Case Details
- Title: AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company)
- Citation: [2021] SGCA 112
- Court: Court of Appeal of the Republic of Singapore
- Date: 29 November 2021
- Civil Appeal No: Civil Appeal No 23 of 2021
- Judges: Andrew Phang Boon Leong JCA, Steven Chong JCA, Quentin Loh JAD
- Judgment by: Steven Chong JCA (delivering the judgment of the court)
- Appellant/Defendant in CWU 183: AnAn Group (Singapore) Pte Ltd (“AnAn”)
- Respondent/Plaintiff in CWU 183: VTB Bank (Public Joint Stock Company) (“VTB”)
- Underlying winding up matter: Companies’ Winding Up No 183 of 2018
- Summonses: Summons No 3902 of 2020 (SUM 3902); Summons No 3569 of 2020 (SUM 3569); Summons No 68 of 2020 (CA/SUM 68/2020); Summons No 74 of 2020 (CA/SUM 74/2020)
- Arbitration clause: Included in the GMRA; disputes “arising out of or in connection with” the agreement to be referred to arbitration under SIAC Rules
- Legal areas: Arbitration; Companies; Winding up; Civil procedure; Costs; Inherent powers; Jurisdiction; Functus officio
- Statutes referenced: Companies Act (Cap 50); Supreme Court of Judicature Act (Cap 322) (“SCJA”)
- Key procedural posture: Appeal against the High Court’s dismissal of AnAn’s application seeking an order that VTB bear the liquidators’ remuneration and expenses after the winding up order was reversed
- Judgment length: 58 pages; 17,165 words
- Related earlier appellate decision: AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] 1 SLR 1158 (“AnAn (CA)”) which reversed the winding up order
- Cases cited (as provided): [2018] SGHC 130; [2018] SGHC 250; [2021] SGCA 112
Summary
This Court of Appeal decision addresses a narrow but practically significant question arising from corporate insolvency proceedings: when a winding up order is reversed on appeal because the debt is subject to a prima facie dispute, can the court order a petitioning creditor (rather than the company) to bear the remuneration and expenses of the liquidators incurred during the “aborted” liquidation? The case also intersects with arbitration law, because the underlying dispute between the parties was subject to an arbitration clause.
The Court of Appeal dismissed AnAn’s appeal. It held that the High Court was correct to reject AnAn’s contention that liquidators’ remuneration and expenses fall within the court’s “costs” power under s 18(2) of the Supreme Court of Judicature Act read with para 13 of the First Schedule to the SCJA. Further, the Court declined to treat the allocation of liability for liquidators’ fees as a matter for the court to decide outside the arbitration framework, absent a clear juridical basis and safeguards against undermining the arbitration agreement.
What Were the Facts of This Case?
The dispute originated from a global master repurchase agreement (“GMRA”) entered into on 3 November 2017 between AnAn and VTB. Under the GMRA, AnAn would sell VTB global depository receipts (“GDRs”) of shares in EN+ Group PLC, and later repurchase those GDRs at pre-agreed rates. The Court of Appeal characterised the arrangement, in substance, as a loan from VTB to AnAn. This characterisation mattered because the winding up application was anchored on VTB’s alleged entitlement to repayment upon default.
Between 7 November 2017 and 6 April 2018, events occurred which culminated in AnAn failing to restore and/or maintain sufficient collateral for the loan arrangement. VTB treated this as an event of default and, on 12 April 2018, issued a default notice designating 16 April 2018 as the early termination date of the GMRA. The notice alleged two events of default. The GMRA also contained an arbitration clause requiring “any dispute” arising out of or in connection with the agreement, including questions of validity, enforceability, and non-contractual claims, to be referred to arbitration under SIAC Rules.
On 23 July 2018, VTB served a statutory demand on AnAn for US$170m. AnAn did not satisfy the demand within the statutory three-week period. VTB then filed Companies’ Winding Up No 183 of 2018 on 17 August 2018, seeking a winding up order. AnAn resisted the winding up application by disputing the debt. The High Court granted the winding up order, applying the “triable issue” standard.
On appeal, the Court of Appeal reversed the winding up order in AnAn (CA). Applying the prima facie standard, the Court found that there was a prima facie dispute over the debt forming the basis of VTB’s winding up application, and it dismissed the winding up application rather than staying it. Critically, the Court indicated that the dispute over the debt was to be resolved via arbitration. As a result, the liquidation was “aborted”, but liquidators had already been appointed and had incurred remuneration and expenses.
What Were the Key Legal Issues?
The appeal raised two main legal issues. First, whether the dispute about who should bear the liquidators’ remuneration and expenses should be referred to arbitration, given the breadth of the arbitration clause and the Court of Appeal’s earlier holding that the debt dispute was arbitrable. This required the court to consider the interaction between insolvency supervision and contractual arbitration agreements.
Second, and more directly relevant to the costs question, the Court had to determine whether “costs” under s 18(2) of the SCJA (read with para 13 of the First Schedule) includes liquidators’ remuneration and expenses. AnAn’s position was that the court’s costs power could be used to order VTB to bear the liquidators’ fees and expenses, even though the default rule is that liquidators are paid from the company’s assets.
Finally, the Court addressed whether it had the power to order a petitioning creditor to bear liquidators’ fees and expenses, and if so, what the juridical basis for that power was. This included consideration of the court’s adjudicatory and supervisory jurisdiction in winding up matters, the relevance of fault or abuse of process, and whether the court was constrained by the doctrine of functus officio after its earlier decision in AnAn (CA).
How Did the Court Analyse the Issues?
The Court of Appeal began by framing the practical problem: liquidators’ remuneration and expenses are ordinarily payable from the liquidated company’s assets. However, where a winding up order is reversed, the liquidation costs may already have been incurred. The Court acknowledged that this can create uncertainty as to who should bear those costs—whether the company, the petitioning creditor, or another party. The novelty in this case lay in whether the court could shift that burden to the petitioning creditor using its costs powers, and whether such a shift would properly respect the arbitration agreement.
On arbitrability, the Court considered that the underlying dispute between AnAn and VTB concerned the debt arising from the GMRA and its termination. The arbitration clause was broad, covering disputes “arising out of or in connection with” the agreement, including non-contractual claims. In AnAn (CA), the Court had already held that there was a prima facie dispute over the debt and that the dispute was to be resolved by arbitration. The Court therefore approached the liquidators’ fees issue with caution: if the allocation of liability for those fees depended on the merits or on the characterisation of the petitioning creditor’s conduct in relation to the debt dispute, it risked becoming intertwined with the arbitrable subject matter.
That said, the Court did not treat the arbitration clause as an automatic bar to all insolvency-related orders. Instead, it examined whether the court’s supervisory jurisdiction could be exercised without effectively deciding the arbitrable dispute. The Court’s analysis emphasised safeguards: insolvency courts must be able to supervise liquidators and ensure the proper administration of winding up proceedings, but they should not undermine arbitration by allowing the arbitration agreement to be circumvented through “costs” or “fees” orders that in substance determine the parties’ substantive rights.
On the costs question, the Court focused on statutory interpretation and the scope of the court’s power under s 18(2) of the SCJA. AnAn argued that liquidators’ remuneration and expenses were properly characterised as “costs” within the meaning of the SCJA and the relevant schedule provision. The High Court had rejected this, and the Court of Appeal agreed. The Court’s reasoning reflected that “costs” in the SCJA context is not a free-standing concept that automatically captures all expenditures incurred in insolvency administration. Rather, the statutory framework must be read carefully, and the juridical basis for shifting liquidation expenses to a non-company party must be clear.
The Court also considered the source of any power to order a petitioning creditor to bear liquidators’ fees. It examined the Companies Act provisions governing winding up and the payment of liquidators, as well as the SCJA’s costs regime. While the court has inherent powers and supervisory jurisdiction, inherent powers cannot be used to create a new substantive liability where the statutory scheme does not clearly provide for it. The Court therefore required a threshold showing that justified the exercise of any exceptional power.
In addressing safeguards and fault, the Court considered whether the petitioning creditor’s conduct was relevant. The Court’s approach suggested that, where the law permits shifting costs or expenses away from the company, it is typically because the petitioning creditor’s conduct is exceptional—such as where there is abuse of process or some form of culpable conduct that justifies departing from the ordinary rule. AnAn’s case did not meet the threshold. The Court found no fault or abuse of process on VTB’s part that would justify an exceptional order requiring VTB to bear the liquidators’ remuneration and expenses.
Finally, the Court dealt with functus officio arguments. AnAn contended that the Court should exercise its power in light of its earlier decision reversing the winding up order. The Court of Appeal rejected the notion that its earlier decision necessarily exhausted or controlled the later costs issue in a way that compelled a particular outcome. Instead, it treated the present application as requiring an independent examination of the statutory and juridical basis for the order sought, and it concluded that the court was not constrained to grant AnAn’s requested relief.
What Was the Outcome?
The Court of Appeal dismissed AnAn’s appeal. It upheld the High Court’s decision to allow the liquidators’ application for their remuneration and expenses to be paid out of the company’s assets (as reflected in SUM 3569), but it dismissed AnAn’s application (SUM 3902) seeking an order that VTB bear the liquidators’ fees and expenses or indemnify AnAn for sums paid.
Practically, the decision means that where a winding up order is reversed because the debt is subject to a prima facie dispute, the default position remains that liquidators’ remuneration and expenses are paid from the company’s assets, unless a clear statutory or juridical basis exists to shift those costs to another party—such as where exceptional circumstances and the required threshold are established.
Why Does This Case Matter?
This case matters because it clarifies the limits of the court’s ability to reallocate liquidation costs after a winding up order is reversed. Practitioners often face the question of what happens to liquidation expenses when the insolvency process is “aborted” on appeal. The Court of Appeal’s refusal to treat liquidators’ remuneration and expenses as “costs” under the SCJA underscores that parties cannot assume that the costs regime will automatically provide a mechanism to shift liability for insolvency administration expenses.
From an arbitration perspective, the decision reinforces the importance of respecting arbitration agreements even in insolvency-adjacent contexts. While insolvency courts retain supervisory powers, the Court of Appeal’s reasoning indicates that where the allocation of fees is closely tied to the merits of the arbitrable dispute or to the characterisation of the petitioning creditor’s conduct in relation to that dispute, the court will be cautious about deciding the issue outside arbitration.
For law students and litigators, the judgment is also useful for its structured approach: it identifies the relevant statutory sources, examines the scope of “costs” under the SCJA, considers inherent powers and safeguards, and applies a threshold concept of fault/abuse of process. The decision therefore provides a roadmap for future applications seeking to shift insolvency-related expenses to a non-company party.
Legislation Referenced
- Companies Act (Cap 50)
- Supreme Court of Judicature Act (Cap 322) — in particular s 18(2)
- First Schedule to the SCJA — para 13
Cases Cited
- AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] 1 SLR 1158
- VTB Bank (Public Joint Stock Company) v AnAn Group (Singapore) Pte Ltd [2018] SGHC 250
- [2018] SGHC 130
- [2021] SGCA 112
Source Documents
This article analyses [2021] SGCA 112 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.