Heap Huat Rubber v Kong Choot Sian: Director's Duties & Company Assets
Heap Huat Rubber Company Sdn Bhd and its subsidiaries sued Kong Choot Sian and others in the High Court of Singapore, alleging breach of fiduciary duties as directors. The plaintiffs claimed the defendants incorporated subsidiary companies for their own benefit, sold company land at undervalue, made improper payments, overpaid themselves, and made improper investments. The court, presided over by Justice Kan Ting Chiu, dismissed the action, finding the plaintiffs failed to prove their claims.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Action dismissed with costs to the defendants except the sixth and seventh defendants.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Malaysian companies sue directors for breach of fiduciary duty, alleging undervalue asset sales and improper payments. The court dismissed the action.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Heap Huat Rubber Company Sdn Bhd | Plaintiff | Corporation | Claim Dismissed | Lost | |
| HHR Properties Sdn Bhd | Plaintiff | Corporation | Claim Dismissed | Lost | |
| HHR Trading Sdn Bhd | Plaintiff | Corporation | Claim Dismissed | Lost | |
| HHR Construction and Supply Sdn Bhd | Plaintiff | Corporation | Claim Dismissed | Lost | |
| Kong Choot Sian | Defendant | Individual | Judgment for Defendant | Won | |
| Kong Siew Seng | Defendant | Individual | Judgment for Defendant | Won | |
| Ng Phuay Khoon | Defendant | Individual | Judgment for Defendant | Won | |
| Ng Phuay Tiong David | Defendant | Individual | Judgment for Defendant | Won | |
| Tan Chong Puat | Defendant | Individual | Judgment for Defendant | Won | |
| Tan Teck Seng | Defendant | Individual | Judgment for Defendant | Won | |
| Low Toh Pwee | Defendant | Individual | Judgment for Defendant | Won | |
| Chan Kim Hong Agnes | Defendant | Individual | Judgment for Defendant | Won | |
| Ng Keng Eng | Defendant | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kan Ting Chiu | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Philip Jeyaretnam | Rodyk & Davidson |
| Jean Lim | Rodyk & Davidson |
4. Facts
- The plaintiffs alleged the defendants sold HHR's land at undervalue.
- The plaintiffs alleged the defendants made improper payments in connection with the sales.
- The plaintiffs alleged the defendants overpaid themselves for their services.
- The plaintiffs alleged the defendants used company funds to purchase vehicles for their own use.
- The plaintiffs alleged the defendants caused the companies to make improper investments.
- The first defendant was a director of HHR from 1987 to 1988.
- The first defendant was later engaged as a senior administration officer and consultant.
5. Formal Citations
- Heap Huat Rubber Company Sdn Bhd and Others v Kong Choot Sian and Others, Suit 1378/2001, [2003] SGHC 133
6. Timeline
| Date | Event |
|---|---|
| Heap Huat Rubber Co Sdn Bhd incorporated. | |
| Kong Choot Sian became a director of HHR. | |
| Kong Choot Sian resigned as director of HHR after being adjudicated a bankrupt. | |
| Panfield Sdn Bhd entered into a sale and purchase agreement with Heap Huat Rubber Co. Sdn. Bhd. for the purchase of land. | |
| Panfield’s annual report was dated. | |
| United Overseas Bank Ltd, Singapore agreed with Panfield a settlement sum of S$34,000,000. | |
| The second and third plaintiffs were incorporated. | |
| The fourth plaintiff was incorporated. | |
| Extraordinary general meeting of HHR was held. | |
| The Official Receiver and Official Assignee of the estates of some shareholders gained majority control of HHR. | |
| New directors for the company and the subsidiaries were appointed. | |
| Suit filed (Suit 1378/2001). | |
| Decision date. |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that the plaintiffs failed to prove that the defendants breached their fiduciary duties.
- Category: Substantive
- Sub-Issues:
- Sale of assets at undervalue
- Improper payments
- Excessive remuneration
- De Facto Director
- Outcome: The court found that only the first defendant was a shadow director, not a de facto director.
- Category: Substantive
- Shadow Director
- Outcome: The court found that the first defendant was a shadow director of the plaintiff companies.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
11. Industries
- Rubber
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Hydrodam (Corby) Ltd | N/A | Yes | [1994] 2 BCLC 180 | United Kingdom | Cited for the definitions of 'de facto director' and 'shadow director'. |
| Secretary of State for Trade & Industry v Deverell | Court of Appeal | Yes | [2000] 2 WLR 907 | United Kingdom | Cited for the interpretation of 'accustomed to act' in the context of shadow directors. |
| Caltong (Australia) Pty Ltd v Tong Tien See Construction Pte Ltd | Court of Appeal | Yes | [2002] 3 SLR 241 | Singapore | Cited for the elements required to prove dishonest assistance in breach of fiduciary duties. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- De facto director
- Shadow director
- Fiduciary duty
- Undervalue
- Improper payments
- Excessive remuneration
- Subsidiary companies
15.2 Keywords
- director
- fiduciary duty
- company
- assets
- undervalue
- payment
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Company Law | 85 |
| Fiduciary Duties | 80 |
| Director's Duties | 75 |
| De facto director | 70 |
| Shadow director | 70 |
| Business Litigation | 60 |
| Corporate Litigation | 60 |
16. Subjects
- Company Law
- Directors' Duties