Ng Kian Huan Edmund v Suying Metropolitan Studio Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Chua Lee Ming J
• Judgment Date: 05 March 2019
• Neutral Citation: [2019] SGHC 56
• Court: High Court (Singapore)
• Hearing Date: 12 April 2018,11 April 2018,22 March 2018,03 April 2018,10 April 2018,05 April 2018,04 April 2018,21 March 2018,25 April 2018,20 April 2018,19 April 2018,13 April 2018,06 April 2018,28 March 2018,24 April 2018,18 April 2018,17 April 2018,27 March 2018,20 March 2018,23 March 2018
• Docket Number: Suit No 867 of 2015
• Plaintiff Counsel: Tan Chee Meng SC, Kerry Chan, Paul Loy and Jitr Vilaivongse (WongPartnership LLP)
• Defendant Counsel: Boey Swee Siang, Lin Yuankai, Selina Toh and Just Wang (Bird & Bird ATMD LLP),William Ong, Lee Bik Wei and Robin Teo (Allen & Gledhill LLP),Randolph Khoo and Sally Tan (Drew & Napier LLC)
• Subject Matter: Companies,Oppression,Minority shareholders,Equity,Remedies,Indemnity
• Published date: 16 May 2020

Chua Lee Ming J: Introduction

In 2012, the plaintiff, Mr Ng Kian Huan, Edmund (“Edmund”), the 3rd defendant, Ms Tan Teow Feng Patty (“Patty”), and two others agreed to join forces and formed a new company, Suying Metropolitan Studio Pte Ltd (“SMSPL”). Edmund and Patty were the major shareholders. Edmund was then running an architectural firm, Metropolitan Office Experimental (“MOX”), while Patty ran an interior design company, Suying Design Pte Ltd (“SDPL”). Patty was planning to retire by 2012 or 2013 and the plan was for Edmund to continue to run the business. Unfortunately, the joint enterprise did not last long. The disputes that arose became intense and personal and resulted in the present proceedings in which both Edmund and Patty have made numerous allegations against each other.

On 24 August 2015, Edmund commenced this action against SMSPL (the 1st defendant), SDPL (the 2nd defendant) and Patty. Edmund’s main claim was that of minority oppression against Patty, pursuant to s 216 of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”). As against SMSPL, Edmund sought certain orders in relation to, among other things, the director’s fees and dividends that he had received as well as those that were outstanding. Edmund also sought orders requiring SDPL and Patty to, among other things, pay certain sums of money back to SMSPL.

SMSPL counterclaimed against Edmund for, among other things, repayment of director’s fees and dividends received by Edmund, breach of director’s duties, and breach of duties of good faith and fidelity. SMSPL’s counterclaim also included conspiracy claims against Edmund and MOX (the 2nd defendant in the counterclaim), and against Edmund and Ms Chong Chin Fong (“Jazz”) (the 3rd defendant in the counterclaim). Jazz is Edmund’s wife and was, until the disputes started, a close friend of Patty.

Initially, Patty’s counterclaim was for an order to authorise proceedings in SMSPL’s name or on behalf of it, against Edmund. After Patty filed her defence and counterclaim, SMSPL amended its defence to include its counterclaim against Edmund. Patty’s counterclaim is therefore moot save that Patty counterclaims for the costs of having had to raise her counterclaim.¹

After the witnesses had given their evidence, parties exchanged written closing submissions on 11 May 2018 and reply closing submission on 25 May 2018. On 4 July 2018, SDPL filed a response to three points in Edmund’s reply submissions and Edmund filed his response on 13 July 2018.

Background

Jazz first introduced Edmund to Patty on 10 November 2011. A second meeting followed sometime in December 2011. A third meeting was held later, also in December 2011, in the presence of Mr Lim Chai Boon (“Chai Boon”), an architect and partner in another architectural company, Swan & Maclaren Pte Ltd (“Swan & Maclaren”). A fourth meeting was held in early January 2012 between Edmund, Patty, Chai Boon, and Ms Anita Chui (“Anita”), who owned an interior design firm, Chiu Design Associates Pte Ltd (“Chiu Design”). Anita and Chai Boon were long-time friends of Patty, and were invited to invest in SMSPL.²

These four meetings culminated in an oral agreement among Edmund, Patty, Anita and Chai Boon (“the Oral Agreement”). SMSPL was subsequently incorporated on 20 February 2012 (“the Incorporation Date”). Patty held 40% of SMSPL’s shares. Edmund held 35%, Anita held 20% and Chai Boon held 5%.³ Chai Boon did not pay for his shares and eventually decided to withdraw from SMSPL. On 7 July 2014, Chai Boon’s shares (which had been paid for by Patty by then) were transferred to one Mr Shawn Lim (“Shawn”) who was then a director and an employee of SMSPL. Shawn resigned as an employee on 4 August 2014 and ceased to be a director of SMSPL on 13 August 2014. His 5% shareholding was transferred to Patty on 21 August 2014 and on 24 March 2015, Patty transferred 5% of her shareholding in SMSPL to Ms Martinez Gejane Siman (“Ane”), a former employee of SDPL.⁴

It was common ground that the Oral Agreement was for a merger of MOX and SDPL to form SMSPL, and that all new businesses would be undertaken by SMSPL. Following the incorporation of SMSPL, all the employees of MOX and SDPL were transferred to SMSPL. Foreign staff nominally continued to be employed by MOX and SDPL as their employment passes were not transferrable. Chiu Design had ceased operations before SMSPL was incorporated.⁵

What was in dispute was the treatment of amounts received by MOX and SDPL from projects that were in existence on the Incorporation Date (“pre-incorporation projects”). Edmund alleged that the agreement was that the amounts received by MOX and SDPL, pursuant to invoices dated after the Incorporation Date, were to be transferred to SMSPL, after deducting the expenses incurred.⁶ Patty’s version was that MOX and SDPL would continue to own the revenue from their respective pre-incorporation projects (even if invoiced after the Incorporation Date), but MOX and SDPL had to reimburse SMSPL for the use of its resources (primarily manpower).⁷

From 2012 to 2015, MOX and SDPL effected various transfers of monies to SMSPL. The reasons for these transfers are in dispute. Edmund and Patty each argued that these transfers supported their respective versions of the Oral Agreement.

Edmund received $200,000 as director’s fee and $48,700.05 as dividends for 2012. As for 2013, Edmund’s director’s fee was $315,000 (of which he has received $50,000) and his share of dividends was $280,000 (of which he has received $150,000). In these proceedings, SMSPL and Patty alleged that the director’s fee paid to Edmund for 2012 was a loan and that it was agreed on 22 June 2015 that with respect to Edmund’s director’s fee for 2013, the outstanding amount of $265,000 would be loaned to SMSPL as working capital.⁸ SMSPL and Patty further alleged that the declarations of dividends for 2012 and 2013 were made under a mistake of fact as to what SMSPL’s profits were.⁹

Patty had indicated to Edmund by March 2015 that she intended to go on a “sabbatical leave” and would retire in June 2015. SMSPL would then be left to Edmund to run,¹⁰ with the assistance of Ane. Ane was the new design director (though not appointed to SMSPL’s board), and, as stated earlier, had been given a 5% shareholding in SMSPL.¹¹

However, various disagreements arose between Edmund and Patty. On 13 July 2015, Edmund informed Patty and Ane that he intended to leave SMSPL and that he was prepared to give three months’ notice. The three of them agreed to meet again in October 2015 “to put in place the closure of the company”.¹²

On 15 July 2015, Patty withdrew a total amount of $1,164,580 from SMSPL’s bank account with UOB for herself. This amount was withdrawn by way of 23 cheques for $50,000 each and one cheque for $14,580. All 24 cheques were signed by Patty. The reason for the multiple cheques was that cheques for sums above $50,000 required Edmund’s signature. Patty claimed that these payments were meant to be her gratuity and adjusted pay for the period from January to June 2015.¹³ Patty further claimed that she subsequently realised she had been overpaid by mistake. Patty returned the alleged excess amount of $492,580 to SMSPL’s account on 27 July 2015.¹⁴ Edmund disputed Patty’s claims to her gratuity and pay adjustment.

Edmund discovered that Patty was withdrawing monies from SMSPL’s bank account and on 21 July 2015, Edmund learnt from UOB that $1.15m (comprising the 23 cheques for $50,000 each) had been paid out to Patty on 15 July 2015.¹⁵ Edmund subsequently made various requests (including requests through his lawyers) for SMSPL’s financial documents. One of the issues in dispute is whether Edmund was denied access to SMSPL’s financial documents.

Subsequently, sometime between 13 July to 25 July 2015, Edmund was removed as a joint signatory and account holder of SMSPL’s bank account.¹⁶

On 29 July 2015, Patty signed off on nine debit notes from SDPL to SMSPL amounting to $1,765,057 (“the Debit Notes”).¹⁷ Patty deducted a total amount of $230,000 allegedly for drafting services performed by SMSPL. The total amount payable to SDPL was therefore $1,535,057 before GST. After adding GST, the total amount became $1,642,510.99. Patty signed nine cheques in favour of SDPL for the total amount of $1,642,510.99. This amount was paid out to SDPL on 30 July 2015.¹⁸ SMSPL and Patty alleged that these were returns of various loans from SDPL to SMSPL. Edmund disputed this.

On 12 August 2015, Edmund received a notice of an extraordinary general meeting (“EGM”) to be held on 27 August 2015, to propose payment of consultancy fees to SDPL amounting to $640,532 for 2012, $794,993 for 2013 and $329,532 for 2014. Edmund disputed SDPL’s entitlement to charge consultancy fees. Patty and Ane subsequently agreed to the withdrawal of the notice of the EGM, subject to the assent of the other shareholders.¹⁹ As no response had been received from Anita, on 24 August 2015, Edmund commenced the present action and filed Summons No 4106 of 2015 for, among other things, an injunction to restrain SMSPL from holding the EGM on 27 August 2015. On 26 August 2015, Anita replied that she agreed to withdraw the notice of the EGM. On the same day, a consent order was recorded to the effect that among other things, the proposed EGM would not be held and SDPL undertook to pay the sum of $1,642,510.99 to its solicitors to be held by them until further order.

Meanwhile, on 25 August 2015, Edmund, Patty, Anita and Ane met and agreed that the directors would work towards the cessation of SMSPL’s operations by October 2015.²⁰ A list of projects was drawn up, with various courses of actions to be undertaken by the respective directors-in-charge.²¹ Edmund’s last day of work at SMSPL was 12 October 2015. He was not paid his salary for the period from 1 to 12 October 2015, which amounted to $4,063.35.

On 9 October 2015, Edmund filed...