Kuah Kok Kim v Chong Lee Leong Seng Co (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 30 April 1991
• Neutral Citation: [1991] SGCA 11
• Docket Number: Civil Appeal No 85 of 1989
• Date: 30 April 1991
• Year: 1991
• Published date: 19 September 2003
• Plaintiff Counsel: Michael Khoo (Michael Khoo & BB Ong)
• Citation: [1991] SGCA 11
• Defendant Counsel: Davinder Singh (Drew & Napier)
• Court: Court of Appeal (Singapore)
• Subject Matter: Winding-up order sought,Whether petition improperly presented as winding-up petition under Companies (Winding-up) Rules 1969,Winding up,Commencement of proceedings,Proceedings taken out by minority shareholders under s 216 of Companies Act,Oppression,s 216 Companies Act (Cap 50, 1990 Ed),Companies,Whether petition an irregularity and could be remedied under O 2 r 1 of Rules of the Supreme Court 1970

Cur Adv Vult

The appellants are minority shareholders of the company, Chong Lee Leong Seng Co (Pte) Ltd (the company). On 17 March 1989 they instituted proceedings under s 216 of the Companies Act (Cap 50, 1990 Ed) (the Act) by way of a petition filed in Companies Winding-Up Petition No 77 of 1989 seeking an order that the company be wound up under the Act and that Wong Tui San and Ee Hock Leong of Ernst & Whinney be appointed liquidators of the company, or alternatively an order that six directors of the company (named therein) be removed as directors, that Wong Tui San and Ee Hock Leong be appointed managers of the company, and that certain decisions of the board of directors of the company be cancelled. The complaints of the appellants were that the directors (i) had conducted the affairs of the company in a manner oppressive to one or more of the members of the company, including the appellants, and/or in disregard to the appellants` interests as members of the company; (ii) were exercising their powers as directors of the company in a manner oppressive to one or more of the members of the company, including the appellants, and/or disregard of the appellants` interests as members of the company, and/or (iii) had acted and/or were threatening to act in a manner which unfairly discriminated against or was otherwise prejudicial to one or more of the appellants as members of the company. The petition was presented as a winding-up petition under the provisions of the Companies (Winding-Up) Rules 1969, and in accordance with r 23 the registrar appointed 21 April 1989 as the date for the hearing of the petition.

Almost immediately after the filing of the petition, the appellants took out an application by way of summons-in-chambers No 1515 of 1989 for an order for appointment of provisional liquidators and managers of the company under s 272 of the Act. The application was supported by an affidavit filed by Kuah Kok Kim, one of the appellants. On 8 April 1989, Lau Kiat Bin, one of the directors of the company, filed a voluminous affidavit exhibiting no less than 46 exhibits, and the affidavit was expressed to contest both the petition and the application for provisional liquidators and manager. On the same day, five affidavits were filed by five other directors respectively, namely, Lau Huang Nam, Kuah Hong Seng, Tan Say Joo, Kuah Leong Bee and Wong Shueng Sze, each confirming that the events referred to in the affidavit of Lau Kiat Bin, in which each of them was involved, were true and accurate and adopting the same in their entirety. In addition, two further affidavits were filed on behalf of the company, namely, the affidavit of Leena Sankaran, who is a solicitor in the firm of M/s Drew & Napier, the solicitors for the company, and the affidavit of Yip How Wong, who is a director of JAC Secretaries Pte Ltd which provided secretarial and management services to the company. These two affidavits exhibited various documents and sought to support the matters or events referred to in Lau Kiat Bin`s affidavit. However, the application for appointment of provisional liquidators was not heard in view of the order made subsequently which is the subject of this appeal.

On 7 April 1989, the petition was advertised purto r 24 of the Companies (Winding-Up) Rules 1969. About one week later, on 13 April 1989, the company took out an urgent application for an order under s 259 of the Act. The application was heard on the same day and it was ordered that all payments made by the company and on its behalf including payments out of the company`s bank accounts and all other transactions and dispositions of property by and on behalf of the company and in the ordinary course of business up to and including the date on which the petition was disposed of should not be avoided under the provision of s 259 of the Act. It was the view at that time that an order under that section was necessary, as the petition had been advertised as a winding-up petition, and, presumably, in consequence, the company was endifficulties with its bankers and customers in carrying on its business. Section 259 of the Act provides:

Any disposition of the property of the company, including things in action, and any transfer of shares or alteration in the status of the members of the company made after the commencement of the winding up by the Court shall unless the Court otherwise orders be void.

After having obtained that order, the company on 14 April 1989 took out an application by way of SIC No 2136 of 1989 for an order that pursuant to O 18 r 19(1) and/or the inherent jurisdiction of the court the petition be struck out and dismissed on the ground that the petition and/or the proceedings instituted by the appellants thereunder constituted an abuse of the process of the court. In support of the application, an affidavit was filed by Lau Kiat Bin on the same day. The abuse complained of consisted of (i) the application for appointment of provisional liquidators and managers and (ii) the advertisement of the petition appearing in the edition of The Straits Times on 7 April 1989. The application was resisted by the appellants. It came on for hearing before Chan Sek Keong J, who held that the petition was improperly presented as a winding up petition under the Companies (Winding-Up) Rules 1969, as the proceedings ought to have been properly commenced by way of petition pursuant to the provisions of O 88 of the Rules of Supreme Court 1970, and he ordered that the petition be struck out: Re Chong Lee Leong Seng Co (Pte) Ltd [1989] 3 MLJ 343 . Against that decision, this appeal is now brought.

There are three issues before us: (i) whether the Companies (Winding-Up) Rules 1969 apply to the proceedings taken out by the appellants under s 216 of the Companies Act in which a winding-up order against the company was sought; (ii) if such Rules are not applicable, whether the petition having been filed as a companies winding up petition in Companies Winding Up No 77 of 1989 is a nullity or an irregularity, and (iii) if it is an irregularity, whether in all the circumstances of the case the error could have been remedied and the petition ought not to have been struck out. We turn to the first issue, and it is convenient at this stage to set out in full the provisions of s 216 of the Act, which are as follows:

(1) Any member or holder of a debenture of a company or, in the case of a declared company under Part IX, the Minister may apply to the Court for an order under this section on the ground -

(a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or holders of debentures including himself or in disregard of his or their interests as members, shareholders or holders of debentures of the company; or

(b) that some act of the company has been done or is threatened or that some resolution of the members, holders of debentures or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures (including himself).

(2) If on such application the Court is of the opinion that either of such grounds is established the Court may, with a view to bringing to an end or remedying the matters complained of, make such order as it thinks fit and, without prejudice to the generality of the foregoing, the order may -

(a) direct or prohibit any act or cancel or vary any transaction or resolution;

(b) regulate the conduct of the affairs of the company in future;

(c) authorize civil proceedings to be brought in the name of or on behalf of the company by such person or persons and on such terms as the Court may direct;

(d) provide for the purchase of the shares or debentures of the company by other members or holders of debentures of the company itself;

(e) in the case of a purchase of shares by the company provide for a reduction accordingly of the company`s capitals; or

(f) provide that the company be wound up.

(3) Where an order that the company be wound up is made pursuant to subsection (2)(f), the provisions of this Act relating to winding up of a company shall, with such adaptations as are necessary, apply as if the order had been made upon a petition duly presented to the Court by the company.

(4) Where an order under this section makes any alteration in or addition to any company`s memorandum or articles, then, notwithstanding anything in any other provision of this Act, but subject to all provisions of the order, the company concerned shall not have power, without the leave of the Court, to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; but subject to the foregoing provisions of this subsection the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company.

(5) An office copy of any order made under this section shall be...