Case Details
- Citation: [2021] SGCA 112
- Case Number: Civil Appeal No 23 of 2021
- Decision Date: 29 November 2021
- Court: Court of Appeal of the Republic of Singapore
- Coram: Andrew Phang Boon Leong JCA; Steven Chong JCA; Quentin Loh JAD
- Judgment Author: Steven Chong JCA (delivering the judgment of the court)
- Plaintiff/Applicant: AnAn Group (Singapore) Pte Ltd (“AnAn”)
- Defendant/Respondent: VTB Bank (Public Joint Stock Company) (“VTB”)
- Procedural History (key steps): VTB obtained a winding up order against AnAn in CWU 183; the Court of Appeal reversed that decision in AnAn (CA) (CA/CA 174/2018) and dismissed the winding up application; after reversal, AnAn sought orders that VTB bear the former liquidators’ remuneration and expenses in HC/SUM 3902/2020
- Lower Court (Judge): General Division of the High Court (oral judgment dated 25 February 2021)
- Key Applications Below:
- HC/SUM 3569/2020: Liquidators’ application for discharge and for payment of remuneration/expenses (Prayers 1–3)
- HC/SUM 3902/2020: AnAn’s application for VTB to bear the liquidators’ remuneration/expenses and/or indemnify AnAn
- Legal Areas: Arbitration — Arbitrability and public policy; Companies — Winding up; Civil Procedure — Inherent powers
- Statutes Referenced:
- Civil Procedure Act (Cap 322) / Civil Procedure Act 2005 (as reflected in metadata)
- Companies Act (Cap. 50)
- Supreme Court of Judicature Act (Cap. 322)
- Restructuring and Dissolution Act 2018 (as reflected in metadata)
- Specific Provisions Mentioned in Extract:
- Supreme Court of Judicature Act: s 18(1) and s 18(2)
- SCJA First Schedule para 13 (reference to “costs”)
- Companies Act: s 268(3)(c) and s 276(4)
- Rules of Court: Order 92 r 4 and Order 92 r 5 (as pleaded by AnAn)
- Arbitration Context: GMRA contained a broad arbitration clause referring disputes “arising out of or in connection with” the agreement, including questions of validity, termination, enforceability and non-contractual claims
- Counsel:
- For the appellant: Lee Eng Beng SC, Chew Xiang and Cheong Tian Ci, Torsten (Rajah & Tann Singapore LLP)
- For the respondent: Shobna Chandran, Yong Manling Jasmine and Muhammad Taufiq bin Suraidi (Tan Rajah & Cheah)
- Length: 26 pages; 15,582 words
Summary
In AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2021] SGCA 112, the Court of Appeal addressed an unusual consequence of a reversed winding up: where a winding up order is set aside after the company was not ultimately wound up, who should bear the costs of the aborted liquidation, including the liquidators’ remuneration and expenses?
The Court of Appeal dismissed AnAn’s appeal. While the High Court had already granted the liquidators’ application for payment of their remuneration and expenses out of the company’s assets (and discharged them), AnAn sought a further order that VTB bear the liquidators’ fees or indemnify AnAn. The Court of Appeal held that the court did not have the power, on the pleaded statutory and procedural bases, to shift those liquidation expenses to the petitioning creditor in the circumstances of this case.
What Were the Facts of This Case?
The dispute arose out of a global master repurchase agreement (“GMRA”) between AnAn and VTB. Under the GMRA, AnAn sold VTB global depository receipts (“GDRs”) representing shares in EN+ Group PLC, with an obligation for AnAn to repurchase the GDRs later at pre-agreed rates. The Court of Appeal characterised the arrangement “in substance” as a loan from VTB to AnAn, which is important because it framed the underlying debt and the alleged default that later triggered the winding up proceedings.
The GMRA contained a broad arbitration clause. It required that “any dispute arising out of or in connection with” the agreement—including questions about its subject matter, existence, negotiation, validity, termination or enforceability, and even non-contractual claims—be referred to arbitration under the SIAC Rules. This arbitration architecture later became relevant to whether the liability for liquidation-related expenses should be determined by the court or by arbitration.
Between November 2017 and April 2018, events occurred which culminated in AnAn failing to restore and/or maintain sufficient collateral. VTB treated this as an event of default and issued a default notice on 12 April 2018, designating 16 April 2018 as the early termination date of the GMRA. VTB then served a statutory demand for US$170m on 23 July 2018. AnAn did not satisfy the demand within the statutory period, and VTB filed CWU 183 seeking a winding up order.
At first instance, the High Court ordered AnAn to be wound up, applying the “triable issue” standard. AnAn appealed. In CA/CA 174/2018 (“AnAn (CA)”), a five-judge coram of the Court of Appeal reversed the winding up order. The Court of Appeal applied the “prima facie dispute” standard and held that there was a prima facie dispute over the debt forming the basis of VTB’s winding up application. The Court of Appeal dismissed CWU 183 and indicated that the dispute over the debt should be resolved via arbitration. As a result, AnAn was not wound up.
What Were the Key Legal Issues?
The principal issue on appeal was whether, after the winding up order was reversed, the court could order a party other than the company to bear the liquidators’ remuneration and expenses incurred during the aborted liquidation. Put differently, the case asked whether the court had a juridical basis to shift the burden of liquidation costs to the petitioning creditor (VTB) once the winding up application failed.
AnAn’s argument focused on the court’s power to award “costs” under the Supreme Court of Judicature Act (“SCJA”), particularly s 18(2) read with para 13 of the First Schedule. AnAn contended that “costs” should be interpreted broadly enough to include liquidators’ remuneration and expenses, thereby enabling the court to make orders about who should bear those fees.
VTB resisted on two fronts. First, it argued that the statutory and procedural provisions relied upon by AnAn did not extend to liquidators’ remuneration and expenses as a species of “costs” that could be reallocated. Second, VTB contended that the question of liability for the liquidators’ fees should be determined in arbitration, not by the court, given the broad arbitration clause and the close connection between the winding up and the underlying contractual dispute.
How Did the Court Analyse the Issues?
The Court of Appeal began by framing the practical problem: liquidators’ remuneration and expenses are typically payable from the assets of the company being wound up. However, where the winding up order is reversed and set aside, liquidation expenses may already have been incurred. This creates a difficult allocation question—whether the company should bear those costs, whether the petitioning creditor should bear them, or whether some other entity should do so.
On the statutory basis, the Court of Appeal agreed with the High Court’s approach to the meaning of “costs” in para 13 of the SCJA. The High Court had held that the reference to “costs” in para 13 refers to legal costs—such as solicitors’ fees, charges and disbursements incurred in relation to legal proceedings—and does not include liquidators’ remuneration or expenses. In the extract, the High Court’s reasoning is explicit: AnAn’s reliance on the costs power was misplaced because liquidators’ fees are not “legal costs” in the ordinary sense, and the company itself had acknowledged that “costs of liquidation…do not relate to legal costs”.
Against that backdrop, the Court of Appeal considered whether AnAn could nevertheless rely on the SCJA costs jurisdiction to reach a different result. The Court’s analysis proceeded on the premise that statutory powers must be anchored in the relevant provisions. If the costs power is directed to legal costs of proceedings, it cannot be stretched to cover liquidation remuneration merely because the practical effect is similar (both are expenses). The Court therefore declined to treat liquidators’ remuneration and expenses as a form of “costs” capable of being reallocated under the SCJA.
The Court also addressed the broader juridical question of whether the court had any inherent or procedural power to order a party other than the company to bear liquidation expenses. AnAn had pleaded, in addition to the SCJA, reliance on the inherent jurisdiction and on specific procedural rules (Order 92 rules 4 and 5). The Court of Appeal’s reasoning, as reflected in the extract and the structure of the appeal, indicates that the court was not persuaded that these provisions supplied the necessary legal basis to impose liability for liquidation fees on VTB. In particular, the Court treated the allocation of liquidation expenses as a matter governed by the Companies Act framework rather than a matter to be re-engineered through general procedural or inherent powers.
Although the arbitration clause and arbitrability arguments were part of the case, the Court’s ultimate conclusion on power and basis was decisive. The Court of Appeal dismissed CA 23, meaning it did not grant AnAn the relief sought. The practical effect is that the liquidators’ remuneration and expenses remained payable out of the company’s assets (as ordered below), and AnAn could not shift those costs to VTB through the court’s costs jurisdiction or other procedural mechanisms.
What Was the Outcome?
The Court of Appeal dismissed AnAn’s appeal in CA 23. As a result, the High Court’s orders granting the liquidators’ entitlement to remuneration and expenses out of AnAn’s assets (including the “Handover” remuneration and disbursements) stood, and AnAn’s application to make VTB bear those liquidation fees or indemnify AnAn was refused.
Practically, the decision confirms that where a winding up order is reversed, the court will not readily infer a power to reallocate liquidation costs to the petitioning creditor absent a clear statutory or juridical basis. The company remains responsible for the liquidation expenses already incurred, at least on the pleaded grounds and in the circumstances of this case.
Why Does This Case Matter?
This case matters because it addresses a gap that frequently arises in insolvency practice: the “afterlife” of liquidation costs when the winding up is ultimately set aside. Practitioners often assume that costs follow the event, but liquidation costs do not always map neatly onto ordinary litigation costs principles. AnAn v VTB underscores that courts will be cautious about expanding costs powers beyond their statutory meaning, particularly where the relief sought would shift the financial burden of liquidation to a third party.
For companies and creditors, the decision also highlights the importance of understanding the interaction between winding up proceedings and arbitration. The underlying debt dispute in this case was subject to arbitration, and the Court of Appeal had previously indicated that the dispute should be resolved through arbitration. While the Court of Appeal’s dismissal in this appeal turned on the absence of the necessary power to reallocate liquidation fees, the case nevertheless reinforces that the legal character of the dispute and the contractual dispute resolution regime can influence how courts approach related remedial questions.
For liquidators and insolvency professionals, the decision provides comfort that liquidators’ remuneration and expenses can be secured through the statutory liquidation framework even where the winding up does not ultimately proceed. For petitioning creditors, it is a warning that pursuing a winding up application that is later reversed may not automatically expose the creditor to liability for liquidation fees via a costs reallocation order.
Legislation Referenced
- Supreme Court of Judicature Act (Cap. 322), including s 18(1) and s 18(2)
- Supreme Court of Judicature Act (Cap. 322), First Schedule para 13
- Companies Act (Cap. 50), including s 268(3)(c) and s 276(4)
- Rules of Court (Cap. 322), Order 92 r 4 and Order 92 r 5 (as relied on by the appellant) [CDN] [SSO]
- Restructuring and Dissolution Act 2018 (as reflected in metadata)
- Civil Procedure Act 2005 / Civil Procedure Act (as reflected in metadata)
Cases Cited
- [2018] SGHC 130
- [2018] SGHC 250
- AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] 1 SLR 1158 (“AnAn (CA)”) (CA/CA 174/2018)
- [2021] SGCA 112 (this case)
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.