Tan Siew Hui v Lim Lai Soon and others and another appeal
| Jurisdiction | Singapore |
| Judge | Woo Bih Li JAD |
| Judgment Date | 10 October 2023 |
| Neutral Citation | [2023] SGHC(A) 32 |
| Court | High Court Appellate Division (Singapore) |
| Docket Number | Civil Appeals Nos 74 of 2022 and 77 of 2022 |
| Hearing Date | 17 July 2023 |
| Citation | [2023] SGHC(A) 32 |
| Year | 2023 |
| Plaintiff Counsel | Khoo Kah Lip Michael SC and Low Miew Yin Josephine (Michael Khoo & Partners) |
| Defendant Counsel | Lok Vi Ming SC, Qabir Singh Sandhu and Clara Lim Ai Ying (LVM Law Chambers LLC),Ling Daw Hoang Philip, Chua Cheng Yew and Low Ziron (Wong Tan & Molly Lim LLC),Sam Hui Min Lisa (Lisa Cen Hui Min) (Lisa Sam & Company) |
| Subject Matter | Companies,Shares,Trusts,Beneficiaries,Rights |
| Published date | 10 October 2023 |
Family enterprises evolve in varied forms; little is said, even less is written. In the present case, Tan Hong Sin (“Johnny”), having lost his employment in Singapore, returned to Malacca. In September 2000, he set up Friendlypack Sdn Bhd (“FP Malaysia”) with the help of his father (“the Father”) and extended family members. In time, the business acquired three other companies in Malaysia, Singapore and Thailand: Duramin Sdn Bhd (“Duramin”), Friendlypack (S) Pte Ltd (“FP Singapore”) and Friendly Pack (Thailand) Co Ltd (“FP Thailand”) (all four companies are collectively referred to as “the Companies”).
The first respondent (“Mdm Lim”) and Johnny were married on 16 January 1993. On 22 June 2017, Mdm Lim initiated divorce proceedings against Johnny in Singapore. Interim judgment was granted on 9 January 2018. In subsequent ancillary proceedings, parties disagreed over whether the shares in the Companies formed part of the pool of matrimonial assets to be divided. Mdm Lim took the position that Johnny was the beneficial owner of most, if not all, of these shares. In contrast, Johnny contended that he owned no beneficial interest even in the shares that are registered in his name because his sister, Tan Siew Hui (“Mary”), and other relatives had provided the seed capital for FP Malaysia and the shares in that company were held on trust for relatives who had provided such seed capital. Johnny also disputed that he owned the shares in the other three companies. Mary filed an affidavit in support of his position.
Mdm Lim therefore filed HC/S 704/2018 (“Suit 704”) and sought declaratory relief that Johnny is the beneficial owner of all the shares in the Companies. Mdm Lim’s initial claim included a claim that Johnny was the beneficial owner of two patents which have expired; these are not relevant to these appeals.
A Judge sitting in the General Division of the High Court (the “Judge”) held that Johnny’s beneficial interest in respect of the Companies was:
Two appeals ensued. AD/CA 74/2022 (“AD 74”) is an appeal brought by Mary, who was the seventh defendant in Suit 704. AD/CA 77/2022 (“AD 77”) is an appeal filed by Johnny, the first defendant, and his nephew, Philip Tan Pei Yeanz (“Philip”), the ninth defendant in Suit 704. In this judgment, we refer to Johnny and Philip collectively as the “AD 77 Appellants”.
These appeals concern the beneficial ownership of the shares of the Companies registered or held in the names of various persons. These registered shareholders will be referred to as having the legal interest in the shares. This is contrasted with the beneficial interest or ownership of the shares. In these appeals, the main company in contention is FP Malaysia; the other three support its work. Mdm Lim’s case is that Johnny is the beneficial owner of most, if not all, of the FP Malaysia shares in question. The appellants in AD 74 and AD 77, on their part, contend that Johnny’s beneficial interest in FP Malaysia is limited to a single initial subscription share. Mary’s case, broadly, is that she is the beneficial owner of 92.33% of the shares. The AD 77 Appellants’ case is that various relatives including Mary (“the Relatives”) are the beneficial owners of the same 92.33%.
BackgroundThe Companies are in the business of the manufacturing and selling and/or leasing of metal crates and pallets for the packing and transportation of natural rubber. FP Malaysia, the second defendant in Suit 704, was incorporated in September 2000. Duramin, the third defendant in Suit 704, is a Malaysian company that was acquired sometime in or around 3 July 2009. FP Singapore, the fourth defendant in Suit 704, was acquired on 27 April 2005 and its name was changed from Fusion Cuisine & Catering Pte Ltd. FP Thailand, the fifth defendant in Suit 704, is a Thai joint venture first incorporated in 2004.
Mdm Lim filed Suit 704 on 12 July 2018. On 25 July 2018, two weeks after Suit 704 was filed, Johnny made two share transfers of shares in FP Malaysia and in Duramin to Mary. First, all but one share of Johnny’s shares in FP Malaysia were transferred to Mary, such that Mary then owned 92.33% of the shares. Second, all but one share of Johnny’s shares in Duramin were transferred to Mary, resulting in Mary becoming the 99.99% shareholder of Duramin. This was followed on 24 September 2018 with a transfer by Mdm Teo Eng Wah (“Mdm Teo”) of her shares in FP Malaysia to her son and Johnny’s nephew, Philip. Johnny’s Defence was filed thereafter on 28 December 2018. The table below reflects these transfers.
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It is not disputed that Johnny is responsible for the day-to-day operations of the Companies. He is also a director of FP Malaysia, Duramin and FP Thailand. Koh Choon Heong (“Mr Koh”) is the sole director and shareholder of FP Singapore. Mr Koh was the sixth defendant in Suit 704, the third respondent in AD 74 and the second respondent in AD 77. Puriwaj Sarawiroj (“Mr Sarawiroj”) is a Thai national who is one of the shareholders in FP Thailand. Eventually, Mdm Lim’s claim was focused on 49% of the shares in FP Thailand and not on the 51% held by Mr Sarawiroj.
After Mdm Lim discovered the share transfers, she applied for injunctions against Johnny, Mary and FP Singapore in the divorce proceedings. A Mareva injunction was subsequently granted against Johnny on 18 December 2018 in respect of his Australian property; money held in four bank accounts; his Central Provident Fund (“CPF”) account in Singapore; and his Kumpulan Wang Simpanan Pekerja account (the CPF equivalent in Malaysia). A Mareva injunction was granted against Mary on 20 September 2019 against further disposal of the FP Malaysia and Duramin shares transferred to her on 25 July 2018.
Decision belowThe Judge disregarded the 25 July 2018 transfers of shares from Johnny to Mary. He held that these transfers were designed to pre-empt the court’s determination of the ownership rights of the shares in dispute in Suit 704 (GD at [43]). We agree that the 25 July 2018 transfers should be disregarded for the purpose of determining the beneficial ownership of shares. The arguments before us also focused on what had transpired before these transfers.
In so far as Mdm Teo transferred her 22,998 shares to Philip, this was done after 25 July 2018. Philip is a party in the action. Mdm Lim discontinued the action against Mdm Teo while maintaining at the trial below that Philip’s shares were also beneficially owned by Johnny. Hence, for convenience, we will continue to refer to the 22,998 shares as being registered in Philip’s name, but the focus remains on who the beneficial owner of these shares was before the transfer to him.
The defence of the AD 77 Appellants and of Mary was that the beneficial ownership of FP Malaysia was held in proportion to the Relatives’ financial contributions. Likewise, the beneficial ownership of the other three companies belonged to the Relatives. The Relatives are the Father, Mary and others,
Because some of the Relatives like Tan Hong Chai and Tan Cheng Pow were not parties to the action, the AD 77 Appellants contended below and on appeal that Mdm Lim should have joined all the Relatives as parties in her action, failing which she was not entitled to the declaratory relief she was seeking,
The Judge dismissed the argument that the requirements for the grant of a declaration had not been met because Mdm Lim had failed to join all persons whose interests might be affected by Suit 704. The defendants had failed to prove that others not before the court would likely have any claim (GD at [35]).
The Judge was satisfied that Mdm Lim had made out a substantial part of her claim against Johnny (GD at [31]). He was of the view that Mary’s position in court departed from her pleadings and affidavit of evidence-in-chief (GD at [36]). Further, the contradiction between the evidence of Mary and Johnny could not be explained away and also significantly undermined the strength and veracity of their claims (GD at [41]).
In the result, for FP Malaysia, the Judge found that the shares registered in Johnny’s name were held for his own benefit and the shares registered in Mary’s name were held beneficially for Johnny. Thus, Johnny was the beneficial owner of 92.33% of the shares. The Judge arrived at this conclusion for the following reasons:
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