Borneo Ventures Pte Ltd v Ong Han Nam

JudgeLai Siu Chiu SJ
Judgment Date15 December 2017
Neutral Citation[2017] SGHC 320
Citation[2017] SGHC 320
CourtHigh Court (Singapore)
Published date16 August 2018
Docket NumberSuit No 1268 of 2016 (Registrar’s Appeal No 110 of 2017)
Plaintiff CounselTeh Guek Ngor Engeline, Yeo Yian Hui Mark and Huen Huimin Jessie (Engeline Teh Practice LLC)
Defendant CounselLem Jit Min Andy, Sharmini Selvaratnam and Poon Pui Yee (Eversheds Harry Elias LLP)
Subject MatterCivil Procedure,Stay of proceedings,Limited stay pending outcome of foreign proceedings
Hearing Date17 May 2017
Lai Siu Chiu SJ: Introduction

This case came up for hearing before this court by way of a Registrar’s Appeal No 110 of 2017 (“the Appeal”). Ong Han Nam (“the Defendant”) had filed an application in Summons No 6145 of 2016 (“the Stay Application”) for a stay of proceedings in Suit No 1268 of 2016 (“the Suit”) commenced by Borneo Ventures Pte Ltd (“the Plaintiff”), pending the final outcome of a suit that was then ongoing in the High Court of Sabah and Sarawak at Kota Kinabalu, in the State of Sabah, Malaysia (“the Malaysian Suit”).

The Stay Application was heard and granted by an Assistant Registrar (“the AR”) on 7 April 2017. The AR ordered a limited stay of all proceedings in this Suit against the Defendant until 31 July 2017 and awarded costs to the Defendant. The date 31 July 2017 was chosen by the AR as the trial of the Malaysian Suit had been fixed to take place between 19 and 22 June 2017.1

For completeness, I note that, by way of the Defendant’s affidavit dated 29 June 2017, which was after the decision in this Appeal had been rendered, this court was informed that the hearing of the Malaysian Suit was not concluded on 22 June 2017 and had been adjourned to 10 July 2017 at the juncture when the last witness of the Defendant, Ms Wong Lee Ken (“Wong”), was in the witness stand.2 On 11 July 2017, this court was further updated that the Malaysian Suit had concluded on 10 July 2017 and that the decision in that suit was likely to be rendered in September 2017.3

After the AR gave his decision, the Plaintiff filed the Appeal which this court heard and allowed. As the Defendant has appealed (after obtaining leave of court) against this court’s decision in Civil Appeal No 140 of 2017, I now set out the grounds for allowing the Appeal.

The facts

The facts set out hereinafter are extracted from: the three affidavits filed by the Defendant; an affidavit filed on the Plaintiff’s behalf by Alex Ng Soon Heng (“Ng”), the Group Chief Financial Controller of GSH Corporation Limited (“GSH”), which is the ultimate holding company of the Plaintiff; an affidavit filed by Goi Seng Hui (“Goi”) the Executive Chairman of GSH; two affidavits filed by Joyce Blasius (“Blasius”), an associate from the Malaysian law firm acting for the Plaintiff in the Malaysian Suit, vide, No bki-22NCvC-21/2-2016 (HC1), which the Plaintiff has taken out against (a) Omega Brilliance Sdn Bhd (“OBSB”) and (b) the Defendant; and an affidavit filed by Madeline Lee May Ming, a former partner of the Malaysian law firm called Mazlan & Associates who headed her firm’s team that conducted the due diligence exercise on behalf of the Plaintiff for a subscription agreement that formed the basis for the Plaintiff’s claim in the Suit.

The Plaintiff is a company incorporated in Singapore and is a wholly owned subsidiary of GSH. The Defendant is a Malaysian and is the sole owner of a British Virgin Islands incorporated company called Eagle Origin Limited (“Eagle”), which in turn owns 22.5% of the shares in a company called The Sutera Harbour Group Sdn Bhd (“SH Group”). Besides Eagle and the SH Group, the Defendant also owns other companies/shares in other companies such as Sutera Harbour Holdings Sdn Bhd (“SHHSB”).

Pursuant to a Subscription Agreement dated 30 December 2013 (“the SA”), the Plaintiff acquired 77.5% of the share capital in the SH Group and thereby became its majority shareholder.4 This acquisition under the SA was completed on 26 March 2014.5 Clause 12.15(a) of the SA states that the agreement shall be governed by and construed in accordance with the laws of Singapore while sub-clause (b) thereof provides for disputes to be referred to arbitration in Singapore in accordance with the rules of the Singapore International Arbitration Centre.6

The SH Group is the immediate parent company of a fully integrated resort, Sutera Harbour Resort Sdn Bhd (“SH Resort”), covering approximately 384 acres located at Kota Kinabalu, Sabah. The SH Resort consists, inter alia, of two 5-star hotels with extensive convention and banquet facilities, which the Defendant developed from the 1990s until July 2000 when SH Resort was completed and officially opened.7

The SH Resort is in turn the parent company of five companies, namely, (i) Advanced Prestige Sdn Bhd; (ii) Eastworth Source Sdn Bhd; (iii) The Little Shop Sdn Bhd; (iv) Sutera Harbour Travel Sdn Bhd; and (v) Sutera Harbour Golf & Country Club (“SHGCC”). The Defendant has been a director of SHGCC since 19 December 1991.8 For ease of reference, the court will hereinafter adopt the Plaintiff’s nomenclature and refer to all five companies collectively as “the Sutera Target Group”.

The corporate structure of the various companies mentioned above, ex post the completion of the SA, is best depicted in the chart below:

SHGCC owns and has title to a piece of 99 years leasehold state land located at Sembulan District, Kota Kinabalu with an area approximating 95.58 hectares or 238.63 acres (“the Sembulan land”).9 In the SA, the Defendant had warranted to the Plaintiff that SHGCC owned the Sembulan land without encumbrances.

The Plaintiff alleged that by a sale and purchase agreement signed on 21 March 2014 (“the S&P”) but which was apparently back-dated to 1 March 2014, SHGCC agreed to sell to OBSB a portion of the Sembulan land measuring 1.459 acres (“the Subject land”) for RM1,000 as consideration (“the Transaction”).10 The S&P was signed by the Defendant on behalf of OBSB.11 According to the 1st affidavit filed by Blasius, OBSB was incorporated in Malaysia on 7 February 2013 and the Defendant became its director on 22 March 2013.12 There was no resolution passed by SHGCC to approve the S&P or the sale of the Subject land.13

A power plant known as the co-generation facility (“the Co-Gen facility”) is situated on the Subject land. The Co-Gen facility was developed by Profound Heritage Sdn Bhd (“PHSB”) at a cost of RM155m between 1997 and 1999, with financing from, inter alia, Bank Islam (L) Ltd (“the Bank”).14 PHSB was owned and controlled by the Defendant until it was wound up by an order of court in Malaysia on or around 11 January 2012.15 The Co-Gen facility was operated by PHSB and supplied/supplies electricity to the SH Resort.16

Since 2002, tenancy agreements had been entered into between SHGCC and PHSB on an annual basis for the rental of the Subject land.17On 1 December 2012, the liquidators of PHSB entered into a one year tenancy with SHGCC to rent the Subject land at RM5,558 per month.18

After PHSB was wound up, the Defendant purportedly entered into negotiations with the Bank and reached an agreement to settle the outstanding debt owed by PHSB to the Bank. Under the settlement terms, PHSB would make payment of approximately RM33.6m to the Bank to discharge the charge which the Bank held over PHSB’s plant and machinery and all other securities.19 The settlement sum of RM33.6m was paid to the Bank on or about 29 March 2013.20

On 12 July 2013, OBSB (represented by the Defendant) and the liquidators of PHSB executed an asset sale agreement (“the ASA”) for the sale of PHSB’s plant and machinery to OBSB for RM33.6m. Under cl 2.2.4 of the ASA, the Subject land was expressly excluded from the sale but the Co-Gen facility was included.

Prior to completion of the SA on 26 March 2014 (see [7] above), the Defendant issued a disclosure letter dated 18 March 2014 (which was wrongly dated 18 March 2013) to the Plaintiff (“the Disclosure Letter”) where no mention was made of the S&P or the Transaction.21 The Plaintiff only found out about the S&P more than a year later, when a tax review was conducted on SHGCC’s accounts by its auditors.22 The relevant paragraphs from the Disclosure Letter addressed to both the Plaintiff and TYJ Group Pte Ltd read as follows:23 This Disclosure letter forms an integral part of the transactions effected by or under the [SA]. Each item disclosed (or deemed disclosed) in this Disclosure Letter shall be deemed to be a disclosure in respect of all warranties notwithstanding that an item disclosed may be disclosed by reference to a particular paragraph or paragraphs, or clause or clauses in the [SA].

[…]

Without limiting the generality of the disclosures referred to above, [the Plaintiff], SHHSB, [SH Resort] and [the Defendant] also wish to make specific disclosures against the Warranties and these are set out in the schedule attached hereto. Each item disclosed shall, however, be deemed to be a disclosure in respect of the Warranties and shall not be limited to the paragraph or clause which is referred to in the schedule.

On 29 February 2016, SHGCC commenced the Malaysian Suit against OBSB and the Defendant as the first and second defendants respectively. SHGCC’s claims, inter alia, were (i) for the Defendant’s breach of the fiduciary duties that he owed to SHGCC as its director; (ii) that the S&P is null and void and has no legal effect; (iii) for an order that OBSB remove all its installations and structures on the Subject land; (iv) for damages in the alternative, and (v) double rent from OBSB for occupation of the Subject land.

The Defendant alleged that on 24 August 2016, the Plaintiff’s Singapore solicitors sent a letter of demand to his Singapore solicitors making the same claims against him as in the Malaysian Suit.24 In response, the Defendant’s solicitors denied the Plaintiff’s allegations, adding that any attempt by the Plaintiff to refer the matter to arbitration would only result in multiplicity of actions and proceedings on substantially the same subject matter and involving the same parties as in the Malaysian Suit.25

The Plaintiff commenced arbitration proceedings against the Defendant by a notice of arbitration dated 3 October 2016, to which the Defendant filed a response on 17 October 2016.26 Ng deposed in his affidavit that to avoid paying the high costs involved in the...

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1 cases
  • Borneo Ventures Pte Ltd v Ong Han Nam
    • Singapore
    • High Court (Singapore)
    • 5 May 2020
    ...and allowed. The Defendant then appealed to the Court of Appeal against this court’s decision (see Borneo Ventures Pte Ltd v Ong Han Nam [2017] SGHC 320). Subsequently however, the Defendant withdrew his appeal (on 29 January 2018) and this Suit came up for hearing before this court. The Ma......

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