Han Cheng Fong v Teo Chong Nghee Patrick and others

• Jurisdiction: Singapore
• Judge: Tan Lee Meng J
• Judgment Date: 27 February 2013
• Neutral Citation: [2013] SGHC 51
• Citation: [2013] SGHC 51
• Court: High Court (Singapore)
• Published date: 08 March 2013
• Docket Number: Suit No 908 of 2010
• Plaintiff Counsel: Anthony Lee Hwee Khiam and Pua Lee Siang (Bih Li & Lee)
• Defendant Counsel: Chan Kia Pheng, Harpal Singh, Tan Wei Ming and Favian Kang (KhattarWong LLP),Sean Lim (Hin Tat Augustine & Partners)
• Subject Matter: Companies,Directors,Removal,Tort,Conspiracy
• Hearing Date: 17 August 2012,31 July 2012,27 September 2012,30 November 2012,17 October 2012

Tan Lee Meng J:

The plaintiff, Dr Han Cheng Fong (“Han”), was the chairman and a director of the fifth defendant, Cleantech Partners Hangzhou Pte Ltd (“CTPHZ”), a wholly-owned subsidiary of the fourth defendant, Cleantech Partners Pte Ltd (“CTP”), until he was dismissed on 12 October 2010 (“the dismissal”).

The first defendant, Mr Teo Chong Nghee Patrick (“Patrick”), the second defendant, Mr Lim Shih Hsi (“Richard”), and the third defendant, Mr Michael Heng Swee Hai (“Michael”), are directors of CTP. Patrick and Richard were also CTPHZ’s directors at all material times while Michael joined the CTPHZ board after the dismissal. These three defendants will collectively be referred to as “the defendants” in the rest of this judgment.

Han, who claimed that he was entitled to remain as the chairman and a director of CTPHZ by virtue of a shareholders’ agreement on 1 March 2010 as well as his legitimate expectations, claimed damages for wrongful dismissal. He also asserted that Patrick and Richard conspired against him to injure him by unlawful means and sought to wind up CTP and CTPHZ under s 216 of the Companies Act (Cap 50, 2006 Rev Ed).

Han’s allegations were denied by the defendants, who contended that they had good grounds for the dismissal.

Background

CTP is a Singapore company, whose founder directors are Patrick, Richard, Michael and Mr Robin Low Soo Chee (“Robin”).

In late 2009, CTP wanted to collaborate with a Chinese company, Hangzhou Vanwarm Holdings Group Ltd (“Vanwarm”), to develop a low-carbon project in Hangzhou, China, known as the “Hangzhou-Singapore Eco-Park” (“the Hangzhou project”). This project, which is managed by the Hangzhou Qianjiang Economic Development Area Management Committee (“HQEDA”), is intended to showcase clean and environmentally friendly technological innovations.

CTP’s founder directors invited Han to participate in the Hangzhou project because of his expertise in the property market in Singapore and China. Han was a former Chief Executive Officer of Fraser & Neave Ltd and a former Deputy Chairman of DBS Land. Han’s request that Ms Christine Liew Sok Kuan (“Christine”), a former real estate sales executive from Frasers Centrepoint Limited, be included as a shareholder of CTP so that she could work in the Hangzhou project was acceded to.

The 1 March 2010 Meeting

Han wanted to have the terms of his participation in the Hangzhou project recorded in a shareholders’ agreement. In early March 2010, CTP’s founder directors, Han, Christine and Cleantech Ventures Asia Pte Ltd (“CTVA”), a company controlled by Patrick and Richard, signed a document (“the 1 March document”). Han asserted that the 1 March document was a shareholders’ agreement but the defendants insisted that it was not.

Apart from giving shares and directorships in CTP to Han and Christine, the 1 March document provided, inter alia, that Han would be appointed the chairman and a director of a new subsidiary of CTP, subsequently named CTPHZ, which was to be set up to roll out the Hangzhou project. The 1 March document also stipulated that profits from the Hangzhou project would be shared between CTP and CTPHZ in the proportion of 33% and 67% respectively. Of the 67% intended for CTPHZ, 33% would be shared by its directors while the remaining 67% would be distributed to CTPHZ’s management, headed by Han, at his sole discretion. The 1 March document further provided that any “change to the above Resolutions shall require unanimous decision of the Board of Directors of CTP”.

Tripartite agreement between HQEDA, CTP and Vanwarm

On 23 March 2010, CTP entered into a tripartite agreement with HQEDA and Vanwarm (“the Tripartite Agreement”) to collaborate on the preparation of a master plan for and the development and promotion of the Hangzhou project.

Problems with Patrick’s fund-raising

On 24 March 2010, the Business Times reported (“the BT Report”) that CTP was “dipping its toes into potential deals, including a coal gasification project in Indonesia, a wind farm project in Vietnam and a solar panel installation business in China”. Han thought that the BT Report, which was published after an interview with Patrick, Richard and Michael, portrayed CTP as a substantial company with many impressive projects when it was in fact only involved in the Hangzhou project. Concerned that such misstatements in the course of CTP’s fund raising efforts for its business might tarnish his reputation, Han informed CTP’s directors on 7 April 2010 that he would focus his attention on CTPHZ and not sit on the CTP board “so as not to stand in the way of [CTP’s] fund raising efforts”. The directors of CTP accepted his stand.

Setting up of CTPHZ and appointment of Han as its chairman

On 1 April 2010, CTPHZ was incorporated. Han became its chairman. The other directors were Robin, Patrick, Richard and Christine. Michael was not appointed to the CTPHZ board.

Signing of collaboration agreement with Vanwarm

On 31 May 2010, Han signed a collaboration agreement with Vanwarm on CTPHZ’s behalf (“the Collaboration Agreement”). Under the Collaboration Agreement, a joint venture company named “Hangzhou Vanwarm Cleantech Co Ltd” (“HVC”) was to be set up and CTPHZ was guaranteed a profit of RMB130 million from the Hangzhou project by Vanwarm. Furthermore, Vanwarm undertook to arrange for Hong Kong Hong Jia Investments Co Ltd (“Hong Jia”) to lend CTPHZ USD6 million to pay for CTPHZ’s 40% share of HVC’s registered capital of USD15 million (“the Loan Agreement”).

To be enforceable in China, the Collaboration Agreement had to be registered with the relevant Chinese governmental department there but this was not done as Vanwarm wanted the said agreement to be confidential. As such, whether CTPHZ would eventually receive the promised profit of RMB130 million depended entirely on Vanwarm’s generosity.

On 17 June 2010, HVC was incorporated in China. CTPHZ appointed Han and Robin to the HVC board. HVC’s other directors were Vanwarm’s chairman, Mr Liu Hai (“Liu Hai”), Vanwarm’s general manager, Mr Chen Yang, and Mr Zeng Jimin.

Cracks in Han’s relationship with the defendants

In the meantime, Han’s relationship with the defendants deteriorated. The defendants contended that Han was egotistical and overly protective of Christine. When Patrick chided her at a meeting, Han sent him an email on 1 June 2010, part of which read as follows:

... IF I HAD KNOWN BEFORE I SIGNED THAT YOU HAD AN OUTBURST DIRECTED AT CHRISTINE BUT AIMED AT ME AT THE MEETING WHILE I WAS AT THE LOO I WOULD NOT HAVE SIGNED AND YOU KISS THE PROJECT GOODBYE. I took a long time to decide on joining the team. But after joining I had conscientiously worked at getting this project off the ground ensuring that we end up getting what we all wanted ... money ... without undue risk to the team financially and to our reputation.

... I KNOW DAMN WELL WHAT RISKS AND REWARDS ARE. I WOULD NOT BE WHERE I AM NOW IF I DID NOT KNOW ANYTHING ABOUT THIS. I KNOW WHO SAID THIS AND MY MESSAGE TO HIM IS DON’T TRY TEACH YOUR GRANDMOTHER TO SUCK EGGS.

[upper case in original]

Han asserted that by August 2010, he discovered that Patrick and Richard were planning to deprive him and Christine of their rights under the 1 March document and to remove him from his posts in CTPHZ. Without the knowledge of Patrick and Richard, the emails sent by them to each other and to Robin about sidelining or getting rid of Han were handed over by Robin to Han and Christine.

Han also discovered by August 2010 that Patrick and Richard were trying to sell their CTP shares to a Malaysian company, Bintan Kindenko Corporation Berhad (“BKCB”). This was contrary to the understanding with HQEDA and Vanwarm that the Hangzhou project was to be a China-Singapore project. Between June and August 2010, emails were exchanged between Patrick, Richard and others which showed that Patrick and Richard were hoping by the sale of their CTP shares to BKCB to, in their own words, “get rid of [Han] and [Christine]”. It was also made clear in the said emails that they were “going to be ruthless” when dealing with Han. In the end, the proposed sale did not go through. According to Patrick, the proposed sale of CTP’s shares was not completed because Han and Christine would not be interested in the deal and he was told that “the regulators in the Kuala Lumpur Stock Exchange were unfriendly to Chinese projects”.

Han thought that his interests would be better protected if he was appointed to the CTP board, as had been intended under the 1 March document. He emailed CTP’s company secretary, Mr Ng Chee Tiong (“Ng”), to arrange for his appointment as the deputy chairman and a director of CTP but no action was taken on his request.

On 25 August 2010, Han instructed Ng to ask all CTPHZ directors to disclose their directorships. In an email on 5 September 2010, Patrick informed the other CTPHZ directors that he would address the issues raised by Han with Ng in a “memo to CTP members” at a later date.

On 18 September 2010, Christine and Robin formed a new company, Green Solutions @ ARB Pte Ltd, which changed its name to “International Eco-City Pte Ltd” (“IEC”) on 20 January 2011. The defendants alleged that IEC was formed to hijack the Hangzhou project from CTPHZ, a charge vehemently denied by Han.

CTPHZ board meeting on 29 September 2010

On 24 September 2010, Han arranged for a meeting of the CTPHZ board to be held on 29 September 2010. After receiving the notice of the said meeting, Patrick emailed Richard and Robin on 27 September 2010 to ask them not to attend the said meeting. He stated as follows:

I ask both of you for [your] support not to attend [the meeting] ... if any one of us do, it is the break up of CTP... pls believe me.

Every time we attend a board meeting, we risk making a mistake and [Han] has already ... [planned] to catch us wrong footed.

Robin attended the meeting on 29...