Dynasty Line Limited (in liquidation) v Sukamto Sia and another and another appeal

CourtCourt of Appeal (Singapore)
JudgeSundaresh Menon CJ
Judgment Date29 April 2014
Neutral Citation[2014] SGCA 21
Citation[2014] SGCA 21
Defendant CounselChan Leng Sun SC, Ang Hsueh Ling Celeste, Jennifer Fong Lee Cheng and Michelle Virgiany (Wong & Leow LLC),Alvin Yeo SC, Tan Whei Mien Joy, Ong Xi-Lin Adeline and Yin Juon Qiang (WongPartnership LLP),Siraj Omar and Lee Wei Alexander (Premier Law LLC)
Published date02 May 2014
Plaintiff CounselPhilip Jeyaretnam SC, Koh Kia Jeng, Patrick Wong and Crystal Goh (Rodyk & Davidson LLP, instructed), Siraj Omar and Lee Wei Alexander (Premier Law LLC),Samuel Chacko, Soh Ean Leng Angeline and Yeo Teng Yung Christopher (Legis Point LLC)
Hearing Date14 January 2014
Docket NumberCivil Appeal No 103 of 2013 and Civil Appeal No 105 of 2013
Date29 April 2014
Subject MatterTort,Duties,Companies,Equity and limitation of actions,Directors,Laches,Conspiracy,Defences,Equity,Limitation of Actions,Acquiescence
Sundaresh Menon CJ (delivering the judgment of the court): Introduction

Dynasty Line Limited (“Dynasty”) was the personal investment vehicle of Sukamto Sia (“Sia”). It purchased a significant quantity of shares in a Hong Kong-listed company from several vendors, including Low Tuck Kwong (“Low”). The shares, which were Dynasty’s only asset, were transferred to Dynasty in full even though there was a substantial sum yet to be paid by Dynasty for the shares. Dynasty then pledged all the shares to various banks as security for loans to Sia and his associates, who subsequently defaulted on the loans. As a result, the shares were sold by the banks to satisfy the debts owed to them.

Some years later, Low successfully applied for Dynasty to be wound up in the British Virgin Islands (“BVI”). The liquidators of Dynasty then commenced proceedings against Sia and his co-director, Lee Howe Yong (“Lee”), for breaches of fiduciary duties under BVI law as directors of Dynasty in Suit No 256 of 2010. This claim was dismissed by the High Court judge (“the Judge”) who heard this matter and that is the subject matter of these appeals.

The main issue presented in these appeals is whether Sia and Lee had breached their fiduciary duties in causing Dynasty to pledge the shares and had thereby failed to act in the best interests of Dynasty’s creditors at a time when Dynasty’s solvency was or appeared to be in doubt.

Facts Background to the dispute

Dynasty was a company incorporated under the laws of the British Virgin Islands (“BVI”). Sia was its sole shareholder. Although Lee did not hold any shares in Dynasty, Sia had promised him 20% of the profits of Dynasty.

Under seven separate sale and purchase agreements dated 5 February 1996, Dynasty acquired 29,537,367 shares (“the Shares”) in China Development Corporation Limited (“CDC”) from Low and the following vendors: Johnny Tsao Yue Hwa; Yap Han Hoe; Swanny Sri Sujanty Setyono; Lau Kang Thow; Evelyn Ong Suat Tay; and Low Cheng Lum (collectively, “the Vendors”).

The Vendors transferred their Shares to Dynasty before the intended completion date on 2 May 1996. However, only HK$64,459,317.16 or approximately 28% of the Purchase Price was ultimately paid.

The subsequent pledges

Between April 1996 and November 1997, Dynasty pledged the Shares to various financial institutions as security for loan facilities (“the Security Transactions”) granted to Sia, Sia’s business associate Franklin Syah, and a company owned by Sia and Lee known as Beswil Investment Pte Ltd (“Beswil” and collectively, “the Borrowers”). Details of the Security Transactions are provided in the table below:

S/N Date Number of shares Name of financial institution Recipient of loan facilities
1 23 April 1996 12,032,302 Commerzbank (South East Asia) Limited (“Commerzbank”) Sia
2 6 November 1996 5,600,000 Société Générale (Labuan branch) Beswil
3 29 August 1997 48,822,700 KG Investments Asia Limited Franklin Syah
4 3 November 1997 10,702,625 Creditanstalt Bankverein Sia
We note in passing that there was a stock split of CDC shares on 15 May 1997 in the ratio of 5:1. This stock split affected the number of shares pledged under the third and fourth transactions in the table above.

The Borrowers defaulted on the loans. The financial institutions listed in the table above then sold the Shares and applied the proceeds to satisfy the debts they were owed.

The winding up of Dynasty and other proceedings

On 10 June 1999, the Vendors commenced proceedings in Hong Kong against Dynasty in HCA 9505 of 1999 (“HCA 9505”) for the unpaid balance of the Purchase Price. On 6 April 2001, the Vendors obtained judgment in the sum of HK$166,042,936.79.

More than six years passed before Lau Wu Kwai King Lauren (“Lauren”) and Kennic Lai Hang Hui were appointed as joint provisional liquidators of Dynasty (“the Provisional Liquidators”) on 23 August 2007. Soon after, on 27 September 2007, the Provisional Liquidators commenced proceedings in Hong Kong on behalf of Dynasty against Sia and Lee in HCA 2057 of 2007 (“HCA 2057”) for, among other things, breaches of fiduciary duties in relation to their dealing with the Shares. The Hong Kong Court of Appeal allowed Sia’s application to stay Dynasty’s action on the ground that Hong Kong was not the appropriate forum.

Low then commenced liquidation proceedings against Dynasty in the BVI and on 22 December 2009, Dynasty was wound up by the BVI High Court. On the same day, William Tacon (“Tacon”) and Lauren were appointed as joint liquidators of Dynasty (“the Liquidators”). The Liquidators then brought the present suit in Suit No 256 of 2010 against Sia and Lee for breaches of fiduciary duties under BVI law as directors of Dynasty (“the Original Claim”) while Sia responded by filing a counterclaim against Low for a breach of a settlement agreement and against Dynasty, Low, Tacon and Lauren for conspiracy to injure him (“the Counterclaim”), also under BVI law.

The decision below

The Judge dismissed the Original Claim and the Counterclaim. She held that: Dynasty’s claim against Sia and Lee was not time-barred. The exception to the six-year time bar in s 22 of the Limitation Act (Cap 163, 1996 Rev Ed) (“Limitation Act”) applied because Dynasty had alleged a fraudulent breach of trust.1 Dynasty’s claim was not barred by laches. Although there was substantial delay on the part of Low, it would not have been practically unjust to have allowed a remedy if Dynasty’s claims had been made out.2 The defence of acquiescence did not apply because even if Low knew that Sia would pledge the Shares, there was no evidence to suggest that Low had known that Dynasty was insolvent or on the verge of insolvency at the time he transferred the Shares.3 Sia and Lee did not breach their fiduciary duties as directors of Dynasty. Payment for the Shares did not follow the payment schedule because Low and Sia had entered into a collateral agreement, which afforded flexibility in the payment of the Purchase Price. Accordingly, there was no debt due and payable at the time the Security Transactions were entered into.4 Given that Dynasty was neither insolvent nor on the verge of being insolvent at the time of the Security Transactions, Sia and Lee owed their primary duties to the shareholders and not to the creditors of Dynasty.5 The pledging of the Shares was not improper and was done in the interests of Dynasty.6 Low, Lauren and Tacon did not conspire to cause loss and damage to Sia through the pursuit of stale and baseless claims in Singapore. The Liquidator’s decision to commence the Original Claim was based on independent advice.7 There was insufficient evidence to prove that Low had actually given Lauren or Tacon instructions regarding the commencement and conduct of the Original Claim.8

Dissatisfied, Sia filed Civil Appeal No 103 of 2013 against the Judge’s dismissal of the Counterclaim while Dynasty brought a cross appeal, namely Civil Appeal No 105 of 2013, against the Judge’s dismissal of the Original Claim.


From both appeals, three issues arise for our decision: Did Sia and Lee breach their fiduciary duties as directors of Dynasty? Are Dynasty’s claims time-barred or defeated by laches or acquiescence? Did Low, Lauren and Tacon conspire with the predominant purpose of causing injury to Sia through the pursuit of stale and baseless claims?

Did Sia and Lee breach their fiduciary duties as directors of Dynasty? Was there a collateral agreement?

We have noted that the Judge below found that Low and Sia had entered into a collateral agreement for flexibility in the payment of the Purchase Price. Before we analyse the alleged collateral agreement, we observe that much the same allegation had in fact been raised previously in Hong Kong as a defence in HCA 9505. In those proceedings, it had been alleged that there was an oral agreement between Low and Sia that the balance of the purchase price would be paid to Low (instead of the other vendors) and that payment could be made by either Dynasty or Sia.9 However, this defence was abandoned after Low had given his evidence on the stand10 and the paragraphs referring to the collateral agreement in the amended defence were then deleted in the re-amended defence.11 Having abandoned the argument that there had been a collateral agreement in earlier proceedings, we think that Sia’s attempt to re-litigate it in the present proceedings stood to be regarded as an abuse of process. However, this argument was not fully pressed by the respondents and so not fully canvassed in the present appeal. We therefore say no more about it.

In the present proceedings, Sia’s pleaded collateral agreement was materially similar to that pleaded in HCA 9505 although it contained an additional term, namely, that part of the purchase price to be received by Low would be applied towards setting off outstanding amounts that Low owed Sia at the time. It was also pleaded in Sia’s defence that “the intention of the collateral contract was to allow some flexibility in the repayment terms”. We note here that the terms of the pleaded collateral agreement were set out in the pleadings and they made no reference to the timing of the payments.

Notwithstanding the lack of any reference in the terms of the alleged collateral agreement to the timing of the payments that fell due under the sale and purchase agreements, the Judge found that there was a collateral agreement which “provided for flexibility in the payment of the Purchase Price”12. According to the Judge, this allowed Sia to pay Low for the Shares on an ad hoc basis. It was not clear to us just what was meant by this and at the hearing before us, we pressed counsel for Sia, Mr Samuel Chacko, to clarify the precise terms of the collateral...

To continue reading

Request your trial
27 cases
  • Kim Seng Orchid Pte Ltd v Lim Kah Hin (trading as Yik Zhuan Orchid Garden)
    • Singapore
    • High Court (Singapore)
    • 11 January 2017
    ...court in eSys Technologies Pte Ltd v nTan Corporate Advisory Pte Ltd [2013] 2 SLR 1200 at [37]–[38] and Dynasty Line Ltd v Sukamto Sia [2014] 3 SLR 277 at [58]) as follows: Laches is a doctrine of equity. It is properly invoked where essentially there has been a substantial lapse of time co......
  • Esben Finance Ltd and others v Wong Hou-Lianq Neil
    • Singapore
    • International Commercial Court (Singapore)
    • 14 December 2020
    ...are time-barred is a question of Singapore law (see Dynasty Line Ltd (in liquidation) v Sukamto Sia and another and another appeal [2014] 3 SLR 277 at [51]) that will turn on the meaning and effect of s 29(1) of the Limitation Act. Here, it was submitted on behalf of the plaintiffs that the......
  • Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd
    • Singapore
    • High Court (Singapore)
    • 12 February 2016
    ...proof that the requirements of a binding contract have been met (Dynasty Line Ltd (in liquidation) v Sukamto Sia and another appeal [2014] 3 SLR 277 (“Dynasty Line”) at [18]). Whether a collateral contract was precluded by Transaction Documents The foremost attack advanced by PNGSDP is that......
  • Lim Oon Kuin v Ocean Tankers (Pte) Ltd
    • Singapore
    • Court of Appeal (Singapore)
    • 28 October 2021
    ...Pte Ltd [2021] 4 SLR 883 (refd) Dextra Partners Pte Ltd v Lavrentiadis, Lavrentios [2021] SGCA 24 (refd) Dynasty Line Ltd v Sukamto Sia [2014] 3 SLR 277 (refd) Goh Chok Tong v Chee Soon Juan [2003] 3 SLR(R) 32; [2003] 3 SLR 32 (refd) Koh Siak Poo v Perkayuan OKS Sdn Bhd [1989] 3 MLJ 164 (re......
  • Request a trial to view additional results
4 books & journal articles
  • Contract formation
    • United Kingdom
    • Construction Law. Volume I - Third Edition
    • 13 April 2020
    ...almost invariably be no doubt as to the parties’ intention to enter into the collateral agreement. 457 Dynasty Line Ltd v Sukamto Sia [2014] SGCa 21 at [18]. See also Crown Melbourne Ltd v Cosmopolitan Hotels (Vic) Pty Ltd [2016] HCa 26 at [22], per French CJ, Kiefel and Bell JJ. 458 See pa......
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2014, December 2014
    • 1 December 2014
    ...a successful IPO. Hence, the conspiracy claim was also dismissed. 25.30 In the Court of Appeal decision of Dynasty Line Ltd v Sukamto Sia[2014] 3 SLR 277, the claims in lawful means conspiracy for pursuing legal actions failed. The High Court decision of Dynasty Line Ltd v Sia Sukamto[2013]......
  • Equity and Trusts
    • Singapore
    • Singapore Academy of Law Annual Review No. 2014, December 2014
    • 1 December 2014
    ...company's interests. 21 The High Court's decision in Dynasty Line Ltd v Sia Sukamto[2013] 4 SLR 253 was reviewed last year. On appeal ([2014] 3 SLR 277), the Chief Justice confirmed the High Court's holding on the issue of limitation period and a breach of fiduciary duty in the context of c......
  • Case Note
    • Singapore
    • Singapore Academy of Law Journal No. 2016, December 2016
    • 1 December 2016
    ...at [46]. See eSys Technologies Pte Ltd v nTan Corporate Advisory Pte Ltd[2013] 2 SLR 1200 at [37]–[38] and Dynasty Line Ltd v Sukamto Sia[2014] 3 SLR 277 at [58]. 23 Chng Weng Wah v Goh Bak Heng [2016] 2 SLR 464 at [44]. 24 [2014] 3 SLR 1048. 25 Chng Weng Wah v Goh Bak Heng [2016] 2 SLR 464......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT