Polybuilding (S) Pte Ltd v Lim Heng Lee and Others

• Jurisdiction: Singapore
• Judge: G P Selvam J
• Judgment Date: 16 May 2001
• Neutral Citation: [2001] SGHC 95
• Docket Number: Originating Summons No 600259 of (Summons in Chambers No 600436 of 2001)
• Date: 16 May 2001
• Published date: 07 November 2003
• Year: 2001
• Plaintiff Counsel: Abigail Ang (Thio Su Mien & Partners)
• Citation: [2001] SGHC 95
• Defendant Counsel: Anna Oei (Lim Ang & Partners),Goh Phai Cheng SC (Ang & Partners)
• Court: High Court (Singapore)
• Subject Matter: Whether shareholder properly represented at meeting,Removal of director at extraordinary general meeting,Resolutions,Company seeking court declaration of removal,Majority of directors signing resolution in writing without notice to minority,Companies,Whether notice to minority necessary Whether resolution valid,Articles allowing resolution in writing signed by majority of directors to be valid,Directors,Whether good faith exists,Whether removal of director lawful,Whether company coming to equity with clean hands,Removal

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The application

This was an application by Polybuilding (S) Pte Ltd, the plaintiffs. There were five defendants: (1) Lim Heng Lee; (2) Koh Guan Poh; (3) Loh Song Huat [commat] Loh Sung Wat; (4) Lim Soo Chong [commat] Lim Soo Kong; and (5) Polymotor Pte Ltd.

The application sought remedies against the second defendant only. It asked for a declaration that the second defendant, Koh Guan Poh, ceased to be a director of the plaintiffs from 27 January 2001. It also asked for certain other consequential equitable remedies including an injunction. No remedy was sought against any of the other defendants.

The basis of the application was that the second defendant was removed from his office as director by an ordinary resolution passed at an extraordinary general meeting of the plaintiff company.

At the outset I suggested that it might be better if this matter were heard with oral evidence. The first and second defendants responded positively. The plaintiffs and other defendants were adamantly against it. So,I decided to hear the matter.

At the hearing, it was obvious that no remedy was sought against the first, third, fourth and fifth defendants. It was summarily dismissed as against those four defendants.

The second defendant contested the application. His ground was that the fifth defendant (Polymotor Pte Ltd) was not properly represented at the EGM of the plaintiffs (Polybuilding (S) Pte Ltd) on 27 January 2001 when a resolution was purportedly passed, voting him out of office. This ground was elaborated as follows.

Polymotor at the material time had five shareholders. Four of them were directors. They were:

Lim Soo San	-	Shareholder
Lim Soo Tiah	-	Shareholder and Director
Lim Soo Chong	-	Shareholder and Director
Koh Guan Poh	-	Shareholder and Director
Loh Song Huat	-	Shareholder and Director

On 13 December 2000 three of the four directors without notice to Koh Guan Poh signed a `written resolution` appointing one of them, Loh Song Huat, as the representative of Polymotor at any meeting of the plaintiffs. The written resolution, says the second defendant, was invalid because he, as a director, had no notice of it and accordingly it was unlawful in equity. Since some of those who signed the written resolution, with full knowledge of the invalidity, voted in concert to oust him from the board of Polybuilding, the removal was unlawful.

Article 92, pursuant to which the written resolution was procured, read as follows:

A resolution in writing signed by a majority of the Directors of the Company shall be as valid and effectual as if it had been passed at a Meeting of the Directors duly called and constituted.

Chan Choon Ming v Low Poh Choon It is necessary to consider the law. The following propositions are settled law.

(1) Every director of a company, by reason of being vested with the power to act on behalf of the company becomes a fiduciary. That fiduciary office imposes on every director an equitable duty to act bona fide in the interest of the company as a whole and not for personal and ulterior reasons. Lack of bona fides of the directors is a good ground to invalidate the written resolution. The impropriety of individual directors will be imputed to the company which has notice of the impropriety through its directors. See Chua Boon Chin v JM McCormack [1978-1979] SLR 496 [1979] 2 MLJ 156 , Howard Smith v Ampol Petroleum [1974] AC 821[1974] 1 All ER 1126 and Lee Tak Samuel v Chou Wen Hsien [1984] HKC 409[1984] 1 WLR 1202.

(2) Since all directors collectively owe their duties to the company no director or group of directors can exclude one or more directors from their deliberations or exclude his input of his insight before a decision is...