Winsta Holding Pte Ltd and another v Sim Poh Ping and others

• Jurisdiction: Singapore
• Judge: Chua Lee Ming J
• Judgment Date: 05 November 2018
• Neutral Citation: [2018] SGHC 239
• Court: High Court (Singapore)
• Docket Number: Suit No 491 of 2015
• Year: 2018
• Published date: 15 April 2020
• Hearing Date: 01 February 2018,12 January 2018,11 January 2018,06 February 2018,08 February 2018,07 February 2018,23 February 2018,26 January 2018,24 January 2018,23 January 2018,30 January 2018,18 January 2018,17 January 2018,19 January 2018,02 February 2018,31 January 2018,14 February 2018,16 January 2018
• Plaintiff Counsel: Lee Eng Beng SC, Cheng Wai Yuen Mark, Chew Xiang, and Ho Zi Wei (Rajah & Tann Singapore LLP)
• Defendant Counsel: Christopher Anand s/o Daniel, Ang Si Yi (Advocatus Law LLP),Narayanan Sreenivasan SC, Ang Mei-Ling Valerie Freda, and Hiren George Jonas (Straits Law Practice LLC),Ng Wan-E Cheryl and Li Wanchun (TSMP Law Corporation),The twelfth defendant by original action and plaintiff in counterclaim in person,The thirteenth defendant in person.
• Subject Matter: Equity,remedies,equitable compensation,fiduciary relationships,duties,Civil Procedure,costs,principles,investigations
• Citation: [2018] SGHC 239

Chua Lee Ming J: Introduction

The first plaintiff, Winsta Holding Pte Ltd (“Winsta Holding”), is the holding company in a group of companies (“the Winsta Group”) which are in the hostel and serviced apartments business. The second plaintiff, M Development Ltd, formerly known as NTI International Limited, (“M Development”), is a public company listed on the Singapore Exchange. M Development holds 51% of the issued share capital of Winsta Holding.

The Winsta Group comprises Winsta Holding and the following wholly owned subsidiaries of Winsta Holding (“the Winsta Subsidiaries”): Evan Hostel Pte Ltd (“Evan Hostel”). Carlisle Hostel Management Pte Ltd (“Carlisle Hostel”). Katong Hostel Pte Ltd (“Katong Hostel”). Pearl Hill Hostel Pte Ltd (“Pearl Hill Hostel”). Queensway Student Hostel Pte Ltd (“Queensway Hostel”). The Hill Lodge @ Mount Vernon Pte Ltd (“Hill Lodge”). Global Residence Pte Ltd (“Global Residence”).

On 20 May 2015, Winsta Holding and the Winsta Subsidiaries commenced this action against the defendants claiming breach of fiduciary and other duties, knowing receipt, dishonest assistance, conspiracy to injure and/or deceit.

The Winsta Subsidiaries were placed under creditors’ voluntary liquidation between 3 August 2015 and 4 August 2015. By way of a Deed of Sale and Assignment dated 29 October 2015, the liquidators of the Winsta Subsidiaries assigned the claims by the Winsta Subsidiaries to M Development for $50,000 plus 5% of the net realised proceeds of the litigation.

On 13 January 2016, M Development was ordered to be made a party to these proceedings in place of the Winsta Subsidiaries.

The defendants

The first defendant, Mr Sim Poh Ping (“Sim”) is the father of the second defendant, Ms Sim Pei Yee (“Lynn”) and the third defendant, Ms Sim Pei San (“Joyce”). In this judgment, Sim, Lynn and Joyce, together, will be referred to as “the Sim Family”. As mentioned earlier, M Development holds 51% of the shares in Winsta Holding; the remaining 49% is held by various shareholders including Sim and Joyce.

Sim was at all material times a director of Winsta Holding and each of the Winsta Subsidiaries. He was also the Managing Director of Winsta Holding until 22 May 2015.

Lynn, who is the elder daughter, was at all material times a director of Winsta Holding and each of the Winsta Subsidiaries. Lynn was also a director of M Development until 28 April 2015.

Joyce was at all material times a director of Winsta Holding and each of the Winsta Subsidiaries.

The plaintiffs allege that at all material times, the Sim Family controlled and were the beneficial owners of the following defendants (together, “the corporate defendants”): The fourth defendant, Overseas Student Placement Centre Pte Ltd (“OSPC”). OSPC provided marketing and agency services to the Winsta Group. The fifth defendant, ATAS Residence Pte Ltd (“ATAS”). ATAS is in the business of, among other things, lodging and boarding houses and student hostels. ATAS was formerly known as OSPC Pte Ltd (a different company from OSPC which is referred to in (a) above). The sixth defendant, Uni-House Pte Ltd (“Uni-House”). It is in the business of hostel services for students and workers and chartered bus services. Uni-House filed a counterclaim against M Development for breach of a tenancy agreement between Uni-House and Hill Lodge. The seventh defendant, Unihouse @ Evans Pte Ltd (“Unihouse @ Evans”). It is in the business of lodging and boarding house services and chartered bus services. The eighth defendant, Jiu Mao Jiu Hotpot Pte Ltd (“JMJ Hotpot”). The ninth defendant, ICS Catering Pte ltd (“ICS Catering”), formerly known as Mumum Catering Pte Ltd. It is in the business of food catering. ICS Catering filed a counterclaim against M Development for the price of meals sold and/or services rendered to Evan Hostel ($263,537.42) and Hill Lodge ($79,342.95). The tenth defendant, I-Masters Air-Conditional Pte Ltd (“I-Masters”). It is in the business of manufacturing and repair of refrigerating, air-conditioning and ventilating machinery and equipment and other construction installation. I-Masters filed counterclaims for unpaid services against Evan Hostel ($4,643), Carlisle Hostel ($41,094.50), Katong Hostel ($33,075), Pearl Hill Hostel ($2,270), Hill Lodge ($2,832) and Global Residence ($11,692).

The eleventh defendant, Mr Kong Weijia (“Dave Kong”) holds 10% of the shares in ATAS. He is also the sole director of ATAS. The plaintiffs allege that he was at all material times a key accomplice and associate of the Sim Family.

The twelfth defendant, Ms Ng Connie (“Connie Ng”) was an employee of Katong Hostel who was seconded to Winsta Holding on 1 November 2009. Connie Ng was in charge of financial and accounting matters of the Winsta Group. She resigned on 12 May 2015. Connie Ng filed a counterclaim against Winsta Holding or Katong Hostel claiming $2,892.86 being compensation for unconsumed leave and unpaid salary.

The thirteenth defendant, Mr Tan Choon Leong (“Shawn Tan”), was at all relevant times the Operation Manager of Winsta Holding. He is also a director of I-Masters.

Default judgments entered against some of the defendants

ATAS, Uni-House, Unihouse @ Evans and ICS Catering failed to file their Lists of Documents. On 9 September 2017, the plaintiffs entered judgment against them for, among other things, damages to be assessed. The counterclaims filed by Uni-House and ICS Catering were dismissed.

As I-Masters was not present at the trial, I struck out its counterclaim and entered judgment against it for, among other things, damages to be assessed.

The trial proceeded against Sim, Lynn, Joyce, OSPC, JMJ Hotpot, Dave Kong, Connie Ng and Shawn Tan on both liability and damages. Both Connie Ng and Shawn Tan were unrepresented. The trial also served as the assessment of damages against ATAS, Uni-House, Unihouse @ Evans, ICS Catering and I-Masters, all of whom were notified of, but were not represented at, the trial.

Background to the dispute

Sim ventured into the business of property leasing in 2002 and the hostel business in 2003. Katong Hostel was incorporated on 1 July 2003 and in December 2003, it started the first student hostel at 369 Tanjong Katong Road. The hostel business proved profitable and Sim expanded the business. The management of each hostel was placed under a separate company. Pearl Hill Hostel was incorporated on 25 May 2004 and Hill Lodge on 9 January 2006. In 2007, Sim expanded the business to the management of serviced apartments and incorporated Global Residence which started its serviced apartments business with rented apartments at Tiong Bahru.

Winsta Holding was incorporated on 27 February 2008 and became the holding company. On 13 March 2008, Queensway Hostel was incorporated as another subsidiary of Winsta Holding. In 2009, Winsta Holding acquired Carlisle Hostel.

In January 2010, M Development bought 51% of the issued share capital of Winsta Holding from a number of shareholders including Sim and Joyce. M Development completed its acquisition of the shares on 23 August 2010. The vendors represented that the consolidated net profit after tax of Winsta Holding and its subsidiaries for the period from 1 July 2008 to 31 December 2010 would not be less than $4,000,000 (“the Profit Warranty”). Sim was invited but declined to join the Board of M Development. Lynn was appointed to the Board of M Development; the date of her appointment is unclear but it appears she had become a director of M Development by 8 September 2010.¹

As was required under the terms of M Development’s purchase of the shares in Winsta Holding, the Sim Family continued to manage Winsta Holding and its subsidiaries. Sim was in charge of charting the overall direction of the Winsta Group and handling key contracts with governmental authorities whilst Lynn and Joyce were the directors-in-charge of the day-to-day operations.

On 13 June 2011, a nominee of M Development, Mr Huang Wen-Lai (“Huang”) was appointed to the Board of directors of Winsta Holding.²

On 17 December 2012, Evan Hostel was incorporated as another subsidiary of Winsta Holding.

The consolidated net profit after tax target under the Profit Warranty (see [19] above) was achieved. However, the Winsta Subsidiaries’ profits declined between 2010 and 2012. The reasons for the decline in profits are in dispute. In 2013, the Winsta Group registered a loss of $8.5m.³ Further losses were projected for 2014 due largely to the fact that the leases for four properties had expired or would expire in 2014.⁴ On 23 May 2014, the Board of M Development decided to appoint additional directors to the Board of Winsta Holding.⁵

On 29 July 2014, M Development’s nominees – Ms Huang Tzu Ting (“Tina”), Mr David Chin (“David”) and Mr Yap Kian Peng (“Yap”) – were appointed as directors of Winsta Holding.⁶ Tina is Huang’s daughter. David and Yap were independent directors of M Development. On the same day, Sim was appointed as managing director of Winsta Holding.⁷

The plaintiffs allege that following the appointment of the additional directors to the Board of Winsta Holdings, they began to suspect very significant interested party transactions in the Winsta Group. In April 2015, Huang, Tina, David and Chin signed a directors’ resolution authorising Tina to take the necessary steps to protect, secure and preserve the company’s records and financial information.⁸ Tina engaged KordaMentha Pte Ltd (“KordaMentha”), a company specialising in forensic accounting, review and investigation services, for this purpose.⁹ On 7 April 2015, KordaMentha secured the records and financial information of the Winsta Group companies. On 9 April 2015, KordaMentha produced its Draft Preliminary Findings.¹⁰ The plaintiffs allege that KordaMentha uncovered fraudulent and/or wrongful activities which formed the basis for the claims in this action.

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