Toh Kim Chan v Toh Kim Tian & Others

• Jurisdiction: Singapore
• Judge: Woo Bih Li JC
• Judgment Date: 11 November 2002
• Neutral Citation: [2002] SGHC 266
• Docket Number: Suit No 117 of 2002
• Date: 11 November 2002
• Published date: 19 September 2003
• Year: 2002
• Plaintiff Counsel: Peter Low and Khoo Guan Chuan (Peter Low Tang & Belinda Ang)
• Citation: [2002] SGHC 266
• Defendant Counsel: Cheong Gay Eng and Koh Boon Hai (Cheong & Koh)
• Court: High Court (Singapore)
• Subject Matter: Shares,ss 2(6)(a), 6(2), 22(1), 26, 32 Limitation Act (Cap 163, 1996 Rev Ed),Account,Purchasing of plaintiff's shares,Right of plaintiff to demand accounting,Applicable limitation period,Ordering of account,Assets to be included in account,Accounts,Partners inter se,Companies,Laches on part of plaintiff,Limitation of Actions,Jurisdiction of court to make order,Partnership,Particular causes of action

Judgment Cur Adv Vult

GROUNDS OF DECISION

Background

1. This is a dispute among some members of the Toh family although only one member is the plaintiff i.e Toh Kim Chan and only one member is a defendant i.e Toh Kim Tian, who is the first defendant. The second defendant Ang Kiang Hua is the wife of Kim Tian. Both of them are at present the registered shareholders and the directors of a company known as Guan Joo Engineering Works & Building Pte Ltd (‘GJEWB’ or ‘the Company’) which is the third defendant.

2. In 1975 of 1977, five members of the Toh family agreed to start a business together with each contributing $5,000 as the initial capital of the Firm. The five were:

(a)	Toh Chuan Seng	-	the father
(b)	Toh Kim Hwee (passed away in February 1995)	-	the eldest son (his wife is Mdm Nou Siou Hue)
(c)	Toh Kim Tian	-	the third son (who is also the first defendant)
(d)	Tock Kim Yock	-	the fourth son
(e)	Toh Kim Chan	-	the fifth son (who is also the plaintiff)

3. On 1 February 1977, a firm/partnership was registered for this business under the name ‘Guan Joo Hardware Co’ (‘the Firm’ or ‘the Partnership’). The registered partners were Kim Yock and Kim Tian. On 2 March 1977, the wife of Kim Hwee, Mdm Nou Siou Hue, was registered as a partner of the Firm. Mdm Nou explained that her name was used because her husband was a partner of another business which was in financial difficulties. He did not want those financial difficulties to affect the Firm’s business (see para 5 of her AEIC). However she was not involved in the Firm’s business except to assist Kim Hwee (para 6 of her AEIC).

4. On 29 April 1981, Kim Yock’s name was withdrawn as a registered partner although it is common ground that he remained a partner in substance. Kim Yock explained that his name was removed as a partner because his own business had closed down and he had several creditors. He did not want the Firm’s business to be affected by his own failure (NE 49).

5. On 13 July 1984, the name of the Firm was changed to ‘Guan Joo Engineering Works’.

6. It was not disputed that at all material times, the five individuals I have named were partners who had an equal interest in the business. As regards who was running the business, the evidence was not very clear. According to Kim Tian’s AEIC (para 5), he had run the business. According to Kim Chan’s statutory declaration, the business was initially managed by Kim Hwee and Kim Tian until its name was changed to Guan Joo Engineering Works, after which Kim Tian managed the business. Then according to Kim Chan’s AEIC (para 12), the business was initially managed by Kim Hwee only. This point was not investigated in cross-examination. It seems to me that Kim Tian was running the business from the time its name was changed to Guan Joo Engineering Works, on 13 July 1984, if not earlier. However, it was not disputed that the partners who worked for the Firm received fringe benefits, like cars which were paid by monies of the Firm, in addition to payments for their work. Whether such payments were in substance salaries or not is another matter. There were also advances to partners which were recorded as loans. They were not of equal amounts and it was Kim Tian who was in charge of the fringe benefits, payments for work done and advances. In addition, the father received monthly sums of money from the business.

7. On 4 April 1996, GJEWB was incorporated on the instructions of Kim Tian. Although Kim Chan suggested that this was done without consultation with anyone else (see his AEIC para 17), his own statutory declaration of 13 December 2001 states that the reason Kim Tian gave for converting the Firm to a private limited company was for limited liability (see his AEIC p 9). This was repeated in Kim Chan’s solicitors’ (Loke & Co) letter dated 28 December 2001 to Kim Tian and Mdm Ang (see Kim Chan’s AEIC p 16). Indeed that letter also states, inter alia, ‘You have managed to convince the rest to only registering it [the company] in two names only … for convenience purposes’. Furthermore, Kim Chan’s witness Toh Kim Chiew said that he did advise Kim Tian to convert the Firm into a private limited company (NE 75).

8. Kim Chiew is the seventh son. He was not a partner of the Firm and has no direct interest in the present dispute. However, apparently, he is the most highly educated and has the widest working experience among the siblings. He has worked for multi-national corporations and overseas. He is on amicable terms with his siblings and he has been used as an intermediary by the opposing camps.

9. At this stage, I would mention that of the five partners, the father Chuan Seng appears to be neutral. Kim Hwee passed away in February 1995 and his interest was treated by all as having vested in his wife Mdm Nou. She has sold her interest to Kim Tian but she was a witness for Kim Chan. Kim Yock is on the side of Kim Chan. The fifth partner is Kim Tian himself. However, some other siblings, although not partners of the Firm, are taking the side of Kim Chan. In total, there were eight sons and five daughters (before Kim Hwee passed away in February 1995) in Chuan Seng’s family.

10. Coming back to GJEWB, the company was incorporated on 4 April 1996. According to Kim Tian, the business of the Firm was transferred to GJEWB and the Firm ceased business on 30 April 1996. The first two shareholders of GJEWB were Kim Tian and Mdm Nou each holding one share. These were the same two persons who were the remaining registered partners of the Firm, since Kim Yock’s name was removed as a partner on 29 April 1981. Mdm Ang, who is Kim Tian’s wife, became a director on 2 May 1996.

11. According to para 11 of the Amended Statement of Claim, Kim Tian had promised that once GJEWB was ‘stabilisied’, he would make the father (Chuan Seng), Mdm Nou, Kim Yock and Kim Chan directors and equal shareholders of GJEWB. In so far as Mdm Nou is concerned, this alleged promise cannot be correct because she was holding one share out of two shares when GJEWB was incorporated and she was already one of two directors at the date of incorporation.

12. In para 18 of Kim Chan’s AEIC, he says that as Kim Tian and his wife refused to accede to his requests, he had no choice but to instruct a lawyer (meaning Loke & Co) to send a letter of demand to them. Eight statutory declarations from eight people, including one from Kim Chan, were enclosed with the letter of demand. In Kim Chan’s statutory declaration, he said that Kim Tian promised that he would make the father and Kim Chan directors and shareholders after GJEWB stabilised. The father and Kim Chan trusted Kim Tian to honour his words. However, there is no mention in Kim Chan’s statutory declaration about the promise to make Kim Yock a director and shareholder of GJEWB.

13. Furthermore, Loke & Co’s letter dated 28 December 2001 only referred to a promise of Kim Tian that the father and Kim Chan would be made shareholders once GJEWB had stabilised. There was no mention in Loke & Co’s letter of making these two persons directors and again no mention about making Kim Yock a director or shareholder.

14. In cross-examination, Kim Chan said he could not remember when the promise (as alleged in the Amended Statement of Claim) was made. He initially said that the promise was made to four of his elder brothers but then said that it was made to their father, Mdm Nou and Kim Yock. He claimed to be present when Kim Tian made the promise to Kim Yock and Mdm Nou (NE 12 to 13). However, the father did not give any evidence. As for Kim Yock, his AEIC did not elaborate on this alleged promise. Neither did his oral evidence. Mdm Nou’s AEIC also did not elaborate on this alleged promise. Neither did her oral evidence.

15. Coming back to Kim Chiew, it was his evidence during cross-examination that when there was a discussion about carrying on the business of the Firm through a company, he asked Kim Tian whether he was going to include the names of the other partners as shareholders. Kim Tian’s reply was that it would be easier to effect the transition by using the names of the same two persons, who were named as partners of the Firm, as shareholders of the Company (NE 77 and 78). There was no suggestion by Kim Chiew of any promise by Kim Tian at that time to make the rest of the partners directors in the Company.

16. According to Kim Tian, there was no such promise of making the others directors or registered shareholders. He claimed that he did not give any thought to the question of making the other partners registered shareholders as he had never denied that they were beneficial shareholders in the Company (para 10 of his Amended Statement of Claim and para 12 of his AEIC).

17. I prefer the evidence of Kim Chiew that he did ask Kim Tian as to whether the other partners would be registered as shareholders and Kim Tian’s response was that it would be easier to effect the transition by using the same names of those who had been the registered partners. However, I also find that Kim Chan has not made out his allegation that Kim Tian had promised to make the other partners directors, as well as shareholders, once GJEWB had stabilised. For example, there would be no reason to make that promise in respect of the father who did not appear interested even in being a registered shareholder, let alone a director. I also doubt if either Kim Yock or Kim Chan himself had any interest then, i.e 1996, in being a director when all along neither was involved in management of the business.

18. After GJEWB was incorporated, it took over the business of the Firm. Mdm Ang became its third director on 2 May 1996. Although Kim Tian sought to explain why he made her a director instead of one of the other partners, I need not decide whether I believe his explanation. On 11 June 1996, 89,999 new shares in GJEWB were issued to Kim Tian and 9,999 shares were issued to Mdm...