Re Eng Cheong Peng Kee Pte Ltd

• Jurisdiction: Singapore
• Judge: Christopher Lau JC
• Judgment Date: 27 April 1998
• Neutral Citation: [1998] SGHC 139
• Date: 27 April 1998
• Subject Matter: Order to purchase plaintiff's shares at a fair value without any discount,Date of valuation of shares,Whether winding up appropriate,Appropriate remedy in circumstances of case,Oppression,Companies,s 216 Companies Act (Cap 50, 1994 Ed),Relief under s 216,Application for relief,Whether propensity to oppress minority and disregard interests of minority shareholder still existed,Words and Phrases,Whether full rectification of situation taken place,'Oppressive',s 216 Companies Act (cap 50, 1994 Ed)
• Docket Number: Originating Summons No 935 of 1996
• Published date: 19 September 2003
• Defendant Counsel: Lim Chor Pee and Jack Lee (Chor Pee & Partners),Wong Meng Meng and Chou Sean Yu (Wong Partnership)
• Court: High Court (Singapore)
• Plaintiff Counsel: Harry Elias, Audrey Thng and Chan Kia Peng (Harry Elias & Partners)

Judgment:

CHRISTOPHER LAU JC

Cur Adv Vult

This is an application by the plaintiff under s 216 of the Companies Act (Cap 50, 1994 Ed) (the Act) for relief. Her complaint is that the first, second and third defendants have conducted the affairs of the fourth defendant company (ECKP (S)) and its subsidiary companies Eng Cheong Peng Kee (Hong Kong) Ltd (ECPK (HK)), Eng Cheong Peng Kee (Malaysia) Sdn Bhd (ECPK (M)), ECPK Enterprises Pte Ltd (ECPK Enterprises) and have exercised their power in a manner that is oppressive or in disregard of her interests as a shareholder.

2. Background

The following facts are not in dispute: 2.1. The plaintiff is a member and a director of ECPK (S). ECPK (S) was incorporated on 14 June 1948 and has an issued and paid up capital of 10,000 shares at $100 per share. Its registered office is at 15 Hong Kong Street, Singapore.

2.2. The plaintiff became a shareholder of ECPK (S) sometime about 18 January 1973 when her late mother transferred her entire shareholding comprising of 1,452 shares in the issued and paid up capital of ECPK (S) to the plaintiff. The plaintiff`s late mother paid for these 1,452 shares. The plaintiff has not, at any time, received any shares from the first defendant. The shares which were transferred to her by her late mother represent 14.52% of the issued and paid up capital of ECPK (S).

2.3. On about the same date, that is, 18 January 1973, the plaintiff was appointed a director of ECPK (S).

2.4. The rest of the shareholding in ECPK (S) is presently held by the following persons:

The first defendant	3,253	32.53%
The second defendant	3,066	30.66%
(the plaintiff`s half brother)
The third defendant	400	4%
(the plaintiff`s cousin)
Low Kee Wah	400	4%
(the third defendant`s half brother)
Low Kee Cheong	400	4%
(the third defendant`s half brother)
Au Yong Woon	233	2.33%
(mother of Low Kee Cheong and Low Kee Wah)
Ong Geok Mui	396	3.96%
(mother of the third defendant and Low Kee Chuan)
Low Kee Chuan	400	4%
(the third defendant`s brother)

2.5. ECPK (S) and its subsidiaries are in essence a family company, dealing in fruit, vegetables and holding real property. ECPK (S) and/or its subsidiaries have not, at any time, since their respective dates of incorporation, been involved in any other business.

2.6. Sometime on or about 4 March 1974, the first defendant gave and transferred to the second defendant 1,593 shares in ECPK (S).

2.7. On the following dates, the following additional shares were purchased by the first defendant from the following transferors. The second defendant registered these shares in his own name, without the first defendant`s knowledge and in breach of trust:

Date	Transferor	No of shares
19 July 1983	Low Yoke Chye	125
14 September 1985	Low Peng Hai	1,196
14 September 1985	Low Ee Gin	315
14 September 1985	Low Kee Eng	125
14 September 1985	Low Peng Hock	1,152

. On 14 September 1985, 4,506 shares were thus registered in the second defendant`s name.

2.8. On 10 March 1992, after the first defendant threatened to report the second defendant for criminal breach of trust, the second defendant transferred, free of charge, 1,440 shares to the first defendant. These 1,440 shares were part of the 4,506 shares set out in [para ] 2.6 and 2.7 above.

2.9. ECPK (S) wholly owns the following subsidiaries:

2.9.1. ECPK (HK);

2.9.2. ECPK (M);

2.9.3. ECPK Enterprises; and

2.9.4. ECPK Technologies Pte Ltd.

. I refer to ECPK (S), ECPK (HK), ECPK (M) and ECPK Enterprises hereinafter collectively as `the ECPK Group` or `ECPK (S) and its subsidiaries`.

2.10. ECPK (HK) is in the business of fruiterers and greengrocers and was incorporated on 1 March 1955.

2.11. ECPK (M) is also in the business of fruiterers and was incorporated on 31 March 1967.

2.12. ECPK Enterprises is a property holding company and in the business of leasing properties at Eng Cheong Tower, North Bridge Road, Singapore. It was incorporated on 14 May 1970.

2.13. ECPK Technologies Pte Ltd is a dormant company.

2.14. The only directors of ECPK (HK) and ECPK Enterprises are the first, second and third defendants and the plaintiff. The four of them, together with one Mdm Yap Yoke Ying, are the directors of ECPK (M).

2.15. The objects for which ECPK (S) was established are as follows:

2.15.1. to carry on in Singapore and Malaysia and in any part of the world, the business of fruiterers and greengrocers, bacon factors and rice and cereal merchants, bakers, butchers, meat salesman, butter factors and salesmen, cheesemongers, corn and flour merchants, cheese factors and agents, dairymen, egg merchants and salesmen, poulterers and general provision merchants, and to buy, sell, manufacture and deal in goods, stores and consumable articles of all kinds as wholesalers and retailers and to transact every kind of agency business, and generally to engage in any business or transaction, which may seem to ECPK (S) directly or indirectly conducive to its interests;

2.15.2. to purchase or otherwise acquire all or any part of the business, property and liabilities of any company, society partnership or person, formed for all or any part of the purposes within its objects and to conduct and carry on, or liquidate and wind up, any such business;

2.15.3. to purchase, take on, lease, or otherwise acquire for the purposes of ECPK (S), any estates, lands, buildings, easements or other interests in real estate, and to sell, let on lease, or otherwise dispose of or grant rights over any real property belonging to ECPK (S), and other objects set forth in its memorandum of association.

2.16. Although ECPK (HK), ECPK (M) and ECPK Enterprises are wholly owned subsidiaries of ECPK (S), the accounts of these subsidiaries are not consolidated with that of ECPK (S). All the resolutions and share registers of ECPK (HK) and ECPK (M) are kept in Singapore. Secretarial services to these two subsidiaries are rendered by Elite Management Services Pte Ltd, which is a company based in Singapore. Furthermore, the control, direction and all management decisions regarding these two subsidiaries are from Singapore.

2.17. From 1973 to about 1975, the plaintiff was, together with the first defendant, actively involved in the management of ECPK (S). During this period the plaintiff was also involved in the construction of Eng Cheong Tower and in setting up the administration of ECPK Enterprises. Since about 1975 (except for the period between late 1984 to mid 1989 when the plaintiff was not in Singapore), the plaintiff has managed and continues to manage the business of ECPK Enterprises.

2.18. Sometime in 1984, the firstt defendant, who is now 84 years old, suffered a debilitating stroke. As a result, he became and still is semi-paralysed and wheelchair bound. His state of health is such that he requires 24 hours nursing and medical care paid for by ECPK (S). He stopped going to the offices of ECPK (S) and its subsidiaries. Annual general meetings are conducted at the first defendant`s house at 2C, Amber Road, Singapore.

2.19. The second defendant has, since that period, run the business of ECPK (S), ECPK (HK) and ECPK (M).

3.1. Events leading to the action

Sometime in October/November 1995 during the course of one of the plaintiff`s regular visits to the first defendant, the first defendant told both the plaintiff and her husband, Tan Kok Quan (TKQ) that he had been travelling to Hong Kong and Shanghai. The first defendant said that he was about to enter into contracts to purchase canned and dried food products from Shanghai. He also said that he would be going to Shanghai. He also said that he would be going to Shanghai in about a fortnight`s time to finalise the contracts and to sign the same. When TKQ asked him who had accompanied the first defendant in his `business` travels, the first defendant`s reply was that he was accompanied by his nurse and his daughter-in-law (a housewife) who had acted as his interpreter. Further, to TKQ`s specific question as to whether the second defendant had accompanied the first defendant, the first defendant`s response was no. The first defendant`s response alarmed the plaintiff and TKQ. They were concerned that the first defendant, by his alleged conduct, might prejudice and/or expose ECPK (S) or its subsidiaries to liability.

3.2.Acting on her concern, the plaintiff telephoned the second defendant on the day following the visit. During this telephone conversation (the October/November 1995 telephone conversation) the plaintiff asked the second defendant if he knew of the first defendant`s intention to enter into the contracts which the first defendant had told TKQ and the plaintiff about. The second defendant`s response was 3.2.1. the first defendant`s travels were not for the business of ECPK (S) and/or its subsidiaries but were for the first defendant`s personal holiday;

3.2.2. there were no contracts as he had `undone` what the first defendant had done.

3.3.Sometime in January 1996, after the plaintiff returned from her usual year-end holidays with her sons, she saw ECPK (HK)`s draft accounts for the financial year ended 30 June 1995. She noticed that: 3.3.1. the travelling expenses for that company had increased by 1,700% from HK$23,877 for the financial year ended 30 June 1994 to HK$426,886 for the financial year ended 30 June 1995. No explanatory notes were given for the said 1,700% increase;

3.3.2. someone had, by way of amendment, pencilled or inked `1` and `2` beside the item `Outport travelling` which was reflected as a single item in the typewritten version in the 1995 draft accounts. This written amendment was adopted in the final audited account, which separated `Outport travelling` into `Outport travelling - 1` and `Outport travelling - 2`. `Outport travelling` had previously never been differentiated in this manner. Again, no explanatory notes were provided in the accounts as to why there was such differentiation;

3.3.3. the foreign exchange gain for the year ended 30 June 1995 had increased by about HK$2m (from HK$2.5m to HK$4.5m)...