Chong Choon Chai and Another v Tan Gee Cheng and Another

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 11 August 1993
• Neutral Citation: [1993] SGCA 58
• Citation: [1993] SGCA 58
• Defendant Counsel: Jose Charles (Ong Teck Ghee & Pnrs)
• Published date: 19 September 2003
• Plaintiff Counsel: Perumal Athitham (Perumal Jeremiah & Pnrs)
• Date: 11 August 1993
• Docket Number: Civil Appeal No 167 of 1992
• Court: Court of Appeal (Singapore)
• Subject Matter: s 254(1)(i) Companies Act (Cap 50, 1990 Ed),Whether unfair or unjust conduct similar to and capable of amounting to oppression,Just and equitable,Application to strike out,Winding-up petition under s 254 of Companies Act,s 254(1)(f) Companies Act (Cap 50, 1990 Ed),O 18 r 19(1)(b) & O 58 r 5 Rules of the Supreme Court,Whether relief for oppression should be brought by way of originating petition,Interpretation,Companies,Winding up,Striking out,Civil Procedure,Whether scandalous, vexatious and frivolous or abuse of process of court,Lack of probity of directors and majority shareholders,Directors and majority shareholders acting in their own interests and in unjust and unfair manner,Whether conduct suffices for winding-up on just and equitable grounds,Oppression

This was an interlocutory appeal from the decision of Lai Siu Chiu JC in which, on an application to strike out the Companies Winding Up Petition No 178 of 1992, she ordered that leave be given to the petitioners to amend the heading of the proceedings to that of an originating petition. At the conclusion of the hearing, we allowed the appeal, set aside the order of the learned judicial commissioner and dismissed the application. We now give our reasons.

The appellants are two shareholders and directors of a company, Kim Heng Glass (Pte) Ltd (`the company`) each holding 39,300 shares. The other shareholders and directors of the company are Koh Kim Seng (`Koh`) and Tan Gee Cheng (`Tan`), each holding 81,300 shares (both of whom we shall refer to jointly as `the majority shareholders`). On 3 August 1992, the appellants filed a petition for the winding-up of the company under s 254 of the Companies Act (Cap 50, 1990 Ed). In the petition, the appellants raised various matters against the majority shareholders; but essentially there were three complaints against them. First, the appellants alleged that the majority shareholders had invited them (the appellants) to join the company on the understanding that they would be entitled to `equal participation in the management and conduct of the affairs of the company` and they became shareholders and directors of the company on 1 September 1991. Towards the end of March 1992, differences arose between the appellants and the majority shareholders as to the mode of conducting the business of the company which resulted in a deadlock between them, and subsequently the appellants were excluded from equal participation in the affairs of the company. Secondly, they alleged that there had been malpractices on the part of the majority shareholders as directors of the company and also acts of discrimination against the appellants including (i) payment of large sums of director`s fees to the majority shareholders themselves while denying similar payment to the appellants, and (ii) revocation of an allotment of 12,000 shares validly made to the appellants. Finally, the appellants alleged that in an attempt to resolve the deadlock they negotiated with the majority shareholders to sell their shares to the latter but were unsuccessful, and that it was not possible to come to an agreement on the sale of their shares at a fair value for the reason that the majority shareholders were in the habit of under-declaring the company`s stocks and were in control of the stocks. The petition ended with the following para:

(13) In the circumstances, it is submitted that the affairs of the company are being conducted in a manner oppressive to your petitioners and it is just and equitable that the company should be wound up.

The appellants then sought, inter alia, the following orders:

(i) a declaration that the 12,000 shares had been validly issued to the appellants on 12 September 1991;

(ii) the company be wound up by court under the Companies Act.

Soon after the filing of the petition and service thereof, an application by way of a Summons-in-Chambers No 5743 of 1992 was taken out for an order that the petition be struck out under O 18 r 19(1)(b) and the inherent jurisdiction of the court on the ground that it is scandalous, vexatious and frivolous or otherwise an abuse of the process of the court or alternatively, that the petition be struck out on the ground that under O 58 r 5 relief in cases of oppression should be brought by way of an originating petition and that there are suitable alternative remedies available and the appellants had acted unreasonably. It is not clear from the summons whether the application was taken out by the company or by the majority shareholders. At the hearing below, the application was treated as having been taken out by the majority shareholders and in this appeal they were named as the respondents. However, no issue as to the appropriate and proper party was taken or raised below and before us. The summons was heard before Lai Siu Chiu JC. She declined to strike out the petition but gave leave to the appellants to amend the heading in the proceedings to that of an originating petition and adjourned the hearing of the application to a later date; she also ordered the costs of the day and of the amendments to be paid by the appellants. Her reason for giving leave to amend the proceedings was apparently based on the view she took of the decision of the Court of Appeal in Kuah Kim Kok v Chong Lee Leong Seng Co (Pte) Ltd.

With respect, we do not think that Kuah Kim Kok , is on all fours with the instant case. In that case, the application for the reliefs sought was made by way of a petition under s 216 of the Companies Act but the application was made by way of a winding-up petition, and the question was whether the proceedings under s 216 could be so commenced in that form. This court held that a petition for reliefs under s 216 should be commenced by way of an originating petition under O 88 r 5(h) and not by way of a winding-up petition,...