Lin Choo Mee v Tat Leong Development (Pte) Ltd and Others and Other Matters

• Jurisdiction: Singapore
• Judge: Steven Chong J
• Judgment Date: 13 April 2015
• Neutral Citation: [2015] SGHC 99
• Court: High Court (Singapore)
• Docket Number: Companies Winding Up Nos 226, 227 and 228 of 2014
• Year: 2015
• Published date: 15 April 2015
• Hearing Date: 23 February 2015,17 March 2015,27 February 2015
• Plaintiff Counsel: N Sreenivasan SC, Tan Kai Ning Claire, and Zhu Zhihao Daniel (Straits Law Practice LLC)
• Defendant Counsel: Hui Choon Wai and Ho Si Hui (Wee Swee Teow & Co)
• Subject Matter: Companies,Winding Up
• Citation: [2015] SGHC 99

Steven Chong J: Introduction

This case concerns three separate applications to wind up three companies owned and managed by a family (“the Tat Leong companies”) on the ground that it is just and equitable to do so. In 1990, the patriarch of the family, Lin Whan Chiu (“LWC”) was diagnosed with cancer. He expressed his wishes on the division of his personal wealth in a handwritten note addressed to his five sons. His dying wish, after stating his intention on the division, was simply this – “[a]ll my sons please remember, don’t fight with one another, so that your father will rest in peace”. He passed away in 1992. Alas, it would appear that his wish has not been fulfilled with the commencement of the present actions.

LWC had eight children. In order of birth, they are: Mr Lim Sze Eng (“LSE”) – the eldest son and de facto defendant in this action. Ms Lim Lay Chin – the eldest daughter Mr Lin Choo Mee (“LCM” or “the plaintiff”) – the plaintiff in these applications. Mr Lim Chu Leong (“LCL”) Ms Lim Lek Choon Mr Lin Joo Hock (“LJH”) Ms Lim Lay Hua Mr Lin Tze Kin (“LTK”)¹

It will be observed that only the names of the sons are abbreviated. That is because LWC’s daughters do not feature in this saga. LWC was – by any account – an extremely traditional man who, perhaps reflecting the mores of his day, organised his affairs with strict adherence to two principles: (a) patriarchal leadership; and (b) primogeniture, ie, that inheritance should be passed down to male descendants in order of seniority.² These two themes shaped the fortunes of the Tat Leong companies and are central to the present applications.

The family business started in 1977 with the operation of a petrol kiosk before diversifying into properties. Unsurprisingly (given the two themes), the eldest son was the driving force in the business. Over time, the business in Singapore gradually became less active and the family’s fortunes waned. Dividends have never been declared throughout the history of the group.³ Presently, its Singapore income comes primarily from the collection of rental from a single unit at Far East Plaza (“the Far East Plaza unit”).⁴ Although the business expanded into China through two subsidiaries, they have not generated any returns for the group to date.⁵ Two of the sons sold their stakes and exited from the group about a decade ago. Things came to a head when the plaintiff was not renewed as a director of the various companies in the group, a position he had occupied for three decades since the inception of the businesses. This was perhaps the catalyst for the present applications.

The facts

Before discussing the relevant legal issues, it is necessary to trace the history of the group of companies in some level of detail.

As a preface, I note that LWC had been involved in the petroleum business since the early 1970s through his company, Chip Chuan Trading Company Private Limited (“Chip Chuan”), of which he was a director and shareholder.⁶ Chip Chuan was in the business of supplying bunkers to ships in Singapore.

Early years – incorporation of the companies and the passing of LWC Incorporation of Tat Leong Petroleum Company and Tat Leong Petroleum

In 1976, LSE, who was 23 years of age at the time,⁷ together with his then-girlfriend (now wife) Ms Tan Lay Hoon (“TLH”), founded a partnership, Tat Leong Petroleum Company (“TLPC”).⁸

On 17 June 1977, LSE and TLH incorporated Tat Leong Petroleum Co (Pte) Ltd (“TLP”), which is the defendant in Companies Winding Up No 228 of 2014 (“CWU 228/2014”).⁹ At the time of TLP’s incorporation, LSE and TLH were the only shareholders and directors of TLP. On 23 November 1977, one month after he turned 21, the plaintiff was appointed a director of TLP.¹⁰

On 8 November 1978, the board of directors of TLP (consisting of LSE, TLH, and the plaintiff) passed two resolutions.¹¹ In the first, it was resolved that LWC would be appointed a director of the company. In the second, it was announced that there would be a third allotment of shares wherein each of LWC’s five sons and LWC’s wife, Mdm Tan Ah Kar (“TAK”), was each given 10,000 shares. LWC was given 40,000 shares.

Incorporation of Tat Leong Development and Tat Leong Investment

On 5 January 1979, Tat Leong Development (Pte) Ltd (“TLD”), the defendant in Companies Winding Up No 226 of 2014 (“CWU 226/2014”) was incorporated. LSE and the plaintiff were TLD’s founding directors and they each held a single ordinary share in TLD. On 28 April 1983, the board of directors of TLD (consisting of LSE and the plaintiff) passed a resolution appointing LWC and LCL as directors of the company, taking the total number of directors in TLD to four: LWC and three of his sons.¹²

On 8 August 1983, the board of directors of TLD passed two resolutions. In the first, it was resolved that LSE’s single share would be transferred to Tat Leong Investment Pte Ltd (“TLI”) (see [13] below). In the second, it was resolved that a further allotment of shares would be made to TLI, LWC, and all of LWC’s sons except for LSE.¹³

I pause to observe that, after this allotment of shares, LSE, through his majority shareholding in TLI, effectively became (and still remains) the main shareholder in TLD.

On 14 May 1983 – TLI, the defendant in Companies Winding Up No 227 of 2014 (“CWU 227/2014” – was incorporated.¹⁴ As in the case of TLD, LSE and the plaintiff were its founding directors and each held one of the two shares that were issued.¹⁵ It is common ground that TLI was set up as an investment holding company with its chief purpose being the holding of shares in TLD.¹⁶ On 20 May 1983, LWC and LCL were appointed directors of TLI. This move, which paralleled what took place in TLD, took the total number of directors in TLI to four: LWC and three of his sons.¹⁷ On 20 July 1983, TLI allotted shares to LSE, the plaintiff, LCL, LJH, and LTK (ie, all of LWC’s sons), with the bulk of the shares going to LSE.¹⁸

LWC’s handwritten note and his passing

Before his death on 26 June 1992,¹⁹ LWC was diagnosed with cancer. After learning of his diagnosis, he transferred his shares in TLP and TLD to LSE.²⁰ He also authored a handwritten note in Mandarin dated 28 November 1990 addressed to his five sons (“the handwritten note”). Given how pivotal this note is to the plaintiff’s case, its translated contents are reproduced here in full:

To my five sons (Ying, Ming, Liang, Fu, Qing)

All the properties of the company and the personal wealth of me and your mother should be divided into seven equal portions.

Ziying, as the eldest son, will receive two portions; Ziming, Ziliang, Zifu, Ziqing will receive one portion each.

Your mother, ?Jin, also known as Chen Yajia, will receive one portion. She will make the decision on how to allocate her portion, none of you should have any objection.

The three daughters will receive 15,000 dollars in cash each, no one else should have objections.

If Ziliang has a son, he will receive the legacy as stated above (- added by translator); if he doesn’t have a son, he will receive 300,000 dollars in cash. He will not be entitled to other legacy.

Any son of Lin Hong Ru [LWC] that does not have a son will receive 300,000 in cash when getting old.

Ziying, my eldest son, please ensure fair division of the properties according to my will. Anyone who does not have a son will receive 300,000 in cash when getting old, and will not be entitle to claim other properties. I hereby endorse this.

Father

Lin Hong Ru

On Nov 28, 1990 (Oct 12 by Chinese calendar)

All my sons please remember, don’t fight with one another, so that your father will rest in peace.

[emphasis in original]

As is clear from the above, the contents of the handwritten note demonstrate LWC’s commitment to the two principles of patriarchal leadership and primogeniture (see [3] above): LWC’s daughters do not have any share in LWC’s companies, sons without male descendants would not be entitled to claim other properties but only $300,000 in cash, and LSE, the eldest son, gets a double-share of the inheritance and is charged with the responsibility of executing his father’s wishes. It is also notable that “Ziliang’s” (LCL) share in the property of the company was made contingent on him having a son (presumably to ensure that shares in the various companies remained in the hands of LWC’s male descendants, consistent with the principle of primogeniture).

Growth years – investments and expansion Bedok Petrol Station

On 1 March 1979, TLP purchased a piece of land in Bedok New Town on which it constructed a petrol station. The purchase of the land and the construction of the petrol station cost approximately $750,000.²¹ This sum was financed, in part, through an overdraft facility extended by the Development Bank of Singapore and a loan extended by the Housing and Development Board. At least $205,000 was provided by LWC.²² However, the parties disagree on whether LSE had also contributed a sum of money of $200,000 to this investment. The plaintiff was the station manager of the Bedok Petrol Station between 1981 and 1982. Thereafter he managed TLP’s other petrol stations until 1999. Unlike the Bedok Petrol Station, these other stations were not owned by TLP. TLP was merely granted a licence by Singapore Petroleum Company to operate them.²³ In 1985, the petrol station located at Bedok New Town was sold for about $4m.²⁴

Property investments

In 1986, LWC and TAK, who were the owners of a piece of property at No 5 Teo Kim Eng Road, decided to sub-divide the parcel of land in order that a portion of it may be redeveloped.²⁵ On 24 December 1986, LWC and TAK executed a sale of a portion of No 5 Teo Kim Eng Road to TLD for a sum of $400,000.²⁶ The existing property on No 5 Teo Kim Eng Road was redeveloped and two semi-detached houses (Nos 25 and 27 Jalan Rimau) were constructed on the parcel of land purchased by TLD. Construction was completed...