Winpac Paper Products Pte Ltd v. Directors: Derivative Action & Director's Duties under Companies Act
In Winpac Paper Products Pte Ltd [2000] SGHC 33, the High Court of Singapore dismissed an application by the plaintiff, a director, for leave under Section 216A of the Companies Act to bring actions in the name of the company against various parties, including ABCPacking&CarriageCo Pte Ltd, New Horizon Logistics Pte Ltd, Winpac Paper Pte Ltd, and the first and second defendants for breach of directors' duties. The court, presided over by Justice Goh Joon Seng, found that the plaintiff had not demonstrated good faith or that the actions were prima facie in the company's interest. The plaintiff's application was dismissed with costs.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiff's application dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Application for leave to bring action in the name of Winpac Paper Products. The court dismissed the application, finding no good faith or company interest.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Second defendant | Defendant | Individual | Claim Dismissed | Won | |
| Third defendant | Defendant | Individual | Claim Dismissed | Won | |
| Winpac Paper Products Pte Ltd | Plaintiff | Corporation | Application Dismissed | Lost | |
| First Defendant | Defendant | Individual | Claim Dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Goh Joon Seng | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lek Siang Pheng | Helen Yeo & Partners |
| Michael Low Wan Kwong | JS Yeh & Co |
4. Facts
- The plaintiff, first, and second defendants are directors of the third defendant.
- The third defendant is a wholly-owned subsidiary of Everbright Global Investments Pte Ltd.
- Everbright is currently in members` voluntary liquidation.
- The plaintiff holds 39.02% of Everbright's issued shares.
- The third defendant's business was mainly in cartons, papers merchanting and letting of industrial premises.
- The third defendant owns a commercial building at 156, Gul Circle, Singapore.
- The plaintiff applied for leave to commence proceedings in the name of the third defendant against various parties.
5. Formal Citations
- Re Winpac Paper Products Pte Ltd, OS 1090/1999, [2000] SGHC 33
6. Timeline
| Date | Event |
|---|---|
| Extraordinary general meeting convened regarding liquidation of Everbright. | |
| Tenancy of ABCPacking&CarriageCo Pte Ltd ended. | |
| Plaintiff commenced proceedings against the first and second defendant. | |
| Third defendant joined as a party. | |
| Winpac Paper's outstanding sum reduced to $1,061,117.99. | |
| Application dismissed by the High Court. |
7. Legal Issues
- Derivative Action
- Outcome: The court dismissed the application for leave to bring a derivative action.
- Category: Substantive
- Breach of Directors' Duties
- Outcome: The court found no evidence that the directors' decisions were not honestly made.
- Category: Substantive
- Good Faith
- Outcome: The court was not satisfied that the complainant was acting in good faith.
- Category: Substantive
- Interests of the Company
- Outcome: The court was not satisfied that it was prima facie in the interests of the company that the action be brought.
- Category: Substantive
8. Remedies Sought
- Leave to bring action in the name of the company
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Commercial Litigation
11. Industries
- Paper Products
- Logistics
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Howard Smith Ltd v Ampol Petroleum Ltd & Ors | N/A | Yes | [1974] AC 821 | N/A | Cited regarding the court's attitude towards management decisions and the responsibility of directors. |
| Teo Gek Luang v Ng Ai Tiong & Ors | N/A | Yes | [1999] 1 SLR 434 | Singapore | Cited regarding management decisions being left to the Board of Directors and members generally not being able to sue in the name of the company. |
| Re Marc-Jay Investments | N/A | Yes | [1974] 5 QR (2d) 235 | N/A | Cited regarding the court's function to deny an application if the intended action is frivolous, vexatious, or bound to be unsuccessful. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| s 216A Companies Act (Cap 50) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Derivative action
- Director's duties
- Companies Act
- Good faith
- Interests of the company
- Liquidation
- Shareholder
- Board resolution
- Rental arrears
- Breach of agreement
15.2 Keywords
- Companies Act
- derivative action
- directors duties
- good faith
- company interest
- Winpac Paper Products
- liquidation
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Director's Duties | 80 |
| Company Law | 75 |
| Winding Up | 65 |
| Derivative action | 40 |
| Commercial Disputes | 30 |
| Bankruptcy | 20 |
16. Subjects
- Companies Law
- Directors' Duties
- Shareholder Rights
- Derivative Actions