Sharikat Logistics Pte Ltd v Ong Boon Chuan and others

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 02 September 2011
• Neutral Citation: [2011] SGHC 196
• Court: High Court (Singapore)
• Docket Number: Suit No 212 of 2011 (Registrar’s Appeal No 195 of 2011)
• Published date: 05 September 2011
• Year: 2011
• Hearing Date: 22 August 2011,25 July 2011
• Plaintiff Counsel: Kannan Ramesh and Arthur Yap (Tan Kok Quan Partnership)
• Defendant Counsel: Josephine Choo and Quek Kian Teck (WongPartnership LLP)
• Subject Matter: Civil Procedure,Pleadings,Further and better particulars
• Citation: [2011] SGHC 196

Choo Han Teck J:

This was an appeal by the plaintiff against an order by the Assistant Registrar compelling it to provide the further and better particulars of its claim. The plaintiff and the fourth defendant incorporated the fifth defendant as a joint venture company for a single project. They constructed a terraced factory and leased it to tenants. The fifth defendant’s income consists of the rentals. Initially, the plaintiff had 40% of the shares in the fifth defendant and the fourth defendant held the remaining 60%. Sometime between July 2007 and January 2008 the fourth defendant transferred 9% of the shares to the third defendant who is the brother-in-law of the first defendant. The second defendant is the son of the first defendant.

The fourth defendant is a company owned by the first defendant, his wife and her brother, the third defendant. There were initially only two directors in the fifth defendant. One was Phang Say Lang (“Phang”), nominated by the plaintiff and the other was the first defendant. Phang was appointed the supervisor in the construction of the factory. The third defendant was the administrator and manager of the project and was solely responsible for the preparation, verification and submission of all progress claims in the construction of the factory. Phang and the first defendant would be the joint signatories to the fifth defendant’s bank account.

The construction of the factory was awarded by contract to TG Properties Pte Ltd (“TG Properties”), a company in which the first defendant had a 63% shareholding. The contract sum was $3.5m. Another company, TG Realty Pte Ltd (“TG Realty”), in which the first defendant had a 75% shareholding, was appointed the estate agent to secure tenants for the factory. The project architect was one Tan Meow Hwa, who, the plaintiff alleges, did not perform his duties faithfully and did not verify the progress claims submitted by the third defendant. Phang subsequently signed cheque payments for the progress claims in reliance of the architect’s certification. The plaintiff alleges that claims in respect of the air-conditioning work, in progress claims 2 to 10 and the variation works 9 and 10 were in fact not done.

The plaintiff further alleges that the tenants to the factory were secured by the Jurong Town Corporation and not by TG Realty. Yet a claim for an agency fee of $50,000 was made and payment sanctioned by the first defendant-controlled board (because Phang refused to authorise payment). The plaintiff also alleges that the first defendant and the fourth defendant conspired to remove Phang as a director of the fifth defendant and his authority over the signing of the company’s cheques. The requisite board resolutions were accordingly passed, and one of them was the acceptance of Phang’s resignation as director. Phang did not attend the meeting and under Art 83 of the fifth defendant’s Articles of Association, the board meeting was not validly convened. Another attempt was made in February 2009 to remove Phang as director, this time by an extraordinary general meeting of the company, but the meeting was adjourned and no further meeting was held. In December 2010, the first defendant once again attempted to pay TG Realty the sum of $54,600 being the $50,000 agency fee and arrears of management fees. Phang again refused to authorise payment of the cheque. Eventually, in December 2010, the first defendant used his majority shareholding to convene an extraordinary general meeting held on 4 January 2011 in which his son, the second defendant was appointed as alternate signatory to the fifth defendant’s bank accounts, and at the same time, the first defendant was appointed the managing director. Thus, the first defendant was the majority shareholder of the fifth defendant. He and his brother-in-law were the majority at the Board level, and he and his son became signatories to the bank accounts. On 14 February 2011 the first defendant through a board meeting and a shareholders’ meeting obtained resolutions to pay him $7,000 a month in salary, and the second defendant and Phang would be paid $1,000 each. The plaintiff alleges that the resolutions were not bona fide in that no payments were made previously and required partly because the directors had no executive functions. The plaintiff also alleges that the first defendant and the fourth defendant conspired to prevent the fifth defendant from declaring dividends.

The plaintiff thus sued the first defendant for various breaches of duties as a fiduciary, and the third and fourth defendants for...