Retrospect Investment (S) Pte Ltd v Lateral Solutions Pte Ltd and another [2020] SGCA 15: A photo of the stock market. (Photo credits: Austin Distel/Unsplash)

CASE SUMMARY

In Retrospect Investment (S) Pte Ltd v Lateral Solutions Pte Ltd and another [2020] SGCA 15, the appellant and the respondent were shareholders in a company, SWTPL. They were embroiled in a section 216 Companies Act minority oppression action commenced by the appellant.  

Prior to the commencement of the trial, they reached an agreement that the respondents would buy out the appellant’s shares in SWTPL. A consent order (“the Consent Order”) to that effect was recorded before the High Court Judge (“the Judge”) and leave was granted to the appellant to discontinue the action. Pursuant to the Consent Order, the appellant subsequently filed a Notice of Discontinuance.  

Thereafter, the parties disagreed on the valuation date for the purpose of the agreed buy-out. The respondents took the position that the date of the Consent Order was the relevant date whilst the appellant argued for an earlier date in 2015 on the basis that around that date, the respondents allegedly set up another entity to compete with SWTPL and that act had the effect of reducing the value of the appellant’s shares in SWTPL. The appellant thus asserted that it would be unfair to use the date of the Consent Order as the appropriate date.    

The problem was that the Consent Order did not specify the relevant valuation date. To resolve the impasse, the parties took out a consent summons whereby the Consent Order was amended to include the following order:  

In the event that parties are unable to come to an agreement on the reference date for the valuation of the [appellant’s] shares in [SWTPL], the parties shall be at liberty to refer the matter to the Court for determination, which determination shall be final.  

An Assistant Registrar (“AR”) made an order in terms of the consent summons (“the Amended Consent Order”). Following that, the Judge heard the parties on the relevant date pursuant to the Amended Consent Order. Having considered the evidence, the Judge agreed with the respondents that the relevant date is the date of the Consent Order (“the Valuation Date Order”).  

The appellant appealed the Valuation Date Order. The Court of Appeal directed parties to address the following issue:  

Whether the High Court had the jurisdiction or power to amend the consent order notwithstanding the discontinuance of the Suit and if not, what are the orders that the Court should make in the circumstances. 

COURT’S DECISION

The Court of Appeal concluded that the AR was wrong to have made the Amended Consent Order as the court became functus officio when the Consent Order was made and the action discontinued thereafter. It thus followed that the Judge did not possess the power or the jurisdiction to hear the matter of the valuation. In the circumstances, both the Amended Consent Order and the Valuation Date Order were set aside as they were nullities.  

Once an action is discontinued, the court becomes functus officio. Thereafter, the court’s power or inherent jurisdiction over the action is limited to making non-substantive amendments to its orders, for example, to clarify its terms or to give consequential directions to give effect to them. The court cannot correct substantive orders or effect substantive amendments, or variations, to orders that have been perfected. Here, it could not be said that the terms of the Amended Consent Order were non-substantive. In this regard, the court noted that at the time the Consent Order was recorded, the parties specifically informed the Judge that the parties would not be referring any “substantive issues” to the court after the discontinuance including the applicable valuation date and the approach to be adopted by the independent valuer. 

CONCLUDING REMARKS

The decision demonstrates the importance of ensuring that the terms of court orders, be it by consent or otherwise, are comprehensive.

To read the full judgment, click here.