Hong Alvin v Chia Quee Khee

• Court: High Court (Singapore)
• Judge: Quentin Loh J
• Judgment Date: 18 November 2011
• Neutral Citation: [2011] SGHC 249
• Citation: [2011] SGHC 249
• Docket Number: Suit No 423 of 2010 (Registrar’s Appeal No 1 of 2011)
• Hearing Date: 16 March 2011,01 March 2011,04 March 2011
• Published date: 23 November 2011
• Plaintiff Counsel: Lee Eng Beng SC and Lynette Koh (Rajah & Tann LLP)
• Defendant Counsel: Ang Cheng Hock SC and Jason Chan (Allen & Gledhill LLP),Christopher Daniel (Advocatus Law LLP),B Ganeshamoorthy (Cornerstone Law LLP)
• Subject Matter: Civil Procedure

Quentin Loh J: Introduction

This is an appeal by the 1st Defendant, Mr Alvin Hong against a dismissal by the Assistant Registrar (“AR”) of his application in Summons No 4081 of 2010 to strike out the Respondent’s Claim against him.

Background facts

The Respondent, an advocate and solicitor, is an executor and trustee appointed under the will dated 23 January 2007 (“the Will”) of the deceased Mr Peter Fong (“the Testator”). The other three executors and trustees under the Will are the Appellant, Ms Linda Kao (“Linda”, who is the 2nd Defendant in this action), and Ms Evelyn Ho (“Evelyn”, who is the 3rd Defendant in this action). The Appellant is a medical doctor and a nephew of the Testator.

The Testator, who was also known as “Piti Kulkasetr”, appears to have been a successful businessman. He set up Airtrust (Singapore) Ltd (“AT”) in 1972 with dealings in the power, oil and gas industries. He held a majority of its issued and paid up share capital. The Testator’s last will was made on 23 January 2007, (there is a codicil dated 21 March 2008 which is not relevant for the issues raised here). According to the Statement of Claim, he was diagnosed with cancer sometime in 2007 and passed away on 25 April 2008.

Almost 8 years before his death, on 13 May 2000, the Testator incorporated the Fong Foundation Ltd (which is the 4th Defendant in this action) (“the Fong Foundation”), a public company limited by guarantee to promote charitable, educational and cultural causes. These causes included: charitable purposes of all kinds and in all aspects, to provide relief of human suffering, poverty and distress, to improve human living conditions and standards, to give and make financial assistance and other form of contributions towards medical treatment and care, educational facilities, research, community and social welfare services for the benefit of all persons and members of all races including without limitation, the poor, needy, aged handicapped and mentally retarded, persons in need of moral of social rehabilitation or welfare, victims of fire, flood famine, war, pestilence or other calamity and such other persons as the Board of Directors shall deem to be suitable and worthy objects of such relief and assistance; the provision of financial assistance for the upkeep and maintenance of the Aviator Martyr’s Memorial Monument in Nanjing, the People’s Republic of China (“PRC”); the provision of financial assistance for the upkeep and maintenance of the Fong ancestral village at Guan Xi Village, Hang Tang City, Hui An county, Fujian province, PRC; and the promotion, encouragement, fostering, development, improvement and advancement of education, art and culture, health, sports, recreational and other leisure pursuits and activities for the benefit of the public, including but not limited to the establishment of scholarships for and chairs at educational institutions, the patronage sponsorship and participation in exhibitions, social musical theatrical and other events and entertainments and for lectures and other purposes as the Board of Directors may deem suitable. The original directors and members of the Fong Foundation comprised the Testator, the Appellant, Linda and Evelyn. The Testator’s daughter, Ms Carolyn Fong (“Carolyn”), was appointed as a director during the Testator’s lifetime on 25 January 2006 and therefore before he was diagnosed with cancer. In paragraph 10 of the Statement of Claim it is alleged that the Board of Directors (“the Board”) followed all the Testator’s instructions concerning how the Fong Foundation was to be operated and managed during the Testator’s lifetime.

Sometime on or around 3 January 2006, ie, some two and a quarter years before he died, and before he was diagnosed with cancer, the Testator transferred 5,100,000 shares held by him in AT (“the AT Shares”) to the Fong Foundation. These shares constitute 51% of the issued share capital of AT. Although the figures and percentages are not clear, this does not affect the issues in this case. The Testator still held some shares in AT after this transfer. There is a reference to 1,459,410 shares as well as a reference to the Testator holding 65.59% of AT’s issued share capital before the AT Shares were transferred to Fong Foundation.

Linda is the incumbent Managing Director of AT, whilst AT’s other directors are Carolyn, Anthony Craig Stiefel (“Stiefel”), Evelyn, Denis Atkinson (“Atkinson”) and the Respondent. Evelyn was the Testator’s personal assistant having started as a clerk in AT sometime around June 1974.

During the course of submissions, I was informed that a tussle for control has ensued amongst the directors of AT. Linda, Evelyn and the Respondent are on one side while Carolyn, the Appellant, Atkinson and Stiefel are on the other. I was told that the following proceedings are extant: (a) Originating Summons No 505 of 2010 (“OS 505”) taken out by Carolyn on 24 May 2010, seeking leave under section 216A of the Companies Act (Cap 50, 2006 Rev Ed) to commence a derivative action on behalf of AT against Linda for alleged breach of fiduciary duties. Prakash J handed down a judgment on 11 April 2011 granting leave for Carolyn to do so on some, but not all of her alleged complaints. Appeals from that decision were lodged. On 15 September 2011, the Court of Appeal dismissed the appeals against the decision of Prakash J, save for allowing one further complaint of Carolyn’s with regard to a transaction relating to Wrangwell Ltd; this was in addition to those allowed earlier by Prakash J for KSCC International Pte Ltd, Ribands Pte Ltd and Mega-Bond Management Limited. (b) On 1 June 2010, a notice was given to shareholders of AT for the convening of an Extraordinary General Meeting (“EGM”) to remove Linda as AT’s Managing Director and to appoint the Appellant as a director. Linda commenced Suit No 428 of 2010 on 11 June 2010 and obtained an interim injunction to prevent the holding of the EGM pending the resolution of OS 505. (c) On 9 June 2010, the Respondent commenced the present suit, Suit No 423 of 2010 against the Appellant and the other defendants; (d) On 13 July 2010, Carolyn launched Suit No 510 of 2010, claiming oppression and naming Linda, Evelyn, Atkinson and the Respondent as defendants.

The dispute

In his Statement of Claim, the Respondent alleged that the AT Shares were transferred to the Fong Foundation on trust for the specific purpose of carrying the Testator’s intention that the Fong Foundation would control, operate and manage the business of AT and its subsidiary and associate companies after his death, through the directors of the Fong Foundation as appointed by the Testator. The Respondent pleads that it was the intention of the Testator that the Appellant would cease to be a director of the Fong Foundation after the Testator’s death and that the Respondent would replace the Appellant as director in the Fong Foundation. The Respondent says this was told to the Respondent on a number of occasions by the Testator. The material terms of the alleged trust thus required the Appellant to step down as a director of the Fong Foundation upon the Testator’s death and for the Respondent to be appointed in his stead. According to the Respondent, these terms were set out in Clauses 3 and 4 of the Will. Clauses 3 and 4, which are set out in paragraph 19 of the Statement of Claim, read as follows: 3.1 I give to the Fong Foundation Limited (“the Foundation”), a company incorporated by me in Singapore, fifty-one per cent (51%) of my shares (hereinafter called “My Shares”) in Airtrust Singapore Pte Ltd, a company incorporated in Singapore (“the Company”) and fifty-one percent (51%) of the shares held by the Company in all its subsidiaries and associated companies, wherever incorporated and/or situated (hereinafter tougher with the Company called “the Group”) (and my interests in the business of the Group represented by my shares are hereinafter called “my business interests”) to be held by them upon the following trusts and with the following powers.

The reference to “fifty-one per cent (51%) of my Shares” ... in Airtrust Singapore Pte Ltd” above means 51% of the 100% shares in the Company and not 51% of my 65.59% shares held by me in the Company, and likewise 51% of the Company’s shares in its subsidiaries and associated companies.

[...]

3.2 It is my wish that My Shares given to the Foundation shall not ever be diluted in the future, and the Foundation will always, through the ownership of my Shares, retain control of the Company by owning the majority of the shares in the Company.

[...]

4 I set up The Foundation for the following purposes, and it is my wish that these purposes be respected and followed after my lifetime – a) [...] b) to control, operate and manage the business of Airtrust and the Group. For this purpose, it is my wish that the Board of Directors of the Foundation, which presently comprises myself, Linda, Evelyn and Alvin, shall after my death, comprise a core of directors made up of the following – i. Linda ii. Evelyn iii. my daughter Carolyn Fong Wai Lyn iv. Chia and v. my son Fong Wei Heng, after he has attained the age of twenty-one (21) years.”

The Respondent’s pleaded reliefs as against the Appellant are: (a) an order that the Appellant, (as well as the Linda and Evelyn), carry out their duties as executors and/or trustees in accordance with the Testator’s wishes as expressed in Clauses 3 and 4 of the Will (this order in effect sought the Court’s endorsement that Clauses 3 and 4 of the Will were breached and the Court should order the executors and trustees to carry out its terms); and (b) an order that the Appellant shall be removed as and cease to be a director of the Fong Foundation forthwith. (c) a declaration that the Fong Foundation had breached the trust terms...