GABRIEL LAW CORPORATION
Madison Pacific Trust Limited and Ors v David Salim and Anor
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Gabriel Law Corporation (“GLC”) was recently involved in defending an application made by joint and several Receivers and Managers (“R&Ms”) of the assets of the debtor (“Debtor”). The case was Madison Pacific Trust Limited (“Madison”) and Ors v David Salim and Anor [2025] SGHC 128 (the “Judgment”). Ms Halimatul and Mr Sameer Melber acted for GLC and M/s Rajah & Tann LLC acted for the R&Ms.
In this case, Madison had taken out a Mareva injunction against the Debtor and pursuant to the said Mareva injunction, obtained an order for the appointment of receivers and managers (“Receivership Order”).
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The Receivership Order provided inter alia as follows:
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"3.1 The Receivers and Managers shall, jointly and severally, have the sole right and power, in respect of the 1st Defendant, to:
(a) subject to the proviso at paragraph 3.2 below, identify, take into custody or under his control, require to be delivered, get in and receive, collect and preserve, all assets of the 1st Defendant, except that the Receivers and Managers shall have no power of sale unless such sale is approved by the Court;
(b) subject to the proviso at paragraph 3.2 below, take control of and exercise all rights which the 1st Defendant may have in relation to any of his assets, including but not limited to:
(i) companies or entities, whether in or outside of Singapore, in which the 1st Defendant holds, jointly or otherwise, directly or indirectly, a controlling or majority interest ("Interested Companies" or “Interested Company”) (in accordance with the provisions of any relevant constitutional or related documentation of such entities); or
(ii) such shares of such Interested Companies as are owned (directly or indirectly) by the 1st Defendant;
as may be necessary to obtain control or management of such company or entities and to take such steps as the Receivers and Managers think fit for the purpose of preserving its/their assets;
…
(e) subject to the proviso at paragraph 3.2 below, making such filings and doing such acts as are necessary in the relevant applicable jurisdictions to effect such replacement or appointment, and/or obtain approval from relevant local authorities for such replacement or appointment. Alternatively, seeking court orders from the relevant applicable jurisdictions to effect such replacement or appointment;
(h) require meetings and conduct interviews with any agent of the 1st Defendant and / or any shareholder, director, officer, employee, and/or agent of any Interested Company, to better understand its business, affairs, financials, and assets for the purpose of preserving the assets of the 1st Defendant, and / or any Interested Company;
(i) investigate into the transfer of assets, directly or indirectly, to, in favour of, to the credit of, and / or in the account of, the 1st Defendant and / or his nominees, from any one of the Interested Companies and / or the companies listed at paragraph 2 above, and prepare a report of his findings, and as to the status of the assets, business and affairs of the 1st Defendant and every Interested Company, within three (3) months of his appointment for the purpose of preserving the business and affairs of the 1st Defendant and every Interested Company, or such longer period as he may apply to Court for;
(j) obtain, in the name of the 1st Defendant or in the name of one or both of the Receivers and Managers (as may be appropriate), information from any party in respect of the assets, transactions and/or affairs of the 1st Defendant, including but not limited to, banks and/or other financial institutions and/or any government or statutory authority or body;
…"
Pursuant to the aforesaid, the R&Ms requested from M/s GLC, who had previously acted on certain matters for the Debtor, various information and documents. In summary, in the proceedings, they requested the following:
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Information and/or documents pertaining to assets of the Debtor;
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Information and/or documents relating to the bank accounts from which GLC received payment from the Debtor or persons/entities paying on his behalf for GLC’s bills, and the contact details of the persons GLC liaised with for payment of GLC’s bills; and
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The production of Court papers in respect of HC/S 123/2021 (“Suit 123”) taken up by the Debtor against a 3rd party, which GLC acted as the Debtor’s solicitors.[1]
GLC had declined to produce the requested information and documents as aforesaid on the basis that they were privileged under Sections 128 and 131 of the Evidence Act 1893 (“EA”) and also that the sealed documents between the Debtor and the 3rd party cannot be unsealed by the R&Ms. This position resulted in proceedings being taken by the R&Ms against GLC.
THE ISSUES BEFORE THE COURT
The matters came before the Honourable Justice Philip Jeyaretnam (“Phillip J”). Phillip J noted that the issues raised were important questions. He observed at paragraph 1:
"1 …Unsurprisingly, the application raised important questions concerning legal professional privilege, including its scope and ambit, whether the R&Ms are to be equated with Mr Salim for the purpose of privilege and whether they or the Registrar may waive privilege in place of Mr Salim."
At paragraph 8 of the Judgment, Phillip J also had this to say:
"8 … I had questions regarding (a) the scope and effect of a sealing order, including the position of counterparties, and (b) whether the R&M stands in the position of the individual in the way that a trustee in bankruptcy does…"
The position of the R&Ms was that the information and/or documents sought fell within paragraphs 3.1(i) and 3.1(j) of the Receivership Order.[2]
GLC’s position was that the information and/or documents sought were subject to legal advice privilege pursuant to Sections 128(1) and 131 of the EA and that the R&Ms did not have the authority to lift such privilege. With regard to the sealed documents, GLC also took the position that GLC could not disclose the cause papers in Suit 123 as they had been sealed by an Order of Court.[3]
Philip J then particularised the following issues for consideration[4]:
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" 12 The following issues therefore arise for my consideration:
(a) Scope of the R&Ms’ powers: Do the information and/or documents sought by the R&Ms prima facie fall within the scope of what they are empowered to obtain under the Receivership Order?
(b) Legal privilege: If (a) is answered affirmatively:
(i) Are the information and/or documents sought by the R&Ms legally privileged?
(ii) If so, can the R&Ms nevertheless access the information and/or documents?
(c) Sealing order: Can the R&Ms access the documents that are subject to a sealing order in HC/S 123/2021?"
COURT'S REASONING
Philip J considered various case law on the subject of a Court-appointed receiver and concluded that in Singapore, the power of appointment of a receiver was codified in Section 4(10) of the Civil Law Act 1909 (“CLA”). The Court observed at paragraph 17 as follows:
“…17 In Singapore, the power to appoint a receiver has been codified in s 4(10) of the Civil Law Act 1909 (2020 Rev Ed) (“CLA”) (Lee Kuan Yew v Tang Liang Hong and another and other suits [1997] 1 SLR(R) 328 at [7])…”
For our present purposes, the Court also concluded that: (a) the powers under Section 4(10) of the CLA extended to the power to appoint both receivers and managers[5], (b) that the said Section 4(1) of the CLA gave the Court “power to appoint a receiver on both an interlocutory and final basis”[6], and (c) that there was an additional basis for the appointment of a receiver under the Supreme Court of Judicature Act 1969 (“SCJA”).[7]
It is to be noted that the Court was also very clear as to what was the effect of the appointment of a receiver. The Court stated that “[t]he appointment does not have proprietary effect, but operates by way of injunction that both restrains the respondent from dealing with the assets in question, and authorises the receiver in respect of the same assets”[8].
This position was contrasted by the Court with the position of an Official Assignee or trustee in bankruptcy. In the case of an Official Assignee or trustee in bankruptcy, the property of the bankrupt vested in them upon the making of the bankruptcy order.[9]
Thus, the power of a receiver when contrasted with the power of an Official Assignee or trustee in bankruptcy, becomes more obvious. The receiver can operate only by way of an injunction by stopping the debtor from dealing with the assets and authorizing the receiver to deal with the same. The receiver cannot go further to require the cooperation of a 3rd party not bound to obey the instructions of the debtor.[10] The receiver cannot compel the 3rd party to comply with any instruction the receiver may give in place of the debtor. The 3rd party will be free to withhold any cooperation.[11]
Bearing the above in mind, one must also understand that the source of the powers of the receivers and managers is in the court order appointing them. The Court order then must function in line with the CLA which gives the authority to such receiver and manager as explained above. The court order cannot in any way enlarge the powers of the receivers and managers beyond that provided by law.
Within this boundary laid down by law, one then has to interpret the terms of the Receivership Order to determine the powers given to the R&Ms.[12] In the present case, the Court then interpreted para 3.1(j) of the Receivership Order and concluded that the said paragraph only required the provision of “information”. In the result, the R&Ms were not entitled to “documents per se”.[13]
It is submitted that if the information was in fact privileged, then even if the order stated for the information to be provided, such information should not be provided if legal privilege applied. This is because of the sanctity of legal privilege as provided for in Sections 128 and 131 of the EA. It is mandatory that such legal privilege be always complied with and adhered to. A court order cannot lift such privilege. [51] of the Judgment states as follows:
"51 In my view, this approach is more appropriate. It better coheres with the ultimate test endorsed in Skandinaviska at [47], namely whether the communication or other document was made confidentially for the purposes of legal advice. Applying that test, the information sought in paras 2(a) to 2(d) of Annex A is not privileged, whereas the information sought in para 1(a) of Annex A may include privileged information."
Thus, it can be safely concluded that information, if it is subject to legal privilege as provided for under Sections 128 and 131 of the EA, cannot be revealed notwithstanding any court order requiring the same. The court order in such a case must necessarily be construed to mean to provide information that is not subject to legal privilege.
SANCTITY OF PRIVILEGE
The R&Ms in the case crafted a letter of authorisation (“LOA”) in the name of the Debtor authorising the R&Ms to act in the Debtor’s name to obtain the information and/or documents from GLC. The Debtor had refused to execute the LOA on the basis that communications between the Debtor and GLC were subject to legal privilege. The R&Ms, to overcome the Debtor’s refusal, sought to get the said LOA executed by an Assistant Registrar. The said LOA was executed by the Assistant Registrar pursuant to paragraph 4(e) of the Receivership Order.[14]
The question that came up was whether such LOA requesting the release of privileged information to the R&Ms placed the R&Ms in the shoes of the Debtor and for the R&Ms to thus have the ability to lift legal privilege that inured to the benefit of the Debtor. The Court after reviewing the law concluded[15] that the Receivership Order pursuant to which the LOA was purportedly issued did not authorise the R&Ms to review the privileged information or otherwise waive privilege on behalf of the Debtor.[16]
The Court concluded and emphasized the importance of upholding legal privilege. The Court stated:
"76 First, in my view, legal privilege is and should be treated as a personal right (see Go-To Developments at [24]). It is not and should not be treated as a right that can be exercised or waived by a receiver and manager on an individual’s behalf. This accords with the purpose of the privilege, which is to enable legal advice to be sought and given in confidence (see Skandinaviska at [47]). An individual would not be able to speak with the assurance of confidentiality if his right to legal privilege was not treated as a right personal to and exercisable only by him."
The Court also emphasized that when interpreting any relevant court order which purports to give authority to a receiver and manager to obtain information or documents, it must be construed to apply to only information and documents which are not privileged.[17] This can be found in the Court’s conclusion is at [81] of the Judgment:
"81 In my view, this approach must, a fortiori, apply to the interpretation of court orders as well. It would be illogical to interpret a court order as derogating from legal advice privilege in the absence of express language or necessary implication, if a statutory provision would not be so interpreted."
Finally, the Court doubted that any court has the power to issue a receivership order that allowed the receiver and manager to access privileged material in the name of the receivership respondent, or to waive privilege in his name. The court stated:
"83 Third, I doubt that the court has the power to issue a receivership order that allows the receiver and manager to access privileged material in the name of the receivership respondent, or to waive privilege in his name. Legal professional privilege is statutorily enshrined in ss 128 and 131 of the EA. Those provisions have mandatory effect. Section 128(1) stipulates that “[n]o advocate or solicitor shall at any time be permitted, unless with his or her client’s express consent” to disclose privileged communications. Section 131(1) stipulates that “[n]o one may be compelled to disclose to the court” any privileged communication. Moreover, Order 11 of the Rules of Court 2021 (“ROC 2021”), which governs the court’s power to order the production of documents, contains an express carveout for privileged documents in O 11 r 5(3), which states:
Subject to any written law, the Court must not order the production of any document which is subject to any privilege or where its production would be contrary to the public interest."
It is the submission herein that receivers and managers cannot be given the power even by court order to obtain privileged information or to lift legal privilege which inured to the benefit of the debtor.
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SEALING ORDER
It is an undisputed fact that sealing orders are granted pursuant to the Court’s inherent power.[18]
In the present matter, the R&Ms argued that there can be no plea of confidentiality against them as they were seeking the cause papers in Suit 123 pursuant to paragraph 3.1(j) of the Receivership Order.
The Court rejected the R&Ms’ contentions. The Court emphasized that the R&Ms did not get placed in the position of the Debtor as a party to the proceedings in Suit 123 as a result of the Receivership Order.[19]
The Court concluded that in order to lift any sealing order, the test was to “ask if the purpose of the sealing order would be defeated if it did not have the effect of preventing disclosure of the sealed documents to the R&M”.[20] The Court concluded that the effect of the sealing order would be “denuded if the R&Ms were to obtain a copy of the cause papers that they seek”[21].
Finally on this issue, the Court also concluded that the effect of the Sealing Order was that the cause papers in Suit 123 could not be, “without the consent of all parties to Suit 123, be disclosed to any party”[22] [emphasis in original]. In the present case, the other party to Suit 123 which is also a beneficiary to the Sealed Order, was not a party to the present proceedings. As such, it was not appropriate for the Court to grant an order that would undercut the Sealing Order.[23]
CONCLUSION
This case has now developed and clarified the law insofar as privileged information and documents and sealing orders vis-à-vis a receiver and manager are concerned. Receivers and managers appointed through any court order must now bear in mind that they are not entitled to privileged information and documents subject to privilege. The law as enshrined in Sections 128 and 131 of the Evidence Act overrides any such entitlement. The sanctity of such legal privilege must always be respected. A court order giving any authority to the receiver and manager to obtain any information or documents must be interpreted to exclude privileged information or privileged documents.
It is also now settled law that the receiver and manager appointed through any court order also cannot unseal a sealed matter as that would denude the purpose of the sealing order. If a receiver and manager in such a situation wishes to try to lift the sealing order, at the very minimum the receiver and manager must make all parties to the suit where the sealing order was issued be made parties to the proceedings in which the receiver and manager is seeking the lifting of the sealing order.
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PETER GABRIEL
Managing Partner
Gabriel Law Corporation
[1] See [7] of the Judgment
[2] See [9] of the Judgment
[3] See [10] of the Judgment
[4] See [12] of the Judgment
[5] See [20] of the Judgment
[6] See [20] of the Judgment
[7] Section 18(2) of the SCJA read with paragraphs 5(a) and 5(c) of the First Schedule of the SJCA. Also see [24] of the Judgment
[8] See [28] of the Judgment
[9] See [28] of the Judgment
[10] See [29] of the Judgment
[11] See [29] of the Judgment
[12] See [31] of the Judgment
[13] See [34] of the Judgment
[14] See [54] of the Judgment
[15] See [63] of the Judgment
[16] See [75] of the Judgment
[17] See [76] to [80] of the Judgment
[18] See [85] of the Judgment
[19] See [93] of the Judgment
[20] See [93] of the Judgment
[21] See [94] of the Judgment
[22] See [95] of the Judgment
[23] See [95] of the Judgment