Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another

Lee Seiu Kin J:

[1] In this action, the plaintiff (“Pacrim”) seeks damages against the second defendant, Mainstream Limited (“MSL”) for its failure to transfer certain MSL shares submitted by Pacrim for registration in September 2003. The matter before me concerns an appeal against the decision of the Assistant Registrar (“AR”) on 14 April 2010 in which he held that Pacrim was bound by a scheme of arrangement (“the Scheme”) under s 210 of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”). I dismissed the appeal and upheld the decision of the AR. Pacrim has appealed and I now give the grounds for my decision.

[2] With regard to the background facts, I can do no better than to repeat what the AR had set out in his grounds of decision (“GD”) given on 3 May 2010. They are as follows:

[3] The nub of the matter is as follows. Pacrim’s action in this originating summons was dismissed by the High Court on 3 August 2004, against which Pacrim lodged an appeal to the Court of Appeal. On 21 August 2007, while the appeal was pending, the Scheme was brought into force. On 22 February 2008, the Court of Appeal allowed Pacrim’s appeal. The issue turns on whether Pacrim is bound by the terms of the Scheme and that in turn depends on whether Pacrim is a “creditor” within the meaning of s 210 of the Act, the relevant parts of which are as follows:

[4] The term “creditor” is not defined. The issue is whether Pacrim, whose status at the time the Scheme came into force was that of a party that had a claim in damages against MSL that was dismissed by the High Court but whose appeal was pending, falls within that term. There is no binding authority on this point. The AR had, in his GD, traversed the relevant authorities and concluded that the term “creditor” in s 210 of the Act should be given a wide meaning. It is not necessary for me to similarly traverse those authorities because counsel for Pacrim, Ms Lisa Chong (“Ms Chong”), conceded that judicial attitudes in jurisdictions from which the Act was derived had moved towards a broad approach. Indeed, paras 4.11 – 4.13 of Ms Chong’s written submission on the issue helpfully set out the positions taken in relevant decisions in various Australian jurisdictions:

[5] However in the paragraph that follows, Ms Chong stated that Pacrim’s “acceptance of the broad legal meaning of “creditor” does not detract from the fundamental premise that the claim or liability in question must be one which is legally due or enforceable”. Ms Chong’s submission went on to state, in summary, that Pacrim’s situation at the time the Scheme was established was one which did not fall within the broad definition that she accepted was the case. I saw no merit in that argument. At the time the Scheme was established, Pacrim had its claim dismissed by the High Court but its appeal was pending. This meant that in the event its appeal was allowed, it would be a creditor; indeed this was an eventuality that did materialise. There was no basis on principle to exclude persons in Pacrim’s position from the scope of “creditors”. In practice, doing so would unfairly benefit such companies who would be able to recoup its entire debt from a company resuscitated from the sacrifices of all the other creditors. Therefore there is also no basis on policy to do so. For these reasons I dismissed the appeal.