Golden Village Multiplex Pte Ltd v Phoon Chiong Kit

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 28 February 2006
• Neutral Citation: [2006] SGHC 38
• Date: 28 February 2006
• Subject Matter: Section 157 Companies Act (Cap 50, 1994 Rev Ed),Defendant allegedly acting to detriment of plaintiff by exploiting position as director of plaintiff to benefit other company at plaintiff's detriment,Breach of fiduciary duties,Directors,Companies,Defendant director of two companies engaged in litigation against each other,Duties,Whether defendant breaching director's and fiduciary duties to plaintiff
• Docket Number: Suit No 557 of 2005
• Published date: 03 March 2006
• Defendant Counsel: Chan Kia Pheng and Shaun Koh (KhattarWong)
• Court: High Court (Singapore)
• Plaintiff Counsel: Philip Ling and Ambrose Chia Heng Guan (Wong Tan and Molly Lim LLC)

28 February 2006

Lai Siu Chiu J:

The background

1 The plaintiff, Golden Village Multiplex Pte Ltd, is a Singapore company which owns and operates cinema complexes under the “Golden Village” name. The defendant, Phoon Chiong Kit, is a director of the plaintiff. On 8 September 2005, the defendant applied to court by way of Summons in Chambers No 4593 of 2005 (“the defendant’s application”) for the following orders against the plaintiff:

(1) a declaration that the warrant to act signed by Mr Kirk Senior purportedly for and on behalf of the Plaintiff to authorise Wong Tan & Molly Lim LLC (“WTML”) to act for the Plaintiff in this action herein is invalid as Mr Kirk Senior was not authorised to sign the said warrant to act, and that consequently, WTML had not been validly and/or properly authorised to represent the Plaintiff in this action herein;

(2) accordingly, an order that this action herein be struck out;

(3) costs; ...

2 The plaintiff on its part applied by way of Summons in Chambers No 3983 of 2005 (“the plaintiff’s application”) for the following orders:

1. that the Defendant, whether by himself or by any of his agents or servants or otherwise howsoever be restrained until the conclusion and disposal of the trial of this action or until further Order from:-

a. acting in breach of his fiduciary duties and other duties as director of the Plaintiff;

b. acting against the interests or to the detriment and/or prejudice of the plaintiff, including in but not limited to all matters arising in or relating to Suit No. 413 of 2005/E [(“Suit 413”)]; and

c. exploiting or otherwise using any confidential information belonging to the Plaintiff or any part thereof against the interests or to the detriment and/or prejudice of the Plaintiff.

2. in furtherance of, but without limiting the generality of paragraph 1 above, that the Defendant, whether by himself or by any of his agents or servants or howsoever otherwise:-

a. take all necessary steps to withdraw the affidavit affirmed and filed by the Defendant on behalf of Golden Harvest Films Distribution (Pte) Ltd (“GHFD”) on 5 July 2005 and any further or other affidavits filed by the Defendant on behalf of GHFD in support of GHFD’s application in Summons in Chambers no. 3346/2005/N [(“SIC 3346”)] in [Suit 413]; and

b. be restrained until the conclusion and disposal of the trial of this action or until further Order from affirming and/or filing any further or other affidavits on behalf of GHFD in [Suit 413], including but not limited to any further or other affidavits in support of GHFD’s application in [SIC 3346] in [Suit 413].

…

3 Both applications came up for hearing before me on the same day. I made the following orders on the defendant’s application:

(a) No order on prayer (1) but the plaintiff was to obtain a resolution from its board of directors no later than 5 December 2005 ratifying the warrant to act signed by Mr Kirk Senior (“Senior”) dated 5 August 2005 to proceed with this legal action against the defendant.

(b) For the purposes of the board resolution, the defendant, in view of his directorship of both the plaintiff and GHFD, was to abstain from voting as one of the nominee directors of GHFD.

(c) No order on prayer (2) pending the board resolution in order (a) above. However, the action would be struck out if the resolution was not obtained by 5 December 2005.

(d) Costs reserved.

(e) Liberty to apply on order (a) above.

4 I then made the following orders on the plaintiff’s application:

(a) Pending the resolution of the board of directors of the plaintiff in the defendant’s application, the defendant was to give a written undertaking not to act against the interests of the plaintiff as its director and not to participate in any manner in Suit 413 pending the outcome of SIC 3346 in that suit.

(b) The defendant’s application was adjourned sine die with liberty to restore.

(c) Costs reserved.

5 The defendant has appealed in Civil Appeal Nos 119 and 120 of 2005 respectively against my decisions on the plaintiff’s application and on the defendant’s application.

The facts

6 Before I set out the facts relating to this suit, I need first to refer to Suit 413 (also referred to as “the earlier suit”) in which the plaintiff is suing GHFD and Golden Harvest Entertainment (Holdings) Limited (“GHE”) as the first and second defendants respectively. The plaintiff’s action against GHFD in the earlier suit was for breach of an agreement for a lease that had been assigned to the plaintiff.

7 The plaintiff’s application had referred to the earlier suit as well as SIC 3346. In SIC 3346 filed by GHFD, the defendant filed an affidavit as GHFD’s director and prayed for reliefs similar to the prayers in the defendant’s application, viz that the warrant to act (signed by the plaintiff’s managing director, Kenneth Tan, authorising WTML to act for the plaintiff in the earlier suit) was invalid and that accordingly that action should be struck out.

8 SIC 3346 was heard by an assistant registrar on 2 December 2005 who made the following orders:

(a) The plaintiff was granted a final extension of time to 27 December 2005 to obtain a resolution of the board of directors of the plaintiff to ratify the commencement of the earlier action.

(b) The earlier action was stayed pending compliance with order (a);

(c) GHFD was at liberty to restore the hearing of SIC 3346 before Assistant Registrar Dorcas Quek (“AR Quek”) for a final order for the earlier action to be struck out if the plaintiff failed to obtain the board resolution in order (a).

9 On 5 January 2006, Suit 413 was struck out by AR Quek. The plaintiff appealed by way of a registrar’s appeal to a judge in chambers against her orders. Its appeal was allowed on 6 February 2006 when Andrew Ang J reversed the orders made by AR Quek, restored the suit and dismissed SIC 3346.

10 I turn now to the present case. In these proceedings, the plaintiff is suing the defendant for breach of his director’s and fiduciary duties arising out of his conduct in the earlier suit. The affidavit in support of the plaintiff’s application was filed by Senior. Senior set out the factual matrix which gave rise to the dispute here.

11 A shareholders’ agreement dated 24 February 2000 (“the Shareholders’ Agreement”) was signed between the plaintiff; Village Cinemas Australia Pty Ltd (“Village”), an Australian company; a Hong Kong company called Golden Screen Limited (“Golden Harvest”) and another Hong Kong company known as Dartina Development Limited (“Dartina”). Dartina owns all the issued and paid-up shares of the plaintiff through its wholly-owned subsidiary, Golden Village Holdings Pte Ltd (“GVH”). Village and Golden Harvest agreed to participate in a joint venture (“the JV”), inter alia, to acquire, hold, construct, develop, lease and operate cinema complexes in Singapore using the plaintiff as the JV vehicle.

12 The Shareholders’ Agreement provided that Village and Golden Harvest would each have the right to nominate three directors for appointment to the board of directors of the plaintiff. Accordingly, Senior, Graham William Burke and Peter Edwin Foo were nominated and appointed by Village whilst Raymond Chow, Roberta Chin Chow and the defendant were the nominees and appointees of Golden Harvest. The defendant is also a director of GHFD (together with Raymond Chow and Roberta Chin Chow) and of GHE which is a Bermudan company. Both GHFD and GHE are part of the Golden Harvest group of companies headed by Raymond Chow.

13 IMAX Corporation (“IMAX”), a Canadian company, is in the business of leasing large-format projection systems and providing related services. By a letter dated 30 September 2002 (“the Letter of Intent”) from IMAX and accepted by GHFD and Village Roadshow (Singapore) Pte Ltd (“VRS”), a subsidiary of Village, it was agreed that GHFD and VRS would lease from IMAX a large-format projection equipment and technology (collectively “the IMAX system”) for installation in an IMAX theatre (“the IMAX theatre”) to be located in the multiplex cinema complex owned and operated by the plaintiff at Great World City.

14 The Letter of Intent was followed by an agreement dated 23 December 2002 (“the Agreement for Lease”) wherein IMAX agreed to lease to GHFD and VRS the IMAX system for use in the IMAX theatre at Great World City for 20 years commencing 23 December 2002.

15 In consideration of the Agreement for Lease, GVH and GHE executed a guarantee dated 23 December 2002. IMAX then delivered the IMAX system to, and it was installed at, the IMAX theatre and has, since 5 January 2005, been operated by the plaintiff.

16 With the express consent of IMAX, GVH and GHE, both GHFD and VRS assigned all their respective rights and obligations under the Agreement for Lease to the plaintiff by an assignment agreement dated 17 October 2003 (“the Assignment”).

17 By a subsequent agreement dated 11 February 2004 (“the Transfer Agreement”) made between Village, VRS, GHFD, GHE and GVH, the parties agreed that the plaintiff’s rights and obligations would be transferred to GHFD (or to a company within the Golden Harvest group) while GHE would accept a transfer of the obligations under the guarantee dated 23 December 2002.

18 Under cl 1 of the Transfer Agreement, upon the happening of a specified event (viz the number of paid admissions to the IMAX theatre falling below 212,000 in any period of 12 consecutive months), the plaintiff was entitled (at Village’s request) to call upon GHFD, by a notice of transfer, to accept a transfer of the plaintiff’s rights and obligations under the Letter of Intent and the Agreement for Lease. Further, on the date of transfer, GHFD would pay the plaintiff a transfer sum equivalent to 50% of the amounts paid to IMAX by the plaintiff under the Letter of Intent or the Agreement for Lease.

19 The plaintiff took the view that the event under cl 1 of the Transfer Agreement had taken place. It therefore issued the transfer notice to GHFD on...