Lim Kok Wah and others v Lim Boh Yong and others and other matters

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 13 August 2015
• Neutral Citation: [2015] SGHC 211
• Plaintiff Counsel: Lee Hwee Khiam Anthony, Cheng Geok Lin Angelyn and Quek Jun Haw Joey (Bih Li & Lee LLP),Hee Theng Fong and Toh Wei Yi (Harry Elias Partnership LLP)
• Docket Number: Suit No 1005 of 2012, Originating Summons No 1042 of 2012 and Originating Summons No 1050 of 2012
• Date: 13 August 2015
• Hearing Date: 02 December 2013,28 August 2013,22 August 2013,29 August 2013,21 August 2013,20 August 2013,23 August 2013,27 August 2013,30 July 2014,30 August 2013,30 May 2014
• Subject Matter: Companies,Minority shareholders,Oppression
• Year: 2015
• Citation: [2015] SGHC 211
• Court: High Court (Singapore)
• Published date: 04 September 2015

Vinodh Coomaraswamy J: Introduction

This litigation is between two sets of brothers who share a father but have different mothers. The brothers are now locked in a struggle for control of two companies: Siem Seng Hing & Company (Pte.) Limited (“SSH”) and Kenson Enterprise (Pte) Ltd (“Kenson”).

This litigation comprises three sets of proceedings. The main proceedings are Suit No 1005 of 2012 (“S1005”). I will, for convenience, refer to the parties throughout this judgment by their position in S1005. The four plaintiffs seek relief in S1005 under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) arising from what is said to be the oppressive and unfairly prejudicial conduct of the first and second defendants.

Before the plaintiffs commenced S1005, however, the first and second defendants had brought separate proceedings by way of two originating summonses against the plaintiffs. In Originating Summons No 1042 of 2012 (“OS1042”), the defendants seek a declaration that an Extraordinary General Meeting (“EGM”) of the shareholders of SSH on 25 October 2012 and the resolutions passed at that meeting are invalid. In Originating Summons No 1050 of 2012 (“OS1050”), the defendants seek a declaration that a meeting of the directors of Kenson held on 25 October 2012 and the resolutions passed at that meeting are invalid.

I have dismissed the plaintiffs’ claim in S1005 and granted the first and second defendants the relief which they seek in OS1042 and OS1050. The plaintiffs have appealed against my decision. I now set out my grounds.

Background facts LKH and the Lim family

All of the natural persons who are parties to the proceedings before me are sons of Mr Lim Khai Huat @ Lim Ngam (“LKH”). LKH died in 2001 at the age of 88.¹ His enduring wish was that his sons would remain united, come what may. This litigation would undoubtedly have been a profound disappointment to him.

LKH had two wives and 13 children. He had the following nine children by his first wife, Mdm Choo Chee Lan (“Mdm Choo”):² Mr Lim Kok Wah (“LKW”), the first plaintiff; Mr Lim Kok Khee (“LKK”), the second plaintiff; Mr Lim Hoo Sig (“LHS”), the third plaintiff; Mr Lim Beng Tuan (“LBT”), the fourth plaintiff; Mdm Lim Bee Gan; Mdm Lim Eng Neo; Mdm Elsie Lim Bee Har; Mdm Lim Bee Cheng; and Mdm Lim Mui Kwee (“LMK”).

LKH had the following four children by his second wife, Mdm Ng Hong Mui (“Mdm Ng”):³ Mr Lim Kok Leong (“LKL”), the second defendant; Mr Lim Boh Yong (“LBY”), the first defendant; Mdm Lim Lee Kwan; and Mdm Lim Bee Leng.

Throughout LKH’s lifetime, and in fact for almost a decade after his death, the two branches of his family lived and worked harmoniously together. Their relationship started deteriorating in or about late 2010. Before tracing the circumstances which led to this deterioration, it is convenient to introduce the corporate defendants.

SSH The initial years

LKH, together with other like-minded entrepreneurs, incorporated SSH on 26 February 1957 to carry on the business of selling and supplying building materials.⁴ The other founders of SSH are not related to the Lim family. Their identities are inconsequential to this dispute.

None of LKH’s children was involved in the business of SSH at the time of its incorporation and for a decade after that. At that point, LKH (and the other founders) either allotted shares or transferred a portion of their own shares to their respective sons. The founders thereby drew in the next generation into the family business. It was also during this period that LKW and LKK as well as LKL and LBY were appointed directors and thereby became involved in managing the business of SSH.

In 1975, LKH incorporated Kenson to be, effectively, the family holding company for both branches of his family.

In the 1980s, LKH acquired all the shares in SSH from all the other shareholders who were not part of his family. He held these shares either in his own name or through Kenson. By 30 December 1993, all of the shares in SSH were owned either by members of the Lim family or by Kenson.⁵

The parties’ involvement in SSH

As was typical with many men of LKH’s generation, he drew in only his sons as directors and shareholders in SSH. LKH passed away intestate. It was only by reason of his intestacy that his wives and daughters came to hold shares in SSH.⁶

Up to 2001, the plaintiffs collectively held 20.55% of the shares in SSH whilst the defendants held 13.98% of those shares.⁷ The remaining 65.47% of the shares in SSH were held by LKH (ie, 49.87%) and by Kenson (ie, 15.60%). The table below sets out the shareholding in SSH from 30 December 1993 until LKH’s death in 2001, in order of magnitude.⁸ For ease of reference, the plaintiffs’ names are in bold and the defendants’ names are in italics.

Shareholder	Percentage
LKH	49.87%
Kenson	15.60%
LKW	8.10%
LBY	7.99%
LKL	5.99%
LHS	4.25%
LBT	4.13%
LKK	4.07%
Total	100.00%

LKH’s sons have all served as directors of SSH at one time or another. The details of their appointments as directors are as follows:⁹ LKW was appointed a director in 1978. LKK was appointed a director in 1978. He was not re-appointed in 1982 but returned to the board in 1983. He remained a director for three years and ceased to be a director in 1986. LHS was appointed a director in 1993. LBT was appointed a director in 1998. LBY was appointed a director in 1978 but ceased to hold office in 1981. He was re-appointed in 1983. LKL was appointed a director in 1984 but ceased to hold office in 1986. He was re-appointed in 1993.

All of LKH’s sons, apart from LKK, served as directors of SSH until this litigation began. It is a matter of record that LKK ceased to serve as a director in 1986 and was never re-appointed to the board. The parties, however, dispute the reason for LKK’s departure from the board.

LKH was the managing director of SSH until the time of his death.¹⁰ Although the extent of the involvement of the other plaintiffs in SSH is in dispute, it is common ground that LKW and LBY took the lead in managing SSH, at first under LKH’s supervision from 1993 until his death in 2001, and thereafter on their own.¹¹ They were appointed the chairman and the managing director respectively of SSH on 22 August 2001.¹²

Kenson

As mentioned above, LKH incorporated Kenson in 1975. LKH and his two wives, Mdm Choo and Mdm Ng, were its initial shareholders and directors. As with SSH, LKH was Kenson’s managing director until he died in 2001.¹³

In line with LKH’s practice, all of his sons (but none of his daughters) were allotted shares in Kenson. Thus, in 1977, each son was allotted 3,333 shares. In 1978, LKH appointed all of his sons as directors of Kenson. They remain directors to the present day.¹⁴ In 1992, Mdm Choo and Mdm Ng stepped down as directors.

In 1995, LKH transferred all of his shares in Kenson to four of his sons: LKL, LBY, LHS and LKW. He transferred 140,897 shares to LKL, 34,327 shares to LBY, 13,393 shares to LHS and 3,770 shares to LKW.¹⁵ The table below sets out the shareholding in Kenson from the time of these transfers to the present day, in order of magnitude.¹⁶ Once again, for ease of reference, the plaintiffs’ names are in bold and the defendants’ names are in italics.

Shareholder	Percentage of shareholding
LKL	31.97%
LBY	19.39%
LBT	13.59%
LKW	11.75%
LHS	11.57%
LKK	11.40%
Mdm Ng	0.19%
Mdm Choo	0.14%
Total	100.00%

The second defendant, LKL, holds more shares in Kenson than any other shareholder. He was therefore appointed the managing director of Kenson.

The four plaintiffs hold 48.31% of Kenson. Significantly, however, LKL and LBY together hold 51.36% of Kenson. Pursuant to a shareholders’ resolution of Kenson passed on 14 October 2010, Kenson appointed LKL as its corporate representative to attend and vote for Kenson at all meetings of the shareholders of SSH.¹⁷ Kenson’s vote in SSH, which was worth 15.60% of SSH, was therefore controlled by the first and second defendant’s branch of the Lim family.

Events leading to this litigation

Cracks in the relationship between the two branches of the family started to surface a decade after LKH’s death. A series of events which had their genesis in events in 2008 and which took place in late 2012 saw the tension build up between the two branches.

2008 Rights Offer

On 18 June 2008, a special resolution was passed at an EGM of SSH approving a rights issue to the existing shareholders to raise $1,700,007 (“the 2008 Rights Offer”).¹⁸ Although it was not appreciated at the time, the 2008 Rights Offer had implications for the control of SSH.

In the same resolution, the directors were empowered to allot the rights shares that were not taken up by the existing shareholders to any persons whom they considered suitable. On the next day, 19 June 2008, the shareholders were notified by letter of the 2008 Rights Offer.

The deadline for SSH’s shareholders to accept their entitlement to the rights shares was 30 June 2008. All of the existing shareholders, save for LKH’s estate, subscribed for their entitlement under the offer. However, the shares under the 2008 Rights Offer remained unallotted for more than four years, until 25 October 2012 (see [36] below).

Distribution of LKH’s shares in SSH

On 20 January 2011, nearly a decade after LKH’s death, his shares in SSH were finally distributed to his beneficiaries in accordance with the law of intestacy.¹⁹ But 79,787 shares in SSH, representing 1.92% of its share capital, were not distributed. These shares were earmarked for distribution to LMK, LKH’s daughter with Mdm Choo. But they could not be distributed to LMK because Mdm Choo took...