Ma Wai Fong Kathryn v Trillion Investment Pte Ltd and others and another appeal

• Jurisdiction: Singapore
• Judge: Judith Prakash JA
• Judgment Date: 20 March 2019
• Neutral Citation: [2019] SGCA 18
• Plaintiff Counsel: Rethnam Chandra Mohan, Chia Xin Ran Alina and Stella Ng Yu Xin (Rajah & Tann Singapore LLP)
• Date: 20 March 2019
• Docket Number: Civil Appeal No 44 of 2018 and Civil Appeal No 45 of 2018
• Hearing Date: 29 January 2019
• Subject Matter: Winding Up,Just and Equitable Grounds,Companies
• Published date: 27 March 2019
• Defendant Counsel: The first respondent in Civil Appeals Nos 44 and 45 2018 not represented,and Palmer Michael Anthony, Reuben Tan Wei Jer and Amanda Chen (Quahe Woo & Palmer LLC)
• Court: Court of Appeal (Singapore)
• Citation: [2019] SGCA 18
• Year: 2019

Judith Prakash JA (delivering the grounds of decision of the court): Introduction

These grounds of decision relate to three connected appeals and three connected companies belonging, in the main, to three brothers. The appellant herein is the widow of one of the brothers and the executrix of his estate. After her husband’s death, the relationship between the appellant and her brothers-in-law broke down and she subsequently filed applications to have the three companies wound up on the “just and equitable ground”. After hearing the parties, we allowed one appeal and dismissed another. No decision was made in the third appeal as the parties accepted at the hearing that the company concerned should be wound up as it had never conducted any business and it served no purpose to keep it going. Accordingly, a consent order to that effect was made.

The two cases on which we reached a decision were Civil Appeal No 44 of 2018 (“CA 44”) and Civil Appeal No 45 of 2018 (“CA 45”). They involved Trillion Investment Pte Ltd (“Trillion”) (the subject of CA 44) and Double Ace Trading Company (Private) Limited (“Double Ace”) (the subject of CA 45). The original winding up applications were made by Madam Kathryn Ma Wai Fong (the “Appellant”) who also applied for the third company, Faxlink Trading Pte Ltd (“Faxlink”), to be wound up. The three applications were heard by the same Judge (“the Judge”) who, as mentioned earlier, eventually dismissed all of them. After hearing the appeals against these decisions, we dismissed the appeal in respect of Trillion but allowed that in respect of Double Ace and ordered that the latter company be wound up as we considered it would be just and equitable to do so.

Background

The Appellant’s late husband was Wong Kie Nie (“WKN”), a Malaysian businessman and one of the three sons of the late Datuk Wong Tuong Kwong (“Datuk Wong”). The other two sons are Wong Kie Yik (“WKY”) who was the second respondent in both CA 44 and CA 45, and Wong Kie Chie (“WKC”) who was the third respondent in CA 44.

WKN was a shareholder and director of Trillion, Double Ace and Faxlink (collectively “the Companies”). He ran all the Companies until March 2011 when he fell ill with cancer. WKN passed away on 11 March 2013.

The business empire

The Companies originally formed the Singapore section of the business empire of Datuk Wong who was a highly successful Malaysian businessman. His empire covered a wide array of businesses including timber logging and harvesting, land development, trading, manufacturing, oil palm plantations, oil milling, the hotel business and travel services. WTK Realty Sdn Bhd was the flagship company of the group which comprised over 50 companies operating in jurisdictions like Australia, Liberia, the British Virgin Islands, Papua New Guinea and Singapore.

Datuk Wong managed all his companies, including Trillion and Double Ace, from their respective inceptions till about 1990 when he suffered a stroke. WKN then took over Datuk Wong’s position and managed the business empire until he himself fell ill in 2011.

Trillion and Double Ace

Trillion was incorporated in Singapore in 1979 and was brought into Datuk Wong’s group by WKY in 1982. The purpose of the acquisition was to operate Trillion as an investment holding company which invested in real estate. Around 1984, Trillion purchased the office unit known as 3 Shenton Way, #20-08, Shenton House, Singapore (the “Trillion unit”). The purchase price was approximately $1.139 million. Ever since acquiring it, Trillion has been renting the Trillion unit to Double Ace for $5,000 a month. From the accounts, however, it appeared that Double Ace had not paid the rent and the same was reflected in Trillion’s accounts as a debt due.

As at 9 June 2017, Trillion had an issued share capital of $150,000 divided into 150,000 shares of $1 each. WKY, the Appellant (as executrix of WKN’s estate) and WKC are recorded as the registered shareholders, each holding 50,000 shares in Trillion.

Double Ace was incorporated on 15 May 1972 by Datuk Wong and his brother-in-law, Mr Lau Hieng King, who were the initial subscribers in equal shares. Double Ace was set up for the purpose of trading in spare parts to supply other companies in the group. Subsequently, Double Ace also acted as an agent for some of these other companies and generated healthy revenues for the services it rendered.

As for Double Ace’s shareholding, sometime after 24 April 1973 WKY became a shareholder and later WKN became a shareholder as well as a director. Presently, Double Ace has an issued share capital of $50,000 divided into 50,000 ordinary shares of $1 each. The Appellant (as executrix of WKN’s estate) holds 19,500 shares, WKY holds 19,998 shares, WKY’s son holds two shares while the remaining 10,500 shares belong to other members of Datuk Wong’s family.

In the late 1970s, Double Ace purchased the office unit known as 3 Shenton Way, #20-07, Shenton House, Singapore (the “Double Ace unit”) for approximately $71,000. Double Ace did not use these premises as its office but instead rented them out for approximately $2,500 per month. As mentioned, Double Ace is the tenant of the Trillion unit and uses the same as its office address. According to Ong Kim Siong (“Mr Ong”), a director of Double Ace, at about the time the proceedings commenced, its liability to Trillion for unpaid rental was in the vicinity of $890,169.44. As we understood the position, no rental had been paid by Double Ace thereafter and therefore the liability had increased.

Prior to the death of WKN, the Appellant was not a shareholder of Trillion or Double Ace and was never involved in the management of these two companies.

The dispute below

Since WKN’s passing, the Appellant and the rest of Datuk Wong’s family have been embroiled in litigation across multiple jurisdictions. According to WKY, as at 30 August 2017, a total of 69 legal proceedings had been filed by the parties in Malaysia, the British Virgin Islands and Singapore.

In August 2017, the Appellant filed the originating summonses HC/OS 163, 164 and 165 of 2017 to wind up Trillion, Double Ace and Faxlink respectively under s 254(1)(i) of the Companies Act (Cap 50, 2006 Rev Ed) (the “Act”). The Appellant gave three grounds for her contention that the Companies should be wound up under the section.

First, the Appellant alleged that the relationship of trust and confidence shared between WKN, WKY and WKC (“the Wong Brothers”) in the running of the Companies extended to the members of their respective families. This relationship of trust and confidence had irretrievably broken down after WKN’s passing as evidenced by the Appellant’s exclusion from participation in the management of the Companies despite her request to be made a director of the Companies.

Second, the Appellant alleged that there had been mismanagement on the part of the directors and/or employees of the Companies. The Appellant contended that the directors and/or employees of the Companies were “obscuring their financial misappropriations”. As such, the Appellant argued that a private liquidator should be appointed to investigate the Companies’ affairs.

Finally, she alleged that there had been a loss of substratum of the Companies. In particular, the Companies had abandoned the businesses which each was set up and/or acquired to do.

In reply, the Respondents (being WKY, WKC, WKY’s son and the respective companies) denied all the allegations made by the Appellant in the three winding up applications. First, the Respondents argued that the relationship of mutual trust and confidence in the running of the Companies had only been amongst the Wong Brothers. When WKN passed away, this relationship ended. Second, there was no mismanagement of the Companies such that a winding up on just and equitable grounds was warranted. Finally, there was no loss of substratum in respect of any of the Companies save for Faxlink. In any event, the Respondents submitted that the Articles of Association (the “Articles”) of Double Ace and Faxlink contained an exit mechanism which the Appellant should utilise before filing a winding up application. WKY and WKC also argued that the court should order that the Appellant’s shares in the Companies be bought out instead of ordering the winding up the Companies.

The decision below

The Judge dismissed the appellant’s application to wind up the Companies on the grounds given in Ma Wai Fong Kathryn v Trillion Investment Pte Ltd and other matters [2018] SGHC 88. The Judge’s decision is summarised below.

First, on the Appellant’s argument that there had been a breakdown of mutual trust and confidence between the Appellant and the other shareholders of the Companies, the Judge found that although the Companies were run on the basis of mutual trust and confidence amongst the Wong Brothers, this relationship did not extend to the Appellant as executrix of WKN’s estate.

Secondly, on the Appellant’s contention that there had been mismanagement of the Companies on the part of the Companies’ directors and/or employees, the Judge found that there was no ground to suspect any lack of probity on the part of the directors of the Companies. The facts raised by the Appellant were mere suspicions.

Finally, as for the Appellant’s contention that there had been a loss of substratum of the Companies, the Judge found that the Appellant did not have any standing to raise this argument. On the facts, the Judge found that it could not be said that the Appellant’s participation in the Companies was predicated on the assumption that the Companies would be conducting any specific business. As for Faxlink, although it was a dormant company, as the Judge had already found that the Appellant had no basis to insist on participating in the management of the Companies, the demise of Faxlink should be left to the managers of Faxlink.

Accordingly,...