Low Hian Chor v Steel Forming & Rolling Specialists Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 13 January 2012
• Neutral Citation: [2012] SGHC 10
• Court: High Court (Singapore)
• Hearing Date: 14 September 2011
• Docket Number: Originating Summons No 591 of 2011
• Plaintiff Counsel: Foo Soon Yien (Bernard & Rada Law Corporation)
• Defendant Counsel: Tan Yew Cheng (Leong Partnership)
• Subject Matter: Companies
• Published date: 09 April 2013

Chan Seng Onn J: Introduction

This was an application made pursuant to section 216A of the Companies Act (Cap. 50, 2006 Rev Ed) (“the Act”) by Low Hian Chor (“the Plaintiff”), for leave to bring an action in the name and on behalf of Steel Forming & Rolling Specialists Pte Ltd (“the Defendant”), against a former director of the Defendant, Ang Thiam Swee (“Ang”), for breaches of director’s duties owed to the Defendant. I allowed the application, and now give my reasons.

Facts

The Defendant is a private limited company incorporated in Singapore in 1984 that carries on the business of, inter alia, fabrication of steel structures, pressure vessels and steel plate cutting. The Defendant’s shareholding structure is as follows: Gan Oh Boon (“Gan”), a bankrupt shareholder whose 80% shareholding in the Defendant is currently held by the Official Assignee; The Plaintiff, who holds 10% of the shares; and Ang, who holds 10% of the shares

Gan was a director of the Defendant from the time of its incorporation in 1984 to 27 October 2009, when he was made a bankrupt and statutorily disqualified from directorship under s 154 of the Act. On 27 October 2009, Gan was convicted of 2 charges under s 96(1)(b) and 3 charges under s 95(2) of the Income Tax Act (Cap. 134, 2001 Rev Ed) for making fraudulent tax claims on alleged expenses of $1,620,000 purportedly made by the Defendant, and sentenced to two weeks’ imprisonment. Due to Gan’s use of the Defendant to make the fraudulent tax claims, the Defendant was also charged under the Income Tax Act and penalized to pay $988,933.58 in monthly instalments of $65,928.90.

The Defendant subsequently engaged forensic accountants Stone Forest Corporate Advisory Pte Ltd to investigate the Defendant’s accounts and Gan’s mismanagement of the Defendant. These investigations revealed that Ang had together with Gan committed various breaches of their duties as directors to the Defendant. During the time of Gan’s directorship, Gan and Ang were co-signatories of the Defendant’s DBS bank account. It transpired from the investigations that Ang had signed cheques together with Gan and misappropriated the Defendant’s funds by (a) making payment without basis from the Defendant’s account to Ang;(b) transferring money without basis from the Defendant’s account to a personal DBS bank account jointly held by Ang and Gan’s son; and (c) paying secret commissions.

The Plaintiff then instructed his solicitors to write to Ang’s solicitors in a letter dated 6 January 2011, requesting that Ang return these misappropriated sums to the Defendant. In a letter from Ang’s solicitors dated 20 January 2011, Ang denied that he had misappropriated the Defendant’s funds. The Plaintiff subsequently took out this application for...