Sim Poh Ping v Winsta Holding Pte Ltd and another and other appeals

JudgeSundaresh Menon CJ
Judgment Date09 April 2020
Neutral Citation[2020] SGCA 35
Citation[2020] SGCA 35
Defendant CounselThe sixth respondent in Civil Appeal No 220 of 2018 in person.,Lee Eng Beng SC, Cheng Wai Yuen, Mark, Chew Xiang, Ho Zi Wei, Lim Wee Teck, Darren (Rajah & Tann Singapore LLP)
Docket NumberCivil Appeals Nos 218, 219 and 220 of 2018
Hearing Date21 October 2019
Plaintiff CounselChristopher Anand s/o Daniel, Harjean Kaur, Keith Valentine Lee Jia Jin and T Varshini (Advocatus Law LLP),Narayanan Sreenivasan SC, Ang Mei-Ling Valerie Freda and Hiren George Jonas (K&L Gates Straits Law LLC)
Published date15 April 2020
CourtCourt of Appeal (Singapore)
Date09 April 2020
Subject MatterCosts,Fiduciary relationships,Equitable compensation,Duties,Remedies,Civil Procedure,Breach,Equity
Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction and overview

These are three related appeals arising out of the decision of the High Court judge (“the Judge”) in Winsta Holding Pte Ltd and another v Sim Poh Ping and others [2018] SGHC 239 (“the Judgment”). In essence, they relate to two main areas. The first concerns the liability of the relevant defendants for alleged breaches of fiduciary duties. The second is closely related to the first inasmuch as if any breaches of fiduciary duties are in fact established, the question arises as to what remedies are available to the plaintiff concerned.

We commence by observing that the former relates, in the main, to factual findings in relation to liability by the Judge in the court below, whilst the latter raises, inter alia, difficult legal issues which have hitherto not been decided definitively by this court.

Not surprisingly, in so far as the former (ie, the issue of liability for alleged breaches of fiduciary duties) is concerned, the inquiry is a fact-centric one that, in turn, engages (in a holistic fashion) all the relevant facts and circumstances of the case. This will, indeed, be evident in the analysis that follows.

In so far as the latter (ie, remedial aspect) is concerned, the difficult legal issue that must be decided by this court relates to the role (if any) of causation when a breach of fiduciary duty has been established. We will explore this – as well as other related issues – later in this judgment. Let us turn now to the factual background to the present appeals.

Facts

Winsta Holding Pte Ltd (“Winsta Holding”) is the holding company, and beneath it were seven subsidiaries (singly, a “Winsta Subsidiary” and collectively, “the Winsta Subsidiaries”). Six of these subsidiaries were primarily in the hostel business, and the last ran a serviced apartments business. Winsta Holding and its 51% shareholder, M Development Ltd (“M Development”), were the plaintiffs in the action below. Because cross-appeals have been brought against the Judge’s decision, we refer to Winsta Holding and M Development collectively as “the Winsta Companies” for convenience. We will also refer hereafter to Winsta Holding as well as the Winsta Subsidiaries as “the Winsta Group”.

The chief antagonists in the action were Mr Sim Poh Ping (“Mr Sim”), Ms Sim Pei Yee (“Ms Lynn Sim”) and Ms Sim Pei San (“Ms Joyce Sim”) (collectively, “the Sims” or the “Sim family”). Mr Sim is the father of Ms Lynn Sim and Ms Joyce Sim. Each of them was a director of Winsta Holding and of all of the Winsta Subsidiaries. The allegations were that they had breached their fiduciary duties by diverting opportunities away from the Winsta Group to their own corporate vehicles or by entering into interested party transactions between the Winsta Group and these corporate vehicles. These are the seven named corporate defendants in the suit below (which are separate and distinct from the Winsta Subsidiaries, and are therefore not to be confused with the latter; see also [17] below); we will refer to them as “the Corporate Defendants”. In addition, the Winsta Companies pursued claims against three other individuals, Mr Kong Weijia (“Mr Dave Kong”), Ms Ng Connie (“Ms Connie Ng”), and Mr Tan Choon Leong (“Mr Shawn Tan”). These individuals allegedly dishonestly assisted the Sims in breaching their fiduciary duties to the Winsta Group. The total value of the claims pursued was in the range of $16.3m to $39.8m, as quantified by the Winsta Companies’ expert. The thirteen defendants are collectively referred to as “the Defendants”.

The Judge explained his holdings in the Judgment. The Judge found that the Sims had committed a large number of breaches of fiduciary duty against the Winsta Group. Some of these included the diversion of corporate opportunities from a Winsta Subsidiary to their own vehicles, but most of them concerned interested party transactions where the Sim sisters (Ms Lynn Sim and Ms Joyce Sim) stood on both sides of the transaction. Although liability for breach of fiduciary duty was established, the Judge determined that the burden fell on the Winsta Companies to establish but-for causation, rejecting the rule in the Privy Council decision (on appeal from the Supreme Court of Canada) of Brickenden v London Loan & Savings Co et al [1934] 3 DLR 465 (“Brickenden”, and therefore commonly referred to as “the Brickenden rule”) that had been interpreted (in the Singapore context (though cf the strict reading of the Brickenden rule, as to which see [89] below)) to entail the burden being placed on the wrongdoing fiduciaries instead to prove that their principals would have suffered the loss in any event. The Winsta Companies faced significant difficulties in proving but-for causation, and ultimately only two of their claims, concerning the diversion of two opportunities, succeeded. Mr Dave Kong, Ms Connie Ng and Mr Shawn Tan were also found to have assisted the Sims in carrying out the breaches of fiduciary duty.

The Winsta Companies and some of the Defendants filed appeals against the Judge’s decision. We summarise the thrust of these three appeals briefly. Civil Appeal No 218 of 2018 (“CA 218”) is Mr Sim’s appeal against the Judge’s decision finding him liable for breaching his fiduciary duties towards the Winsta Group. The Judge accepted that the evidence did not show that Mr Sim had an interest or control in any of the corporate defendants which had benefited from the various breaches of fiduciary duty, apart from Overseas Students Placement Centre Pte Ltd (“OSPC”), but nevertheless found Mr Sim to have breached the no-conflict and no-profit rules. Mr Sim alleges that this is a “quantum leap” in reasoning and must be overturned on appeal.

Civil Appeal No 219 of 2018 (“CA 219”) is the appeal brought by the Sim sisters and their corporate vehicles OSPC and Jiu Mao Jiu Hotpot Pte Ltd (“JMJ Hotpot”). By this appeal, the Sim sisters seek to reduce the amount of equitable compensation and costs ordered to be paid to the Winsta Companies.

Civil Appeal No 220 of 2018 (“CA 220”) is the most legally complex of the three appeals. In this appeal, the Winsta Companies appeal against the Judge’s decision to reject Brickenden and require them to prove but-for causation. They say that Brickenden is justified on the basis of authority, principle, and policy, and is particularly apt for this case where they, as principals, face difficulty in establishing but-for causation given that the Sims as directors had such pervasive control over the Winsta Subsidiaries.

We now go into the facts in greater detail.

The parties The Plaintiffs

Winsta Holding, the first respondent in CA 218 and CA 219 and the first appellant in CA 220, was the first plaintiff in the High Court. It is the holding company in a group of companies (viz, the Winsta Group) which are in the hostel and serviced apartments business. The Winsta Group comprises Winsta Holding and the following wholly owned subsidiaries of Winsta Holding (viz, the Winsta Subsidiaries): Evan Hostel Pte Ltd (“Evan Hostel”); Carlisle Hostel Management Pte Ltd (“Carlisle Hostel”); Katong Hostel Pte Ltd (“Katong Hostel”); Pearl Hill Hostel Pte Ltd (“Pearl Hill Hostel”); Queensway Student Hostel Pte Ltd (“Queensway Hostel”); The Hill Lodge @ Mount Vernon Pte Ltd (“Hill Lodge”); and Global Residence Pte Ltd (“Global Residence”).

On 20 May 2015, Winsta Holding and the Winsta Subsidiaries commenced Suit No 491 of 2015 (“the Suit”) in the High Court claiming breach of fiduciary and other duties, knowing receipt, dishonest assistance, conspiracy to injure and/or deceit. The Winsta Subsidiaries were placed under creditors’ voluntary liquidation between 3 August 2015 and 4 August 2015.

M Development, the second respondent in CA 218 and CA 219 and the second appellant in CA 220, was the second plaintiff in the Suit. M Development holds 51% of the issued share capital of Winsta Holding and is a public company listed on the Singapore Exchange. M Development was assigned the claims by the Winsta Subsidiaries in the Suit on 29 October 2015.

The Defendants

Mr Sim, the appellant in CA 218 and the first respondent in CA 220, was the first defendant in the Suit. His daughters, Ms Lynn Sim and Ms Joyce Sim, are the appellants in CA 219 and two of the respondents in CA 220. Mr Sim and Ms Joyce Sim, together with two related companies, held 34% of the shares in Winsta Holding. The remaining 15% of the shareholding was owned by various unrelated third parties.

The directorships of the Sims in the Winsta Group at all material times were as follows: Mr Sim: managing director of Winsta Holding (July 2014 to 22 May 2015), director of Winsta Holding, and director of each of the Winsta Subsidiaries; Ms Lynn Sim: director of M Development (until 28 April 2015), director of Winsta Holding, and director of each of the Winsta Subsidiaries; Ms Joyce Sim: director of Winsta Holding and each of the Winsta Subsidiaries.

Seven companies were made defendants to the action below (viz, the Corporate Defendants). The Corporate Defendants were alleged to have been the vehicles of the Sim family which were used to facilitate the Sims’ wrongdoing, and are as follows: OSPC (ie, Overseas Students Placement Centre Pte Ltd); ATAS Residence Pte Ltd (“ATAS”); Uni-House Pte Ltd (“Uni-House”); Unihouse @ Evans Pte Ltd (“Unihouse@Evans”); JMJ Hotpot (ie, Jiu Mao Jiu Hotpot Pte Ltd); ICS Catering Pte Ltd (“ICS Catering”); and I-Masters Air-Conditional Pte Ltd (“I-Masters”).

In addition (and as alluded to above), claims were brought against three other individuals who were alleged to have dishonestly assisted the Sims in their breaches of fiduciary duty: Mr Dave Kong, the director of ATAS (see the Judgment at [11]), an employee of OSPC (see the Judgment at [40]) and a shareholder in JMJ Hotpot (see...

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