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Grounds publishedDecided 30 Sep 2015
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Court of Appeal

The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd (nTan Corporate Advisory Pte Ltd and others, other parties) and another appeal

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[2015] SGCA 50Case no. Summons No 5682 of 2012 in Civil Appeal No 44 of 2010 and Summons No 6520 of 2012 in Civil Appeal No 47 of 2010

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  1. Sundaresh Menon CJ (with whom Chan Seng Onn J, Quentin Loh J and Vinodh Coomaraswamy J agreed):

  2. Introduction

  3. [1] 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.

  4. [2] 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.

  5. [3] 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”.

  6. Background facts: the Scheme

  7. [4] 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.

  8. [5] 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.

  9. [6] 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.

  10. [7] 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:

  11. [8] 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.

  12. [9] 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.

  13. [10] 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 give the MC a more balanced composition by including some Scheme Creditors who had not voted in favour of the Scheme.

  14. Correspondence regarding the VAF

  15. [12] Throughout this time, neither the High Court nor the CA had been made aware of the VAF. The question of nTan’s entitlement to the VAF was first brought to the CA’s attention about a year and a half later by a letter dated 27 January 2012 addressed to the Supreme Court Registry (“the Registry”) from Rajah & Tann LLP (“Rajah & Tann”), the solicitors for the MC. The letter was copied to Allen & Gledhill LLP, who, in a later letter, indicated that they were acting for “Mr Nicky Tan, the [SM] of [the Company]”, as well as to WongPartnership LLP, the solicitors for the Company.

  16. [13] This letter triggered a series of correspondence between these three parties and the CA, which culminated in the VAF Decision. Given that nTan alleges that it was denied natural justice in the manner in which the CA arrived at the VAF Decision, and given that the CA arrived at the VAF Decision following this series of correspondence, we shall describe in some detail the contents of the various letters. In doing so, we shall use the names of the parties rather than the names of the law firms who represented them and sent the letters on their behalf.

  17. The MC’s letter of 27 January 2012

  18. [16] Leaving [8(j)] aside, the MC also expressed a more general concern that a success fee, the quantum of which depended on the value of debt restructured under the Scheme (as was the case for the VAF), would give rise to “a possible conflict of interest and duty on the part of nTan, in that it was nTan that adjudicated on the debts that were to be admitted for voting on and participating in the Scheme”. The MC then requested that the CA direct that the VAF be subject to taxation in accordance with [8(j)], and that the CA provide guidance as to how such taxation should be conducted.

  19. Initial responses to the MC’s 27 January 2012 letter

  20. [17] On 30 January 2012, the Registry wrote to the SM and the Company with an invitation to respond to the MC’s letter of 27 January 2012. On 1 February 2012, the SM – identified as “Mr Nicky Tan” – wrote to the Registry. The SM’s letter was stated to be in response to the MC’s 27 January 2012 letter, but not the Registry’s 30 January 2012 letter. The letter said that the MC’s letter had made a number of “serious allegations” against various parties and, furthermore, contained some “factual inaccuracies”. The SM also complained that the MC had not disclosed relevant material facts. Given that the MC was asking the CA to make substantive directions in relation to the Scheme, the SM proposed that the MC put forward its request in a more appropriate manner by way of a formal application supported by affidavit, after which the SM and any other concerned party could file a reply affidavit.

  21. [19] On the morning of 7 February 2012, the SM sent another letter to the Registry. It stated as a preliminary matter that the SM had not received the Registry’s 30 January 2012 letter, and had known of its existence only when the Company extended him a copy. The SM then reiterated the request in his 1 February 2012 letter that the MC be directed to make its request for further directions from the CA by way of a formal application supported by affidavit. He also asked for more time to make a substantive and detailed response to the MC’s letter of 27 January 2012.

  22. [21] As to the second issue, which concerned the VAF, the SM rejected the MC’s allegation that it had only “recently” been informed of the VAF. The SM asserted that on 12 August 2011, the Company had informed the Scheme Creditors, including the MC, that it had earmarked $63m in its financial statements for meeting potential liabilities and other Scheme-related expenses “including, inter alia, nTan’s VAF”. It was accordingly suggested that the MC ought to have been aware of the existence of the VAF by 12 August 2011. The SM also said that the Company had provided the MC with further details relating to the VAF just over a month later, on 22 September 2011, and had informed the MC on that occasion that the VAF was payable upon successful sanction of the Scheme and that the Company would negotiate with nTan on the quantum of the VAF. The SM’s point was that the MC had in fact had at least five months since 22 September 2011 to plot its course in relation to the VAF.

  23. [22] The SM then went on to reiterate once more his request that the MC be directed to make a formal application supported by affidavit for the further directions which it sought from the CA. He added that, if the CA were not minded to direct so, he would seek an extension of time until 15 March 2012 to submit a detailed response to the MC’s 27 January 2012 letter. In making this request, the SM pointed out that no party would be prejudiced if more time were taken to set out all the facts and arguments properly. He also emphasised that it was important to consider the matter carefully because the MC’s request that (among other things) the VAF be taxed under [8(j)] would “have broad ranging impact and [raise] matters of public interest”, and would effectively “alter the agreement between nTan and the Company and the terms of the Scheme which ha[d] been approved by the requisite majority of the [Scheme Creditors] and sanctioned by the [CA]”.

  24. The Registry’s letter of 7 February 2012 and the responses thereto

  25. [23] In the late afternoon on the same day (ie, 7 February 2012), the Registry sent the parties a letter on behalf of the CA. This letter referred to all the previous correspondence, including the letter sent that morning by the SM. It informed the parties that the CA was considering the issues raised and asked them to clarify certain matters relating to the VAF, namely:

  26. (a) whether the VAF had been disclosed to any of the Scheme Creditors prior to the CA’s sanction of the Scheme on 13 October 2010, and if so, when, how and to whom disclosure had been made;

  27. (b) whether the VAF had been disclosed at any meeting of the Scheme Creditors;

  28. (c) whether the VAF had been disclosed to any court hearing the application to sanction the Scheme; and

  29. (d) whether the VAF had been disclosed to the Scheme Creditors on 12 August 2011, as the SM said it had been.

  30. [24] The Company was the first to respond, doing so on 10 February 2012. Its answers to the questions posed were:

  31. (a) No – to the best of the Company’s knowledge, the VAF had not been disclosed to any of the Scheme Creditors prior to the CA’s sanction of the Scheme on 13 October 2010;

  32. (b) No – the VAF had not been disclosed at the meetings of the Scheme Creditors held on 16 October 2009 and 24 September 2010;

  33. (c) No – the VAF had not been disclosed to any court hearing the application to sanction the Scheme; and

  34. (d) Yes – the VAF had been disclosed to the Scheme Creditors on 12 August 2011.

  35. [25] Both the SM and the MC responded on 14 February 2012. Turning, first, to the SM’s letter, his answers to the four questions posed were identical to those given by the Company. But, the SM did not confine his response to those matters. Instead, he went on to make two broad points. One was that the non-disclosure of the VAF in the context of the Scheme was not inconsistent with prevailing practice. The SM stated that, to his knowledge, companies in other schemes of arrangement likewise had not disclosed to their creditors the engagement letters or the fees of their professional advisors prior to the court’s hearing of the application to sanction the scheme in question. The SM’s other broad point was that, even before the CA sanctioned the Scheme on 13 October 2010, two of the Scheme Creditors had, in their submissions to the CA, articulated some concerns over the fees of the Company’s professional advisors and the lack of information disclosed by the Company in that regard, but the CA had not thought fit to pursue this line of inquiry very far.

  36. [26] A substantial part of the SM’s 14 February 2012 letter was taken up with expanding on the second of the two broad points just mentioned. He pointed out that:

  37. (a) Ho Lee Construction Pte Ltd, a Scheme Creditor opposed to the Scheme, had complained in its submissions to the CA dated 1 October 2010 of a “lack of visibility in respect of nTan’s fees, including on a success formula”;

  38. (b) Oversea-Chinese Banking Corporation Limited (“OCBC”), another Scheme Creditor opposed to the Scheme, had similarly complained in its written submissions to the CA dated 5 October 2010 that the Company had “not seen any need to justify the fees” paid to the SM and other professional advisors, and had expressed dismay at the impossibility of ascertaining whether the SM would “receive any success or contingency fee upon the sanction of the Scheme”;

  39. (c) in its 5 October 2010 written submissions, OCBC had also argued (among other things) that, in view of the lack of transparency as to the SM’s fees, the office of SM ought not to be occupied by any person from nTan because “[g]rave doubt” had been cast on nTan’s “impartiality, independence, competence and professional judgment”; but

  40. (d) significantly, the CA had not acceded to this last-mentioned aspect of OCBC’s written submissions (ie, the argument at sub-para (c) above), nor had the CA made any directions in response to it.

  41. [27] The SM concluded his 14 February 2012 letter by reiterating yet again his request that the MC be directed to make a formal application supported by affidavit for the further directions which it sought from the CA. He also reiterated his alternative request that he be granted an extension of time until 15 March 2012 to submit a detailed response to the allegations that the MC had made in its 27 January 2012 letter.

  42. [28] Moving, finally, to the MC’s response of 14 February 2012, its answers to the first three of the four questions posed by the CA were the same as those given by the Company and the SM. But, it departed from the Company and the SM on the fourth question, which was whether the VAF had been disclosed to the Scheme Creditors on 12 August 2011. The MC said that, to the best of its recollection, there had been no reference to or mention of the VAF on that day. The Scheme Creditors had indeed been told about the earmarking of $63m in the Company’s financial statements for meeting potential liabilities and other Scheme-related expenses, but the Company had then declined to answer a direct query regarding the professional fees due to the SM on the basis that those fees remained the subject of ongoing negotiations between the Company and the SM. The MC alleged that express disclosure of the VAF had taken place only on 22 September 2011.

  43. [29] The MC concluded its letter by expressing disagreement with nTan’s position that it should make a formal application supported by affidavit for the further directions which it sought from the CA. In this connection, the MC clarified that it was “merely seeking further guidance from the [CA] on the directions laid down in [the] Brief Grounds”, and was “not seeking a ruling from the [CA] on any factual allegations in relation to the fee arrangements between the Company and nTan and/or the [SM]”. According to the MC, the facts set out in its 27 January 2012 letter served only “to provide the background and context of [its] request for directions”. Nonetheless, the MC also indicated that, should the CA take the view that those facts were relevant to the directions sought in its 27 January 2012 letter, it would be happy to address the matters subsequently raised by the SM and the Company.

  44. The Registry’s further letter of 20 February 2012

  45. [30] On 20 February 2012, the Registry wrote to the parties again. It listed four issues that the CA said had been raised for its consideration by the correspondence thus far, namely:

  46. (a) whether any bill of costs to be taxed under [8(j)] should be served on the MC;

  47. (b) whether the MC should be allowed to instruct solicitors to participate in the taxation proceedings;

  48. (c) whether the taxation mandated by [8(j)] could be waived with the consent of all the parties; and

  49. (d) whether the VAF should be taxed under [8(j)].

  50. The CA answered the first three issues in the affirmative, but emphasised, with regard to the third issue, that taxation could be waived only if the MC also consented.

  51. [31] As to the fourth issue, the CA requested the parties to address it on three issues of fact and four issues of law. The three issues of fact were:

  52. (a) what the prevailing practice was for remuneration of scheme managers in Singapore;

  53. (b) whether other scheme managers in Singapore, or in countries where similar statutory schemes existed, had ever adopted similar arrangements for success fees which would be paid over and above the scheme manager’s basic remuneration; and

  54. (c) what the exact amount of the VAF was.

  55. [32] The four issues of law were:

  56. (a) whether the Company and/or the SM ought voluntarily to have disclosed the VAF to the Scheme Creditors before or at the meetings of the Scheme Creditors, and/or to the court;

  57. (b) assuming that the Company and/or the SM had such an obligation to disclose, what the consequences of a failure by the Company and/or the SM to discharge that obligation ought to be;

  58. (c) assuming that the Company and/or the SM had no such obligation to disclose, whether there should nonetheless be any legal constraint on the nature and quantum of the success fee arranged between a company and its scheme manager; and

  59. (d) whether the court had inherent power to tax the VAF, and if not, whether the VAF fell within [8(j)].

  60. [33] The CA directed the parties to respond within 14 days of their receipt of the Registry’s 20 February 2012 letter, meaning that the deadline was 5 March 2012. On 1 March 2012, the MC wrote to the Registry seeking an extension of time on the basis that novel points of law had been raised. The Registry replied on the same day informing the parties that the new deadline was 14 March 2012.

  61. The parties’ responses to the Registry’s 20 February 2012 letter

  62. The responses of the Company and the MC

  63. [35] Turning to the questions of law posed by the CA, the Company and the MC diverged on the first legal issue, namely, whether the Company and/or the SM ought voluntarily to have disclosed the VAF to the Scheme Creditors and/or to the court. The Company argued that there was no such obligation of disclosure because it was not the practice in Singapore for a company to include the details of its scheme manager’s fees in the scheme documents, and because, in this particular case, the Company understood from the SM that it was not to disclose to third parties the terms of its engagement with the SM without his consent.

  64. [36] The MC, on the other hand, contended that the Company and the SM did have an obligation to disclose the VAF. Two main reasons were furnished. The first had to do with the materiality of the information to be disclosed. The MC argued in this regard that the Scheme Creditors should have been given all information necessary for them to make a meaningful choice in voting on the Scheme, and that the existence of the VAF was one such piece of information as the large quantum of the VAF could have a material impact on the Company’s financial situation. The second reason had to do with an alleged position of conflict on the part of the SM and nTan. The MC argued that the VAF ensnared the SM and nTan in “two distinct levels of conflict”. One was that the SM had an incentive to admit the proofs of debt of those Scheme Creditors supporting the Scheme and reject the proofs of those opposing, so that the VAF would become payable; the other was that the SM had an incentive to admit as much debt as possible so as to increase the quantum of the VAF.

  65. [37] As to the second question of law, namely, what the consequences of a failure to disclose the VAF ought to be, the Company did not give any substantial answer. The MC, however, contended that the Company’s and the SM’s breaches of their disclosure obligations could have three possible consequences. First, the Scheme might be set aside on the ground that the Scheme Creditors’ consent to it had been obtained by fraud; second, the Company’s obligation to pay the VAF to nTan might be set aside by reason of the SM’s breach of a fiduciary duty owed by him to the Scheme Creditors such as would call for an account of profits, or alternatively, the Company’s liability to pay the VAF might be subordinated to the claims of the Scheme Creditors; and third, the SM might be removed and replaced.

  66. [38] In relation to the fourth question of law, viz, whether the court had inherent power to tax the VAF, and if not, whether the VAF fell within [8(j)], the MC considered that the CA did not have inherent power to tax the VAF, but maintained that the VAF did fall within [8(j)]. The Company, on the other hand, contended that the CA had inherent power to tax the VAF. It expressed no view on whether the VAF fell within [8(j)].

  67. The response of the SM

  68. [39] The SM’s submissions in response to the questions set out in the Registry’s 20 February 2012 letter, which were likewise filed on 14 March 2012, spanned 155 paragraphs across 104 pages, with an annex that was five pages long. In these submissions, the SM did not launch at once into his answers to the aforesaid questions. Instead, he prefaced his answers with “four key points” which he said were “important and relevant” for the CA to have regard to.

  69. [41] The second key point raised by the SM was that the CA should have regard to the MC’s conduct in considering whether the VAF should be subject to taxation under [8(j)]. To begin with, the SM cautioned against conflating the question of taxation with the matter of his and the Company’s alleged failure to disclose the VAF to the Scheme Creditors; he argued that the MC itself, in its 14 February 2012 letter, had taken the position that its request for (among other things) a direction that the VAF be taxed under [8(j)] was separate from this alleged non-disclosure. In any event, the SM submitted, in so far as the MC was alleging a breach of an obligation to disclose, it was incumbent on the MC to make an application to the court explaining why there was such an obligation, given that the terms of the engagement between the Company and nTan were subject to a confidentiality clause.

  70. [42] The SM then pointed out that the MC had known all along that the SM was also the IFA, and that certain of the Scheme Creditors had at various points raised questions pertaining to nTan’s remuneration, including the specific question of whether nTan would receive a success fee – the SM suggested that this was “because the creditors were aware that such arrangements are commonplace in the financial and corporate sectors”. If the issue of nTan’s remuneration had truly been of concern, the SM contended, the MC could have sought disclosure by way of an application to the court prior to the sanction of the Scheme. Despite having had ample opportunities to do so, the MC had opted not to take that course. The SM’s point – although he did not say so in quite these terms – was that any alleged non-disclosure of the VAF did not impugn the validity of the Scheme Creditors’ approval of the Scheme because the issue of nTan’s remuneration had in truth been wholly immaterial to that approval, as shown by the fact that the Scheme Creditors had given their approval despite their awareness of the issue.

  71. [44] The SM’s fourth key point was that, although the MC had, in its 27 January 2012 letter, made an allegation of “a possible conflict of interest and duty” against nTan, it had thereafter declined to put this allegation on affidavit. The SM also emphasised that the MC seemed to allege only potential rather than actual conflict.

  72. [46] The SM also asserted that Rajah & Tann, counsel for the MC, had acted as counsel for the company concerned in three of the five cases in which Mr Nicky Tan had been the financial advisor of a company under a scheme of arrangement, the implication being that Rajah & Tann must have known that there had been a success fee which had not been disclosed to the creditors in those instances. In fact, said the SM, two members of the MC (namely, OCBC and DBS Bank Ltd (“DBS”)) would also have been aware of “nTan’s standard practice of charging a [success fee] when acting as financial advisor”, given their involvement in those other schemes of arrangement.

  73. [48] We turn now to the SM’s answers to the CA’s four questions of law. As to the first legal issue, the SM submitted that nTan did not have to make voluntary disclosure of its fee arrangements for work done as the Company’s IFA because its contract with the Company was a private and confidential one. He argued that there were no laws, regulations, industry guidelines or codes of practice which required such disclosure; nor was there any existing practice or precedent suggesting that there was any such requirement.

  74. [49] On the second question of law, the SM submitted that, even if there was an obligation to disclose the VAF which had been breached by him and the Company, no consequences should flow from this. This was because the Scheme Creditors had approved the Scheme despite knowing that OCBC had suggested, prior to the CA’s sanction of the Scheme, that there might be an undisclosed success fee payable to nTan. On this basis, it was contended that, even if there had been a breach of a disclosure obligation, that should not affect the Scheme Creditors’ approval of the Scheme.

  75. [50] As for the third question of law, the SM submitted that there ought not to be any legal constraint on the nature and quantum of the success fee arranged between a company and its professional advisor because such success fee arrangements were a matter of private contract between the parties concerned. If neither party made an issue of such an arrangement, it was not for the court to interfere. The SM also submitted that the court ought not to interfere because it would have a wider impact on the industry’s remuneration practices.

  76. [52] Having answered the questions posed by the CA, the SM proceeded to “provide some additional facts in response” to the MC’s allegation of “a possible conflict of interest and duty” on nTan’s part. He pointed out that, even though the CA had said in an earlier decision on the Scheme (viz, The Royal Bank of Scotland v TT International) that a scheme manager was “inherently in a position of conflict” (at [77]) because he would be remunerated for successfully resuscitating the company, there was nonetheless no objection to a scheme manager adjudicating on the proofs of debt and performing his other functions. If this was right, the SM submitted, it should make no difference that nTan was also receiving remuneration as the Company’s IFA. The SM then spent several paragraphs explaining how nTan, as the Company’s IFA and, later, as the SM (through those of its officers named at [5] above), had in fact acted against its own self-interest in the events leading up to the sanction of the Scheme.

  77. Further correspondence after the parties’ submissions of 14 March 2012

  78. [53] The correspondence between the parties and the Registry did not end with the filing of the parties’ written submissions on 14 March 2012. About two weeks later, on 29 March 2012, the MC wrote to the Registry seeking to clarify what it alleged were factual inaccuracies in the SM’s submissions. It stated, among other things, that Rajah & Tann had not acted as counsel for the companies in question in the other schemes of arrangement in which Mr Nicky Tan had been involved, and that it had not been privy to the success fee arrangements in those schemes, much less had it advised on such arrangements.

  79. [54] The SM responded on 2 April 2012. He said that the only point he wished to make was that even in the other schemes of arrangement mentioned in his written submissions of 14 March 2012, the financial advisor’s success fee had not been disclosed in the scheme documents. He added that the question of whether or not Rajah & Tann knew about the VAF in this particular case (ie, the VAF as defined at [2] above) was not one which affected his submissions.

  80. [55] On 10 April 2012, the MC again wrote to the Registry. It clarified that its allegation of “a possible conflict of interest and duty” on nTan’s part was based on “simple undisputed facts”, including the following: (a) the quantum of the VAF was dependent on the value of debt restructured under the Scheme; (b) the higher the value of the supporting Scheme Creditors’ debt admitted by the SM, the more likely the Scheme would be approved so as to entitle nTan to the VAF; and (c) the VAF had not been disclosed to the Scheme Creditors before the Scheme was sanctioned by the CA. The MC concluded by emphasising that the only issue which it wanted resolved was that of taxation of the VAF, and that it did not intend to raise factual allegations which were irrelevant to this issue.

  81. [56] On 11 April 2012, the SM wrote to the Registry pointing out that the MC had not alleged any actual conflict of interest on nTan’s part. He also asked the CA to consider four points, namely:

  82. (a) the MC had had the opportunity to raise issues relating to the terms of nTan’s engagement and its fees – an opportunity which it did in fact take – hence, these issues were res judicata;

  83. (b) the MC did not dispute the SM’s submission that nTan had acted against its own self-interest in some instances in the events leading up to the sanction of the Scheme;

  84. (c) the MC did not dispute the SM’s assertion that the prevailing industry practice was for a company under a scheme of arrangement not to disclose the success fees (if any) payable to its financial advisors; and

  85. (d) the CA should be slow to rewrite the terms of the contractual arrangements freely negotiated between the Company and nTan.

  86. There was no further correspondence relating to the VAF beyond this point.

  87. The VAF Decision

  88. [57] On 27 September 2012, the CA released the VAF Decision. The upshot of it was that nTan was not entitled to the full amount of the VAF under its agreement with the Company. The CA first considered the content of the legal obligations owed to the Scheme Creditors by the Company and the SM. With regard to the Company, the CA held that the Scheme Creditors were “entitled to expect to receive accurate information which would allow them to make a holistic assessment” of the merits of the Scheme, and this meant that the Company was under a duty to disclose to the Scheme Creditors “all material information”, including information pertaining to the VAF (at [20]–[21] of the VAF Decision). The CA then held that the Company had breached this duty by failing to disclose the VAF (at [23]).

  89. [58] Next, the CA directed its attention to the SM. It affirmed the duties of the SM to act in good faith towards the Scheme Creditors and not to mislead them or suppress material information from them or even be a party to any attempt by the Company to do so (at [25] of the VAF Decision). Moreover, given the SM’s assumption of the “quasi-judicial” role of adjudicating on the admission and rejection of proofs of debt, the CA considered that he owed duties to be “objective, independent, fair and impartial” and not to place himself in “a position of conflict”. The CA considered that such a conflict had arisen in the present case, in that the quantum of the VAF which would accrue to nTan was dependent on the value of the debts adjudicated upon by Mr Nicky Tan, nTan’s “controlling shareholder” (at [26]). The CA rejected as irrelevant the distinction which the SM had sought to draw “between the VAF accruing to nTan in its role as a ‘financial advisor’ vis-à-vis that of a ‘scheme manager’” (at [27]).

  90. [59] Having found that both the Company and the SM had breached their legal duties to disclose to the Scheme Creditors and the court “all benefits accruing to the proposed SM (or his firm)” (at [29] of the VAF Decision), the CA turned to consider what the consequences of those breaches should be. It opined that, “[o]rdinarily, the Scheme should be set aside and put to a fresh vote because it might not have been approved by the [Scheme Creditors] if they had known about the VAF”. But, the CA concluded that it would not do so because such a course was “not practical … without causing more harm to the Company and [its] creditors” (at [33]).

  91. [60] Instead, the CA ordered (at [34] of the VAF Decision) that:

  92. (a) the SM/nTan, the Company and the MC were to endeavour to agree on the amount of professional fees that ought properly to be awarded to nTan for its efforts in reviving the Company; and

  93. (b) in the event that the parties were unable to reach agreement, nTan’s global fees would fall to be assessed by the High Court.

  94. We shall refer to these orders as “the VAF Orders”. The CA went on to direct that an assessment of nTan’s fees would involve considering, first and foremost, the value contributed by nTan, while other factors to take into account would include the nature of nTan’s work, the time spent, the scope of work and the assistance in fact provided by nTan’s employees (at [35]).

  95. nTan’s application to set aside the VAF Decision

  96. [61] Shortly after the VAF Decision was released, nTan filed two summonses, namely, Summons No 5682 of 2012 (“SUM 5682/2012”) and Summons No 6520 of 2012 (“SUM 6520/2012”). Both summonses contained the same prayers. The first prayer was for leave to intervene in CAs 44 and 47 of 2010 – as mentioned earlier, these were the appeals lodged by the Scheme Creditors opposed to the Scheme against Prakash J’s decision to sanction the Scheme. nTan had to apply for leave to intervene because it was not named as a party to the appeals. The second prayer was for the VAF Decision to be set aside in its entirety. Thereafter, the MC, through the agency of three of the Scheme Creditors (including OCBC and DBS), also sought leave to intervene in CAs 44 and 47 of 2010 for the purpose of opposing nTan’s application in SUM 5682/2012 and SUM 6520/2012 to set aside the VAF Decision. By agreement of the parties, nTan and the MC were permitted to intervene in the appeals, and so it is that nTan’s application to set aside the VAF Decision has come before us, opposed by the MC as well as the Company.

  97. [62] nTan’s application to set aside a decision of Singapore’s apex court is a rare one. Nevertheless, it is not unknown to the law, and indeed, it is common ground between the parties that the CA does have what is frequently called the “inherent jurisdiction” to set aside, in limited circumstances, a previous decision that it made. We should point out that the term “inherent jurisdiction” may not be entirely accurate, and that “inherent power” is the preferred language for the reasons given by this court in Re Nalpon Zero Geraldo Mario [2013] 3 SLR 258 (“Re Nalpon”) at [31]–[41]. For reasons that will shortly become evident, there is significance in this distinction.

  98. [63] It is also accepted by all the parties that one circumstance in which the CA may exercise this inherent power to set aside a previous decision that it made is where the manner in which it arrived at that previous decision constituted a breach of natural justice. The authority for this proposition is the decision of this court in Management Corporation Strata Title Plan No 301 v Lee Tat Development Pte Ltd [2011] 1 SLR 998 at [55]. We shall refer to that decision as “Lee Tat (No 2)” in order to distinguish it from an earlier CA decision in the same litigation, Lee Tat Development Pte Ltd v Management Corporation Strata Title Plan No 301 [2009] 1 SLR(R) 875, which we shall refer to as “Lee Tat (No 1)”. We shall make ample reference to both Lee Tat (No 1) and Lee Tat (No 2) later in this judgment.

  99. nTan’s grounds for setting aside and the issues that arise

  100. [64] nTan’s setting-aside application in SUM 5682/2012 and SUM 6520/2012 is based on two main grounds. The first is that the VAF Decision was made in breach of the rules of natural justice, in that nTan was not given a proper opportunity to be heard on the VAF-related issues dealt with in that decision. The second is that the CA did not have jurisdiction to make the VAF Decision and/or the VAF Orders, the reason being that the CA’s statutorily-conferred jurisdiction over the Scheme did not extend to creditors of the Company who were not parties to the Scheme, such as nTan. Under the terms of the Scheme, nTan was expressly designated an “Excluded Creditor” whose debts would not be subject to the Scheme and would, instead, be paid by the Company as and when they fell due. This meant, so nTan contended, that the CA lacked jurisdiction to make findings and orders that would directly affect an agreement between nTan and the Company, which was what the CA did in the VAF Decision.

  101. [65] Apart from the two main grounds mentioned above, there are possibly two other distinct grounds for nTan’s setting-aside application. We say “possibly” because these two other grounds might instead be subsumed within the second of the two main grounds, viz, that of lack of jurisdiction. The first of these two possible grounds is that in the VAF Decision, the CA ought not to have dealt with issues relating to the non-disclosure of the VAF because those issues had previously been canvassed before the CA and were therefore res judicata. It is not entirely clear whether this res judicata ground is advanced as a subset of nTan’s jurisdiction ground, which was the suggestion made in oral submissions, or as an independent stand-alone ground, which was the position taken in written submissions. As for the other setting-aside ground which may possibly exist, it is that the CA had no power to make the VAF Orders. This contention was put forward under the broad heading of the jurisdiction ground, but it might be more accurate to see it as an alternative submission to the argument that the CA lacked jurisdiction to make the VAF Decision and/or the VAF Orders. We shall deal with both of these possible grounds for setting aside in the course of this judgment.

  102. [66] We heard nTan’s setting-aside application on 10 November 2014. The various grounds described above were fully argued before us by nTan, the MC and the Company, and we reserved judgment at the conclusion of the hearing. In the course of considering the matter, it occurred to us that there was a further pertinent issue that the parties had not addressed, which was, broadly, this: is nTan estopped by reason of res judicata from contending before us that the CA lacked jurisdiction and/or power to make the VAF Orders and/or hand down the VAF Decision? If so, nTan’s jurisdiction ground and any others that are either dependent on it or subsets of it would fail at the threshold regardless of any substantive merits. We invited the parties to tender further written submissions on this additional issue; we then decided to convene a further hearing for oral arguments to be made on this issue. The further hearing took place on 6 May 2015, and at its conclusion, we reserved judgment once more.

  103. [67] Given the shape of nTan’s contentions and the course that the present litigation has taken, the following issues arise for our decision:

  104. (a) Is there any merit in nTan’s argument that the VAF Decision ought to be set aside on the ground that the issues dealt with therein are res judicata? This covers the first of the two possible setting-aside grounds described at [65] above.

  105. (b) Did the manner in which the CA arrived at the VAF Decision constitute a breach of natural justice so as to warrant setting aside the VAF Decision and/or the VAF Orders? This, of course, covers the first main ground of nTan’s setting-aside application, which we have referred to at [64] above.

  106. (c) Is nTan, by reason of res judicata, estopped from arguing that the CA did not have jurisdiction and/or power to hand down the VAF Decision and/or make the VAF Orders? This covers the additional point referred to at [66] above which we raised after the first hearing of nTan’s setting-aside application, although it also extends into what we have described at [64] above as the second main ground relied on by nTan.

  107. (d) In the event that the preceding issue is answered in the negative, did the CA have jurisdiction and/or power to hand down the VAF Decision and/or make the VAF Orders? This covers what is left of nTan’s second main setting-aside ground at [64] above and also the second of the two possible setting-aside grounds described at [65] above.

  108. We shall discuss these issues in the aforesaid sequence. If issue (c) is answered in the affirmative, it will not be necessary for us to decide issue (d).

  109. Issue (a): nTan’s res judicata ground

  110. [68] The arguments made by nTan in respect of its res judicata ground are, in truth, very similar to those which it made in its written submissions to the CA dated 14 March 2012. nTan points now, as it did then, to the fact that the CA sanctioned the Scheme on 13 October 2010 in spite of concerns expressed by OCBC on 5 October 2010 over the possibility of an undisclosed success fee payable to the SM. nTan accordingly contends that the CA must have considered OCBC’s allegations of non-disclosure and lack of transparency, and must have determined, albeit not expressly, “that there [were] no such non-disclosure or transparency issues on the facts”. Hence, the MC should have been estopped by reason of res judicata from raising anew these issues of non-disclosure and transparency, as it sought to do in its letter of 27 January 2012, and therefore, the CA should not have considered those issues. Since it was the MC’s 27 January 2012 letter that led ultimately to the VAF Decision, nTan contends, the VAF Decision itself should never have come into existence.

  111. [69] In any event, argues nTan, the fact that OCBC expressed concerns over the possibility of an undisclosed success fee is sufficient to establish that, by 5 October 2010, it was aware of the existence of such a success fee, or at least alive to this possibility. Given this knowledge, nTan submits, it was incumbent on OCBC or any other disgruntled Scheme Creditor to pursue the success fee issue with all due vigour at that point in time. But, the issue was not pursued then even though it ought to have been, and thus, it was an abuse of process for the MC to pursue it belatedly in its 27 January 2012 letter.

  112. [70] In our judgment, we need not rule on the substantive merits of nTan’s res judicata ground. Specifically, it is not necessary for us to decide whether the MC was estopped from raising the issues relating to the VAF in its 27 January 2012 letter, or whether it was an abuse of process for the MC to have done so. Even if we were minded to accept, in nTan’s favour, that the MC was precluded from raising the VAF-related issues which it brought up in that letter and that, therefore, the VAF Decision should never have come into being, the critical and dispositive fact is that this was not the view taken by the CA in making the VAF Decision. The CA there clearly did engage with (among other issues) the VAF-related issues mentioned in the MC’s 27 January 2012 letter, and it is evident that it did not consider res judicata to be an obstacle to its doing so notwithstanding nTan’s protestations to the contrary in its written submissions of 14 March 2012.

  113. [71] Hence, taken at its highest, nTan’s res judicata ground amounts to no more than an allegation that the CA committed an error in failing to accede to its submissions on res judicata. But, the general rule is that a decision by a court of competent jurisdiction is, unless reversed on appeal, unimpeachable even if it might be wrong. There is sound policy behind this rule, namely, the public interest in the finality of litigation; finality requires an acceptance of the truth that the courts may sometimes decide wrongly (see Lee Tat (No 1) at [72]) and that even apex courts are not immune from this. Indeed, the whole point of the doctrine of res judicata is that erroneous decisions must nevertheless be given due effect, and in this connection, it is worth recounting what Lord Millett said in Mulkerrins v PricewaterhouseCoopers (a firm) [2003] 1 WLR 1937 at [10]:

  114. Hence, even if the VAF Decision were afflicted by error, that, without more, would not afford an adequate basis to set it aside.

  115. [72] There remains the further argument that, if the MC were indeed precluded by res judicata from raising the VAF-related issues in its 27 January 2012 letter, this would mean that the CA did not have the jurisdiction to determine those issues. nTan appears to have put forward such an argument: in its written submissions, it contended that, in view of the application of res judicata, the CA was “functus” on the VAF-related issues raised by the MC and was “in that sense, without jurisdiction”. It followed, said nTan, that the VAF Decision had to be set aside as a “nullity”. So expressed, the res judicata ground is simply a subset of the jurisdiction ground, as counsel for nTan said in his oral submissions; accordingly, we leave the argument for consideration later in this judgment when we address the jurisdiction ground. We would add that nTan also argued that if the VAF Decision were indeed made without jurisdiction such that it was a nullity, that decision could not itself ever give rise to res judicata. We likewise address this point later.

  116. Issue (b): nTan’s breach of natural justice ground

  117. General observations

  118. [73] We turn now to nTan’s breach of natural justice ground, which is also its first main ground for seeking to set aside the VAF Decision. It is not disputed that the concept of natural justice consists of two broad rules that may be expressed as Latin maxims: one is nemo iudex in sua causa, which means “no one shall be a judge in his own cause”, and the other is audi alteram partem, which means “hear the other side”. It is also not disputed that the CA is bound to decide the matters before it in a manner which accords with these rules of natural justice. In the present case, nTan relies only on the audi alteram partem rule; for convenience, we shall refer to it as “the hearing rule”. In the administrative law and arbitration contexts, the hearing rule has been said to require that the parties be given notice of the allegations against them as well as a fair opportunity to be heard and to present their case: see the decisions of this court in Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 at [43] and Kay Swee Pin v Singapore Island Country Club [2008] 2 SLR(R) 802 at [7]. We accept that these observations apply, at least conceptually, in the context of an application to set aside a CA decision.

  119. [74] However, in this connection, we should develop a point which we made in the context of a challenge to an arbitral decision founded on an alleged breach of natural justice in the arbitral proceedings. In AKN and another v ALC and others and other appeals [2015] 3 SLR 488 at [46]–[47], we repudiated the tendency, which we noticed was taking hold among counsel, to reframe what in substance might be errors of law or fact on the part of an arbitral tribunal as entailing an alleged breach of natural justice. Such a challenge should not be made lightly and, in our judgment, should never be made without counsel being satisfied that it can fairly be put that the decision under challenge was arrived at because of a material breach of one or more of the essential rules of natural justice. This is because such applications often entail a re-litigation of the merits, and so will impose an inevitable and considerable strain on limited judicial resources. But, if this is true in the context of arbitration, then it must apply with even greater force in the context of a decision of the CA, which is the apex court in this country. In our judgment, much more rather than less deference is due such a decision, not least because:

  120. (a) the CA is not an inferior tribunal but the highest court in our land, and can be trusted, as a general rule, not to fail in according the parties procedural justice; and

  121. (b) the CA, being itself the ultimate guardian of procedural justice (subject only to legislation), can be expected to act in a procedurally fair manner, and again, as a general rule, it can be taken to have determined that it has acted in a procedurally fair manner in arriving at its decisions.

  122. In our judgment, it should follow that a challenge based on an alleged breach of natural justice should rarely, if ever, be made in respect of a decision of the CA. The considerations we have already articulated concerning the conservation of scarce judicial resources apply with even greater force in the context of rehearing a matter that has already been considered by the CA, as does the general interest in having finality in litigation.

  123. nTan’s complaints

  124. [75] Having made these general observations, we turn to nTan’s breach of natural justice ground proper, which revolves around five specific complaints, as detailed in its written submissions. These are that:

  125. (a) the MC was not directed to make a formal application supported by affidavit for the further directions which it sought from the CA, with the result that nTan did not know the “four corners” of the case against it;

  126. (b) the MC had expressly emphasised in its letter of 14 February 2012 that it was “not seeking a ruling from the [CA] on any factual allegations in relation to the fee arrangements between the Company and nTan and/or the [SM]”, and in those circumstances, nTan could not have expected that the CA would make any findings of fact that were adverse to it in the VAF Decision;

  127. (c) in the lead-up to the VAF Decision, there was no oral hearing to clarify disputed allegations of fact, and the parties were heard only through letters and written submissions;

  128. (d) there was no cross-examination to test disputed facts; and

  129. (e) there was no process of discovery such as would have allowed the parties to discover material supporting their factual allegations.

  130. [76] There is no doubt that the MC did not make a formal application supported by affidavit for the further directions which it sought from the CA, and that there was no discovery, cross-examination or oral hearing leading up to the VAF Decision. However, in our judgment, there is no single procedure mandated for resolving all the disputes that might possibly come before the courts. Disputes vary greatly in nature, and it would be wrong to mandate that a particular procedure must be followed in any given case. Sometimes, legislation, whether primary or secondary, prescribes the procedure to be followed in particular types of cases; in such situations, the courts are bound to comply. But, other times, nothing is specifically prescribed by law, and it is then unquestionably within the court’s discretion to determine how it will deal with the dispute before it in a manner which it thinks appropriate and fair. To put it in another way, when no particular procedure has been mandated or excluded by law, a court is not under any unqualified obligation to adopt any specific process or procedural tool available to it for resolving disputes, including the filing of affidavits, discovery, cross-examination and oral hearings. On the contrary, a court possesses a generous measure of discretion to decide which processes and procedural tools it will use or dispense with, and in this regard, it will take into account the nature of the issue it is being asked to decide.

  131. [77] There were parts of nTan’s written submissions which suggested that certain processes or procedural tools were categorically or at least generally required under certain conditions. We are unable to accept this. For example, nTan argued that “cross-examination should be permitted and/or ordered where there is conflicting evidence, where a person is accused on the basis of false statements of fact, and/or [where] a ‘grave finding of fact’ is sought against a person”. Such processes as discovery and cross-examination might often assist the courts in resolving factual disputes. But, it would be going much too far to say that their absence in the resolution of a given factual dispute must necessarily or even ordinarily mean that a breach of natural justice has thereby been occasioned. The real question in determining whether there has been a breach of the hearing rule is not what processes and procedural tools the court could have utilised but did not; rather, it is whether the party alleging that it has been prejudiced by an alleged breach of natural justice has in fact been denied a fair opportunity to be heard.

  132. [78] In our judgment, the real kernel of nTan’s breach of natural justice complaints may be distilled into two essential points. The first is that the procedure adopted by the CA for resolving the VAF-related issues left it unaware of the exact parameters or the “four corners” of the case against it, which meant that it was not afforded a fair opportunity to meet and refute that case. The second is that the CA made findings of fact in the VAF Decision which were adverse to nTan without going through a proper forensic process, and this deprived nTan of the opportunity to challenge adverse allegations of fact as well as to advance its own account of the facts. We address these two points in turn.

  133. nTan’s knowledge of the case against it

  134. [79] On the first point, we do not accept nTan’s allegation that it lacked knowledge of the case against it. Although no formal application was made by the MC for the further directions which it sought from the CA, we are satisfied that the issues in dispute became sufficiently crystallised in the course of the exchange of correspondence between the parties and the Registry. From the very start, it would have been apparent that one key issue raised by the MC was whether the VAF should be taxed: in its 27 January 2012 letter, the MC requested the CA to “direct that the [VAF] be subject to taxation” under [8(j)]. That this was an issue the CA intended to resolve would have been clear by 20 February 2012 at the latest: the Registry’s letter of that date stated that four issues had been raised in the parties’ correspondence, the fourth of which was: “[w]hether a success-fee arrangement termed the Value-Added Fee (‘VAF’) between the Company and the [SM] should be subject to taxation under Para 8(j) [of the Brief Grounds]”.

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