The Royal Bank of Scotland NV v TT International Ltd

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeSundaresh Menon CJ
Judgment Date30 September 2015
Neutral Citation[2015] SGCA 50
Citation[2015] SGCA 50
Docket NumberSummons No 5682 of 2012 in Civil Appeal No 44 of 2010 and Summons No 6520 of 2012 in Civil Appeal No 47 of 2010
Date30 September 2015
Defendant CounselChan Hock Keng, Ong Pei Chin, Monica Chong Wan Yee and Charisse Lau (WongPartnership LLP),Lee Eng Beng SC, Low Poh Ling, Raelene Su-Lin Pereira, Jonathan Lee Zhongwei and Mark Ortega (Rajah & Tann Singapore LLP)
Plaintiff CounselEdwin Tong SC, Kenneth Lim, Peh Aik Hin, Tan Kai Liang, Jasmine Tham and Chua Xinying (Allen & Gledhill LLP)
Publication Date03 October 2015
SubjectSetting aside judgment for want of jurisdiction and/or breach of natural justice,Res Judicata,Cause of action estoppel,Issue estoppel,Exceptions to res judicata,Courts and Jurisdiction,Court of Appeal
Sundaresh Menon CJ (with whom Chan Seng Onn J, Quentin Loh J and Vinodh Coomaraswamy J agreed): Introduction

We have before us an application by nTan Corporate Advisory Pte Ltd (“nTan”) to set aside a previous decision of this court, ie, the Court of Appeal (“CA”). nTan alleges that that decision is defective for at least two reasons. One is that the CA acted without jurisdiction in making it, and the other is that it was a decision made in breach of the rules of natural justice. The decision in question was handed down in the broad context of a scheme of arrangement under s 210 of the Companies Act (Cap 50, 2006 Rev Ed) in respect of TT International Ltd (“the Company”). We shall refer to this scheme of arrangement as “the Scheme”. We should mention, at the outset, that nTan’s setting-aside application, apart from raising issues of jurisdiction and breach of natural justice, also gives rise to issues of res judicata. This will become apparent in due course.

In 2008, the Company encountered financial troubles. Seeking to extricate itself from its predicament, it appointed nTan as the independent financial advisor (“IFA”) to it and its subsidiaries. It was agreed that the fees payable to nTan for its services would include what was referred to as a value-added fee that would become payable only upon the occurrence of certain defined events, one of which was the agreement of the Company’s creditors to a scheme of arrangement and the approval of such a scheme by the court. In simple terms, the value-added fee payable to nTan (“the VAF”) was a percentage of that amount of the debt owed by the Company to its creditors which was “waived, written off, extinguished, forgiven or avoided” or converted into equity in the Company pursuant to the anticipated scheme of arrangement. Hence, the greater the value of the debt waived or otherwise rendered not payable as a result of that scheme of arrangement, the greater the amount of the VAF that nTan stood to receive. For this reason, the VAF was described as a success fee.

In due course, the Scheme was proposed and voted on by those of the Company’s creditors to whom it was to apply – we shall refer to these creditors as the “Scheme Creditors”. An attempt to have the Scheme approved by the court was unsuccessful, but following a re-vote, the CA gave its sanction to the Scheme on 13 October 2010. This was an event triggering nTan’s entitlement to the VAF under the terms of its agreement with the Company. But, to date, nTan still has not received the VAF. This is because, by a decision handed down on 27 September 2012, the CA held that: (a) nTan was not entitled to the full amount of the VAF; and (b) “the relevant parties” – namely, nTan/those officers of nTan who were named in the Scheme documents as the Scheme Manager (“the SM”), the Company and the Scheme Creditors constituting the Monitoring Committee which was to ensure (among other things) that the Scheme was implemented according to its terms (“the MC”) – were instead to agree on what the quantum of the VAF ought properly to be, failing which agreement, it would fall to the High Court to assess nTan’s fees. This is the CA decision that nTan seeks to set aside, and it is reported as The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal [2012] 4 SLR 1182. We shall refer to it as “the VAF Decision”.

Background facts: the Scheme

The Company was incorporated in Singapore in October 1984 as a private limited company and was subsequently listed on the Stock Exchange of Singapore in June 2000. It was, at the material time, the main distributor and licensee of the AKIRA brand of electronic products worldwide. As we have mentioned, the Company encountered financial troubles in 2008, which resulted in its creditors declaring events of default and either threatening to commence or actually commencing legal proceedings against it. It was against this backdrop that nTan was appointed as the IFA to the Company and its subsidiaries by an appointment letter dated 28 October 2008. That letter, read together with another letter from nTan to the Company dated 15 May 2009, stipulated that the fees payable to nTan for its services comprised the VAF in addition to charges for the time spent by its personnel.

The Scheme was eventually proposed as a solution to the Company’s financial woes. On 29 January 2009, the High Court granted the Company liberty to call a meeting of the Scheme Creditors in order for them to consider the Scheme and, if they thought fit, approve it. According to the Scheme documents, oversight of the Company’s implementation of the Scheme was to be entrusted to the SM, identified in the Scheme documents as “Mr Nicky Tan Ng Kuang, Mr Dan Yock Hian and/or Ms Lim Siew Soo”, all of whom were (as alluded to at [3] above) nTan personnel. Mr Nicky Tan Ng Kuang (“Mr Nicky Tan”) is and was at all material times the chief executive officer as well as the controlling shareholder of nTan.

The meeting of the Scheme Creditors was held on 16 October 2009. Under s 210(3) of the Companies Act, approval of the Scheme required not only that a majority in number of the voting Scheme Creditors sanction it, but also that this numerical majority represent “three-fourths in value” of the Scheme Creditors “present and voting either in person or by proxy at the meeting”. The latter requirement meant that the Scheme Creditors voting in favour of the Scheme had to hold at least 75% of the total value of the debt owed by the Company to those Scheme Creditors who were present and voting at the meeting. The value of each Scheme Creditor’s debt, and hence, the extent of each Scheme Creditor’s voting power at the meeting, was to be determined by the SM since, under the terms of the Scheme, the SM was to review and assess the proofs of debt submitted by the Scheme Creditors, and could admit or reject these either in whole or in part. Shortly after 5.00pm on the day of the meeting, after the Scheme Creditors had cast their votes, they were informed that the final outcome of the voting would be determined only after the SM had completed the review and assessment of the proofs of debt so as to ascertain whether the 75% threshold had been crossed.

Two months later, on 17 December 2009, the SM announced the voting results, having completed the adjudication of the proofs of debt in the meantime: the requisite majority of Scheme Creditors had voted in favour of the Scheme. The necessary “three-fourths in value” had been attained by a razor-thin margin. On the basis of the proofs of debt admitted by the SM, the Scheme Creditors that voted in favour of the Scheme held 75.06% of the total debt owed by the Company to those Scheme Creditors who were present and voting at the meeting. By way of contrast, if one were to take the pre-adjudication proofs of debt as submitted to the SM, the value of the votes in favour of the Scheme would be closer to 66%. This can be seen from the following table, which sets out a comparison of the proofs of debt submitted to and the proofs eventually admitted by the SM, as well as the respective proportions of the value of the votes for and against the Scheme:

Submitted as at 16 October 2009 Admitted as at 17 December 2009
Total value of proofs voting, ie, less abstentions $554.70m $485.39m
Total value of votes in favour of the Scheme $364.98m $364.34m
And as a percentage of the total value of proofs 65.80% 75.06%
Total value of votes against the Scheme $189.74m $121.05m
And as a percentage of the total value of proofs 34.20% 24.94%

On the strength of this voting outcome, the court’s sanction of the Scheme was sought, and it was granted by Judith Prakash J in the High Court on 15 March 2010. However, a number of Scheme Creditors were dissatisfied with this and lodged Civil Appeals Nos 44 and 47 of 2010 (“CAs 44 and 47 of 2010”) against Prakash J’s decision. After hearing arguments on 18 August 2010, the CA, on 27 August 2010, set aside the approval of the Scheme because certain aspects of the voting procedure and the adjudication of some of the proofs of debt were found to be unsatisfactory (see The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal [2012] 2 SLR 213 (“The Royal Bank of Scotland v TT International”)). In setting aside the Scheme, the CA gave a number of directions, including a direction that a further meeting of the Scheme Creditors be held within four weeks. These directions are set out in Annexure I of The Royal Bank of Scotland v TT International.

The further meeting of the Scheme Creditors was duly held on 24 September 2010. On that occasion, the Scheme Creditors were, pursuant to the CA’s directions, divided into two classes for the purposes of voting on the Scheme. One class, consisting of the Company’s subsidiaries and related parties, voted unanimously in favour of the Scheme. In the other class, which was the general class of Scheme Creditors, a numerical majority representing 76.34% in value voted in favour of the Scheme.

Further hearings then took place before the CA on 5 and 13 October 2010. At the latter hearing, the CA issued brief grounds of decision (“the Brief Grounds”) declaring that the requisite majority of Scheme Creditors had indeed voted in favour of the Scheme at the meeting held on 24 September 2010 (see [5] of the Brief Grounds, which may be found in Annexure II of The Royal Bank of Scotland v TT International). The CA proceeded in the Brief Grounds to approve the Scheme, but subject to alterations which it considered it was empowered by s 210(4) of the Companies Act to make. One such alteration was in the composition of the MC (at [8(a)]). The CA directed that certain banks be made members of the MC; this was to...

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