminal proceedings fall within the ambit of the moratorium in Section 211B(1)(c) of the Companies Act.

I answer this issue in the negative. Applying the rules of statutory interpretation, it would appear that Section 211B(1)(c) CA should be interpreted widely to cover criminal proceedings. However, doing so would result in a clear conflict with Article 35(8) of the Constitution in which case, the latter must be given primacy. I will elaborate below.

Interpretation of Section 211B(1)(c) of the Companies Act

The now-repealed Section 211B(1) CA provides as follows:-

Power of Court to restrain proceedings, etc., against company

Where a company proposes, or intends to propose, a compromise or an arrangement between the company and its creditors or any class of those creditors, the Court may, on the application of the company, make one or more of the following orders, each of which is in force for such period as the Court thinks fit: an order restraining the passing of a resolution for the winding up of the company; an order restraining the appointment of a receiver or manager over any property or undertaking of the company; an order restraining the commencement or continuation of any proceedings (other than proceedings under this section or section 210, 211D, 211G, 211H or 212) against the company, except with the leave of the Court and subject to such terms as the Court imposes; an order restraining the commencement, continuation or levying of any execution, distress or other legal process against any property of the company, except with the leave of the Court and subject to such terms as the Court imposes; an order restraining the taking of any step to enforce any security over any property of the company, or to repossess any goods held by the company under any chattels leasing agreement, hire-purchase agreement or retention of title agreement, except with the leave of the Court and subject to such terms as the Court imposes; an order restraining the enforcement of any right of re-entry or forfeiture under any lease in respect of any premises occupied by the company (including any enforcement pursuant to section 18 or 18A of the Conveyancing and Law of Property Act (Cap. 61)), except with the leave of the Court and subject to such terms as the Court imposes.

[Emphasis in bold added]

It remains unsettled as to whether criminal proceedings fall within the ambit of Section 211B(1)(c) CA. The phrase “any proceedings” is not defined in the Companies Act. There are also no reported decisions on this issue.

That being the case, the scope of Section 211B(1)(c) CA falls to be determined in accordance with the established principles of statutory interpretation. Statutory interpretation is a purposive endeavour, in that an interpretation that would promote the purpose or object underlying the written law must be preferred to an interpretation that would not do so: Section 9A(1) Interpretation Act (Cap.1, 2002 Rev. Ed.) (see also Re IM Skaugen SE and other matters [2019] 3 SLR 979 at [27] (“Re IM Skaugen”)). The three-step approach to purposive interpretation is that as laid down by the Court of Appeal in Tan Cheng Bock v AG [2017] 2 SLR 850 (“Tan Cheng Bock”) at [38] to [54], and summarised in Re IM Skaugen (above) as follows: First, a court should ascertain the possible interpretations of the provision in question, by determining the ordinary meaning of the words in the provision, aided by rules and canons of statutory construction. Second, a court should then ascertain the legislative purpose of the provision and the part of the statute in which the provision is situated. In this regard, it may be necessary to consider the specific purpose of the particular provision in question, although it should be presumed that a statute is coherent as a whole, such that its individual provisions should as far as possible be read consistently with both the specific purpose of the provision and the general purpose of the underlying statute (Tan Cheng Bock at [40]-[41]). In ascertaining the legislative purpose, extraneous material may be a useful aid to interpretation, but primacy must be accorded to the text of the provision and its statutory context (Tan Cheng Bock at [43]); hence, extraneous material should not contradict the express text of the provision except in very limited circumstances (Tan Cheng Bock at [50]). Third, a court should compare the possible interpretations of the provision against the purpose of the relevant provision and prefer the interpretation which furthers the purpose of the written text (Tan Cheng Bock at [54(c)].

Applying the principles of statutory interpretation, I find that there are compelling reasons why Section 211B(1)(c) CA should be read to include criminal proceedings. First, on its plain and natural meaning, “any proceedings” should be given an expansive construction to cover all judicial proceedings, civil and criminal. In this regard, it has been held that quasi-judicial proceedings such as arbitration proceedings also fall within the ambit of Section 211B(1)(c) CA (see Re IM Skaugen at [86]). Second, parliament had specifically identified certain proceedings that are to be excluded from the scope of Section 211B(1)(c) CA. These are proceedings that may be brought against the company under Sections 210, 211B, 211D, 211G, 211H and 212. If parliament had intended a similar carve-out for criminal proceedings, it could have stated so expressly. It did not do so. Third, at various instances in the Companies Act, the draftsman had used the words “civil proceedings” (see for e.g., Sections 216, 383 CA) and “criminal proceedings” (see for e.g., Sections 8H(1)(a), 172B CA), depending on which particular category of proceedings was being referred to in the provision in question. If Section 211B(1)(c) CA was intended to be limited to civil proceedings, the provision would have referred to “civil proceedings” as opposed to “any proceedings”. In fact, there are instances where the draftsman had used the words “any proceedings” to compendiously include both criminal and civil proceedings (see for example, Sections 208A and 386AO CA). Fourth, I find no reason for reading down the phrase “any proceedings” to mean only civil proceedings. The ejusdem generis rule has no application in this specific context.

I turn now to consider the legislative objective behind Section 211B(1)(c) CA. This was explained by Mr. Edwin Tong SC, a member of the ILR Committee and Restructuring Committee during the second reading of the Companies (Amendment) Bill 2017 (Singapore Parliamentary Debates, Official Report (10 March 2017) vol 94), as follows:

The moratorium is crucial because it suspends actions against a debtor company. Without a moratorium, a scramble usually takes place when creditors think that someone else is going to steal a march on them, and consequently everyone moves in to liquidate the company. This undermines any prospect of being able to reach a more beneficial arrangement. It drives a company towards litigation and ultimately kills value in the company. In contrast, a moratorium holds the line and keeps all creditors on an even keel. This is vital, so that companies in distress can have some ‘breathing space’ in order to put in place an effective and mutually beneficial rescue plan.

In Re IM Skaugen at [42], Kannan Ramesh J summarised the legislative purpose of Section 211B of the Companies Act, as follows:

An applicant was allowed a default 30-day breathing space – the Automatic Stay – which could be extended on terms if the s 211B(1) application was allowed, and thereafter for further periods also on terms, in order to either develop and propose a restructuring plan, or if one had been proposed, to refine and mature it based on engagement with the relevant creditor community, with the end objective in both situations being a vote on the plan at a scheme meeting if one was ordered under s 210(1).

Later in the judgment at [83], the Honourable Judge further noted that although the moratorium in Section 211B(1) CA is primarily for the benefit of the debtor in enabling it to pursue its restructuring efforts without the constant threat of litigation, it also protects the interests of creditors generally by precluding certain...

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