Lee Hung Pin v Lim Bee Lian

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 01 July 2015
• Neutral Citation: [2015] SGHC 171
• Published date: 08 July 2015
• Date: 01 July 2015
• Year: 2015
• Hearing Date: 30 April 2015,07 April 2015
• Plaintiff Counsel: Ong Boon Hwee William, So Siew Sian, Candace and Robin Teo (Allen & Gledhill LLP)
• Citation: [2015] SGHC 171
• Defendant Counsel: Anparasan s/o Kamachi and Claire Amanda Lopez (KhattarWong LLP)
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 1141 of 2014

Aedit Abdullah JC:Introduction

The plaintiff in this case sought to unwind a winding up on the basis that that were irregularities in procedure and matters in the company that called for investigation. The plaintiff in effect sought to turn back the clock. While this can be done in appropriate situations, I found that, in the present case, the grounds relied upon by the plaintiff were insufficient. The supposed irregularities were either of his own making or did not cause harm or prejudice; and his claims that there are matters which require investigation were shadowy. The plaintiff has now appealed my decision and I therefore set out my grounds.

Background

The Plaintiff, Mr Lee Hung Pin, was a shareholder and director of Top Treasure Pte Ltd, the 2nd Defendant (“the Company”). The 1st Defendant, Ms Lim Bee Lian, was the secretary and liquidator of the company (“the First Defendant”). The present application was brought under s 343 of the Companies Act (Cap 50, 2006 Rev Ed) (“CA”). The specific orders sought were, in summary:A declaration that the proceedings or resolutions passed at the final meeting of the Company on 3 September 2012 (including any resolutions to dissolve the company) were void.A declaration that the purported dissolution of the Company on 5 December 2012 was void and that, consequently, proceedings may be taken as if the company had not been dissolved.If necessary, an order that the Company be restored to voluntary liquidation.

The Company, which was involved in the import and export of sports products, was incorporated in 1997. The shares in the Company were originally held only by the Plaintiff and his then wife, Ms Cheng Yu Fen, in equal proportions. In 2000, a resolution was passed at an Extraordinary General Meeting (“EGM”) of the Company to increase the share capital of the Company by way of an allotment of shares to Ms Cheng’s brother and to Ms Cheng’s nephew. Following this, the Plaintiff’s shareholding went down from 38 per cent to 19 per cent. The Plaintiff claimed to have been unaware of the EGM or the resolutions passed at that meeting. In May 2008, the Plaintiff and Ms Cheng divorced. When the capital increase and share allotment were discovered, along with what the Plaintiff claimed were other irregularities in the affairs of the company, legal proceedings were instituted by the Plaintiff against Ms Cheng in the Republic of China (Taiwan).

A written directors’ resolution, aiming to fulfil the requirements of a declaration of solvency under s 293(1) of the CA, was passed on 21 August 2009. It stated that the directors had made a full and final inquiry into the affairs of the Company and were of the opinion that the Company was able to pay its debts in full within a period not exceeding twelve months from the date at which the Company proposed to pass a special resolution for winding up. There appeared to be no actual meeting at which the solvency of the Company was considered by its Board of Directors.

Notice was given on 24 August 2009 that an EGM would be held on 16 September 2009 to consider a special resolution to wind up the company under s 290(1)(b) of the CA. This EGM was held and Ms Lim was appointed as the Company’s liquidator. On 24 September 2009, notice of the EGM was published in a local paper. A final general meeting was called for and held on 3 September 2012 to approve the Company’s statement of account and to determine the disposal of its books, accounts and documents. The Company was then dissolved on 5 December 2012. Just shy of two years after that, the Plaintiff filed the present application on 4 December 2014.

The Plaintiff’s Case

The Plaintiff claimed that there were irregularities in the administration of the Company, its winding up and eventual dissolution. Firstly, the plaintiff had not received any notice of the winding up: the notices were sent to the wrong address, namely, 5F, No 6, 26 Alley, 841 Lane Pei An Road, Taipei, Taiwan when the plaintiff actually resided at 2F., No. 8, Aly. 92, Ln. 21, Wenhu St., Neihu District, Taipei City 114, Taiwan (R.O.C.). Ms Cheng still stayed with the Plaintiff at the latter address. However, she did not inform the Plaintiff of the EGM. Furthermore, there was also no actual directors’ meeting to consider the solvency of the company before the declaration of solvency was signed.

Secondly, there were concerns in respect of the affairs of the Company. These include: (a) an amount of money between $500,000 to $1m which was purportedly unaccounted for; (b) the fact that the Plaintiff was removed as a signatory without any indication of a resolution approving this; (c) the fact that credit facilities were obtained without the Plaintiff’s knowledge or approval. Other complaints included a share increase which he contended was unlawful. The Plaintiff argued that these were claims that ought to be (and could only be) pursued by the Company so the Company’s dissolution ought to be voided in order that these claims could be pursued.

The Plaintiff acknowledged that a civil claim he initiated against Ms Cheng, her nephew and her brother in Taiwan did not succeed. However, he argued that that decision did not however give rise to concerns of res judicata because the parties in those proceedings and the present are different.

The Plaintiff contended that a declaration that the Company was never dissolved should be granted as the notice of the final meeting was not given to the Plaintiff. He argued that this failure was fatal as Ms Cheng was aware that the Plaintiff was not staying at the mailing address and had the obligation, as the Company’s director, to ensure that the notice was brought to his attention. He also argued that the onus was on Ms Lim to send the notice of final meeting to the proper address.

The First Defendant’s Case

The First Defendant opposed the application and maintained that the proceedings and processes were proper. The notices required were sent out as required under the Memorandum and Articles of Association of the Company (“Memorandum and Articles”), namely, to the Plaintiff’s registered address. There was no evidence that the Plaintiff had been deliberately excluded from any meetings and, in any event, his attendance and vote was inconsequential as he only held 19% of the shares then. The First Defendant also pointed out that the Plaintiff had taken no action to invalidate any of the meetings before the dissolution of the company despite knowing that they had taken place.

The First Defendant also argued that the various grounds relied upon by the Plaintiff amounted to nothing more than a fishing expedition. He had already failed in the Taiwanese Court and merely sought to re-litigate the same issues in Singapore so his application ought to be barred under the doctrine of res judicata.

The Decision

I dismissed the application. There was no basis for a declaration that the company was not dissolved as there was no invalidity in the final meeting. As for the argument on the reversal of the winding up, the grounds of the application, particularly the argument that there were claims that should have been pursued, were shadowy. Further, even if it were correct that the consideration of solvency and declaration should be made been made at a meeting, no prejudice was caused by this irregularity. As for the events identified by the Plaintiff as requiring investigation, many of these took place in the far past or were not shown to be directly material to the winding up. A number of contentions about the conduct of affairs at the Company, such as the dilution of the Plaintiff’s shareholding through the increase in shares, were also not material to the present proceedings.

The dissolution of the company

The dissolution of the company could not be said to have been void because of the irregularities raised by the Plaintiff. Section 308 of the CA states that the dissolution of a company follows, by operation of law, on the occurrence of certain specified events and requirements which include the lodging of the return of the holding of the final meeting. On the facts of this case, there was compliance with those requirements.

The Plaintiff argued that the dissolution was invalid as no valid notice was given of the final meeting. In particular, it was argued that it was known to the company that the Plaintiff did not reside at the address the notices were sent to. The First Defendant, in response, argued that there was no error in sending the notices to his registered address since this was what was provided for in the Memorandum and Articles. The First Defendant also contended that the Plaintiff failed to change his address despite being invited to do so. Further, the First Defendant pointed out that the Plaintiff did not take any steps to invalidate the meetings on the basis of non-notification despite knowing, around late 2009–2010, that these meetings had taken place.

I accepted that, under the Memorandum and Articles, the notices were to be sent to the address listed in the register of members. As noted by the First Defendant, Art 125 of the Memorandum and Articles specified that the registered address was where notices had to be sent:

A notice or any other document may be served by the Company upon any Member either personally or by sending it through the post in a prepaid letter addressed to such Member at his registered address as appearing in the register of members. [emphasis added]

Article 127 actually went further, specifying that if no registered address in Singapore were given, a member was not entitled to receive any notice. In the present case, the 2nd Defendant had actually sent the notices to the address registered by the Plaintiff even though it was an overseas address. While the validity of Art 127 is doubtful (given that it would effectively deprive members with overseas addresses in the register from receiving...