ARI INVESTMENT LIMITED & Anor v ACCELERA PRECIOUS TIMBER AND STRATEGIC AGRICULTURE LIMITED & 2 Ors
9 cases cited
(7 SG, 2 foreign)
Catchwords
Practice Areas
Counsel (9)
DennisMathiew Firm Fullerton Law Chambers LLC Firm Abiramee Ghandhidass Counsel Appellant Gerard Vincent Nicholas Counsel Appellant Hillary Cheah Si-min Counsel Appellant Ng Jun Jie Justin Counsel Appellant Probin Stephan Dass Counsel Appellant Samuel Ang Rong En Counsel Respondent Tham Wei Chern Counsel Respondent
Case Significance
Ari Investment Ltd and another v Accelera Precious Timber and Strategic Agriculture Ltd and others [2024] SGHC(A) 31 was decided by the Appellate Division of the High Court in Civil Appeal No 3 of 2024, with Woo Bih Li JAD delivering the grounds of decision of the court alongside See Kee Oon JAD and Philip Jeyaretnam J, heard on 5 August 2024 and decided on 8 October 2024. The appellants were Ari Investment Limited and Asian Infrastructure Limited; the respondents included Accelera Precious Timber and Strategic Agriculture Limited, Dennis Kam Thai Leong and Tan E-Lin, Eileen.
The appellants alleged that Choo Han Teck J, a Judge of the General Division of the High Court, had erred in applying the extended principle of res judicata to dismiss their claim in HC/S 1229/2020 (see Ari Investments Ltd and another v Accelera Precious Timber and Strategic Agriculture Ltd and others [2023] SGHC 295). They denied having had sufficient information to raise certain issues in an earlier suit commenced by the second appellant against the second respondent. Having considered the parties' submissions, the court agreed with the Judge's assessment of the evidence and his decision to dismiss the suit, and accordingly dismissed the appeal. The appellants were represented by DennisMathiew, including Gerard Vincent Nicholas, Abiramee Ghandhidass, Hillary Cheah Si-min, Ng Jun Jie Justin and Probin Stephan Dass; the respondents by Fullerton Law Chambers LLC, including Samuel Ang Rong En and Tham Wei Chern.
Summary
SUPREME COURT OF SINGAPORE
8 October 2024
Case summary
Ari Investment Ltd v Accelera Precious Timber and Strategic Agriculture Ltd [2024] SGHC(A) 31
Civil Appeal No 3 of 2024
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Decision of the Appellate Division (“AD”) (delivered by Justice Woo Bih Li):
Outcome: AD affirms the application by a Judge of the General Division of the High Court of the extended principle of res judicata to preclude the appellants from raising tax issues in a second suit, which should have been raised in the first suit.
1 This was an appeal against the decision of a Judge of the General Division of the High Court (the “Judge”) in HC/S 1229/2020 (the “Second Suit”) (see Ari Investments Ltd and another v Accelera Precious Timber and Strategic Agriculture Ltd and others [2023] SGHC 295.
2 The appellants alleged that the Judge had erred in applying the extended principle of res judicata to dismiss their claim in the Second Suit. They denied having had sufficient information to have raised certain issues in an earlier suit commenced by the second appellant against the second respondent.
Facts
3 The first appellant, Ari Investment Limited (“ARI”), and the second appellant, Asian Infrastructure Limited (“AIL”), were companies incorporated in Hong Kong. Mr Malcolm Chang (“Mr Chang”) was a director and shareholder of ARI and AIL. Mr Tin Jiing Soon (“Mr Tin”) assisted Mr Chang with matters relating to ARI and AIL.
4 The first respondent, Accelera Precious Timber and Strategic Agriculture Limited (“APTSA”), owned a majority stake in PT Aceh Rubber Industries (“PT ARI”), a company incorporated in Indonesia which owned and operated a rubber processing plant in Indonesia. Mr Yeo Siang Cher (“Mr Yeo”) was the managing director of PT ARI. The second and third respondents, Mr Dennis Kam Thai Leong (“Mr Kam”) and Ms Tan E-Lin, Eileen (“Ms Tan”) respectively, were directors and shareholders of APTSA, and also directors of PT ARI.
5 In September 2013 and March 2014, Mr Chang agreed with Mr Kam for AIL to extend to Perfect Earth Management Pte Ltd (“PEM”), a company incorporated in Singapore, two loans for use by APTSA as working capital of PT ARI (the “Loans” and the “Loan Agreements”). Mr Kam gave personal guarantees to AIL for both Loans (the “Personal Guarantees”).
6 PEM was subsequently unable to pay back the Loans in full to AIL, and Mr Kam was unable to do so as well.
7 In September 2015, the parties made an alternative arrangement to resolve the problem: ARI and AIL entered into an agreement with APTSA, PT ARI and PEM to restructure the debt (the “Agreement”).
8 Pursuant to the Agreement, ARI paid a total of US$320,000 (through an associated company) to APTSA on 3 September, 30 September and 2 December 2015. Payments stopped thereafter.
9 In the last quarter of 2016 (or around 16 February 2017), Mr Yeo handed to Mr Chang and Mr Tin an unsigned tax notice for the 2013 Financial Year (“FY”) in respect of PT ARI (the “Unofficial Tax Notice”). There was purportedly a signed copy of the Unofficial Tax Notice but this was not disclosed by Mr Kam or Mr Yeo to ARI or AIL until May 2023 well after the Second Suit was filed in December 2020.
10 On 10 February 2017, ARI wrote to APTSA purporting to terminate the Agreement.
11 On 2 May 2017, AIL commenced HC/S 397/2017 (the “First Suit”) against Mr Kam to claim under the Personal Guarantees for the outstanding sums owed by PEM to AIL. Mr Kam pleaded the Agreement to deny liability. AIL’s Reply alleged that the Agreement had been rescinded. AIL further alleged misrepresentation by Mr Kam and breaches of warranties so as to disentitle Mr Kam from relying on the Agreement. There was no allegation then on misrepresentation or breaches concerned with tax issues.
12 On 22 September 2017, ARI wrote to APTSA giving notice of rescission of the Agreement and seeking recovery of the payment of US$320,000 on the basis of various allegations which included that APTSA had made misrepresentations and committed breaches of warranties about tax issues (the “22 September 2017 Letter”).
13 On 13 December 2017, AIL filed HC/SUM 5680/2017 (“SUM 5680”) in the First Suit to seek specific discovery of documents, including documents relating to claims by tax authorities vis-à-vis PT ARI. On 12 February 2018, SUM 5680 was dismissed because there was no allegation in the pleadings about tax issues. There was no appeal by AIL.
14 On 25 May 2018, AIL filed HC/SUM 2425/2018 (“SUM 2425”) to amend its Reply in the First Suit to include an allegation about misrepresentation with respect to PT ARI’s tax issues. SUM 2425 was dismissed. Again, there was no appeal by AIL.
15 By way of a shareholders’ resolution passed on 30 April 2019, PT ARI was placed under liquidation on 2 May 2019.
16 At the conclusion of the First Suit, AIL’s claim on the Personal Guarantees was allowed, but the claim on misrepresentation or breaches of warranties was dismissed.
17 Mr Kam filed an appeal against the decision in the First Suit. On 31 August 2020, the Court of Appeal (the “CA”) allowed his appeal on the basis that he had been discharged from liability under the Agreement when the Agreement had been entered into (Kam Thai Leong Dennis v Asian Infrastructure Ltd [2020] SGCA 87 (“Asian Infrastructure Ltd (CA)”). The CA did not address the prior allegations about misrepresentation or breaches of warranties as there was no cross-appeal by AIL (see Asian Infrastructure Ltd (CA) at [11]).
18 The appellants alleged that they subsequently obtained various tax documents pertaining to PT ARI from a Singapore business associate based in Indonesia referred to as “Mr Wafa”.
19 On 23 December 2020, the appellants commenced the Second Suit against APTSA, PEM, Mr Kam and Ms Tan. The Second Suit was premised on the Agreement (instead of the Loan Agreements) and alleged misrepresentation and breaches of the Agreement, including non-disclosure of tax issues. These tax issues appeared to refer to outstanding tax matters and/or outstanding taxes in respect of PT ARI for the financial years of 2013, 2014 and 2015 arising from the fact that PT ARI did not comply with or had committed multiple breaches of the Indonesian Tax Code.
20 On 1 April 2021, the respondents (ie, APTSA, PEM, Mr Kam and Ms Tan) filed HC/SUM 1510/2021 to strike out the claims in the Second Suit. On 10 August 2021, an Assistant Registrar (“AR”) struck out all claims in the Second Suit “save for the [appellants’] claims on the Tax Issue and the Winding Up Issue”. Hence, the Second Suit against PEM was dismissed because PEM was not involved in the remaining issues. Both the appellants and the respondents filed appeals against the AR’s decision. On 11 October 2021, Valerie Thean J dismissed the appeals in HC/RA 234/2021 (“RA 234”) and HC/RA 235/2021 (“RA 235”). She was of the view that matters pertaining to the non-disclosure of the tax issues and another issue pertaining to the winding up of PT ARI should be dealt with at trial.
21 The appellants said that in about May 2023, about three months before the trial of the Second Suit, they learned of a signed version of the Unofficial Tax Notice (the “Signed Version”) through a disclosure made by Mr Kam. They had previously only seen the Unofficial Tax Notice, ie, the unsigned version.
22 The Judge dismissed the claims on the tax issues and the winding up issue. The basis of the decision on the tax issues was the principle of res judicata, ie, these issues should have been raised in the First Suit.
23 The appeal from his decision concerned only the tax issues and the finding that the principle of res judicata applied. The focus of the parties’ cases was on the liability of Mr Kam.
Decision on appeal
24 The AD agreed with the Judge’s conclusion on the evidence that the appellants had been aware of tax issues at the time of the First Suit and Mr Kam had not been obliged to disclose inculpatory tax documents in the First Suit, and his decision to dismiss the appellants’ suit: at [2], [42] and [48].
25 The Judge rightly found that the appellants had been aware of tax issues at the time of the First Suit, given the undisputed evidence that Mr Chang and Mr Tin had received the Unofficial Tax Notice. The appellants suggested two reasons that this evidence had not been enough to raise tax issues in the First Suit, and the AD rejected both reasons:
a. First, the appellants argued that they had been unable to verify the authenticity of the Unofficial Tax Notice. However, this was not a document received from an unknown third party. It was received from Mr Yeo, who was running PT ARI, and Mr Kam never disputed its authenticity. ARI also relied on the Unofficial Tax Notice to make allegations about misrepresentation on tax issues in the 22 September 2017 Letter: at [43].
b. Second, the appellants suggested that, in any event, the contents of the Unofficial Tax Notice did not disclose any tax issue and they only knew enough to make such an allegation after receiving more documents from Mr Wafa. Although the appellants relied on observations made by Thean J in RA 234 and RA 235, these observations were made in the context of a striking out application. In any event, this position was contradicted by the appellants’ position on the importance of the Signed Version and the appellants’ concession at the hearing of the appeal that the Unofficial Tax Notice (already) disclosed tax issues: at [44]–[47].
26 The Judge rightly found that there had been no requirement for Mr Kam to disclose documents pertaining to tax issues in the First Suit, since no tax issue had been pleaded there. The possibility of tax issues justifying rescission of the Agreement was not sufficient to oblige Mr Kam to disclose tax documents pertaining to tax issues: at [50]–[51].
27 The AD decided that the fact that ARI had not been a party to the First Suit did not mean that it could not be precluded from raising tax issues in the Second Suit by application of the extended doctrine of res judicata. Although ARI was not a party in the First Suit, both the appellants were controlled by Mr Chang. Furthermore, AIL did attempt to raise tax issues in the First Suit but failed. The 22 September 2017 Letter not only showed that tax issues were in play but also that they were factually entwined with other aspects of misrepresentation and breach that were relied on in the First Suit: at [58].
This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.
What did the Appellate Division decide in Ari Investment Ltd v Accelera Precious Timber and Strategic Agriculture Ltd?
In [2024] SGHC(A) 31, the Appellate Division of the High Court dismissed the appeal. It agreed with Choo Han Teck J's assessment of the evidence and his decision to dismiss the appellants' claim in HC/S 1229/2020 on the basis of the extended principle of res judicata.
What was the res judicata argument in Ari Investment Ltd v Accelera Precious Timber and Strategic Agriculture Ltd?
The appellants, Ari Investment Limited and Asian Infrastructure Limited, argued that Choo Han Teck J erred in applying the extended doctrine of res judicata to dismiss their claim. They denied having sufficient information to raise certain issues in an earlier suit by the second appellant against the second respondent.
Cases Cited (9)
SG (3)
[2019] SGHC 288 [2020] SGCA 87 [2023] SGHC 295
SLR (4)
[2000] 1 SLR(R) 53 [2001] 1 SLR(R) 771 [2007] 1 SLR(R) 453 [2017] 2 SLR 760
UK (2)
[1947] 2 All ER 255 [2002] 2 AC 1
Referenced in
Legal concepts & references
Judgment
Read the full judgment on the official Singapore Courts portal.
Read on eLitigationSource: eLitigation ([2024] SGHC(A) 31)