Sim Yong Teng and another v Singapore Swimming Club

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 01 April 2015
• Neutral Citation: [2015] SGHC 82
• Plaintiff Counsel: Ragbir Singh s/o Ram Singh Bajwa (Bajwa & Co)
• Date: 01 April 2015
• Docket Number: Originating Summons No 144 of 2014
• Hearing Date: 21 January 2015,27 March 2015
• Subject Matter: Administrative Law,Natural Justice,Disciplinary Tribunals
• Published date: 25 February 2016
• Citation: [2015] SGHC 82
• Defendant Counsel: Chan Man Phing and Ng Shu Ping (WongPartnership LLP)
• Court: High Court (Singapore)
• Year: 2015

Chan Seng Onn J: Introduction

Mr Sim Yong Teng and his wife, Mdm Goh Eng Eng (the first and second plaintiffs respectively), are seeking to set aside the decision made by the Management Committee (“MC”) of the defendant, the Singapore Swimming Club (“the Club”), on 8 October 2013 (“the 8 October Decision”), to suspend their membership in the Club. The plaintiffs claim that the decision was made in breach of the rules of natural justice and therefore in breach of the Rules of the Singapore Swimming Club (“the Club Rules”).

In the alternative, the second plaintiff also seeks to set aside the decision on the basis that her membership in the Club was a separate membership from the first plaintiff’s membership and therefore the decision of the MC to suspend her membership was in breach of the Club Rules.

The Factual Matrix The Ground of Suspension

Before delving into the facts, it would be useful to set out the grounds on which the plaintiffs were suspended and the various rules regarding the conduct of MC meetings. The plaintiffs were suspended under rule 15(d) of the Club Rules (“Rule 15(d)”) which reads as follows:

RULE 15 CESSATION OF MEMBERSHIP

…

(d) In the event that a member:- (i) Has been convicted in a court of law of competent jurisdiction of any offence which involves an element of dishonesty or moral turpitude; and which in the opinion of the Management Committee would if such member were permitted to remain as a member place the Club in disrepute or embarrass the Club in any way; (ii) Flees the country to escape criminal proceedings; or (iii) Has become an enemy alien then the membership of such member shall be suspended from the date of the occurrence of such event and the member shall forfeit all rights and claims upon the Club, its property, and funds.

Notwithstanding the foregoing, the member shall have a grace period of 6 months to transfer his membership to a third party pursuant to Rule 7. In the event that the member fails to transfer his membership within the 6 months grace period, his membership shall cease on the expiry of the said period and he shall not be entitled to transfer his membership nor will he have any membership rights.

The plaintiffs were suspended specifically under rule 15(d)(i) above. It is not disputed that the proper reading of rule would entail two distinct steps: a finding that the member has been convicted in a court of law of competent jurisdiction of any offence which involves an element of dishonesty or moral turpitude (“First Requirement”); and the MC must be of the opinion that if such a member were permitted to remain as a member, it would place the Club in disrepute or embarrass the Club (“Second Requirement”). Once the two requirements are satisfied, the membership of such a member will be suspended from the date of the decision of the MC. This suspension is then subject to the clause allowing the member a six-month grace period to transfer his membership to a third party pursuant to rule 7 of the Club Rules on “transferability” of memberships. It is only when this six-month period elapses that the membership ceases.

The quorum requirement for a valid MC meeting is set out in rule 21(c) of the Club Rules which provides that the quorum for an MC meeting shall not be less than one-half the total number of members in the MC. Also, while the MC has the power to co-opt not more than two members into the MC under rule 21(a)(vii) of the Club Rules, the co-opted members have no power to vote on issues to be decided at MC meetings.

With this in mind, I now turn to the salient facts.

The Background

The first plaintiff joined the Club sometime in 1974 or 1975. He is now a life member of the Club. The second plaintiff is an ordinary member of the Club and joined around the same time as the first plaintiff. Collectively, the plaintiffs have a “Family Membership” which is defined in rule 4(n) of the Club Rules to mean “the joint membership of a Honorary Life, Life or Ordinary Member and his or her spouse who has become a member of the Club”.

The Insider Trading Conviction

On 12 October 2012, the first plaintiff was convicted after pleading guilty to various offences under the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“the SFA”) and the Companies Act (Cap 50, 1994 Rev Ed) (“the CA”). One of these convictions was in respect of an offence of insider trading under s 218(2) of the SFA (“the Insider Trading Conviction”). As the Insider Trading Conviction formed the basis on which the MC decided that Rule 15(d) applied, I will briefly discuss the facts and circumstances surrounding the commission of that offence.

In 2006, the first plaintiff was serving as an Executive Chairman and Chief Executive Officer of Sinwa Limited (“Sinwa”). Between May and June 2006, the first plaintiff purchased 849,000 Sinwa shares through Tan Leh Hong (“Hong”), who was at the time his girlfriend and constant companion for about 30 years.

Sometime in December 2006, Sinwa entered into negotiations with Phillip Securities Pte Ltd (“PSPL”) for a potential placement of Sinwa shares. The first plaintiff was involved in the discussions relating to the placement. Prior to the public announcement that an agreement was reached between Sinwa and PSPL, the first plaintiff was told that the proposed price of the placement would be $0.465 per share. On the day before the public announcement of the placement agreement and its terms, the first plaintiff through Hong, sold the 849,000 shares of Sinwa at an average of $0.515 per share. In the two days following the announcement of the placement however, the share price of Sinwa increased from $0.530 on 18 January 2007 to $0.590 on 19 January 2007.

The first plaintiff was subsequently charged and convicted under s 218(2) of the SFA for instructing the sale of Sinwa shares whilst in the possession of information not generally available and which would be expected by a reasonable person to have a material effect on the price of the shares. In the course of pleading guilty to the charge, the first plaintiff admitted to the statement of facts which stated, inter alia, that at the time he instructed the sale of these shares on 16 January 2007, he knew that the information he possessed was not generally available and he also knew that if it were generally available, it might have a material effect on the price or value of the company’s shares.

In mitigation, it was submitted that the offences committed were genuine oversights and not deliberate contraventions. Further, it was submitted that the insider trading offence was not committed with the object of dishonest financial plunder since the share price increased after the placement and the first plaintiff had deprived himself of an even higher profit by selling the shares before the announcement of the placement deal.

The global sentence imposed on the first plaintiff was a fine of $153,000. He was also disqualified from being a director of a company for a period of three years.

The 3 April Decision

On 3 April 2013, the MC decided to suspend the membership of the first plaintiff under Rule 15(d) (“the 3 April Decision”). As the first plaintiff’s membership was a Family Membership, the second plaintiff’s rights and privileges were also revoked by the Club.

The 3 April Decision arose from a complaint from one of the Club members, Gary Oon. Gary Oon alleged that the first plaintiff’s Insider Trading Conviction triggered the application of Rule 15(d). The then General Manager of the Club, Timothy Mark James (“Mark James”), alerted the first plaintiff of the complaint lodged against him. As part of the investigations, the first plaintiff provided Mark James with the charges to which he pleaded guilty, together with the charges taken into consideration for the purposes of sentencing.

The first plaintiff was also informed that before the MC made a decision on whether Rule 15(d) applied, he would be given an opportunity to be heard on both the First Requirement and Second Requirement (see [4] above). Through a letter from his solicitors, the first plaintiff explained that his conviction did not involve a finding of dishonesty by the court. As to whether the First Requirement and Second Requirement were satisfied, the first plaintiff said that these were matters for the MC to decide.

Nevertheless, the Club was prepared to afford the first plaintiff an opportunity to appear at the next MC meeting. The first plaintiff appeared before the MC on 26 December 2012. He addressed the First Requirement by stating that his Insider Trading Conviction did not involve any moral turpitude since no issues of morality were raised by the court. As for the Second Requirement, the first plaintiff highlighted his long service to the Club through his presence on various sub-committees and even disciplinary committees.

The MC, as advised by its Legal and Rules Committee, obtained legal advice from the Club’s solicitors. The legal opinion from the Club’s solicitors was presented to the MC on 27 March 2013. The President of the MC, Chua Hoe Sing, instructed the members to consider the matter in order for a decision to be made at the next MC meeting.

At the meeting of 3 April 2013, the MC unanimously decided to suspend the membership of the first plaintiff pursuant to Rule 15(d)(i). As a result, the second plaintiff’s rights and privileges were also revoked. The plaintiffs were given a period of six months to transfer their membership in accordance with the Club Rules.

Dissatisfied with the decision, the plaintiffs instituted Originating Summons 572 of 2013 (“OS 572 of 2013”) for an order that the 3 April Decision be declared null and void for breach of natural justice. The matter came before me on 4 September 2013 and I granted the order.

At the time the 3 April Decision was made, there were a total of 11 MC members...