Innovative Corp Pte Ltd v Ow Chun Ming and another

CourtHigh Court (Singapore)
JudgeAng Cheng Hock JC
Judgment Date13 May 2019
Neutral Citation[2019] SGHC 121
Citation[2019] SGHC 121
Date13 May 2019
Subject MatterDuties,Trusts,Directors,Knowing receipt,Companies,Breach of fiduciary duties,Dishonest assistance,Accessory liability
Plaintiff CounselRaman Gopalan (Withers KhattarWong LLP) and Chew Teck Lim (Chew Teck Lim)
Defendant CounselLim Kheng Yan Molly SC, Wong Si Hui Eunice and Lim Haan Hui (Wong Tan & Molly Lim LLC)
Docket NumberSuit No 410 of 2016
Published date10 April 2020
Hearing Date23 October 2018,25 October 2018,18 October 2018,22 October 2018,17 October 2018,01 February 2019,16 October 2018,19 October 2018,24 October 2018
Ang Cheng Hock JC: Introduction

This case concerns the alleged diversion of a valuable development project from a company to its former director. Having acquired knowledge of the project in his capacity as a company representative, the director then successfully tendered for the project and managed to acquire it for himself. At the time he did this, it is said that he had already resigned as a director and also that the company had no chance securing the project itself. The director set up a corporate vehicle to execute the project. His principal, the aggrieved company, has now brought a claim against him and his corporate vehicle. This raises issues as to the duties of directors in respect of corporate opportunities as well as accessory liability of the corporate vehicle in relation to the alleged breach of fiduciary duties.

Background The parties

The plaintiff, Innovative Corporation Pte Ltd, was incorporated in Singapore on 16 August 2004.1 From its inception, Ms Annie Chen Liping (“Ms Chen”), was a director, major shareholder and served as the company’s major decision-maker.2 Ms Chen emigrated from the People’s Republic of China to Singapore in 1995 and became a Singapore citizen. Prior to her move to Singapore, she worked with a state-sponsored building construction company in Tianjin, China, known as Tianjin Heping Construction Group Co Ltd, (“THC”), on several construction projects in China. THC was established in 1952 and its total assets are in the region of S$85 million.3 It is also registered in Singapore as a foreign company.

Ms Chen maintained her association with THC after her move to Singapore. On 13 June 2001, she incorporated China Heping Construction (Far East) Pte Ltd (“CHC”) as THC’s Singapore subsidiary and assumed the position of its managing director.4 As already mentioned, the plaintiff was later incorporated. Initially, the plaintiff’s business was to organise events to introduce investors from China to potential business opportunities and investments in Singapore. The focus of the plaintiff’s business later shifted to property development and building construction, which is similar to that of CHC’s.5

The first defendant, Mr Ow Chun Ming, also known as Mr Victor Ow, is a real estate developer with 30 years of experience in the industry. He is the Chairman and CEO of the Clydesbuilt Group of companies, including the second defendant, which was incorporated on 17 May 2010 for the purpose of developing the project which is the subject matter of this action.6 The first defendant also became a director and the 50% shareholder of the plaintiff in circumstances which will be explained in the course of this judgment. He has since ceased to be a shareholder and a director, although the date of when he stopped being a director of the plaintiff is a matter of some dispute in this case.

The Project

The Fong Yun Thai Association (“FYTA”) is an umbrella organisation made up of three Hakka clan associations – Foong Shoon Fui Kuan Association, Char Yong (Dabu) Association and Eng Teng Association.7 FYTA is managed by its board of directors comprising representatives from all three of these associations. At the material time, FYTA’s principal asset was the property at 33 Holland Link in Singapore. This land was registered in the names of four trustees, who held it for FYTA’s benefit.8

In late 2007, FYTA decided to embark on a project to build a residential housing development on the land which would comprise of 82 units of semi-detached houses and a Hakka Memorial Museum and Cultural Centre (“the Project”).9 FYTA’s construction committee was overseeing the Project. Mr Liu Cho Chit (“Mr Liu”) was the chairman of the construction committee.10 Mr Liu is a retired property developer with business interests in Singapore and elsewhere. He has been involved with FYTA for more than 20 years. He is a former president of FYTA and was also one of the four trustees in which title to the land was registered. At the material time, he was an honorary president of Foong Shoon Fui Kuan Association.

I should just mention here that parties have also sometimes referred to the construction committee as the “Project committee”. After Mr Liu resigned from the construction committee and it was then dissolved in February 2010, the new committee formed by FYTA to oversee the Project was consistently referred to by parties as the “Project committee”.

FYTA appointed ATI Architects (“ATI”) for the Project. ATI prepared a proposal for the Project which was submitted to the authorities for planning approval. On 6 March 2008, the Urban Redevelopment Authority of Singapore (“URA”) approved ATI’s proposal and FYTA was granted Provisional Permission (“PP”).11 As things turned out, the PP had to be extended three times for six months each because Written Permission for the Project was not obtained until sometime in the second half of 2010. The final extension of six months was granted by URA following a meeting on 2 March 2010, which will be explained later in this judgment.12

In late 2008 or early 2009, Ms Chen was introduced as a representative of THC to Mr Liu. She learnt about the Project from Mr Liu and told him that she was interested in taking on the Project with THC as the developer.13 Negotiations followed. Mr Liu, the architect from ATI and other members of FYTA, that is, Mr Chan Sen Meng (“Mr Chan”), Mr Ho Kiau Seng (“Mr Ho”) and Mr Lew Chee Beng (“Mr Lew”), travelled to Tianjin, China and visited THC for meetings to assess THC’s capability. They met with Mr Chen Xin, one of THC’s directors.14 I pause here to mention that Mr Chan was the president of Eng Teng Association and a vice-president of FYTA. Mr Lew was the president of Char Yong (Dabu) Association and the other vice-president of FYTA. Mr Ho was the president of Foong Shoon Fui Kuan Association, and also the president of FYTA. In short, the three most senior officer-bearers in the FYTA travelled to China to visit THC, together with Mr Liu, who headed the construction committee. Ms Chen did not travel with them to China for this trip.

The discussions culminated in an agreement in Chinese titled “Cooperation Agreement” signed on 9 July 2009 (the “Cooperation Agreement”). The Cooperation Agreement was signed on behalf of FYTA by its president and vice-presidents (Messrs Ho, Lew and Chan). Mr Chen Xin signed on behalf of THC.15 The Cooperation Agreement was a brief one-page document stating that the parties “agree to jointly develop” the Project.16 FYTA was required to obtain all the necessary approvals for the Project. The construction work would be carried out by CHC, which was described as a subsidiary of THC. The Project cost was stated to be S$115 million, and it was expected to be completed in two and a half years. There was also a statement that, of the 82 units of semi-detached houses to be constructed, FYTA would be allocated ownership of 27 units, and THC allocated 55 units. The Cooperation Agreement ended with, “[o]ther matters not discussed in this agreement shall be negotiated separately. This agreement (…) shall become effective on the date of signing”.

In his evidence, Mr Liu explained FYTA’s thinking behind the Cooperation Agreement. He said that the idea was that FYTA would not have to mortgage the land at 33 Holland Link for financing, so the developer who partnered with them, that is, THC, would have to finance the entire cost of the Project. In return, it would be given 55 units of the semi-detached houses to be built. This was why the allocation of the units was provided for in the Cooperation Agreement, and it was also stated that “[FYTA] shall not mortgage the property nor incur debts”.

At a meeting of the board of directors of FYTA, an update was given to them on the Cooperation Agreement. The minutes of the meeting record Mr Chan as saying that “[FYTA] cannot be developer itself. Therefore [FYTA] entrusted the entire development project to the developer – [THC]”.17 In the same minutes, it was also recorded that “[w]ith regard to the cooperation agreement with [THC], the directors who attended do not have any opinion, they unanimously approved it”.18

Following the signing of the Cooperation Agreement, preparatory works started at the site. By a letter of award dated 16 July 2009, ATI engaged CHC to undertake the excavation works which commenced on or around 17 August 2009.19

Not long after, as Mr Liu explained, FYTA’s lawyers advised them that it would be better for a Singapore company to be the developer of the Project instead of THC. This was because it would be more convenient legally and administratively to deal with a local entity.20 THC and Ms Chen were informed of this. Mr Chen Xin then signed a letter of authority on behalf of THC which “irrevocably authorise[d] and directe[d]” FYTA to deal with the plaintiff and Ms Chen in place of THC.21 Ms Chen explained that THC had decided that the plaintiff would be used as the vehicle to collaborate with FYTA on the Project.

Following this, a document titled “Joint Venture Agreement” dated 23 September 2009 (“Joint Venture Agreement”) was drafted.22 This was in English. The plaintiff was identified in the Joint Venture Agreement as the developer appointed by THC.23 The stated counterparties were three of the four trustees of the land. The Joint Venture Agreement referred to the parties’ intention to “enter into a joint venture” and documented additional details as to the Project’s scope, the period of completion and the management of the Project. The Joint Venture Agreement was never executed formally by the parties. There was no evidence before me showing that the plaintiff had executed it and, of the three named trustees, only Mr Liu signed it.

For reasons which are not entirely clear, Messrs Lew, Ho and Chan, who signed the Cooperation Agreement, also appended their signatures to the Joint Venture Agreement although it is not stated in the...

To continue reading

Request your trial
2 cases
  • AK Business Solutions Pte Ltd v Hau Yew Ching and others
    • Singapore
    • District Court (Singapore)
    • 29 July 2022
    ...and alternative remedies is well-established in case law: see, for example, Innovative Corp Pte Ltd v Ow Chun Ming and another [2020] 3 SLR 943 at [135]; Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others [2017] SGHC 15 (“Parakou Shipping”) at [179] and [183]; Main-Line C......
  • Bluestone Corp Pte Ltd v Phang Cher Choon and others and another suit
    • Singapore
    • High Court (Singapore)
    • 4 December 2020
    ...omitted] would suffice to release a director from his obligations to the company. In Innovative Corp Pte Ltd v Ow Chun Ming and another [2020] 3 SLR 943, the High Court cited the principles articulated by the CA in Scintronix when it held (at [101]) that – An informal assent of all the shar......

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