Woo Bih Li JAD (delivering the judgment of the court ex tempore):
Introduction
This is a dispute over whether a director, Lim Cheng San (also known as “Edger”), is to be granted inspection of accounting and other records of three companies pursuant to s 199(3) of the Companies Act 1967 (2020 Rev Ed) (the “Companies Act”). Edger had filed three applications in the High Court against the three companies: Soup Empire Holdings Pte Ltd (“Soup Empire”); Lao Huo Tang Restaurant Pte Ltd (“LHTR”); and Lao Huo Tang Group Pte Ltd (“LHTG”). (collectively referred to as the “Companies”) LHTR and LHTG are wholly owned subsidiaries of Soup Empire.
The High Court judge (the “Judge”) granted Edger’s applications. The Companies have appealed. In gist, Edger claims to be entitled to inspect the documents, which have been listed in Annex A of each of the applications, with public accountants by virtue of his office as director of the Companies. He also wishes to inspect the documents because he has been receiving letters or summonses from IRAS for the late payment of taxes and/or the late or non-filing of GST returns by each of the Companies (the “IRAS Matters”).
The Companies argue that Edger was removed as an employee of Soup Empire. Soup Empire had also wanted to remove him as a director but an injunction was granted to prevent Soup Empire from proceeding with a general meeting to do so. Soup Empire alleges that Edger is in reality seeking the inspection of documents to fish for evidence to support an action, ie, HC/S 465/2021 (“S 465”), commenced by his wife Yeo Su Lan (Yang Shulan) for oppression in respect of the affairs of Soup Empire. Edger’s wife holds 39.6% of the shares in Soup Empire in trust for Edger. The other 60.4% of the shares are held in trust for Thomas Hong (“Thomas”) in the name of his female friend, Tan Li Khim (Chen Liqin).
The Companies also allege that the inspection of documents is for another ulterior motive, namely, that Edger has jumped ship to join a competitor and he is seeking to disclose the information in the documents to the competitor. There is some evidence that Edger brought some of the Companies’ bank statements to the office of a third party. There is a counterclaim against Edger and others in S 465 for conspiracy. There is also another action, ie, HC/S 877/2021 (“S 877”) filed by the Companies against two other persons for conspiracy with the defendants in counterclaim in S 465. But S 877 does not appear material for present purposes except in so far as one Cheong Chee Wai (“James”) is a defendant there. James was Soup Empire’s Director of Operations whose employment was terminated on 21 June 2021. We were informed by counsel for the Companies that James would have been appointed to the board of directors of Soup Empire but for the fact that he was an undischarged bankrupt.
As for the IRAS Matters, the Companies argue that there is no misfeasance and suggest that the matters have been or can be easily resolved without inspection.
Relying on the case of Mukherjee Amitava v DyStar Global Holdings (Singapore) Pte Ltd and others [2018] 2 SLR 1054 (“Mukherjee”), the Judge was of the view that as a director, Edger has a presumptive right to inspect the documents. Secondly, Edger has shown good reasons why he needs access to the documents, ie, to deal with the IRAS Matters. However, the Judge also said that while Edger has a presumptive right to inspect, this is subject to the Companies being able to raise objections to resist inspection which they failed to do.
Background leading to Edger’s applications to inspect
Before continuing and before dealing with an application by Edger to admit fresh evidence, it is useful to bear in mind the background leading to Edger’s applications to inspect. This can be summarised as follows: Suit 465 was commenced on 24 May 2021. As mentioned, it was filed by Edger’s wife. The three defendants are Thomas Hong, Tan Li Khim (Chen Liqin) and Soup Empire. On 21 June 2021, Soup Empire terminated Edger’s employment as Chief Operating Officer. It also filed a defence and counterclaim against Edger, his wife and others on the same day. It then sought to remove Edger as a director via an Extraordinary General Meeting to be held on 15 July 2021. On 14 July 2021, Edger obtained an injunction to restrain Soup Empire from proceeding to remove him as a director. On 23 July 2021, Thomas applied to discharge the injunction. On 18 August 2021, that application was dismissed. Between April 2022 and December 2022, Edger received letters or summonses from IRAS. When Edger received the first of the letters from IRAS in April 2022, his lawyers, Matthew Chiong Partnership (“MCP”), wrote a letter dated 18 April 2022 to Sterling Law Corporation (“SLC”) who was apparently acting for the Companies. In the letter, MCP stated that Edger had received a summons from IRAS in respect of LHTG’s failure to file its income tax returns and other financial documents for Y/A 2020. MCP sought confirmation that this would be done failing which Edger would attend court and pay a composition fine. On 19 April 2022, SLC said that Edger was “to liaise directly with the company on this issue”. Edger then contacted Liew Kiet Leong (“Liew”), the Chief Financial Officer of the Companies, to inquire about the matter. Liew said he would attend to the matter. By 23 August 2022, this, however, had not been done, ie, LHTG had not filed the financial documents for Y/A 2020. 23 August 2022 was the third court mentions that Edger had to attend for the relevant summons. On 25 August...
