Sim Yong Kim v Evenstar Investments: Winding Up on Just and Equitable Grounds

Sim Yong Kim appealed the dismissal of his petition to wind up Evenstar Investments Pte Ltd, in which he and his brother Mike were shareholders. Sim sought the winding up on just and equitable grounds, claiming a breach of assurance by Mike. The Court of Appeal allowed the appeal, finding that Mike breached his promise to allow Sim to exit Evenstar, and ordered the company to be wound up subject to conditions to ensure a fair resolution.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Minority shareholder Sim Yong Kim sought to wind up Evenstar Investments. The court allowed the appeal, finding a breach of assurance.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Sim Yong KimAppellantIndividualAppeal AllowedWonN Sreenivasan, Valerie Ang
Evenstar Investments Pte LtdRespondentCorporationWinding-up OrderLostJimmy Yim, Kelvin Tan Teck San

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeYes
Andrew AngJudgeNo
Andrew Phang Boon LeongJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
N SreenivasanStraits Law Practice LLC
Valerie AngStraits Law Practice LLC
Jimmy YimDrew & Napier LLC
Kelvin Tan Teck SanDrew & Napier LLC

4. Facts

  1. Sim and Mike were the only shareholders in Sinwa Ship Supply Private Limited.
  2. Sinwa KS Limited was incorporated to acquire Sinwa Ship Supply Private Limited.
  3. Mike suggested pooling Sinwa shares into Evenstar, a dormant company.
  4. Mike assured Sim that he would buy him out if he wanted to pull out his shares.
  5. Evenstar invested in other assets besides Sinwa shares.
  6. Mike added his son and daughter as directors of Evenstar.
  7. Sim's employment with Sinwa Singapore Private Limited was terminated.

5. Formal Citations

  1. Sim Yong Kim v Evenstar Investments Pte Ltd, CA 121/2005, [2006] SGCA 23

6. Timeline

DateEvent
Sim Yong Kim and Mike became shareholders in Sinwa Ship Supply Private Limited.
Evenstar Investments Pte Ltd incorporated.
Sinwa KS Limited incorporated to acquire Sinwa Ship Supply Private Limited.
Mike's son and daughter appointed directors of Evenstar.
Sim Yong Kim filed petition to wind up Evenstar Investments Pte Ltd.
Judgment reserved.

7. Legal Issues

  1. Just and Equitable Winding Up
    • Outcome: The court found that it was just and equitable to wind up Evenstar due to Mike's breach of assurance to Sim.
    • Category: Substantive
    • Sub-Issues:
      • Breach of assurance
      • Loss of mutual trust and confidence
      • Frustration of original object
  2. Breach of Assurance
    • Outcome: The court found that Mike breached his assurance to Sim, which was a key factor in the decision to allow the winding up.
    • Category: Substantive
    • Sub-Issues:
      • Failure to honor promise to buy out shareholder
      • Unreasonable offer for shares

8. Remedies Sought

  1. Winding up of the company

9. Cause of Actions

  • Application to wind up company on just and equitable grounds

10. Practice Areas

  • Commercial Litigation
  • Insolvency Law

11. Industries

  • Shipping
  • Investment

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Chua Kien How v Goodwealth Trading Pte LtdHigh CourtYes[1992] 2 SLR 296SingaporeCited as a management deadlock case, but found not relevant to the present case.
Re Iniaga Building Supplies (S) Pte LtdHigh CourtYes[1994] 3 SLR 359SingaporeCited as a case involving alleged exclusion from management, but found not relevant to the present case.
O’Neill v PhillipsHouse of LordsYes[1999] 1 WLR 1092United KingdomCited for the principle that a shareholder has no right to exit at will from a company having the character of a quasi-partnership, unless there is a specific provision allowing him to exit; discussed in relation to unfairness.
Quek Hong Yap v Quek Bee LengHigh CourtYes[2005] SGHC 111SingaporeCited as an 'oppression' case where there was no promise to buy out the minority shareholder's interest.
Re Guidezone LtdEnglish High CourtYes[2000] 2 BCLC 321England and WalesCited for the principle that in the absence of unfair conduct, the court will not wind up a company just because the aggrieved shareholder is not offered the price he would like for his shares.
Ebrahimi v Westbourne Galleries LtdHouse of LordsYes[1973] AC 360United KingdomCited for the principle that a limited company is more than a mere legal entity and that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure.
Ng Sing King v PSA International Pte Ltd (No 2)Court of AppealYes[2005] 2 SLR 56SingaporeOur courts have followed Ebrahimi in s 254(1)(i) cases
Tang Choon Keng Realty (Pte) Ltd v Tang Wee ChengCourt of AppealYes[1992] 2 SLR 1114SingaporeOur courts have followed Ebrahimi in s 254(1)(i) cases
Re R A Noble & Sons (Clothing) LtdEnglish High CourtYes[1983] BCLC 273England and WalesComments on another English High Court case
In re Yenidje Tobacco Company, LimitedCourt of AppealYes[1916] 2 Ch 426England and WalesThe courts have been ready to grant winding-up orders pursuant to their “just and equitable” jurisdiction
Re Goodwealth Trading Pte LtdHigh CourtYes[1990] SLR 1239SingaporeThey have not limited their jurisdiction to superimpose equitable considerations to merely the three circumstances mentioned by Lord Wilberforce in his judgment
Re a company (No 00314 of 1989), ex parte Estate Acquisition and Development LtdEnglish High CourtYes[1991] BCLC 154England and WalesUnder ss 459 to 461 the court is not … faced with a death sentence decision dependent on establishing just and equitable grounds for such a decision
Re Astec (BSR) plcCourt of AppealYes[1998] 2 BCLC 556England and WalesIn order to give rise to an equitable constraint based on ‘legitimate expectation’ what is required is a personal relationship or personal dealings of some kind between the party seeking to exercise the legal right and the party seeking to restrain such exercise, such as will affect the conscience of the former.
Re RJ Jowsey Mining Co LtdOntario Court of AppealYes[1969] 2 OR 549CanadaThe corresponding Canadian legislative provision does not enable the court to give “an entirely independent remedy that will operate outside a prospective winding-up
Re Hillcrest Housing LtdSupreme Court of OntarioYes(1992) 94 DLR (4th) 165CanadaThe Canadian equivalent of s 257(1) of our CA confers a court hearing a winding-up application with the jurisdiction to make “an order in furtherance of or otherwise in connection with a … winding-up order
Re Cumberland Holdings LtdSupreme Court of New South WalesYes(1976) 1 ACLR 361AustraliaThis practice of staying a winding-up order to allow parties to reach an alternative arrangement is one which is well-established in jurisdictions such as Australia
Bernhardt v Beau Rivage Pty LtdSupreme Court of New South WalesYes(1989) 15 ACLR 160AustraliaThis practice of staying a winding-up order to allow parties to reach an alternative arrangement is one which is well-established in jurisdictions such as Australia

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Section 254(1)(i) Companies Act (Cap 50, 1994 Rev Ed)Singapore
Section 257(1) Companies Act (Cap 50, 1994 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Winding up
  • Just and equitable
  • Breach of assurance
  • First right of refusal
  • Quasi-partnership
  • Legitimate expectation
  • Shareholder
  • Director
  • Investment holding company
  • Sinwa shares
  • Evenstar shares

15.2 Keywords

  • winding up
  • just and equitable
  • companies act
  • shareholder dispute
  • singapore
  • evenstar investments
  • sim yong kim

16. Subjects

  • Company Law
  • Winding Up
  • Shareholder Disputes

17. Areas of Law

  • Company Law
  • Winding Up
  • Shareholder Rights