Tiong Sze Yin Serene v HC Surgical Specialists Ltd and another

JurisdictionSingapore
JudgeChua Lee Ming J
Judgment Date28 September 2020
Neutral Citation[2020] SGHC 201
Docket NumberOriginating Summons No 491 of 2020
Subject MatterCompanies,Whether proposed action is prima facie in the interests of company,Statutory derivative action,Whether applicant acting in good faith
Published date02 October 2020
Defendant CounselChua Sui Tong and Gan Jhia Huei (Rev Law LLC),Tan Chee Meng SC, Paul Loy Chi Syann and Janie Hui (WongPartnership LLP)
CourtHigh Court (Singapore)
Hearing Date06 August 2020
Plaintiff CounselOng Ying Ping and Kenneth Chua Kok Siong (Ong Ying Ping Esq)
Chua Lee Ming J: Introduction

The plaintiff, Ms Serene Tiong Sze Yin, applied for leave pursuant to s 216A(2) of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”) to bring an action in the name of the first defendant, HC Surgical Specialists Ltd (“the Company”), against the second defendant, Dr Heah Sieu Min (“Dr Heah”). The plaintiff alleged that Dr Heah had breached his director’s duties in connection with the Company’s acquisition of a 19% stake in Julian Ong Endoscopy & Surgery Pte Ltd (“JOES”).

I dismissed the application with costs. The plaintiff has appealed against my decision.

Background

The Company is listed on the Catalist Board of the Singapore Stock Exchange (“SGX”). It is a medical services group primarily engaged in the provision of endoscopic procedures and general surgery services with a focus on colorectal procedures across a network of clinics in Singapore. Dr Heah, a surgeon by profession, is and was at all material times an Executive Director and the Chief Executive Officer (“CEO”) of the Company.

Dr Ong Kian Peng Julian (“Dr Ong”) is a surgeon who operates JOES. On 1 February 2017, the Company acquired 51% of the shares in JOES from Dr Ong for $2,175,000 (“the 51% Acquisition”). Pursuant to the sale and purchase agreement between the Company and Dr Ong dated 1 February 2017 (“the 1st SPA”):1 The Company employed Dr Ong as a specialist surgeon and to manage JOES. The Company agreed to purchase the remaining 49% of the issued share capital of JOES by 1 April 2021 or such other date to be agreed, at a price to be computed based on JOES being valued at ten times its audited profit after tax for the financial year ended 31 May 2020. Dr Ong provided a guarantee to the Company as to the profit after tax that would be attributable to the Company’s 51% interest in JOES for a four-year period commencing from his employment, and a second guarantee as to the profit after tax that would be attributable to the Company’s 49% interest in JOES for the six-year period commencing from the end of the four-year period referred to above (collectively, “the Profit Guarantees”). In the event that the aggregate profit after tax attributable to the Company’s 51% or 49% interest in JOES was less than the amount guaranteed, Dr Ong was to pay the shortfall within 30 days of the Company’s written notice.2

In December 2016, the plaintiff met one Dr Chan Herng Nieng (“Dr Chan”), a psychiatrist. According to the plaintiff, her marriage was then “undergoing a rocky patch”.3 In January 2017, the plaintiff began an intimate relationship with Dr Chan. Dr Chan was a close personal friend of Dr Ong but he does not have any role in JOES or the Company.

In April 2018, the plaintiff and Dr Chan went to East Europe for a vacation. According to the plaintiff, Dr Chan kept insisting that they engage in more adventurous sex, including having a threesome or even a foursome. The plaintiff was not interested. However, Dr Chan’s suggestions caused the plaintiff to wonder about his sexual proclivities.

One night, when they were in Prague, the plaintiff accessed Dr Chan’s handphone while he was asleep. The plaintiff found WhatsApp messages between Dr Chan and Dr Ong (“the WhatsApp Messages”) that revealed that, among other things, (a) Dr Chan had been engaging in sex with other women, including engaging in a threesome, (b) Dr Ong had expressed an interest in having a foursome involving the plaintiff to which Dr Chan had replied that the plaintiff should be “ok” with it, and (c) Dr Chan and Dr Ong had been sharing their sexual exploits with each other. Apparently, one of the women mentioned in these messages was Dr Ong’s patient. The plaintiff took photographs of the WhatsApp Messages.4

The plaintiff confronted Dr Chan and insisted that he undergo a test for sexually transmitted diseases (“STD”). According to the plaintiff, she had had unprotected sex with Dr Chan based on his assurance that she was the only one for him. Dr Chan did not undergo the STD test after their return to Singapore. In May 2018, the plaintiff’s relationship with Dr Chan ended.

On 31 May 2018, Dr Chan filed a police report5 in which he alleged that: the plaintiff had demanded $10,000 from him, failing which she would send screenshots of the WhatsApp Messages to his parents; and he did not accede to her demand and the plaintiff sent screenshots of the WhatsApp Messages, to his parents and his younger sister.

By way of letters dated 13 June 2018 and 19 June 2018, the plaintiff lodged a complaint (“the Complaint”) with the Singapore Medical Council (“SMC”) against Dr Chan and Dr Ong.6 In the Complaint, the plaintiff alleged as follows: Dr Chan was aware that the plaintiff was having marital issues and experiencing mild depression. In January 2017, he started to prescribe some drugs to the plaintiff to ease her discomfort. After more than a year, the plaintiff started to experience memory loss, have suicidal thoughts and to become more aggressive, easily agitated and restless. She discussed her symptoms with Dr Chan in November 2017 and Dr Chan advised her to increase the dosage of her medication. The plaintiff believed that the medication had an adverse effect on her judgment and made her addicted to the medication, and that her romantic relationship with Dr Chan was the consequence of the medication. Dr Chan took advantage of her situation knowing that she was emotionally unstable and under the influence of the medication. Dr Chan had been colluding with Dr Ong to take advantage of other vulnerable woman patients.

The plaintiff also forwarded a text of the Complaint to persons whom she believed were the superiors or colleagues of Dr Chan and Dr Ong.

Sometime in or around June 2018, Dr Ong informed Dr Heah that the plaintiff was making allegations of sexual misconduct against Dr Chan and himself, including the allegation that Dr Chan and he had improper sexual relations with their patients. Dr Ong maintained that the allegations were untrue and that he intended to take legal action against the plaintiff. Dr Heah asked Dr Ong to keep him updated. Dr Heah also informed his business partner, Dr Chia Kok Hoong (“Dr Chia”), who was an Executive Director of the Company, of his conversation with Dr Ong. Dr Chia and Dr Heah agreed to keep the Board of Directors of the Company (“the Board”) apprised of developments.7

On 4 July 2018, Dr Ong filed a claim against the plaintiff for defamation in District Court Suit No 1894 of 2018 (“the Defamation Action”).8 The Defamation Action was based on the following statements in emails, which the plaintiff had sent to various persons:9

I found out that he has been colluding with Dr Julian Ong, a surgeon from the private practice to take advantage of other vulnerable woman patients.

I suspect Dr Chan uses his reputation as a platform, together with Dr Ong to “source” and “groom” the patients turned victims.

Both doctors exchanged potential patients and colleagues who are deemed to be easily taken advantage to satisfy their immoral desires.

The plaintiff’s defence in the Defamation Action pleaded justification, qualified privilege and fair comment.10

In July 2018, Dr Ong informed Dr Heah that he had filed the Defamation Action and that he also believed that the plaintiff had filed a complaint to the SMC against him. Subsequently, Dr Heah informed Dr Chia of these developments. Both of them agreed to take no further action at that point, and to review the situation if and when the complaint was referred to the disciplinary tribunal.11

On 19 July 2018, Dr Heah informed the Board of the conversations that he had with Dr Ong, and his discussions with Dr Chia. The Board agreed with the assessment that the Defamation Action was a private matter for Dr Ong. At that point, no notice had been received of the Complaint. The Board was of the view that if a complaint was lodged with the SMC, the SMC’s investigations should be allowed to take their course. The Board asked Dr Heah to keep it updated on further developments.

In February 2019, the SMC formally notified Dr Ong of the Complaint lodged against him. On 27 February 2019, Dr Ong informed Dr Heah about the Complaint and that investigations by the SMC were underway. Dr Heah updated Dr Chia on this development soon after. Dr Heah and Dr Chia subsequently met Dr Ong to seek further clarifications and voice their concerns. Dr Ong again reiterated that the plaintiff’s allegations were untrue and mentioned that both Dr Chan and he had separately filed police reports against the plaintiff.

Dr Heah discussed the matter with Dr Chia. They concluded that (a) the SMC, as the medical profession’s regulatory body, was best placed to make findings regarding the plaintiff’s allegations of sexual misconduct, and (b) it did not appear that there was a risk of significant financial impact on the Company arising from the Defamation Action as that was a private matter and Dr Ong was not an executive officer of the Company.

Dr Heah and Dr Chia took the following actions:12 They reminded Dr Ong of his obligations under the Ethical Code & Ethical Guidelines, which all doctors are to adhere to. They made it clear to Dr Ong that the SMC’s findings could have implications for the Company and the Company might have to consider if further disciplinary action would be necessary when SMC had made its findings. They continued to monitor Dr Ong’s conduct.

On 9 April 2019, Dr Heah and Dr Chia updated the Board about the Complaint, and their conversations with Dr Ong. The Board agreed that the SMC proceedings should be allowed to run its course, and to re-assess the course of action to take after the SMC had made its findings.

On 26 July 2019, the Company entered into an investment agreement with Vanda 1 Investments Pte Ltd (“Vanda”), pursuant to which Vanda invested $5m in convertible bonds issued by the...

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1 books & journal articles
  • Company Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2020, December 2020
    • 1 December 2020
    ...Action: Why Do Shareholders Sue — Or Not?” (2020) 20 JCLS 327 at 332–336. 70 Tiong Sze Yin Serene v HC Surgical Specialists Ltd [2020] SGHC 201 at [49]. 71 Tiong Sze Yin Serene v HC Surgical Specialists Ltd [2020] SGHC 201 at [49]. 72 Tiong Sze Yin Serene v HC Surgical Specialists Ltd [2020......

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