Tong Tien See Construction v Tong Tien See: Breach of Director's Duties & Shadow Director Liability

In Tong Tien See Construction Pte Ltd (in liquidation) v Tong Tien See and Others, the High Court of Singapore heard a case brought by the liquidator of Tong Tien See Construction Pte Ltd against its former directors and related parties. The liquidator alleged breach of directors' duties, conspiracy to injure, breach of trust, and knowing assistance in breaches, seeking $53.3 million. The court found the first, second, and third defendants liable for breach of fiduciary duty and conspiracy to injure, holding them responsible for the company's debts. The court also found the eighth and twelfth defendants liable as constructive trustees. Claims against the fourth, fifth, ninth, tenth, eleventh, and thirteenth defendants were dismissed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Construction company's liquidator sues directors for breach of duties, conspiracy, and trust violations, seeking $53.3m. Court finds directors liable for defrauding creditors.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Second defendantDefendantIndividualJudgment against DefendantLost
Y R Jumabhoy of Independent Practitioner
Third defendantDefendantIndividualJudgment against DefendantLost
Y R Jumabhoy of Independent Practitioner
Fourth defendantDefendantIndividualClaim DismissedDismissed
Fifth defendantDefendantIndividualClaim DismissedDismissed
Sixth defendantDefendantIndividualJudgment against DefendantLost
Y R Jumabhoy of Independent Practitioner
Seventh defendantDefendantIndividualDeclaration against DefendantLost
Y R Jumabhoy of Independent Practitioner
Eighth defendantDefendantCorporationDeclaration against DefendantLost
Y R Jumabhoy of Independent Practitioner
Tong Tien See Construction Pte Ltd (in liquidation)PlaintiffCorporationJudgment for PlaintiffWon
Tong Tien SeeDefendantIndividualJudgment against DefendantLost
Y R Jumabhoy of Independent Practitioner
Ninth DefendantDefendantIndividualClaim DismissedDismissed
Y R Jumabhoy of Independent Practitioner
Tenth DefendantDefendantIndividualClaim DismissedDismissed
Y R Jumabhoy of Independent Practitioner
Eleventh DefendantDefendantIndividualClaim DismissedDismissed
Y R Jumabhoy of Independent Practitioner
Twelfth DefendantDefendantIndividualDeclaration against DefendantLost
Y R Jumabhoy of Independent Practitioner
Thirteenth DefendantDefendantIndividualClaim DismissedDismissed
Y R Jumabhoy of Independent Practitioner

3. Judges

Judge NameTitleDelivered Judgment
Tay Yong KwangJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
B M SinghEngelin Teh & Partners
Chan Jin HanEngelin Teh & Partners
Y R JumabhoyIndependent Practitioner
Chee Wai PongNg Ong & Chee
Tan Cheng KiongChung Tan & Partners
Bernard ChaoChung Tan & Partners
Foo Maw ShenAng & Partners
Deborah KohAng & Partners
Belinda AngAng & Partners
Keoy Soo KhimAng & Partners

4. Facts

  1. Tong Tien See Construction Pte Ltd was a Grade G8 construction company before being wound up.
  2. The company was unable to pay debts amounting to $53.3 million.
  3. The liquidator commenced an action against former directors and shareholders.
  4. The plaintiff company was insolvent from about 1995.
  5. The accounts of the plaintiff company were manipulated to show profitability.
  6. The first and second defendants used the plaintiff company's funds for personal benefit.
  7. The sixth defendant was used as a vehicle to dump the plaintiff company's losses.

5. Formal Citations

  1. Tong Tien See Construction Pte Ltd (in liquidation) v Tong Tien See and Others, Suit 824/2000, [2001] SGHC 381

6. Timeline

DateEvent
Construction firm registered by Tong Tien See
Fourth defendant joined the business
Construction firm incorporated as a private limited company
Fourth defendant rejoined the business
Fourth defendant made a director of the plaintiff company
Tong Tien See Holding (Australia) Pty Ltd incorporated in Sydney, Australia
Plaintiff company insolvent since financial year 1 May 1995 to 30 April 1996
Third defendant joined the plaintiff company
Fourth defendant became the deputy managing director
One of the four houses (757 Upper East Coast Road) was sold
Plaintiff company accepted an additional facility from the same bank
Twelfth defendant became the only shareholder of the eighth defendant
Electrical contractor shut off the power supply at a site
Eastwood Lodge project was sold
Twelfth defendant became the sole director of the eighth defendant
Third defendant left Singapore for Sydney, Australia
Eighth defendant adopted the present name
4 and 4A Kew Drive and 755 Upper East Coast Road were purportedly sold to the sixth defendant
Third defendant resigned as a director of the plaintiff company
Tenth defendant left for Sydney
Fourth defendant's services were terminated
Eleventh defendant and her husband were appointed directors of the plaintiff company
Plaintiff company was placed under interim judicial management
Thirteenth defendant bought over 755 Upper East Coast Road
Fifth defendant resigned as a director of the plaintiff company
Yin Kum Choy was appointed its provisional liquidator
The eleventh defendant was instructed by her father to call the police to evict the provisional liquidator and his team
Yin Kum Choy was confirmed as the liquidator upon the winding-up order being made
First defendant withdrew $482,000 from the seventh defendant
First defendant withdrew $482,000 from the seventh defendant
Liquidator met the first and second defendants in Australia
Liquidator's first interim report
Action commenced by liquidator
Mareva injunction
First and third defendants had been adjudicated bankrupt
Twelfth defendant informed the court that she had written to the eighth defendant's banks for a copy of the bank statements
Decision Date

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found the first, second, and third defendants liable for breach of fiduciary duty.
    • Category: Substantive
    • Sub-Issues:
      • Failure to act honestly
      • Failure to act in good faith
      • Conflict of interest
  2. Liability of Shadow Director
    • Outcome: The court found the second defendant liable as a shadow director.
    • Category: Substantive
    • Sub-Issues:
      • Exercising control over directors
      • Accustomed to act on directions
      • Breach of duties
    • Related Cases:
      • [1994] 2 BCLC 180
  3. Conspiracy to Injure
    • Outcome: The court found the first, second, third, and sixth defendants liable for conspiracy to injure.
    • Category: Substantive
    • Sub-Issues:
      • Unlawful means
      • Intent to injure
      • Damage to plaintiff
  4. Fraudulent Conveyance
    • Outcome: The court dismissed the claim against the thirteenth defendant, finding no intent to defraud creditors.
    • Category: Substantive
    • Sub-Issues:
      • Intent to defraud creditors
      • Voidable conveyance
      • Good faith purchaser
  5. Insolvency
    • Outcome: The court found that the plaintiff company was insolvent from about 1995.
    • Category: Substantive
    • Sub-Issues:
      • Inability to pay debts
      • Meeting current demands
      • Temporary lack of liquidity
    • Related Cases:
      • [1989] SLR 164
      • [1989] 1 MLJ 393

8. Remedies Sought

  1. Monetary Damages
  2. Declaration that Property Disposal Breached s 73B of the Conveyancing and Law of Property Act
  3. Rescission of Sale and Purchase Agreement

9. Cause of Actions

  • Breach of Directors' Duties
  • Conspiracy to Injure by Unlawful Means
  • Breach of Trust
  • Knowing Assistance in Breaches
  • Knowing Receipt of Moneys Resulting from Breaches

10. Practice Areas

  • Commercial Litigation
  • Insolvency Litigation

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
West Mercia Safetywear v DoddN/AYes[1988] BCLC 250N/ACited for the principle that when a company is insolvent, the interests of its creditors become the dominant factor.
Re Sanpete Builders (S)N/ANo[1989] SLR 164SingaporeCited to establish that a temporary lack of liquidity does not amount to insolvency.
Re Sanpete Builders (S)N/ANo[1989] 1 MLJ 393MalaysiaCited to establish that a temporary lack of liquidity does not amount to insolvency.
Re Hydrodam (Corby)N/AYes[1994] 2 BCLC 180N/ACited to define the requirements to establish that a defendant is a shadow director of a company.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 1994 Ed) s 4(1)Singapore
Companies Act (Cap 50, 1994 Ed) s 254(2)(c)Singapore
Companies Act s 340(1)Singapore
Companies Act s 340(5)Singapore
Bankruptcy Act s 76(1)(c)(ii)Singapore
Conveyancing and Law of Property Act (Cap 61, 1994 Ed) s 73BSingapore
Interpretation Act (Cap 1, 1999 Ed) s 39Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Shadow Director
  • Fiduciary Duty
  • Insolvency
  • Constructive Trust
  • G8 Grading
  • Sham Bills
  • Creative Accounting
  • Alter Ego
  • Intent to Defraud Creditors
  • Rob Peter to Pay Paul

15.2 Keywords

  • Director
  • Fiduciary duty
  • Shadow director
  • Insolvency
  • Winding up
  • Constructive trust
  • Conspiracy
  • Fraud
  • Creditors

17. Areas of Law

Area NameRelevance Score
Winding Up95
Fiduciary Duties90
Company Law85
Insolvency Law80
Director's Liability80
Breach of Duty75
Trust Law70
Sham Agreements65
Accounting Irregularities50
Contract Law30

16. Subjects

  • Company Law
  • Insolvency
  • Directors' Duties
  • Constructive Trusts