Pelican Engineering Pte Ltd v Lim Wee Chuan and Another

• Judge: Goh Joon Seng J
• Judgment Date: 03 August 1999
• Neutral Citation: [1999] SGHC 202
• Citation: [1999] SGHC 202
• Defendant Counsel: Cavinder Bull (Drew & Napier) and Catherine Lim Chui Ling (Cheong Hoh & Associates)
• Published date: 19 September 2003
• Plaintiff Counsel: Joseph Liow Wang Wu (Derrick Ravi & Partners)
• Date: 03 August 1999
• Docket Number: Suit No 437 of 1998
• Court: High Court (Singapore)
• Subject Matter: Res judicata/issue estoppel raised by plaintiff during application for summary judgment,Summary judgment,Civil Procedure,Res Judicata,Whether a wrong judgment was by itself ground to prevent application of res judicata,Order 14 judgment granted,Assessment of damages,Allegations of fraud,Whether res judicata or issue estoppel operated in respect of matters raised by defendant,Pleadings,Issue estoppel,Whether failure to plead estoppel prevented plaintiff from raising estoppel at assessment hearing,No requirement for pleadings to be closed before assessment hearing,Whether plaintiff required to file reply specifically pleading estoppel,Whether already canvassed in earlier proceedings

: On 25 May 1995, the plaintiff company (`the Company`) commenced an action against the defendants in Suit 888/95. The particulars of Suit 888/95 are set out in [para ] 18 infra. On 15 July 1997, four of the six directors cum shareholders resolved as directors to compromise the suit on payment of $4,657.28 by the defendants to the Company. Following payment of the said sum of $4,657.28, Suit 888/95 was discontinued on 13 August 1997. In the meantime, the other two directors cum shareholders Law Mui Hoon and Chow Eng Choon (`the plaintiffs`) commenced action in OS 888/97 for an order to restrain the other members of the board and the Company from discontinuing Suit 888/95. By the time OS 888/97 was heard, Suit 888/95 had been discontinued. The court then granted leave to the plaintiffs to commence this suit in the name of the Company with costs incurred by the Company to be borne by the plaintiffs.

Pursuant to that order, the Company commenced this action against the defendants. It was in fact prosecuted by Eng Sook Boon, the husband of Law Mui Hoon. I dismissed the Company`s claim with costs to be borne by the plaintiffs. The Company has appealed to the Court of Appeal. I now give my reasons. [The appeal was withdrawn - Ed.]

The background

Eng Sook Boon floated the idea of incorporating the Company. Before its incorporation, he called several meetings of potential investors amongst whom were the defendants.

The Company was eventually incorporated on 2 May 1989 by Eng Sook Boon. He then invited his business associates to invest in the Company as shareholders. When the Company began operation, its paid-up capital was 300,000 shares of $1each, held as follows:

(i) Law Mui Hoon - 100,000 shares

(ii) Chow Eng Choon - 25,000 shares

(iii) Lim Eng Siong - 50,000 shares

(iv) Lim Cheng Gee - 25,000 shares

(v) Goh Eng Hian - 50,000 shares

(vi) Teong Uk Choo - 50,000 shares

It is admitted that Law Mui Hoon holds the shares in trust for Eng Sook Boon and `is under Eng Sook Boon`s influence and control`.

Goh Eng Hian is the brother of the second defendant. In November 1989, he transferred his shares to his sister Goh Bee Leng who is still the holder of those shares. Teong Uk Choo is the wife of the first defendant.

The Company was active for just over two years, 1989 to 1991. During that period, it had three directors Law Mui Hoon, Chow Eng Choon and Lim Eng Siong. But it was Eng Sook Boon who was managing the Company`s affairs. He in fact received a salary of $3,500 paid to him under the name of Law Mui Hoon. But his attention was focused on his own company Cattell Engineering Pte Ltd.

In or about September 1989, the defendants and Eng Sook Boon came to know that the sole shareholder of TS Engineering & Electrical Pte Ltd (`TS Engineering`) Soh Cher Hee intended to sell his interest in TS Engineering. TS Engineering was eligible to tender for public sector construction projects.

The defendants and Eng Sook Boon had discussions with Soh Cher Hee. Eventually, Soh Cher Hee`s shares in TS Engineering were transferred to the defendants in two tranches. On 1 November 1989, Soh Cher Hee transferred 12,500 shares to each of them. The transfers stated that the price of the 25,000 shares was $36,750.00. In fact, it was $40,000.00. This discrepancy is not material to these proceedings. The payment of $40,000.00 was by cheque issued by the Company. Lim Eng Siong was one of the two signatories of the cheque.

After the transfer of the first tranche of shares, the defendants assumed control of TS Engineering. At that time, TS Engineering had secured a contract from the Public Utilities Board for some works in the western part of Singapore. TS Engineering subcontracted part of those works to the Company.

On 17 July 1990, the second tranche of 75,000 shares was transferred to the defendants at the stated price of $117,750. But Soh Cher Hee was in fact paid $65,000. The discrepancy is also not material to these proceedings.

TS Engineering is now a successful company.

In late 1990, there were negotiations between some of the shareholders and Eng Sook Boon with a view to Eng Sook Boon buying over their shares or the assets of the Company. However, no agreement was reached.

Following Eng Sook Boon`s refusal to buy over their shares or the assets of the Company, there was an attempt by those shareholders to sell off the Company`s assets to third parties. But this was prevented by an injunction obtained by Law Mui Hoon in OS 238/91 on 14 March 1991. Thereafter, Eng Sook Boon remained in full control of the Company through Law Mui Hoon and Chow Eng Choon.

Then, notwithstanding the objection of Lim Eng Siong, Eng Sook Boon was appointed the alternate director of Law Mui Hoon on 9 October 1991. This was the official position he held until his resignation on 16 May 1995. Although Eng Sook Boon was in total control, the Company remained inactive and its affairs neglected.

In 1992, Lim Eng Siong as a director of the Company was served a summons by the Registry of Companies for failing to file the annual returns of the Company. He paid a fine of $1,000.

Although the Company had ceased operations, Eng Sook Boon did not repatriate its foreign workers. Consequently, Keppel Insurance Pte Ltd`s bond for securing the repatriation of these workers was called on by the Government. Keppel Insurance Pte Ltd having paid $12,000 to the Government, on 19 February 1993 demanded from Lim Eng Siong reimbursement of the same under the indemnity signed by him and Chow Eng Choon as directed by Eng Sook Boon. Eventually, Lim Eng Siong paid $6,000 in discharge of his liability under the indemnity.

On 25 May 1995, Eng Sook Boon, Law Mui Hoon and Chow Eng Choon commenced Suit 888/95 against the defendants in the name of the Company without the authority of a resolution of the board of directors. In that action, the Company alleged that the defendants were its trustees in respect of their shares in TS Engineering. They also alleged that the defendants were de facto directors of the Company and that they were in breach of their fiduciary duties to the Company by refusing to acknowledge the Company`s ownership of the shares in TS Engineering and by refusing to account therefor.

In or about 1995, the Attorney General sued the Company and obtained judgment in default of appearance for $9,651.20 for foreign workers levy and $700 for costs. The failure to repatriate the foreign workers resulted in the Company having to pay a further sum of $2,000 for foreign workers levy in 1996.

Because of the Company`s failure to repatriate its foreign workers, Lim Eng Siong as a director was `blacklisted` by the Ministry of Labour. Consequently, in July 1996, when he applied for permission to employ a foreign domestic maid for his family, his application was turned down. He had to pay $700 on behalf of the Company before his application was approved.

On 9 May 1997, Lim Eng Siong received another Registry of Companies summons for failing to hold the Company`s annual general meeting and for failing to lodge the annual returns. Because the affairs of the Company were being neglected by Eng Sook Boon and he as a director had to bear the consequences, Lim Eng Siong decided to take control of the Company to put it in order.

Accordingly, on 12 June 1997, Lim Eng Siong issued a notice as a director calling for an extraordinary general meeting (`EGM`) to be held on 2 July 1997. The meeting was to discuss, and if thought fit, to pass the resolutions appointing Teong Uk Choo, Lim Cheng Gee and Goh Bee Leng as additional directors of the Company. Another resolution sought was to authorise the directors to take necessary steps to file audited accounts of the Company for the year ended 30 September 1994.

The EGM on 2 July 1997 was attended by all the six shareholders and Eng Sook Boon even though he was not a registered shareholder. It began with the election of Lim Eng Siong as Chairman. Lim Eng Siong then listed the defaults of the Company under Eng Sook Boon`s control. He then said he wanted all shareholders to be appointed board directors so that the affairs of the Company could be attended to and problems resolved. Law Mui Hoon, Chow Eng Choon and Eng Sook Boon objected. They wanted the board to remain as it had been, that is with only three directors Law Mui Hoon, Chow Eng Choon and Lim Eng Siong. When it became apparent that they could not block the resolution from being passed, they stormed out of the EGM. The remaining shareholders then passed the resolutions proposed by Lim Eng Siong.

On or about 11 July 1997, Lim Eng Siong sent out a notice of meeting of the board of directors to be held on 15 July 1997 (`the Board Meeting`). The notice listed the following proposed resolutions for consideration:

(i) To change Company`s registered office to Blk 16 Defu Lane 10 [num ]01-370 Singapore 539197 [Lim Eng Siong`s office].

(ii) To appoint Mr Wee Cheng Hock as Company Secretary in place of existing Company Secretary, Ms Neo Lay Hiang Pamela.

(iii) To discuss Company`s banking matters.

(iv) To discuss High Court case, Re: Pelican Engineering Pte Ltd v Ts Engineering & Electrical Pte Ltd.

(v) To appoint Mr Kong Kau and Mr Tan Chuan Hai as directors of the Company.

The notice of the Board Meeting was sent to all the directors. It was not disputed by Law Mui Hoon and Chow Eng Choon that they received the notice. But they claimed that they received it late. Hence, they could not attend.

The Board Meeting was thus attended by Lim Eng Siong, Lim Cheng Gee, Goh Bee Leng and Teong Uk Choo. The resolutions set out in the notice were passed by the board. In addition, Lim Eng Siong was appointed chairman of the board of directors. The material resolution is resolution (iv). It reads:

(iv) High Court case

That M/S Chua Teck Leong & Partners` appointment as the Company`s solicitors, if valid, be and is hereby terminated.

That upon receiving the final settlement

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