Re Pek Chuan Development Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong JC
• Judgment Date: 07 May 1988
• Neutral Citation: [1988] SGHC 35
• Docket Number: Companies Winding Up No 379 of 1985
• Date: 07 May 1988
• Year: 1988
• Published date: 19 September 2003
• Plaintiff Counsel: KS Chung (Chung & Co)
• Citation: [1988] SGHC 35
• Defendant Counsel: Alan Wong (Richard Ang & Co)
• Court: High Court (Singapore)
• Subject Matter: Whether company adversely affected by petition,r 30(1) Companies (Winding-Up) Rules 1969,Delay of company in filing affidavit in opposition,Setting aside petition for winding up for want of prosecution,Winding up,Companies,ss 254(1)(i), 257(2) & 285 Companies Act (Cap 50)

This was an application by way of motion by a company, viz Pek Chuan Development Pte Ltd (the company) to set aside a winding-up petition for want of prosecution. At the conclusion of the hearing, I dismissed the application and said I would give reasons later. Here are my reasons.

A company called Pek Chuan Development Pte Ltd (the company) was incorporated on 17 April 1978 with an authorized capital of $5,000,000 divided into 5,000,000 shares of $1 each. The main object of the company is property development. Clause 4 of the memorandum of association specifically provided that certain things could not be done with regard to the corporate existence or character of the company, its shares or a piece of land at Lavender Street/Kallang Bahru (the URA land) without the prior consent of the Urban Redevelopment Authority (URA).

The issued capital of the company was $1,500,000 divided into 1,500,000 shares of which, at the date of the petition, about 30% thereof was owned by Tai Hua Food Industries, 15% thereof by Kuah Hong Kheng (the petitioners) and about 55% thereof by Pek Seng Company Pte Ltd The majority shareholders was controlled by one Pek Tiong Seng (PTS) who consequently became the managing director of the company.

The company was successful in bidding for a piece of land offered by the URA and a contract for sale was signed on 10 July 1978. The company completed the development of a building on the URA land known as Pek Chuan Building consisting of eight shop units and 17 office units. At the date of this petition, ie 24 July 1985, seven units remained unsold.

In or about early 1982, the minority shareholders began to be dissatisfied with the way in which PTS conducted the affairs of the company. On 3 April 1984, Phua Beng Tee, the managing director of Tai Hua Food Industries, filed a winding-up petition in CWU No 104 of 1984 on the ground that it was just and equitable to wind up the company. The specific grounds were:

(a) the improper investment of the company`s funds in a project in Johore;

(b) the arbitrary removal of the powers of the minority directors to run the affairs of the company or to sign cheques;

(c) the improper payment of substantial salary, director`s fees and bonus to PTS;

(d) the attempt by PTS to put the company into further debt by borrowing $4m from United Overseas Bank Ltd.

This petition was subsequently dismissed by consent of the parties. There was, in the course of argument in these proceedings, an issue as to whether the terms of the dismissal constituted res judicata.

The compromise did not lead to enduring peace between the parties. On 24 July 1985, the petitioner filed another petition, the subject matter of this motion, to wind up the company, again on the ground that it was just and equitable to do so under s 254(1)(i) of the Companies Act (Cap 50). The specific allegations in support of the petition are:

(a) PTS made an ultra vires payment;

(b) PTS procured the payment to himself, wrongfully, of a bonus of $245,703 notwithstanding counsel`s opinion against it;

(c) PTS wrongfully paid himself a monthly salary of $6,000 pm;

(d) PTS`s wilful default and refusal to answer the queries of shareholders;

(e) complete loss of confidence by the minority shareholders in PTS who continued to manage the company in an oppressive and high-handed manner;

(f) the extinguishment of the substratum of the company, which was the development for sale of Pek Chuan building;

(g) the company was analogous to a partnership;

(h) the misconduct of the directors as reported on 21 May 1987 by a firm Kaka Singh, an accountant firm of Touche Ross & Co, a firm of public accountants, upon an examination of the company`s accounts.

The petition was endorsed with a date of hearing on 11 October 1985. The petition was served on the company and the Registrar of Companies on 26 July 1985, two days after its filing. All other requirements of the Companies (Winding-Up) Rules 1969 had been complied with.

When the petition came on for hearing on 11 October 1985 on a normal motion day, it was adjourned to a special date for hearing to be fixed by mutual consent of the parties. On that day, the company had not filed any affidavit in opposition to the petitioners. After the adjournment, the following events took place:

(1) 28 November 1985

Kuah Hong Kheng, a director, filed an application in originating summons no 144 of 1986 for an order to inspect the accounting records of the company by an approved liquidator.

(2) 14 July 1986

Notice of change of solicitors filed by petitioners.

(3) 19 October 1986

Order made in terms of application in originating Summons No 144 of 1986.

(4) 24 April 1987

The company filed an affidavit exhibiting three affidavits of PTS filed in CWU No 104 of 1984.

(5) 20 May 1987

Notice of change of solicitors for the petitioners filed.

(6) 20 May 1987

Notice of intention to proceed filed by new solicitors for petitioners.

(7) 28 May 1987

Company filed a motion to dismiss the petition without an accompanying affidavit. Motion fixed for hearing on 17 July 1987.

(8) 6 July 1987

PTS filed his affidavit in opposition to winding up of the company.

(9) 9 July 1987

Company filed affidavit of Susan Leong, a legal assistant in Chung & Co, their solicitors, setting out certain disputes and negotiations with the petitioners relating to the affairs of the company.

(10) 14 July 1987

Petitioners filed two affidavits in answer to PTS`s affidavit of 6 July 1987.

(11) 17 July 1987

Hearing of motion to dismiss petition adjourned to another date on application of solicitors for the company and against the objection of solicitors for the petitioners.

(12) 28 August 1987

Company filed an ex parte application S/C No 5121/87 for an order pursuant to s 285 of the Act to examine Kaka Singh on the contents of his report dated 21 May 1987; hearing was adjourned for two weeks for application to be served on petitioners.

(13) 4 September 1987

Ex parte application S/C No 5121/87 served.

(14) 9 September 1987

Petitioners filed affidavit of Kuah Hong Kheng in reply to PTS`s affidavit of 6 July 1987.

(15) 10 September 1987

Company`s solicitors wrote to registrar to vacate hearing date (ie 22 September 1987) of motion to dismiss; solicitors for petitioners objected.

(16) 11 September 1987

Hearing of ex parte application S/C No 5121/87 adjourned to a date to be fixed and for service of application on Touche Ross & Co

(17) 11 September 1987

Company`s solicitors wrote to petitioners` solicitors asking why petitioners were not proceeding with petition as more than two years had elapsed.

(18) 12 September 1987

Petitioners` solicitors replied that delay due to company making many applications, including application to dismiss the petition, and that petitioner would apply for hearing dates once motion to dismiss was withdrawn.

(19) 22 September 1987

Hearing of motion to dismiss petition again adjourned on application of company against objection of petitioners, with costs ordered against company.

(20) 3 December 1987

Motion to dismiss fixed for hearing on 28/29 March 1988.

(21) 23 February 1988

Company filed application (S/C No 1114/88) to remove affidavit of Kuah Hong Kheng dated 14 July 1987 or alternatively to strike out report of Touche Ross & Co.

(22) 26 February 1988

Hearing of ex parte application S/C No 5121/87 adjourned...