Lau Yu Man v Wellmix Organics (International) Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 28 December 2007
• Neutral Citation: [2007] SGHC 223
• Plaintiff Counsel: Edwin Lee, Wong Tjen Wee and Daniel Xu (Rajah & Tann)
• Published date: 03 January 2008
• Court: High Court (Singapore)
• Defendant Counsel: Philip Jeyaretnam SC, Elizabeth Yeo and Zhulkarnain Bin Abdul Rahim (Rodyk & Davidson)
• Subject Matter: Companies

28 December 2007

Lee Seiu Kin J:

1 This is a continuation of a long running saga between the plaintiff (“Lau”) and, nominally, the defendant company. In actual fact, the plaintiff’s quarrel is with the persons calling the shots in the company, the general manager Wong Yiat Hong Raymond (“Wong”) and the majority shareholder, Lai Shit Har (“Lai”) who is Wong’s mother.

2 I had outlined the background to this matter in my decision in Lau Yu Man v Wellmix Organics (International) Pte Ltd [2007] SGHC 96 dated 20 June 2007 and refer to my narration of the facts there. In the three concluding paragraphs at [10], [11] and [12], I had stated as follows:

10 After hearing the submissions of counsel, I was satisfied that the main object, and therefore the substratum of the Company, was to distribute fertiliser from the Wellmix Group. It is clear from the affidavits that a dispute arose between Lau and Wong as to whether the distributorship agreement covered Malaysia and this had caused a breakdown of their relationship. This has resulted in the first suit (Suit No 600041/2000) being brought by the Company against CUDL for supply of defective goods and breach of contract by attempting to award the Malaysian distributorship to another company, which the parties refer to as MATTRA. There was a proposed compromise in that action, with CUDL paying $20,000 to the Company, and Lau withdrawing as director and transferring his shares. But the Company did not go through with this proposed compromise, although for some reason it discontinued that action. Suit No 642/2001 was filed on 26 May 2001. This was a claim against Lau himself, for breach of duties as director, in particular by getting MATTRA to deal directly with the Wellmix Group instead of through the Company. The Company claims substantial damages in its claim against Lau in that action. However it is hampered by a lack of resources as Lau was the main financier and, combined with the long interlocutory battles that have dragged the case over five years, the Company has reached breaking point in terms of its ability to continue the suit.

11 The other side of the coin is that the Company had transacted no business after December 2000. Clearly it has suspended business since 2001. The Company was being kept alive to sustain the action against Lau. Although Lai and Wong claim that the Company was active in that it received mail etc, it is clear that there is no intention to conduct business. Its only asset is the claim against Lau. Under these circumstances, the condition for ordering winding up under s 254(1)(c) has been met, i.e. the Company has suspended business for a whole year – in fact it has been more than five years as at the date of filing of this Originating Summons. However s 254(1) provides that the court “may” order winding up; the court has the discretion not to do so where appropriate. The issue before me is how I should exercise this discretion. The Company is in disarray. It is not operated as a company. But ordering its winding up will suppress a claim by an impecunious plaintiff (the Company in Suit No 642/2001). The parties have not submitted to me on the strength of the Company’s claim against Lau. I therefore made my decision on the basis that there is a claim and there is a defence. In order to assuage my concerns as to whether winding up would suppress a meritorious claim, counsel for Lau gave the undertaking...