NATURE ONE DAIRY (AUSTRALIA) PTE. LTD. v BICHENO INVESTMENTS PTY. LTD.

[2024] SGCA 44 Court of Appeal 25 October 2024 • CA/CA 43/2024 ( CA/SUM 25/2024,CA/SUM 24/2024 ) • 26 min read

16 cases cited (11 SG, 5 foreign)

Outcome

Application dismissed

the application were dismissed.

Source: [2024] SGCA 44, Court of Appeal, decided 25 October 2024. Read directly from the judgment.

Key facts

Court	Court of Appeal
Decided	25 October 2024
Judges	Kannan Ramesh, Sundaresh Menon
Charges / claim	Civil Procedure, Insolvency Law
Outcome	Application dismissed
Counsel	Central Chambers Law Corporation, Setia Law LLC, Ayana Ki Su Jin, Lee Jin Loong, Ong Tun Wei Danny, Simone Bamapriya Chettiar, Tan Siew Bin Ronnie, Twang Kern Zern

Source: [2024] SGCA 44, Court of Appeal, decided 25 October 2024 — eLitigation. Updated 25 June 2026.

Catchwords

Civil Procedure — Appeals — Leave Insolvency Law — Administration of insolvent estates — Judicial management — Interim judicial management

Practice Areas

Civil Procedure Insolvency Law

Judges (2)

Kannan Ramesh Delivered Sundaresh Menon Coram

Counsel (8)

Central Chambers Law Corporation Firm Setia Law LLC Firm Ayana Ki Su Jin Counsel Respondent Lee Jin Loong Counsel Respondent Ong Tun Wei Danny Counsel Respondent Simone Bamapriya Chettiar Counsel Applicant Tan Siew Bin Ronnie Counsel Applicant Twang Kern Zern Counsel Applicant

Parties (2)

Bicheno Investments Pty Ltd Respondent Nature One Dairy (Australia) Pte Ltd Applicant

Case Significance

Nature One Dairy (Australia) Pte Ltd v Bicheno Investments Pty Ltd [2024] SGCA 44 was a Court of Appeal decision delivered on 25 October 2024 in Civil Appeal No 43 of 2024 and Summonses Nos 24 and 25 of 2024, heard by Sundaresh Menon CJ and Kannan Ramesh JAD, with Kannan Ramesh JAD delivering the grounds of decision of the court. CA 43 was Nature One Dairy (Australia) Pte Ltd's appeal against the decision of the Judicial Commissioner below in HC/SUM 1559/2024, in which Bicheno Investments Pty Ltd had applied for interim judicial managers to be appointed over Nature One Dairy pending the determination of Bicheno's application in HC/OA 547/2024 for Nature One Dairy to be placed under judicial management. The Judge allowed the application and made the interim judicial management order on 11 June 2024. Nature One Dairy filed CA 43 on 12 June 2024, then filed SUM 24 on 25 June 2024 for permission to appeal the order and SUM 25 on 27 June 2024 for permission to adduce further evidence, both of which Bicheno resisted. The matter engaged the law on appeals and leave to appeal and on interim judicial management. Central Chambers Law Corporation acted for the applicant and Setia Law LLC for the respondent.

Summary

SUPREME COURT OF SINGAPORE

25 October 2024

Case summary

Nature One Dairy (Australia) Pte Ltd v Bicheno Investments Pty Ltd [2024] SGCA 44

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Decision of the Court of Appeal (delivered by Justice Kannan Ramesh):

Outcome: The Court of Appeal held that permission to appeal was required to appeal an order made under s 92 of the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed) (the “IRDA”), but declined to grant the applicant’s application for permission to appeal.

Pertinent and significant points of the judgment

• The Court of Appeal held that an order made under s 92 of the IRDA was an “interlocutory order” within the meaning of paragraph 3(l) of the Fifth Schedule to the Supreme Court of Judicature Act 1969 (2020 Rev Ed). Consequently, permission to appeal was required to appeal an order made thereunder.

• The Court of Appeal emphasised the need for directors and/or shareholders directing a company’s conduct in insolvency and/or restructuring proceedings to act with prudence and sensitivity to the company’s financial circumstances in making decisions in the cause, observing that if costs are ordered against the company as a result of such decisions, it would be the unsecured creditors who would in fact bear them given the company’s financial situation and that it seemed incorrect for the creditors to bear that burden in such circumstances.

Introduction

1 CA/CA 43/2024 (“CA 43”) was the appeal of Nature One Dairy (Australia) Pte Ltd (“NOD”) against the decision of the Judicial Commissioner below (the “Judge”) in HC/SUM 1559/2024 (“SUM 1559”). The respondent, Bicheno Investments Pty Ltd (“Bicheno”), applied in SUM 1559 for interim judicial managers to be appointed over NOD, pending determination of Bicheno’s application for NOD to be placed under judicial management. The Judge allowed the application in SUM 1559 and appointed interim judicial managers (the “IJM order”) on 11 June 2024.

2 CA 43 was filed on 12 June 2024. On 25 June 2024, NOD filed CA/SUM 24/2024 (“SUM 24”) for permission to appeal the IJM order. Two days later, on 27 June 2024, NOD filed CA/SUM 25/2024 (“SUM 25”) for permission to adduce further evidence in CA 43. Bicheno resisted both applications.

3 The Court of Appeal considered it appropriate to address SUM 24 first, as CA 43 and SUM 25 would necessarily fall away if permission to appeal was required and not granted.

Background

4 NOD was a company incorporated in Singapore. It carried on the business of manufacturing dairy products. NOD was the parent company of a group in the dairy products industry (the “Group”). In the Group, only one subsidiary was profitable – Nature One Dairy Pte Ltd (“NODPL”). NODPL was in the milk powder business.

5 The respondent, Bicheno, was a creditor of NOD, holding 80 unsecured convertible notes. Bicheno had since redeemed the notes, or the notes had matured. As a result, NOD was liable to pay Bicheno approximately A$5.52m as at February 2021. The debt was the subject of legal proceedings in the Supreme Court of Victoria.

6 On 29 May 2024, NOD announced, through a notice of Annual General Meeting (“AGM”), its plan to sell the business of NODPL to a company seeking to list on the Australian Stock Exchange (the “ListCo”) through an asset-for-share swap arrangement (the “Potential Divestment”). Upon completion of the Potential Divestment, shares in the ListCo would be distributed to NOD’s shareholders in specie. The Potential Divestment was proposed in a draft resolution (“Resolution No 5”) which was accompanied by an explanatory statement (the “Explanatory Statement”). Amongst other things, the Explanatory Statement stated that NOD’s Board “[wa]s ready to proceed with the [Potential Divestment] upon the requisite Resolution being passed”.

7 Four shareholders of NOD objected to the Potential Divestment and requested that Resolution No 5 be withdrawn from the agenda for the AGM. Their request was refused. Accordingly, Bicheno commenced an action to place NOD under judicial management. To prevent the Potential Divestment from being completed before the judicial management application was disposed of, Bicheno also applied ex parte on the same day vide SUM 1559 for NOD to be placed under interim judicial management.

8 Concerning NOD’s financial position, the following facts were salient:

a. First, from NOD’s Annual Financial Statement (“AFS”) for FY 2023, two points were pertinent: (a) NOD’s total current liabilities of S$10.647m exceeded its total current assets of S$1.156m by S$9.491m; and (b) NOD only had cash in bank of S$3,912, which was significantly lower than the S$1.5m it had in FY 2022.

b. Secondly, from the AFS for FYs 2021 to 2023, it was evident that the Group had incurred losses in each of those years and its consolidated balance sheet position had worsened year-on-year.

c. Finally, NOD had not paid a debt of at least A$861,000 owed to Sanston Securities Australia Pty Ltd (“Sanston”). Sanston was also a shareholder of NOD holding 2.5% of its shares.

9 NOD adduced and relied on NOD’s Management Accounts dated 31 March 2024 (the “Management Accounts”), which painted a somewhat different picture of NOD’s financial position from the AFS for FY 2023, presenting NOD as cash flow solvent. The Management Accounts departed from the AFS for FY 2023 in the following ways:

a. Bicheno’s claim of AUD $5,385,000 was reclassified as a contingent and non-current liability;

b. NOD’s counterclaim against Bicheno was reclassified as a contingent and non-current asset;

c. loans owed by NOD’s subsidiaries were reclassified as current assets on the basis that the subsidiaries were able to pay them following demands for payment; and

d. debts totalling S$798,320 owed to related parties were reclassified from current liabilities to non-current liabilities as the relevant related party had allegedly agreed to revise the terms of repayment from “repayable on demand” to “repayable 12 months from demand”.

10 The Judge was satisfied that (a) there was a prima facie case that NOD was insolvent and that the objectives of judicial management set out in s 89(1) of the IRDA would be furthered if an interim judicial management order was made; and (b) there was urgency for the appointment of interim judicial managers. Accordingly, he allowed SUM 1559.

Decision of the Court of Appeal

11 The Court of Appeal held that permission to appeal was required to appeal the IJM order. An order appointing interim judicial managers under s 92 of the IRDA did not finally dispose of the rights of the parties. An application for interim judicial management was not a self-contained application. It was filed in an application for judicial management and involved the same parties as the primary cause, ie, the company and its directors, and the creditors. The appointment of interim judicial managers was to protect the assets and the business of the company pending the disposal of the application for judicial management. Accordingly, the determination of the application for interim judicial management did not dispose of the substantive rights of the parties in the underlying cause – the application for judicial management – which remained to be determined when that application was adjudicated upon: at [25] to [29].

12 The Court of Appeal held that none of the grounds on which permission to appeal might be granted were satisfied. Accordingly, there was no jurisdiction to consider CA 43 and SUM 25, and both the appeal and the application were dismissed: at [31] and [42].

13 On the first ground, the Court of Appeal held that there was no prima facie case of error:

a. First, the Court of Appeal held that the Judge did not err in finding that there was a prima facie case of insolvency. The Court of Appeal agreed with the Judge that the Management Accounts raised more questions than answers, and were no more than a convenient recharacterization of the current liabilities in the AFS for FY 2023: at [32] to [36].

b. Second, the Court of Appeal held that the Judge did not err in taking into account the debts owed to Bicheno and Sanston: at [37].

c. Thirdly, the Court of Appeal held that the Judge did not err in treating the circumstances as sufficiently urgent to warrant the appointment of interim judicial managers. The Court of Appeal considered that the case for urgency was clear as NOD was seeking to sell the business of its only profitable subsidiary, NODPL, by the end of August which would be about the time the judicial management application was scheduled to be heard: at [38].

d. Finally, the Court of Appeal held that the Judge did not err in concluding that there was a prima facie case that the objectives of judicial management stated in s 89(1) of the IRDA were satisfied. The Court of Appeal observed that there was no requirement in the statutes or the jurisprudence for an application for judicial management to be supported by a restructuring plan: at [39].

14 On the second and third grounds, the Court of Appeal held that NOD’s case was unmeritorious because (a) the questions were framed on the basis that there was a prima facie case of error, which the Court of Appeal did not accept; (b) the questions were no more than attempts by NOD to mount factual challenges under the guise of questions of law; (c) in any case, these questions did not raise any issue which was not be sufficiently addressed by the present jurisprudence: at [41].

15 Following a survey of local and foreign jurisprudence, the Court of Appeal concluded by observing that there was much to be said in favour of the view that directors and/or shareholders directing a company’s conduct in insolvency and/or restructuring proceedings ought to act with prudence and sensitivity to the company’s financial circumstances in making decisions in the cause. The obligation of the directors and/or shareholders in such circumstances may be analogised with the duty of directors to take into consideration the interests of creditors where the company is financially stricken. As the company approaches insolvency, the company’s interest shifts towards its main economic stakeholder, its creditors, requiring the directors to make decisions with the interests of its creditors in mind. Further, the principle of proscribing the externalisation of the financial risk onto creditors in these circumstances in the context of costs incurred by the company in insolvency proceedings was a well-entrenched one: at [43] to [49].

16 The costs incurred as a result of NOD’s insistence on proceeding with CA 43 and the related applications could have been avoided—the evidence which NOD sought to adduce by SUM 25 and the arguments in CA 43 could have been respectively adduced and made before the Judge at the hearing of the judicial management application, which was to be heard just a few weeks later. Having regard to all the circumstances of the case, the Court of Appeal considered it appropriate to award costs of $45,000 (inclusive of disbursements) in favour of Bicheno against NOD in relation to CA 43, SUM 24 and SUM 25: at [50].

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 was Nature One Dairy (Australia) Pte Ltd v Bicheno Investments Pty Ltd [2024] SGCA 44 about?

It concerned Nature One Dairy's appeal against the appointment of interim judicial managers over it. Bicheno Investments had obtained an interim judicial management order on 11 June 2024 pending its application to place Nature One Dairy under judicial management, raising questions of permission to appeal.

Who decided Nature One Dairy v Bicheno Investments [2024] SGCA 44?

The Court of Appeal decided the case, comprising Sundaresh Menon CJ and Kannan Ramesh JAD, with Kannan Ramesh JAD delivering the grounds of decision on 25 October 2024 in Civil Appeal No 43 of 2024 and Summonses Nos 24 and 25 of 2024.

Statutes Cited

Insolvency, Restructuring and Dissolution Act Cases on this Act →

Restructuring and Dissolution Act Cases on this Act →

Supreme Court of Judicature Act (Cap 322) Cases on this Act →

Cases Cited (16)

SG (1)

[2024] SGHC 78

SLR (10)

[2013] 2 SLR 880 [2015] 1 SLR 486 [2019] 1 SLR 131 [2020] 5 SLR 1435 [2021] 2 SLR 478 [2021] 2 SLR 683 [2022] 2 SLR 253 [2024] 1 SLR 361 [2024] 1 SLR 579 [2024] 3 SLR 1228

UK (5)

[1903] 1 KB 547 [1972] 1 WLR 791 [1976] 3 All ER 200 [1986] AC 965 [2016] EWHC 1888