Wing Hak Man and Another v Bio-Treat Technology Ltd and Others

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 29 September 2008
• Neutral Citation: [2008] SGHC 165
• Date: 29 September 2008
• Subject Matter: Civil Procedure,Plaintiffs calling upon second defendant to file defence within 48 hours despite first defendant successfully obtaining stay of proceedings against plaintiffs,Natural forum,Plaintiffs alleging conspiracy by unlawful means to deprive them of shares in company listed in Singapore but managed from Hong Kong,Whether filing of defence compromised second defendant's stay application,Whether Singapore or Hong Kong natural forum,Stay of proceedings,Conflict of Laws,Second defendant filing holding defence containing reservation of right to apply for stay
• Docket Number: Suit No 682 of 2007 (Registrar's Appeal No 11 of 2008, Summonses Nos 94 and 280 of
• Published date: 03 October 2008
• Defendant Counsel: Devinder K Rai (Acies Law Corporation),Rajendran Kumaresan (Central Chambers Law Corporation),Edwin Tong and Aaron Lee (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Plaintiff Counsel: Adrian Tan and Wendell Wong (Drew & Napier LLC)

29 September 2008

Belinda Ang Saw Ean J:

1 The substance of the plaintiffs’ claim in this action against the defendants is on unlawful conspiracy against the plaintiffs, Wing Hak Man (“Wing”) and Yiu Ching (“Yiu”). The first defendant, Bio-Treat Technology Limited (“Bio-Treat”), applied for a stay of the present proceedings on the basis of forum non conveniens. On 9 January 2008, the Assistant Registrar allowed Bio-Treat’s application, and consequently ordered a stay of all further proceedings in this action against Bio-Treat. The plaintiffs appealed against the stay order. The appeal was later dismissed for the reasons published in this Grounds of Decision.

2 Separately, the second and fourth defendants also applied to stay the proceedings by way of: (a) Summons No 94 of 2008 which was filed on 9 January 2008 on behalf of the second defendant, Jerry Yip Wai Leung (“D2”), an independent director of Bio-Treat, and (b) Summons No 280 of 2008 which was filed on 21 January 2008 on behalf of the fourth defendant, Kwok Chi-Shing (“D4”), an independent director of Bio-Treat. In these Summonses, D2 and D4 also applied for time extensions to file and serve their respective defences. For convenience, both Summonses are hereinafter referred to collectively as “the stay applications”. On 9 January 2008, Bio-Treat’s lawyers, Drew & Napier LLC (“Drew & Napier”) called upon D2 to file his defence within 48 hours failing which default judgment would be obtained against him. D2 filed his Defence on 11 January 2008.

3 Both stay applications were listed for hearing on the same morning as the plaintiffs’ appeal in RA 11 of 2008. Summons No 94 of 2008 was filed late in contravention of O 12 r 7 (2) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the ROC”). After taking into consideration the overall facts and circumstances of the case, in exercise of the court’s discretion, leave was granted to file Summons No 94 of 2008 out of time (see [53] to [57] below). I allowed the stay applications and ordered a stay of all further proceedings in the action against D2 and D4. Costs orders were made in favour of Bio-Treat, D2 and D4 respectively.

Background facts

4 Wing is the founder of Bio-Treat. Wing was the Executive Chairman, the Non-Executive Chairman as well as the Executive Director of Bio-Treat until October 2006. Wing was also the sole owner of Fullway Group Limited (“Fullway”), a company incorporated in the British Virgin Islands (“BVI”). Fullway was the corporate vehicle used by Wing to hold 289,050,000 (37.39%) ordinary shares in Bio-Treat. Yiu is Wing’s wife. She was the sole owner of Star Choice International Limited (“Star Choice”), a company incorporated in the BVI which Yiu used to hold 39,808,000 (5.15%) ordinary shares in Bio-Treat.

5 Bio Treat is a company incorporated in Bermuda on 22 August 2003. On 16 February 2004, the company was listed on the Main Board of the Singapore Stock Exchange Securities Trading Limited and its shares were and are still traded in Singapore. The business and operations of the company, however, are wholly in People’s Republic of China. Bio-Treat has described itself as one of China’s leading companies in the development and application of biotechnology for the treatment of waste and wastewater. According to the Statement of Claim, Bio-Treat is managed from its office in Hong Kong Special Administrative Region (“Hong Kong”) by the other three defendants. At all material times, Wing was based in Bio-Treat’s Shanghai office. D2 was an independent director of Bio-Treat. He was a member of the Nominating Committee as well as the Remuneration Committee of Bio-Treat until his resignation on 31 July 2007. He is a lawyer by profession. D4 is an independent director of Bio-Treat. Kwok, who is an accountant, is the present Chairman of the Audit Committee of Bio-Treat. He is also a member of the Nominating and Remuneration Committees of Bio-Treat. For completeness, I should mention that at the time of the hearing of the plaintiffs’ appeal and the stay applications, the third defendant, Dennis Chan Kong (“D3”), had not been served with legal process. D3 is the Chief Executive Officer and Executive Director of Bio-Treat. He was appointed a member of the Remuneration Committee on or about June 2006.

The claim in conspiracy by unlawful means against the defendants

6 This case is quite clearly pleaded as an unlawful means conspiracy. The foundation of the conspiracy claim is that the defendants conspired to injure the plaintiffs by the unlawful means of fraudulent misrepresentations and those misrepresentations caused them damage. It was alleged that Wing was fraudulently misled and induced into signing documents purportedly to set up the Wing Family Trust. Reliance was also placed on other specific categories of unlawful acts pleaded in paragraphs 12 and 21 of the Statement of Claim. They include: (i) the incorporation of a web of BVI companies as the means and conduit for the fraudulent transfer and/or divestments of the plaintiffs’ shares in Bio-Treat held through Fullway and Star Choice; (ii) the allegation that the defendants wrongfully and dishonestly wrested control of the plaintiffs’ shares in Bio-Treat by fraudulently transferring them to other BVI companies and then selling them and/or fraudulently transferring the shares first in the open market on or about 19 September 2007 and then to Dongguan Baosheng Environmental Investment Co Ltd (“Dongguan Baosheng”) through Precious Wise Group Limited on or about 28 September 2007; (iii) the allegation that the defendants conspired to and did lodge false and/or misleading announcements on the Singapore Stock Exchange (“SGX”) to mislead the general public as to the state of affairs of Bio-Treat; (iv) the allegation that the defendants fraudulently induced Wing to “sell” some of his shares in Bio-Treat to pay compensation to key employees affected by the cancelled option programme; and (v) the allegation that the defendants fabricated and/or orchestrated Wing’s resignation as Executive Chairman, Non-Executive Chairman and Executive Director of Bio-Treat to hamper or impede his ability to investigate the fraudulent share transfers.

7 The aforementioned categories of unlawful acts are set out one by one in detail below (see [8] to [15]). Notably, the wrongdoings were pleaded as an ongoing overall conspiracy that was joined by the various defendants at unspecified times ranging between May 2005 and September 2007. Pausing at the alleged wrongdoings, by way of comment, even though the plaintiffs may in a proper case sue, for example, Bio-Treat in its own capacity, the act in question will not serve as “unlawful means” for the tort of conspiracy unless the plaintiffs can demonstrate that the individual act was performed in concert. In other words, whilst a party may join in the execution of the conspiracy at a different time and may not be exactly aware of what the other conspirators have actually agreed to do, to be liable for the tort of conspiracy, the party in question, nonetheless, must be sufficiently aware of the surrounding circumstances and share the same objective as the others (see OCM Opportunities Fund II, LP and others v Burhan Uray (alias Wong Ming Kong) and Others [2004] SGHC 115 at [49] (“OCM Opportunities”)). In the present case, the shared objective was to deprive the plaintiffs of their shares in Bio-Treat and the proceeds from any related sale of the shares. The loss to the plaintiffs was stated to be in excess of S$400 million.

8 I begin with the misrepresentations made by D2. The claim against the defendants stemmed from the setting up of a trust known as the Wing Family Trust. The trustee of the Wing Family Trust is a New Zealand company called Wing Enterprise Trustee Company Limited. It was alleged that the defendants fraudulently incorporated the trustee company without the plaintiffs’ consent or agreement. The unlawful means was the making of false representations to Wing in the following circumstances. On or about May 2005, D2 raised to Wing the idea of setting up a family trust which would hold the plaintiffs’ shares in Bio-Treat for Wing and his family. On or about 7 May 2005, at the Dynasty Club in Wanchai, Hong Kong, Wing signed the documents required to set up the trust relying on D2, and one Tan Siok Chin, who was then Bio-Treat’s company secretary, to translate and interpret the relevant documents. He did as he was told and signed at the places indicated in the documents. On or about 27 October 2006, Wing apparently learned that the Wing Family Trust was set up from an SGX announcement dated 9 May 2005. The news must have been shocking as D2 had allegedly represented to Wing that Yiu’s signature was required for the execution of the documents setting up the trust and Wing had not informed Yiu about the trust as he knew she would be against the idea. On her part, Yiu claimed that she did not sign any documents relating to the Wing Family Trust.

9 Pursuant to the Wing Family Trust, Wing purportedly gave up the entire issued capital of Fullway, comprising one ordinary share, to Energy Castle Limited, a BVI company. Similarly, Yiu purportedly gave up the entire share capital of Star Choice, comprising one ordinary share, to Herofaith Limited. However, the shares in Bio-Treat remained registered in the names of Fullway and Star Choice. Pausing here at the transfers, it is the plaintiffs’ case that Yiu’s signature on the documents were forged or tampered with, and/or alternatively, the defendants had fraudulently misled Wing into believing that both his and his wife’s signatures were required for the trust to be set up.[note: 1] Wing claimed that his signature on the Notice of a Substantial Shareholder’s Interests/Change in Interests/Cessation of Interests dated 7 May 2005 (“the Notice of 7 May 2005”) was forged and/or tampered with.[note: 2] Returning to the ownership change, this change coupled with...