Lin Jianwei v Tung Yu-Lien Margaret and another [2020] SGHC 229

The plaintiff, Lin Jianwei, and the first defendant, Tung Yu-Lien Margaret, are the only two shareholders and directors of the second defendant, Raffles Town Club Pte Ltd. The plaintiff is the executive chairman and 60% shareholder of the second defendant. The first defendant is the director and 40% shareholder of the second defendant.

This is an application by the plaintiff who seeks a declaration that he does not require leave to appeal against the decision in Summons No 1281 of 2020 (“SUM 1281”) delivered on 27 July 2020. Alternatively, if leave is required, the plaintiff seeks an extension of time to apply for leave, and that leave be granted for the plaintiff to bring an appeal against the decision in SUM 1281.

For the purpose of Summons No 3929 of 2020 (“SUM 3929”), it is pertinent to know the background and genesis of the parties’ disputes which were first initiated by the plaintiff when he commenced Originating Summons No 1446 of 2018 (“OS 1446”) against the defendants.

The background facts

OS 1446 and SUM 4

OS 1446 was commenced by the plaintiff against the defendants to, inter alia, obtain a declaration that the second defendant had validly appointed a third director or, in the alternative, to convene an extraordinary general meeting (“EGM”) to effect such an appointment. The first defendant counterclaimed in OS 1446 for a declaration that several notices of EGMs and the decisions taken at those EGMs, as well as several notices of board of directors’ meetings and the decisions taken at those meetings, are invalid and of no effect.

Subsequently, the first defendant discovered that the plaintiff’s solicitors were also representing the second defendant in OS 1446 notwithstanding the plaintiff’s action against the second defendant. The first defendant took the view that the plaintiff was acting in conflict of interest and appointed Nair & Co LLC (“N&C”) to act for the second defendant. This was vehemently objected to by the plaintiff. Hence, on 31 December 2018, the first defendant filed Summons No 4 of 2019 (“SUM 4”), seeking a declaration to the following effect:

On 4 March 2019, the parties agreed to a consent order (“the Consent Order”) in respect of SUM 4. The Consent Order provided that the plaintiff’s solicitors would give the first defendant a list of 30 law firms in Singapore. The first defendant would select and engage one law firm from that list “in her discretion … in the name and on behalf of RTC [the second defendant] to act for and represent RTC, as well as to give instructions to and receive advice from such solicitors” in relation to OS 1446. The Consent Order further provided, inter alia, that:

From the list of law firms provided by the plaintiff’s solicitors, the first defendant appointed Joseph Tan Jude Benny LLP (“JTJB”) on 14 March 2019 to act for the second defendant in OS 1446. The inference from this Consent Order and the subsequent appointment of JTJB is that both the plaintiff and the first defendant are satisfied that JTJB represents the second defendant. The logical implication must be that the second defendant has to pay for the legal services rendered by JTJB in safeguarding its interest in OS 1446.

On 4 October 2019, the plaintiff sought leave to discontinue his claim in OS 1446 and this application was granted. However, the first defendant insisted on pursuing her counterclaim in OS 1446. Presently, pursuant to the decision in Summons No 2628 of 2020, the hearing of OS 1446 has been stayed pending the hearing of Suit No 1048 of 2018, which deals with similar issues as in OS 1446.

OS 320 and SUM 1281

On 16 March 2020, the plaintiff commenced Originating Summons No 320 of 2020 (“OS 320”), in which he sought leave to commence a derivative action on behalf of the second defendant, pursuant to s 216A of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”), for N&C’s and JTJB’s fees (“the Fees”) to be taxed under the Legal Profession Act (Cap 161, 2009 Rev Ed) (“LPA”).

On 17 March 2020, the first defendant filed SUM 1281 in OS 1446 seeking reimbursement of the Fees she had paid on behalf of the second defendant to N&C and JTJB.

OS 320 and SUM 1281 were heard together. On 27 July 2020, I dismissed OS 320 and allowed SUM 1281. The reasons for my decision are set out in Lin Jianwei v Tung Yu-Lien Margaret and another and another matter [2020] SGHC 158 (“the Judgment”).

The Notices of Appeal and the present application

On 12 August 2020, the plaintiff filed two Notices of Appeal in Civil Appeal No 137 of 2020 (“CA 137”) and Civil Appeal No 140 of 2020 (“CA 140”) against the decision in OS 320 and SUM 1281 respectively.

On 27 August 2020, the first defendant applied to the Court of Appeal by way of Summons No 90 of 2020 (“CA SUM 90”) and Summons No 91 of 2020 (“CA SUM 91”) to strike out the Notices of Appeal in CA 137 and CA 140 respectively. This was on the basis that the plaintiff had not obtained the requisite leave to appeal against the decision in OS 320 and SUM 1281.

On 11 September 2020, the plaintiff filed SUM 3929 seeking a declaration that leave is not required to appeal against the decision in SUM 1281. In the alternative, the plaintiff seeks an extension of time to apply for leave to appeal, and for leave to appeal to be granted to the plaintiff. This application was filed 46 calendar days (including weekends and public holidays) after I handed down the decision in SUM 1281.

My decision

The issues

The issues that arise for my determination are as follows:

(a) Whether the plaintiff requires leave to appeal against the decision in SUM 1281?

(b) If leave to appeal is required, whether the plaintiff should be granted an extension of time to apply for leave to appeal?

(c) If an extension of time is granted, whether the plaintiff should be granted leave to appeal against the decision in SUM 1281?

I shall address each of these issues in turn.

Whether leave is required

Section 34(2) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) provides that:

In turn, paras 1(b) and 1(h) of the Fifth Schedule to the SCJA provide that:

The first defendant submits that pursuant to paras 1(b) and/or 1(h), the plaintiff requires leave to appeal against the decision in SUM 1281. Conversely, the plaintiff submits that leave is not required to appeal against the decision in SUM 1281 because the matter does not fall within paras 1(b) and/or 1(h).

Whether para 1(b) applies

(a) issues relating to the construction of the Consent Order;

(b) issues relating to the first defendant’s alleged misconduct and breaches of directors’ duties in making payment of the Fees without consulting the second defendant’s board of directors and concealing the fact of such payments until several months later;

(c) issues relating to whether the plaintiff should be granted leave to commence a derivative action under s 216A of the Companies Act on behalf of the second defendant to seek taxation of the Fees;

(d) issues relating to whether the first defendant has a personal entitlement to be reimbursed for the moneys expended in making payment of the Fees; and

(e) issues relating to whether s 122 of the LPA applies to the Fees.

The issues raised at [20(c)] and [20(e)] above are issues relating to OS 320, rather than SUM 1281. The plaintiff, through SUM 3929, seeks a declaration in relation to SUM 1281 which has nothing to do with OS 320. Hence, OS 320 may not be fully relevant to SUM 3929.

In adopting this substantive approach, I consider the purpose of para 1(b) as well as the approach taken by the Court of Appeal in Kosui Singapore Pte Ltd v Thangavelu [2016] 2 SLR 105 (“Kosui”) in its interpretation of s 34(2)(b) of the SCJA (as enacted prior to the amendments made to the SCJA in 2018). Section 34(2)(b) of the old SCJA is in pari materia to para 1(b) of the Fifth Schedule to the SCJA as presently enacted.

Turning to Kosui itself, the Court of Appeal held that an application under s 122 of the LPA fell within the scope of s 34(2)(b). The following observations by the Court of Appeal in particular are pertinent:

Whether para 1(h) applies

The meaning of “order” and “interlocutory application” in para 1(h) is well-settled. The word “order” means an “interlocutory order”, which is one that “does not finally dispose of the rights of the parties” (see Telecom Credit Inc v Midas United Group Ltd [2019] 1 SLR 131 (“Telecom Credit”) at [19], citing Dorsey James Michael v World Sport Group Pte Ltd [2013] 3 SLR 354 (“Dorsey”) and The “Nasco Gem” [2014] 2 SLR 63 (“The Nasco Gem”)). On the other hand, an “interlocutory application” is “an application whose determination may or may not finally determine the parties’ rights ‘in the cause of the pending proceedings in which the application is being brought’” (see Telecom Credit at [26], citing The Nasco Gem at [16]). The concepts of an interlocutory application and an interlocutory order are separate. Where an application is interlocutory, the court must look further at whether the order is also interlocutory (see Telecom Credit at [18]).

The Court of Appeal in Telecom Credit explained the underlying rationale of para 1(h) at [6] and [8] as follows:

The plaintiff submits that SUM 1281 is not an interlocutory application, and that the orders made in SUM 1281 finally determined the parties’ rights in relation to SUM 4 and OS 320. In contrast, the first defendant submits that SUM 1281 is an interlocutory application and that the orders made in SUM 1281 were interlocutory orders which did not dispose of the parties’ rights in relation to the substantive proceedings in OS 1446.

I agree with the first defendant’s submission. The plaintiff’s arguments are incorrect in law. The assessment of whether the application and/or order finally determines or disposes of the parties’ rights must be made in the context of the proceedings in which they arise. As the Court of Appeal made clear in The Nasco Gem at [16] (affirmed in Telecom Credit at [17] and [26]):

Similarly, the Court of Appeal observed in Wellmix Organics (International) Pte Ltd v Lau Yu Man [2006] 2 SLR(R) 525 at [16] that:

This also appears to have been the legislative intention behind para 1(h), based on the following explanation of para 1(h) given by the Senior Minister of State for Law, Assoc Prof Ho Peng Kee (see Singapore Parliamentary Debates, Official Report (18 October 2010), vol 87 at cols 1368–1370):

Thus, the authorities and parliamentary intention affirm the conclusion that the court should look at the originating process from which the application arises. While the plaintiff seeks to distinguish the relevant cases on the basis that none of them involved multiple related originating processes, I do not think it is appropriate to do so. As explained above, the purpose of para 1(h) is to limit appeals to applications and/or orders which do not finally determine or dispose of the substantive outcome of the case itself. That is the threshold which Parliament considered would strike an appropriate balance between the various policy considerations of allowing access to avenues of appeal, developing jurisprudence on interlocutory matters, avoiding strain to the ability and resources of the Court of Appeal, and effective case management in the interests of timely and efficient administration of justice (see Dorsey ([33] supra) at [35]–[37]). The plaintiff has not produced any authority supporting its contention that the court should assess the effect of the application and/or orders by reference to other summonses in the same originating process, or to another originating process altogether. Therefore, the reference point for SUM 1281 must be OS 1446 and not OS 320.

Applying this principle to the present case, the application and orders made in SUM 1281 must be assessed in the context of OS 1446 and the relief prayed for in OS 1446. Since the plaintiff withdrew his claim in OS 1446, the relevant claim is the first defendant’s counterclaim, which involves a declaration that several notices of EGMs and the decisions taken at those EGMs, as well as several notices of the board of directors’ meetings and the decisions taken at those meetings, are invalid and of no effect (“the Declarations”) (see [4] above). The parties’ rights as to the Declarations would not be affected by a determination of SUM 1281 either way. This is because SUM 1281 deals with the entirely separate issue of whether the first defendant should be reimbursed by the second defendant for the Fees she paid to the second defendant’s solicitors. Similarly, the orders made in respect of SUM 1281 pertain only to the reimbursement to the first defendant for the Fees and have nothing to do with the Declarations sought by the first defendant in OS 1446.

This coheres with the fact that SUM 1281 in effect arises as a result of SUM 4 (the application in respect of which the Consent Order was made). SUM 4 was taken out by the first defendant in OS 1446 due to her concern that the plaintiff’s solicitors were also representing the second defendant in OS 1446, which gave rise to a conflict of interest situation. This relationship between SUM 4 and SUM 1281 was not denied by the plaintiff. SUM 4 thus arose out of OS 1446. In this light, SUM 4 is clearly an interlocutory application as it did not concern the Declarations sought for in OS 1446. Instead, it was purely facilitative in so far as it ensured that the second defendant would have appropriate and independent representation for the proceedings in OS 1446. The plaintiff argues that SUM 4 is “standalone” and “bears absolutely no relation to the ultimate issue to be determined in OS 1446” and that is why he submits that SUM 4 is also not an interlocutory application. But SUM 4 is an interlocutory application that arose from the plaintiff’s initiation of OS 1446 where he chose his own solicitors to also represent the second defendant. The outcome of SUM 4 will not determine the substantive rights of the parties in OS 1446. It was the Consent Order in SUM 4 that resulted in SUM 1281 as the first defendant sought reimbursement of the Fees. Given the close relationship between SUM 4 and SUM 1281, it is logical that SUM 1281 must be an interlocutory application from which the interlocutory orders were derived.

Therefore, SUM 1281 is an interlocutory application and the orders made in respect of SUM 1281 are interlocutory orders falling within the scope of para 1(h).

Conclusion on whether leave is required to appeal

For the above reasons, I find that both paras 1(b) and 1(h) of the Fifth Schedule to the SCJA apply in the present case. Therefore, leave to appeal against the decision in SUM 1281 is required.

Whether an extension of time should be granted

Pursuant to O 56 r 3(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”), a party applying for leave to appeal under s 34 of the SCJA must do so within seven days (excluding weekends and public holidays) from the date of the order or judgment in respect of which leave to appeal is being sought. The decision in SUM 1281 was handed down on 27 July 2020. The latest date on which leave to appeal could have been sought was 6 August 2020. However, this application was only filed on 11 September 2020. This amounts to a 36-day delay, including weekends and public holidays.

The applicable principles in relation to extensions of time to file a Notice of Appeal are well-established. In Lee Hsien Loong v Singapore Democratic Party and others and another suit [2008] 1 SLR(R) 757 (“Lee Hsien Loong”), the Court of Appeal reiterated at [18] the four factors that the court will have to consider when deciding whether to grant an extension of time: (a) the length of the delay; (b) the reasons for the delay; (c) the chances of the appeal succeeding if time for appealing were extended; and (d) the prejudice caused to the would-be respondent if an extension of time was in fact granted.

The Court of Appeal also set out the following general principles in relation to these four factors:

(a) The precise facts and circumstances of each case are “all-important” (see Lee Hsien Loong at [28]).

(b) Although all four factors are “equally important” and must be “balanced against one another”, the emphasis will invariably be on the first two factors of the length of the delay and the reasons for the delay (see Lee Hsien Loong at [19] and [28]).

(c) The court’s approach towards the applications for the extensions of time will be “far stricter” than in other situations. The starting point is that the Rules of Court should be obeyed, with reasonable diligence being exercised. This is because the court’s “overriding concern” is the need for finality in order to ensure justice and fairness. In the Court of Appeal’s words, the winning party “should not be kept waiting – at least, not indefinitely – on tenterhooks to receive the fruits of its judgment” (see Lee Hsien Loong at [18] and [33]; Lai Swee Lin Linda v Attorney-General [2006] 2 SLR(R) 565 at [45]).

In relation to the individual factors themselves, the Court of Appeal explained as follows:

(a) If the delay is not de minimis, the court must examine the reasons for such delay. What amounts to a satisfactory explanation depends on the precise factual matrix, although the mere assertion that there was an oversight is insufficient. In assessing the applicant’s explanation, the court must “ensure that justice and fairness are ultimately achieved in the context of the need to ensure that there is finality in litigation” (see Lee Hsien Loong at [21]–[23]).

(b) In evaluating the chances of the appeal succeeding, the court applies a “very low threshold” – whether the appeal is “hopeless” or “there are no prospects of the applicant succeeding on appeal”. In considering this factor, the court should not go into a full-scale examination of the issues. If the appeal is not hopeless, the factor will be neutral (see Lee Hsien Loong at [19]).

(c) Whether prejudice to the would-be respondent can be shown depends on the precise facts of the case. The prejudice must be one that cannot be compensated by an appropriate order as to costs. Moreover, the prejudice must be “tangibly proven” and cannot simply refer to the fact that the appeal would continue if the extension is granted, or that the respondent would be deprived of the benefits of the judgment until after the appeal (see Lee Hsien Loong at [24]–[27]; Aberdeen Asset Management Asia Ltd and another v Fraser & Neave Ltd and others [2001] 3 SLR(R) 335 (“Aberdeen”) at [44]).

The plaintiff submits that if leave is required, it should be granted an extension of time to apply for leave to appeal. Having considered all the four factors in their totality, I find that it is not appropriate for the court to grant the plaintiff an extension of time to apply for leave to appeal against the decision in SUM 1281. I shall address each factor in turn.

Length of the delay and reason for the delay

The plaintiff’s delay of 36 days is clearly not de minimis. The plaintiff’s explanation for this delay is that his omission to apply for leave to appeal was “a bona fide mistake borne out of complexity in applying the relevant legal principles to the present facts”. According to the plaintiff, the decision not to apply for leave had been arrived at after “an elaborate consideration” of the relevant legal principles.

In my view, this is not a satisfactory explanation. First, although the plaintiff claims that SUM 3929 was filed “out of an abundance of caution”, I am not entirely convinced that the plaintiff and his solicitors were seriously of the view that leave to appeal was not required. If that was the case, there would have been no need to file this present application to seek a declaration to the same effect. The plaintiff could simply have contested the first defendant’s application in CA SUM 91 to strike out his Notice of Appeal in CA 140, as he is doing in respect of CA SUM 90. The plaintiff is not seeking a declaration that leave is not required to appeal against the decision in OS 320 notwithstanding that the first defendant has lodged CA SUM 90 to strike out CA 137 on the ground that leave is required to lodge an appeal. The plaintiff’s solicitors explained that this was because there was no uncertainty regarding the need for leave to appeal against the decision in OS 320. In other words, the plaintiff is confident that he can fend off the first defendant’s striking out application in CA SUM 90. The implication of this explanation is that the plaintiff was not as certain about his position in SUM 1281 as he seeks to suggest.

Secondly, even if I accept the plaintiff’s explanation that he honestly believed leave to appeal was not required, this only means that the plaintiff and his solicitors made a mistake in interpreting and/or applying the applicable legal principles. This is not a sufficient ground to grant an extension of time. The Court of Appeal observed in Lee Hsien Loong ([45] supra) at [22] that oversight in itself is “obviously insufficient” to justify an extension of time. Similarly, in Pearson Judtih Rosemary v Chen Chien Wen Edwin [1991] 2 SLR(R) 260, the Court of Appeal held at [20] that a bona fide mistake by the party’s solicitors in the computation of time was not a sufficient ground to grant an extension of time to apply for leave to appeal.

This is similarly the case here. As I have concluded above, both paras 1(b) and 1(h) apply in the present case. Contrary to the plaintiff’s suggestion, the position that leave to appeal is not required was not a reasonable or principled conclusion to reach based on the existing jurisprudence and authorities. In particular, the principles relating to para 1(h) are well-settled and the courts have clearly spelt out the ambit of what constitutes interlocutory applications and interlocutory orders. Indeed, these principles were set out in the cases cited by the plaintiff in his written submissions. In these circumstances, it seems that there was a dereliction of duty on the part of the plaintiff’s solicitors when they advised the plaintiff not to apply for leave to appeal, which resulted in an application for leave to appeal being made long after the time limit for doing so had expired.

Finally, even if the legal principles and/or facts of the present case are of such complexity as the plaintiff contends, the appropriate course of action for the plaintiff was to seek a declaration from the court that leave to appeal was not necessary. This was explained by Steven Chong J (as he then was) in The “Xin Chang Shu” [2016] 3 SLR 1195 (“Xin Chang Shu”) at [9] as follows:

It is true that such a course of action should only be taken where there is “genuine uncertainty” (see Xin Chang Shu at [9]). However, in this case it is notable that the issue of whether leave to appeal is necessary surfaced almost immediately after I handed down my decision in respect of SUM 1281. After SUM 1281 was granted, the plaintiff’s solicitors made an oral application for a stay of execution in light of the fact that the plaintiff was considering an appeal. In response, the first defendant’s solicitors stated that as far as SUM 1281 was concerned, the plaintiff needed to apply for leave to appeal. Therefore, it was expressly brought to the plaintiff’s attention immediately after SUM 1281 was decided that leave to appeal was required. At the very least, it should have alerted the plaintiff and put him on notice that there might be some contention between the parties on the issue of whether leave was required to appeal. Although the plaintiff contends that it was only “formally alerted” to this position when the first defendant filed CA SUM 91 to strike out CA 140, this misses the point. The first defendant’s solicitors had informed the plaintiff’s solicitors and the court in an official court hearing that the first defendant’s position was that leave to appeal was required. This should have made the first defendant’s position abundantly clear.

In these circumstances, if the plaintiff had truly found the facts and applicable principles complex, he should have applied for a declaration that leave to appeal was not required as soon as possible. The plaintiff cannot have his cake and eat it too; he cannot contend that the facts and/or legal principles were so complex that a bona fide mistake was justifiably made, yet not complex enough to warrant an application for a declaration that leave was not required. With due respect, the application of paras 1(b) and 1(h) to SUM 1281 was not legally and factually complex as it is clear that SUM 1281 was an interlocutory application giving rise to interlocutory orders, and only dealt with reimbursement of the Fees.

For these reasons, I do not find that the plaintiff has provided a satisfactory explanation for his 36-day delay in seeking leave to appeal.

Chances of the plaintiff’s appeal succeeding

I turn now to the chances of the plaintiff’s appeal succeeding. I reiterate that the threshold in this regard is extremely low as it only requires that the appeal cannot be described as “hopeless” or having “no prospects” (see [47(b)] above). Having considered the arguments that the plaintiff intends on raising in the appeal, I find that the chances of success in the appeal, while not completely “hopeless”, are nevertheless extremely remote. I shall elaborate on the plaintiff’s arguments in greater detail below. Since the plaintiff’s chances of success in the appeal are remote but not completely “hopeless”, I consider this a neutral factor.

Prejudice to the first defendant

In my view, the prejudice the first defendant alleges is the same as that experienced by any respondent in a case which proceeds on an appeal. However, the Court of Appeal made clear in Lee Hsien Loong ([45] supra) and Aberdeen ([45] supra) that the alleged prejudice cannot simply refer to the fact that the appeal would be continued if the extension was granted (see [47(c)] above). In this regard, the authorities cited by the first defendant were not persuasive. Hong Leong Finance Ltd v Famco (S) Pte Ltd and others [1992] 2 SLR(R) 224 concerned an application for leave to amend a party’s defence, whereas Ong Jane Rebecca v PricewaterhouseCoopers and others [2011] SGHC 203 concerned an application for the vacation of trial dates. The observations made by the court in those cases cannot override the express principles set out by the Court of Appeal as regards what amounts to prejudice in the context of extensions of time for leave to appeal.

Furthermore, given that the first defendant has been reimbursed by the second defendant for the payment of the Fees, she will not suffer the prejudice of having to bear the Fees out-of-pocket should the appeal of SUM 1281 proceed. For these reasons, I do not find that the first defendant would suffer prejudice if an extension of time were granted.

Conclusion on whether extension of time should be granted

Although the first defendant would not suffer prejudice if an extension of time were granted, I am of the view that an extension of time is nevertheless not justified. The length of the delay was excessive and the plaintiff does not have a satisfactory explanation for his delay as the plaintiff’s solicitors were alerted to the fact that leave was required for an appeal of SUM 1281 as early as 27 July 2020 when the order was made. In the circumstances, it would not be just or fair to grant the plaintiff an extension of time simply because the plaintiff’s solicitors were negligent. This was not a case in which the plaintiff’s solicitors misinterpreted or misapplied the principles relating to whether leave to appeal was required. It seems clear that the plaintiff’s solicitors decided not to apply for leave to appeal despite knowing that leave to appeal was likely to be required. I emphasise that seeking a declaration as in SUM 3929 was an option available to the plaintiff from the very beginning. However, the plaintiff chose not to take up that option until after the time limit had expired. Having made that decision, it is only fair that the plaintiff should live with the consequences.

Whether the plaintiff should be granted leave to appeal

Even if the plaintiff is granted an extension of time to apply for leave to appeal, I would nevertheless have declined to grant the plaintiff leave to appeal against the decision in SUM 1281.

The principles concerning leave to appeal are well-settled. There are at least three limbs which can be relied on when leave to appeal is sought. The “common thread” underlying these grounds is that to deny leave may result in a “miscarriage of justice” (see Lee Kuan Yew v Tang Liang Hong and another [1997] 2 SLR(R) 862 at [15] and [16]). The grounds are as follows:

(a) There is a prima facie case of error.

(b) The appeal involves a question of general principle decided for the first time.

(c) The appeal involves a question of importance upon which further argument and a decision of a higher tribunal would be to the public advantage.

Whether there is a prima facie case of error

I shall first consider whether there is a prima facie case of error. The plaintiff submits that there are several prima facie errors of law and/or fact arising from the Judgment. When it comes to errors of fact, Kan Ting Chiu J in Essar Steel Ltd v Bayerische Landesbank and others [2004] 3 SLR(R) 25 (“Essar Steel”) at [26] held that the court will only grant leave to appeal where the error is “clear beyond reasonable argument”. Kan J suggested that this threshold might be satisfied where, for example, undisputed evidence showed the court had made a mistake in respect of the date of service of a notice. In contrast, complaints “that a judge had erred in accepting the evidence of one witness over that of another, or had erred in drawing an inference or coming to a conclusion, will not be considered”. Similarly, the Court of Appeal in IW v IX [2006] 1 SLR(R) 135 (“IW”) at [20] approved the observations in Abdul Rahman bin Shariff v Abdul Salim bin Syed [1999] 3 SLR(R) 138 that:

Bearing these principles in mind, I turn to consider the various errors raised by the plaintiff.

(1) The court’s findings regarding the Consent Order

The plaintiff submits that there was no basis for the court’s conclusion that the plaintiff had agreed by virtue of the Consent Order that:

(a) the first defendant would be solely responsible for determining the reasonableness or otherwise of the bills of the second defendant’s solicitors;

(b) the first defendant would be “solely responsible and solely entitled to hide the bills where received” from the second defendant and its board of directors; and

(c) the first defendant was entitled to make payment of the Fees from her personal bank account and seek reimbursement “after a protracted delay of up to 7 months, thereby potentially prejudicing [the second defendant’s] rights to taxation”.

With respect, this submission is based on a serious misunderstanding of the Judgment. For clarity, I set out the relevant portion of the Judgment at [22] as follows:

As for the finding raised in [66(a)] above, the plaintiff raises further arguments relating to the construction of the Consent Order. The plaintiff submits that the Consent Order does not expressly provide for the reimbursement of JTJC’s fees, although the word “reimbursement” was used in relation to N&C’s fees. The plaintiff further alleges that the court’s construction of the Consent Order was contrary to the plaintiff’s allegations regarding the first defendant’s financial improprieties in managing the second defendant which resulted in OS 1446.

It appears from these arguments that the plaintiff is not relying on any error of law made by the court. Rather, the plaintiff is disagreeing with the court’s interpretation of the facts, specifically, the meaning and scope of the Consent Order. However, the threshold for errors of fact is that they must be “clear beyond reasonable argument” (see Essar Steel ([64] supra) at [26]). I am not persuaded by the plaintiff’s arguments that this is the case here. The plaintiff is contending that the court had made the wrong inferences in its construction of the Consent Order, based on the wording of the Consent Order and the circumstances surrounding the Consent Order. The plaintiff is essentially saying that the court should have drawn a conclusion similar to that set out in his submissions based on the evidence. This is insufficient to amount to a prima facie error of fact that justifies the granting of leave to appeal.

(2) The court’s finding that OS 320 had not been commenced in good faith

The plaintiff submits that the court made several errors in relation to its analysis of whether OS 320 had been commenced in good faith. However, this conflates SUM 1281 and OS 320. The present application concerns the appeal against the decision in SUM 1281, not OS 320. In fact, the plaintiff himself had decided not to make such an application in respect of OS 320, electing only to do so in respect of SUM 1281. Therefore, it is unclear how the court’s reasoning as regards the plaintiff’s good faith for the purposes of s 216A of the Companies Act can affect whether leave to appeal should be granted in respect of SUM 1281.

Nevertheless, for completeness, I clarify that I do not think that the errors raised by the plaintiff provided sufficient grounds to grant leave to appeal in any case. The plaintiff raises the following arguments:

(a) The court applied the wrong legal threshold for good faith by placing undue emphasis on the issue of hostility between the parties, and failing to consider the factual context behind the plaintiff’s commencement of OS 1446 and OS 320, as well as the fact that the plaintiff was a 60% shareholder of the second defendant.

(b) The court wrongly considered the fact that the first defendant was a 40% shareholder of the second defendant in concluding that the plaintiff lacked good faith in bringing OS 320 and resisting SUM 1281.

(c) The court applied the wrong legal threshold for good faith. The correct legal threshold was the same as in an application for striking out on the basis of abuse of process – where the circumstances show that the application was actuated by bad faith.

I am not persuaded by these arguments. It is clear from [7] of the Judgment that the court had applied the legal threshold for good faith set out by the Court of Appeal in Ang Thiam Swee v Low Hian Chor [2013] 2 SLR 340 (“Ang Thiam Swee”). While the court had regard to the hostility between the parties, it also considered whether the plaintiff honestly held the belief that the Fees were unreasonable and excessive, as well as the merits of the proposed action for taxation (see [9]–[13] of the Judgment). These were permissible factors for the court to consider (see Ang Thiam Swee at [29]). Thus, there was no error of law.

Furthermore, to the extent that the plaintiff is submitting that the court should have drawn a different conclusion based on the facts of the case (ie, the circumstances surrounding the commencement of OS 1446 and OS 320 and the plaintiff’s and the first defendant’s shareholdings in the second defendant), this would again fail to meet the threshold of “clear beyond reasonable argument” required for purported errors of fact.

(3) The court’s finding that the taxation of the Fees was not prima facie in the interests of the second defendant

The plaintiff submits that the court had made a prima facie error of law in finding that the taxation of the Fees would not be prima facie in the interests of the second defendant. According to the plaintiff, this is based on the court’s “holding that [the plaintiff] had only made bare assertions that the [Fees] billed are excessive”.

With respect, the court made no such finding regarding whether the taxation of the Fees would be prima facie in the interests of the second defendant. The issues considered by the court are set out clearly at [5] of the Judgment – (a) whether the plaintiff had shown that he was acting in good faith; and (b) whether s 122 of the LPA was operative and if so, whether special circumstances had been shown warranting an order for taxation. The court’s observation that the plaintiff only made bare assertions regarding the excessiveness of the Fees went towards the first inquiry (ie, whether the plaintiff was acting in good faith). Having concluded that the plaintiff was not acting in good faith, there was no reason for the court to consider the other requirements of s 216A of the Companies Act, including whether the taxation of the Fees would prima facie be in the interests of the second defendant.

(4) The court’s findings regarding the applicability of s 122 of the LPA

The plaintiff submits that the court had misapplied and misconstrued the scope of s 122 of the LPA, as follows:

(a) The court’s analysis was incomplete as it failed to address those bills which were issued within 12 months of the plaintiff’s application in OS 320.

(b) The court erred in interpreting the scope of the phrases “delivery of a bill of costs”, “payment of the bill” and “special circumstances” in s 122 of the LPA.

Therefore, the court’s analysis as to whether s 122 applied was not incomplete.

As regards the point raised in [78(b)] above, the plaintiff does not offer any reasons or authorities as to why the court may have made an error in law in interpreting the meaning of those phrases. To the contrary, it is clear from [19] of the Judgment that in relation to the phrase “special circumstances” specifically, the court had regard to the test set out by the courts in JWR Pte Ltd v Syn Kok Kay (trading as Patrick Chin Syn & Co) [2019] SGHC 253, Sports Connection Pte Ltd v Asia Law Corp and another [2010] 4 SLR 590 and Kosui Singapore Pte Ltd v Thangavelu [2015] 5 SLR 722.

For the above reasons, I am not persuaded that there is a prima facie case of error of law and/or fact which justifies the granting of leave to appeal.

Whether the appeal involves a question of general principle decided for the first time

I shall now consider whether the appeal involves a question of general principle decided for the first time. Questions which are peculiar to the particular facts of the case are not questions of general principle, notwithstanding that they may be decided for the first time (see Essar Steel ([64] supra) at [28(b)]). Questions which involve the exercise of judgment depending on all the circumstances of a particular case are also not questions of general principle (see IW ([64] supra) at [27]).

The plaintiff submits that there are five questions (which the plaintiff refers to as “Question 1”, “Question 2”, “Question 3”, “Question 4” and “Question 5”) to be raised in the appeal which would constitute questions of law involving general principles to be decided for the first time in Singapore.

The same can be said for Question 5. Question 5 concerns whether the first defendant was in a position of conflict of interest by reason of her counterclaim in OS 1446, such that she was barred “from making any decision with regard to the representation of [RTC] in the suit”. The plaintiff has no basis to make this argument as it must be emphasised that the plaintiff, with the benefit of legal advice from his solicitors, had agreed to the Consent Order in SUM 4. Thus, the issue raised in Question 5 is one which must be decided on the particular facts of this case, rather than as a matter of general principle.

The plaintiff’s suggestion that Question 5 would be an issue raised on appeal is perplexing. The Consent Order expressly sets out the plaintiff’s and the first defendant’s agreement that:

Thus, the plaintiff himself had clearly agreed that the first defendant was entitled to decide on and engage solicitors for the second defendant in respect of OS 1446. It is not clear why the plaintiff now seeks to raise on appeal the argument that the first defendant was in a position of conflict of interest vis-à-vis the second defendant, or whether he can even do so given his previous position on the matter.

For these reasons, I find that the questions to be raised on appeal are not questions of general principle to be decided for the first time.

Whether the appeal involves a question of importance to the public advantage

I turn now to whether the appeal would involve a question of importance upon which further argument and a decision of a higher tribunal would be to the public advantage. The plaintiff relies on Questions 1 to 5 and submits that:

(a) Questions 1 to 4 have important ramifications on a corporate client’s entitlement to tax its solicitor’s bill of costs in circumstances where there is potential misconduct by one of the company’s directors;

(b) Questions 1 to 4 are questions of law relating to the interpretation of s 122 of the LPA and s 216A of the Companies Act;

(c) Questions 1 to 4 concern the balance to be struck between the public interest in protecting clients from overcharging by solicitors, and protecting solicitors against clients who raise technical points at the last minute to avoid paying the solicitors’ fees; and/or

(d) Question 5 has important ramifications on the scope of directors’ powers, rights and duties in situations where the directors of a company and the company itself are embroiled in a lawsuit.

Again, I am unable to accept the plaintiff’s submissions in this regard. The issues in Questions 1 to 5 concern the application of established principles and statutory provisions to the unique facts of this case. It bears mentioning that the issues arising in this case are highly specific to the facts at hand, in particular, the precise arrangement that was reached between the plaintiff and the first defendant by virtue of the Consent Order. The Consent Order was drafted specifically to cater to the particular circumstances arising between the parties in light of the plaintiff’s initial claim against the defendants. The findings made in this case, therefore, turn on their own facts and are not of such importance as the plaintiff seeks to suggest.

Furthermore, in so far as the Questions relate to issues of statutory interpretation and policy considerations, these are issues which will arise in many cases. It cannot be the situation that all questions involving such issues of statutory interpretation and policy considerations are automatically regarded as questions of importance, the decision of which would be to the public advantage.

In relation to Question 5 specifically, I reiterate again that it is not clear whether such an issue will even be permitted to be raised on appeal. In any case, the principles relating to a director’s conflict of interest when bringing proceedings against the company are well-settled. It is therefore not a question of importance the decision of which would be to the public advantage.

Conclusion on whether leave to appeal should be granted

For these reasons, I am not convinced that any of the grounds warranting the grant of leave to appeal have been satisfied. Contrary to the plaintiff’s submissions, no miscarriage of justice arises from the decision not to grant leave to appeal. It is not the case that there is no recourse for the second defendant if the Fees are truly excessive. Taxation of the Fees is inappropriate under these circumstances for the reasons set out in the Judgment. By persisting in his application for taxation, the plaintiff is simply barking up the wrong tree. Thus, even if there are merits to grant an extension of time to the plaintiff to apply for leave to appeal, there is no basis to grant the plaintiff’s application for leave to appeal.

The plaintiff’s arguments that OS 320 will be rendered nugatory

I shall now deal with the plaintiff’s submissions that SUM 1281 and OS 320 are “intricately enmeshed” and “two sides of the same coin”. Thus, the plaintiff argues that since OS 320 is not an interlocutory application, neither should SUM 1281 be considered an interlocutory application. Similarly, the plaintiff contends that a finding that SUM 1281 requires leave to appeal whereas OS 320 does not would “effectively render the appeal in OS 320 nugatory” as it would enable the first defendant to “take the point that, by no appeal being taken in respect of SUM 1281, [the plaintiff] has in fact conceded the position in OS 320”.

Secondly, even if there is an appeal against the decision in OS 320, the plaintiff overstates the extent of the relationship between OS 320 and SUM 1281. It is true that factually, there is an overlap between OS 320 and SUM 1281 – both deal with the Consent Order, the Fees, and the first defendant’s payment of the Fees. Some of the factual issues also overlap, for instance, the scope of the parties’ arrangements pursuant to the Consent Order. However, from a legal perspective, the two applications are quite different. OS 320 is an action between the plaintiff and the second defendant, for leave to be granted to the plaintiff to commence a derivative action on behalf of the second defendant to send the Fees for taxation. In contrast, SUM 1281 is an application by the first defendant against the plaintiff to compel the plaintiff to procure the second defendant and the finance manager of the second defendant to reimburse the first defendant pursuant to the Consent Order. The Consent Order, in turn, was arrived at after discussions between the solicitors of the plaintiff and the first defendant in SUM 4. As a result, the issues in OS 320 and SUM 1281 are different. The outcome of one may not necessarily determine the other, and vice versa.

Even if the application in OS 320 had been allowed, that did not necessarily mean that SUM 1281 would have been dismissed as the dispute in SUM 1281 was only regarding the quantum to be paid to the second defendant’s solicitors. The court could have ordered the plaintiff to nevertheless procure the second defendant to reimburse the first defendant pending the taxation proceedings brought pursuant to OS 320. In similar vein, the fact that OS 320 may be appealed without the leave of the court whereas SUM 1281 may not does not render any appeal of OS 320 nugatory. The reasons given by the court in respect of its decision on OS 320 can still be considered by the Court of Appeal. If the appeal against the decision in OS 320 is eventually granted and the Fees are successfully taxed, the second defendant’s solicitors can return to the second defendant the amount of the Fees which are found to be excessive.

It seems that OS 320 may also require the leave of the court for an appeal since the substance of OS 320 deals solely with the taxation of the Fees. This is as per the substantive approach to para 1(b) which I have earlier explained (see [31] and [94] above). Notwithstanding that OS 320 is an originating summons, it could also be an interlocutory application like SUM 1281 as OS 320 also arose from SUM 4 which is an interlocutory application arising from OS 1446.

Summary of findings

As such, leave is required to appeal. However, the plaintiff’s application for leave to appeal is out of time. I find that there are no good reasons justifying the grant of an extension of time to apply for leave to appeal, as the plaintiff’s delay is not de minimis and the plaintiff was negligent and caused the delay. This is notwithstanding the fact that the plaintiff’s chances of success on appeal are remote and minimal prejudice would occasion to the first defendant.

Even if an extension of time is granted, there is no justification to grant the plaintiff leave to appeal against the decision in SUM 1281 as the plaintiff has not shown that any of the grounds warranting the grant of leave are satisfied in this case.

Conclusion