Pacrim Investments v Tan Mui Keow Claire: Scheme of Arrangement & Creditor Definition

In Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another, the Singapore High Court addressed a preliminary issue of whether a scheme of arrangement extinguished Pacrim Investments' claim for damages against Mediastream Limited (MSL). Pacrim sought damages for MSL's failure to register share transfers. The court, presided over by Peh Aik Hin AR, determined that Pacrim was a creditor under Section 210 of the Companies Act at the relevant time and was therefore bound by the Scheme, resulting in the extinguishment of its claim. The court determined the preliminary issue in MSL's favor.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Preliminary issue determined in favor of Mediastream Limited; Pacrim's claim for damages is extinguished.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case regarding Pacrim Investments' claim for damages against Mediastream Limited. The key legal issue is whether a scheme of arrangement extinguished Pacrim's claim.

1.7 Decision Date

2 May 2010

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Pacrim Investments Pte Ltd	Plaintiff	Corporation	Claim Dismissed	Lost	Lisa Chong of Lisa Chong & Partners
Tan Mui Keow Claire	Defendant	Individual
Mediastream Limited	Defendant	Corporation	Judgment for Defendant	Won	Andre Maniam of WongPartnership LLP Adeline Ong of WongPartnership LLP

3. Judges

Judge Name	Title	Delivered Judgment
Peh Aik Hin	Assistant Registrar	Yes

4. Counsels

Counsel Name	Organization
Lisa Chong	Lisa Chong & Partners
Andre Maniam	WongPartnership LLP
Adeline Ong	WongPartnership LLP

4. Facts

Pacrim received 70m MSL shares from Desmond Poh as a pledge for a brokerage fee.
Pacrim released 20m shares to Poh, leaving 50m shares as security.
Pacrim submitted transfers of 20m and 30m shares to MSL for registration in September 2003.
MSL refused to register the transfers.
Pacrim commenced proceedings against MSL.
The High Court dismissed Pacrim's claim at first instance.
Pacrim filed an appeal against the High Court's decision.
MSL was placed under judicial management.
A scheme of arrangement was proposed and approved for MSL.
The Court of Appeal allowed Pacrim's appeal after MSL emerged from judicial management.

5. Formal Citations

Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another, Originating Summons No 165 of 2004, [2010] SGHC 134
Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another, , [2005] 1 SLR(R) 141
Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another, , [2008] 2 SLR(R) 898
The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd, , [2008] 3 SLR(R) 121
Re Baring Futures (Singapore) Pte Ltd (in compulsory liquidation) and another action, , [2002] 1 SLR(R) 191
Bank of India v Rai Bahadur Singh and another, , [1993] 2 SLR(R) 1

6. Timeline

Date	Event
2002-09-29	Pacrim received share certificates for 70m MSL shares from Desmond Poh as a pledge.
2003-09-23	Pacrim submitted a transfer of 20m shares to MSL for registration.
2003-09-24	Pacrim submitted a transfer of 30m shares to MSL for registration.
2004-02-10	Pacrim commenced proceedings against MSL for failure to register share transfers.
2004-04-18	Pacrim filed a notice of appeal against the High Court’s decision.
2004-08-03	The High Court dismissed Pacrim's originating summons.
2005-04-22	MSL was placed under judicial management.
2007-07-10	The Scheme was approved by all the Scheme Creditors who attended and voted at the meeting convened.
2007-08-21	The Scheme was approved by the High Court.
2007-08-23	The Scheme took effect when a copy of the court’s order was lodged with the Accounting and Corporate Regulatory Authority.
2007-10-02	MSL emerged from judicial management.
2008-02-22	The Court of Appeal allowed Pacrim’s appeal.
2010-03-12	Hearing of the application commenced; Pacrim confirmed it was only seeking damages from MSL.
2010-04-14	The preliminary issue was determined in favor of MSL.
2010-05-03	Decision Date

7. Legal Issues

Definition of Creditor under Section 210 of the Companies Act
- Outcome: The court held that Pacrim was a creditor under Section 210 of the Companies Act at the relevant time.
- Category: Substantive
- Sub-Issues:
  - Whether a party with a pending appeal is considered a creditor
  - Whether a contingent creditor falls under the definition of creditor
- Related Cases:
  - [2008] 3 SLR(R) 121
  - [1895] 1 Ch 267
  - [2006] 1 WLR 1728
  - [1961] AC 235
Effect of Scheme of Arrangement on Pending Claims
- Outcome: The court held that the Scheme extinguished Pacrim's claim for damages.
- Category: Substantive
- Sub-Issues:
  - Whether a scheme of arrangement extinguishes a claim subject to a pending appeal
  - Binding effect of a scheme on creditors
- Related Cases:
  - [2008] 3 SLR(R) 121

8. Remedies Sought

Registration of Share Transfers
Monetary Damages

9. Cause of Actions

Failure to Register Share Transfers
Breach of Statutory Duty

10. Practice Areas

Commercial Litigation
Insolvency and Restructuring

11. Industries

Investments

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another	High Court	Yes	[2005] 1 SLR(R) 141	Singapore	Cited as the High Court's initial dismissal of Pacrim's claim, which was later overturned on appeal.
Pacrim Investments Pte Ltd v Tan Mui Keow Claire and another	Court of Appeal	Yes	[2008] 2 SLR(R) 898	Singapore	Cited as the Court of Appeal's decision allowing Pacrim's appeal, which led to the assessment of damages.
The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd	Court of Appeal	Yes	[2008] 3 SLR(R) 121	Singapore	Cited for the principle that a scheme becomes an order of court once approved, focusing on the terms of the Scheme.
Re Baring Futures (Singapore) Pte Ltd (in compulsory liquidation) and another action	High Court	Yes	[2002] 1 SLR(R) 191	Singapore	Cited to distinguish between pending proceedings and a final, non-appealable judgment.
Bank of India v Rai Bahadur Singh and another	High Court	Yes	[1993] 2 SLR(R) 1	Singapore	Cited to distinguish between pending proceedings and a final, non-appealable judgment.
In re T & N Ltd and others	English Court	Yes	[2006] 1 WLR 1728	United Kingdom	Cited to support the argument that 'creditor' should be given a wide meaning and that future asbestos claimants were held to be creditors.
Jaurdon v Cricket Communications	US Court of Appeals, Tenth Circuit	Yes	412 F 3d 1156	United States	Cited to support the argument that a plaintiff with a pending appeal against dismissal of its claim has a 'claim' within ch 11 of the Bankruptcy Code (US).
Re Midland Coal, Coke, and Iron Company	English Court of Appeal	Yes	[1895] 1 Ch 267	United Kingdom	Cited for the principle that the word 'creditor' should be used in the widest sense.
Re Glendale Land Development Ltd (No 2)	Australian Court	Yes	(1982) ACLC 562	Australia	Cited for the principle that creditors should be understood as embracing all persons with claims which would be entitled to be admitted to proof if the company were wound up.
Re R L Child & Co Pty Ltd	Australian Court	Yes	(1986) 10 ACLR 673	Australia	Cited to clarify that the formulation in Re Glendale Land Development was not intended to limit the scope of the expression, but rather to indicate that persons with unliquidated, prospective or contingent claims were not excluded.
Bond Corporation Holdings Ltd v Western Australia	Australian Court	Yes	(1992) 7 ACSR 472	Australia	Cited for the proposition that the term 'creditors' is to be given a wide meaning and includes persons having any pecuniary claim against the company, including unliquidated, prospective or contingent claims.
Sea Assets Limited v Perusahaan Perseroan (Persero) PT Perusahaan Penerbangan Garuda Indonesia	English Court of Appeal	Yes	[2001] EWCA Civ 1696	United Kingdom	Cited for the principle that it has been the legislative policy for well over a century to encourage compromises and arrangements between a company and its creditors or members.
Johnston v McGrath and Another	New South Wales Supreme Court	Yes	[2008] NSWSC 639	Australia	Cited for the principle that the claim or liability in respect of which proof is lodged must be one which is legally due, in the sense of being enforceable by legal process if necessary.
In re William Hockley Ltd	English Court	Yes	[1962] 1 WLR 555	United Kingdom	Cited for the definition of a contingent creditor.
Re People’s Parkway Development Pte Ltd	High Court	Yes	[1991] 2 SLR(R) 567	Singapore	Cited for the definition of a contingent creditor.
Winter and Others (Executors of Sir Arthur Munro Sutherland Bart, decd) v Inland Revenue Commissioners [Appeal in In re Sutherland, decd]	House of Lords	Yes	[1961] AC 235	United Kingdom	Cited for the principle that an existing legal liability was not a requirement of a contingent liability.
In re Compania de Electricidad de La Provincia de Buenos Aires Ltd	English Court	Yes	[1980] 1 Ch 146	United Kingdom	Cited as an example of a share option holder who has been recognised to be a contingent creditor of the company.
Re Gwalia Consolidated Ltd	Australian Court	Yes	(1998) 27 ACSR 674	Australia	Cited as an example of a share option holder who has been recognised to be a contingent creditor of the company.
Re Challenger Group Holdings Ltd	Australian Court	Yes	(2003) 48 ACSR 498	Australia	Cited as an example of a share option holder who has been recognised to be a contingent creditor of the company.
In re R-R Realisations Ltd	English Court	Yes	[1980] 1 WLR 805	United Kingdom	Cited as an example of circumstances where all the relevant events excluding damage have not occurred.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Section 210 of the Companies Act (Cap 50, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Scheme of Arrangement
Scheme Creditor
Judicial Management
Creditor
Contingent Creditor
Companies Act
Share Transfer
Pledge
Originating Summons
Preliminary Issue

15.2 Keywords

Scheme of Arrangement
Creditor
Companies Act
Singapore
Insolvency
Share Transfer

17. Areas of Law

Area Name	Relevance Score
Company Law	70
Bankruptcy	60
Schemes of Arrangement	60
Judicial Management	50
Litigation	50
Share Transfer	40
Contract Law	30
Arbitration	20

16. Subjects

Company Law
Insolvency Law
Schemes of Arrangement