Lin Jianwei v Tung Yu-Lien Margaret and another and another matter

• Jurisdiction: Singapore
• Judge: Tan Siong Thye J
• Judgment Date: 27 July 2020
• Neutral Citation: [2020] SGHC 158
• Court: High Court (Singapore)
• Docket Number: Originating Summonses Nos 1446 of 2018 (Summons No 1281 of 2020) and 320 of 2020
• Year: 2020
• Published date: 05 August 2020
• Hearing Date: 27 July 2020
• Plaintiff Counsel: Tham Wei Chern, Danica Gan Fang Ling and Verna Goh (Fullerton Law Chambers LLC),Eugene Singarajah Thuraisingam and Chooi Jing Yen (Eugene Thuraisingam LLP)
• Defendant Counsel: Davinder Singh s/o Amar Singh SC, Tan Siew Wei Cheryl, Pardeep Singh Khosa, Tan Mao Lin, Darveenia Rajula Rajah and Vanessa Poo Jill (Davinder Singh Chambers LLC)
• Subject Matter: Legal Profession,Bill of costs,Companies,Oppression,Minority shareholders
• Citation: [2020] SGHC 158

Tan Siong Thye J (delivering the judgment of the court ex tempore): Introduction

The plaintiff in Originating Summons No 1446 of 2018 (“OS 1446”), Lin Jianwei, and the first defendant in OS 1446, Tung Yu-Lien Margaret, are the only two shareholders and directors of the second defendant in OS 1446, Raffles Town Club Pte Ltd. The plaintiff is the second defendant’s majority shareholder, holding 60% of the second defendant’s shares, while the first defendant holds 40% of the second defendant’s shares.¹ The plaintiff is also the second defendant’s executive chairman.² OS 1446 revolves around the issue of the validity of certain Extraordinary General Meetings, board of directors’ meetings, and related notices issued in relation to the second defendant. The present applications, namely, Summons No 1281 of 2020 (“SUM 1281”) and Originating Summons No 320 of 2020 (“OS 320”), arise from OS 1446.

In SUM 1281, the first defendant, Tung Yu-Lien Margaret, is the applicant. In OS 320, the plaintiff, Lin Jianwei, is the applicant while Raffles Town Club Pte Ltd is the defendant and Tung Yu-Lien Margaret is the intervener. For convenience, I shall refer to the parties in their capacities in OS 1446.

Brief facts

SUM 1281 is the first defendant’s application for the reimbursement of the solicitors’ fees she had paid on behalf of the second defendant to Nair & Co LLC (“N&C”) and Joseph Tan Jude Benny LLP (“JTJB”) for their services in safeguarding the interests of the second defendant in OS 1446 (“the Fees”). The reimbursement is pursuant to the consent order of the court made on 4 March 2019 (“the Consent Order”) which was the corollary of the agreement made by the plaintiff and the first defendant that a separate firm of solicitors was required to protect the interests of the second defendant in their personal disputes in OS 1446.

The plaintiff refuses to authorise this reimbursement on the ground that the Fees are unreasonable and excessive. Accordingly, the plaintiff then took out OS 320 under s 216A of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”) seeking for the Fees to be taxed.

My decision OS 320

I shall first deal with the issues relating to OS 320. The issues that arise for my determination are: whether the plaintiff has shown that he is acting in good faith in his application for taxation of the Fees, thereby satisfying s 216A(3)(b) of the Companies Act; and whether s 122 of the Legal Profession Act (Cap 161, 2009 Rev Ed) (“LPA”) is operative and if so, whether special circumstances have been shown warranting an order for taxation.

Whether the plaintiff is acting in good faith

Under s 216A(3) of the Companies Act, the complainant has to satisfy three requirements before the court grants leave to the complainant to bring an action in the name of and on behalf of the company, as follows: (3) No action or arbitration may be brought and no intervention in an action or arbitration may be made under subsection (2) unless the Court is satisfied that — (a) the complainant has given 14 days’ notice to the directors of the company of his intention to apply to the Court under subsection (2) if the directors of the company do not bring, diligently prosecute or defend or discontinue the action or arbitration; (b) the complainant is acting in good faith; and (c) it appears to be prima facie in the interests of the company that the action or arbitration be brought, prosecuted, defended or discontinued.

Pursuant to s 216A(3)(b) of the Companies Act, one of the requirements for the statutory derivative action sought by the plaintiff is he must satisfy the court that he is acting in good faith in his application for taxation of the Fees in OS 320. As observed by the Court of Appeal in Ang Thiam Swee v Low Hian Chor [2013] 2 SLR 340 at [31]:

The onus is upon the applicant to demonstrate that he is or may be ‘genuinely aggrieved’ … and that his collateral purpose is sufficiently consistent with the purpose of ‘doing justice to a company’ … so that he is not abusing the statute, and, by extension, also the company, as a vehicle for his own aims and interests.

The evidence does not suggest that the plaintiff is acting in good faith. Rather, this application appears to be another acrimonious instance of personal grievances between the two directors (ie, the plaintiff and the first defendant), played out under the semblance of a corporate dispute.

First, the plaintiff claims that he is seeking for the taxation of the Fees in the interests of the second defendant as the Fees are unreasonable and excessive. But this is not borne out by the facts. The second defendant’s solicitors had drafted affidavits and written submissions for at least five applications, including applications for discovery and cross-examination. They also had to prepare for and make submissions at four hearings. Apart from bare assertions that the amounts billed are excessive, the plaintiff has not provided further reasons to substantiate his position although he has been provided with a considerable amount of documents in the form of itemised invoices, timesheets and the solicitors’ warrant to act.³

Secondly, the plaintiff was not involved and could not be involved in giving instructions to the second defendant’s solicitors under the Consent Order albeit he is the majority shareholder and executive chairman of the second defendant. Thus, the first defendant who dealt with the second defendant’s solicitors would be in a better position to evaluate the extent of the work that went into safeguarding the interests of the second defendant for the various applications in OS 1446. She was of the view that the Fees were reasonable and thus paid them on behalf of the second defendant. As there are only two shareholders and directors of the second defendant, the amount paid to the second defendant’s solicitors will also have an impact on the first defendant albeit the impact on the plaintiff will be greater as he is the majority shareholder.

It was the plaintiff who commenced OS 1446 and added the second defendant as a party to OS 1446 although the disputes are between him and the first defendant. At that initial stage, his personal solicitors also had acted for the second defendant, which gave rise to a conflict of interest and eventually resulted in the Consent Order. In the Consent Order, the plaintiff also agreed that the second defendant will pay the solicitors’ fees for the services rendered to the second defendant. It is implied that the solicitor’s fees have to be reasonable and if they are excessive the first defendant is required to send the solicitors’ fees for taxation otherwise she would be in dereliction of her duties as a director under s 157 of the Companies Act. Section 157(1) of the Companies Act states that “[a] director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office”.

Here we have a situation where the Fees were processed and accepted by the first defendant who acted as an active and the sole director authorised to act on behalf of the second defendant in relation to its solicitors for OS 1446. She opines that the Fees are reasonable. The plaintiff, on the other hand, who was not involved in giving instructions to the second defendant’s solicitors and was not in Singapore for most of the time, makes a bare assertion that the Fees are unreasonable and excessive. Clearly, the plaintiff has no idea of the scope and extent of the work done by the solicitors who had worked on OS 1446. Furthermore, the plaintiff in the Consent Order agreed for the second defendant to pay the second defendant’s solicitors for their services. Hence, the plaintiff seems to have reneged on the Consent Order.

Therefore, the evidence does not show that the plaintiff is acting in good faith purportedly to protect the interests of the second defendant. The plaintiff has incurred more legal costs by...