Case Summaries

Jason Aleksander Kardachi v Attorney-General [2020] SGCA 92

SUPREME COURT OF SINGAPORE

22 September 2020

Case summary

Jason Aleksander Kardachi v Attorney-General [2020] SGCA 92
Civil Appeal No 95 of 2019

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Decision of the Court of Appeal (delivered by Woo Bih Li J):

Outcome: CoA dismissed appellant’s appeal and held that he was disqualified as a director from 7 August 2018 under s 155A(1) of the Companies Act.

Pertinent and significant points of the judgment:

  • The ordinary meaning of s 155A(1) should be applied to determine whether s 155A(1) has been triggered. A rectifying construction of the provision should not be adopted (at [34], [35] and [40]).
  • It was not necessary to decide whether the doctrine of substantive legitimate expectations is or should be accepted as part of Singapore law. The doctrine is irrelevant when what is in issue is purely a question of law to be determined by the court based on the relevant statutory provision (at [57] and [60]).
  • The Court of Appeal sets out the applicable framework to determine whether an applicant should be granted leave to act as a director under s 155A(3) (at [70]-[73]).

Background to the appeal

1 The appellant is a restructuring and insolvency professional. On 6 September 2010, he was appointed as the Managing Director of Borrelli Walsh Pte Ltd, an international consulting company that specialises in restructuring, insolvency and forensic accounting. On 8 November 2010, he was appointed as a director of four companies in the Global Brands Group. Subsequently, these four companies were struck off by the Registrar of Companies (“the Registrar”) under s 344 of the Companies Act (Cap 50, 2006 Rev Ed):

S/N

Name of Company

Date of Striking Off

1

Global Brands F&B Pte Ltd (“GB F&B”)

7 November 2016

2

Consolidated Brands (Asia) Pte Ltd (“CB Asia”)

8 January 2018

3

Global Brands Retail Pte Ltd (“GB Retail”)

8 January 2018

4

Global Brands Holdings Pte Ltd (“GB Holdings”)

6 August 2018

 2 In late August 2018, the appellant was unable to lodge documents electronically through the Accounting and Corporate Regulatory Authority’s (“ACRA”) web portal. In September 2018, he was informed by ACRA that he had been disqualified as a director from 8 January 2018, pursuant to s 155A(1) of the Companies Act.

3 On 27 September 2018, the appellant requested ACRA to provide the details of the companies that had been struck off. ACRA replied by way of e-mail to the appellant on 2 October 2018 and attached a letter dated 31 August 2018 containing the relevant details (“31 August 2018 Letter”). The 31 August 2018 Letter only identified GB F&B, CB Asia and GB Retail as the companies that formed the basis of the appellant’s disqualification. GB Holdings was not identified.

4 In HC/OS 1282/2018 (“OS 1282”), the appellant applied for leave to act as a director under s 155A(3) of the Companies Act. In the alternative, he applied for a declaration that he had not been disqualified as a director under s 155A(1).

5 The respondent, representing the Minister for Finance, opposed OS 1282. The High Court judge (“the Judge”) dismissed OS 1282. The Judge held that s 155A(1) was triggered on 8 January 2018. Thus, the appellant was disqualified as a director for a five-year period which commenced on 9 January 2018. The Judge also dismissed the appellant’s leave application under s 155A(3).

Issues to be determined

6 There were three main issues in the appeal:

(a) First, whether s 155A(1) was triggered on 8 January 2018 when CB Asia and GB Retail were struck off (“Issue 1”).

(b) Second, whether s 155A(1) was triggered on 6 August 2018 when GB Holdings was struck off (“Issue 2”).

(c) Third, whether the appellant should be granted leave under s 155A(3) (“Issue 3”).

The Court’s decision

Issue 1: Whether s 155A(1) was triggered on 8 January 2018

7 The Court held that whether or not s 155A(1) was triggered on 8 January 2018 was simply a matter of determining and applying its ordinary meaning. There is no ambiguity or obscurity on the face of s 155A(1). It provides that a person is disqualified from acting as a director for five years if he was a director of a company that was struck off by the Registrar under s 344 of the Companies Act and within a period of five years immediately before that date, was also a director of no fewer than two other companies that were similarly struck off. It was clear that the ordinary meaning of s 155A(1) was not manifestly absurd or unreasonable (at [34]).

8 Accordingly, applying the ordinary meaning of s 155A(1), the provision was not triggered on 8 January 2018 because the appellant had only been a director of one other company that was struck off by the Registrar before that date (namely, GB F&B, which was struck off on 7 November 2016) (at [35]).

9 Notwithstanding the ordinary meaning of s 155A(1), the Judge considered that it was appropriate to adopt a rectifying construction of the provision. In effect, the Judge replaced the words “immediately before the date” with the words “ending on the date”. The Court held that it was not appropriate to adopt a rectifying construction of s 155A(1). Applying the test to determine whether a rectifying construction should be adopted, it was not “apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, the eventuality that was required to be dealt with so that the purpose of the Act could be achieved”. In fact, it was more likely that the draftsman and Parliament had made a conscious and deliberate decision for s 155A(1) not to apply simply because a person was a director in not less than three companies that were struck off within a five-year period. Otherwise, s 155A(1) could have been worded like s 155(3) of the Companies Act (at [36], [40] and [41]).

Issue 2: Whether s 155A(1) was triggered on 6 August 2018

10 The Court held that based on the ordinary meaning of s 155A(1), the appellant was disqualified for a five-year period commencing on 7 August 2018 (at [51]).

11 The Court rejected the appellant’s contention that he was not disqualified from 7 August 2018. According to the appellant, the doctrine of substantive legitimate expectations precluded the respondent from relying on GB Holdings as forming the basis of his disqualification. The appellant’s submission was premised on ACRA’s 31 August 2018 Letter. Through this letter, ACRA had allegedly made a representation which “pinned down” GB F&B, CB Asia and GB Retail as the companies that formed the basis of the appellant’s disqualification.  There was no reference to GB Holdings. In the circumstances, the appellant submitted that he had a legitimate expectation “that his disqualification would be limited to that which was pronounced by ACRA”. The Court noted that whether or not the doctrine should be recognised in Singapore remains an open question. However, it was not necessary to decide this question because the doctrine would be of no assistance to the appellant in any event. The issue was whether s 155A(1) was triggered on 6 August 2018 when GB Holdings was struck off. This was purely a legal determination that was for the court to make, and not ACRA. If the facts before the court showed that s 155A(1) was triggered on the date on which GB Holdings was struck off, such that the appellant was disqualified for five years thereafter, the fact that ACRA failed to mention GB Holdings in the 31 August 2018 Letter would not in any way affect that outcome (at [52], [54], [57] and [58]).

Issue 3: Whether the appellant should be granted leave under s 155A(3)

12 The Court held that whether leave should be granted under s 155A(3) depends on a holistic assessment of the following non-exhaustive considerations. First, the court should consider the applicant’s capacity for compliance in the future. Second, it should be considered whether there were any exculpatory reasons for the applicant’s failure to wind up or procure the striking off of the companies that were struck off by the Registrar. Third, the Court was provisionally of the view that, as a general rule, it should be incumbent on an applicant to provide some detail about the specific company or group of companies for which leave is being sought. He should also explain why it is necessary for him to be a director in these companies. The court will then examine whether leave should be granted in respect of each company individually (at [70][73]).

13 A significant plank of the appellant’s leave application was his explanation for why he did not or could not procure the striking off of the four companies. However, the Court held that these reasons did not provide a sufficient basis for granting leave (at [80]).

(a) For GB F&B, the appellant claimed that he was content for it to be struck off by the Registrar because he was under the impression from a letter sent by ACRA that no action was required on his part. He was not aware of s 155A at that time. However, ACRA was not under a duty to provide legal advice to the appellant on the consequences of a striking off by the Register, and he should have been aware of s 155A (at [85] and [86]).

(b) For CB Asia, the appellant claimed that he was under the impression that his application to strike off the company was successful. However, ACRA did send a letter informing the appellant about its intention to strike off CB Asia. That, at the very least, ought to have alerted the appellant to inquire about the status of his application (at [88] and [90]).

(c) For GB Retail and GB Holdings, the appellant claimed that he could not strike these companies off the register because he was unable to obtain a release of the securities that were granted over their assets. Nonetheless, in the intervening period, it was incumbent on the appellant to ensure that GB Retail and GB Holdings complied with the basic filing requirements. The companies would not have been struck off by the Registrar had he done so (at [92] and [94]) .

14 The Court found that although the appellant had taken further steps since his disqualification to demonstrate a capacity for compliance in the future, this was a basic requirement for any applicant seeking leave under s 155A(3). This factor alone did not warrant granting leave to the appellant. The Court also held that there was no basis to take a more benign view of the circumstances leading to the appellant’s disqualification on account of his role as a restructuring and insolvency professional. The Court did not give any weight to the appellant’s contention that he had served a disqualification period of two years and seven months because this was contradicted by the further evidence adduced by the respondent on appeal. In the circumstances, the Court affirmed the Judge’s decision to dismiss the appellant’s leave application under s 155A(3) (at [98], [100] and [105]).

This summary is provided to assist in the understanding of the Court’s judgment. 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 judgment.

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