W&P Piling v Chew Yin What: Directors' Duties & Asset Transfers
In W&P Piling Pte Ltd (in liquidation) v Chew Yin What and Others, the High Court of Singapore ruled in favor of the plaintiff, W&P Piling, against its directors Chew Yin What, Lee Kok Swee, and Yeung Chun Keung, for breaching their fiduciary and statutory duties. The directors transferred company assets to the parent company, Wee Poh Construction Co. Pte Ltd, without proper accounting of the sale proceeds. The court found the directors liable and directed the Registrar to assess damages. The third defendant was entitled to 75% contribution from the other two defendants.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Interlocutory judgment awarded to the plaintiff against all three defendants. Damages to be assessed by the Registrar.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Judgment against directors for breach of fiduciary duties by transferring company assets to parent firm. Failure to account for sale proceeds.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| W&P Piling Pte Ltd (in liquidation) | Plaintiff | Corporation | Interlocutory Judgment | Won | Jeya Putra, Magdalene Chew |
| Chew Yin What | Defendant | Individual | Interlocutory Judgment | Lost | Leslie Phua, Louis Lim |
| Lee Kok Swee | Defendant | Individual | Interlocutory Judgment | Lost | Leslie Phua, Louis Lim |
| Yeung Chun Keung | Defendant | Individual | Interlocutory Judgment | Lost | Tan Cheow Hin |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lai Siu Chiu | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Jeya Putra | AsiaLegal LLC |
| Magdalene Chew | AsiaLegal LLC |
| Leslie Phua | William Poh & Louis Lim |
| Louis Lim | William Poh & Louis Lim |
| Tan Cheow Hin | CH & Partners |
4. Facts
- The plaintiff was in the business of mixed construction activities and roofing as well as piling works.
- The first, second, and third defendants were directors of the plaintiff.
- The first and second defendants were also directors of the plaintiff’s immediate holding company, Wee Poh Construction Co. Pte Ltd.
- The plaintiff purchased five machines for its construction activities.
- The plaintiff was placed under a scheme of arrangement in January 2002.
- The defendants transferred the five machines to Wee Poh, who then sold them off.
- The plaintiff did not receive payment from any of the sales of the five machines.
- The plaintiff was insolvent when the transfers and sales took place.
5. Formal Citations
- W&P Piling Pte Ltd (in liquidation) v Chew Yin What and Others, Suit No 162/2006, [2007] SGHC 124
6. Timeline
| Date | Event |
|---|---|
| Plaintiff incorporated | |
| Third defendant became a director of the plaintiff | |
| Second defendant became a director of the plaintiff | |
| Third defendant's service contract with holding company dated | |
| Plaintiff purchased first machine | |
| Plaintiff purchased second machine | |
| Hire-purchase agreement for the first machine signed | |
| Plaintiff purchased third machine | |
| Plaintiff purchased fourth machine | |
| Hire-purchase agreement for the third machine signed | |
| Plaintiff purchased fifth machine | |
| Hire-purchase agreement for the fifth machine signed | |
| Hire-purchase agreement for the fourth machine signed | |
| Plaintiff placed under scheme of arrangement | |
| Chow Soong Cheng resigned from plaintiff's services | |
| Plaintiff sold first machine to Wee Poh | |
| Wee Poh sold fifth machine to Lim Sing Piling Pte Ltd | |
| Plaintiff defaulted on second instalment payment | |
| Winding-up petition filed against the plaintiff | |
| Plaintiff issued credit note to Wee Poh | |
| Defendants resigned as directors of the plaintiff | |
| Company ordered to be wound-up | |
| Caterpillar terminated hire-purchase agreement with Wee Poh | |
| Third defendant sued holding company | |
| Wee Poh placed under scheme of arrangement | |
| First and second defendants examined in court | |
| First and second defendants filed affidavits | |
| Court ordered Yin to admit plaintiff's proof of debt | |
| Judgment date |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that the directors breached their fiduciary duties by transferring assets to the parent company without proper accounting.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Failure to act in good faith
- Failure to act honestly
- Breach of Statutory Duty
- Outcome: The court found that the directors breached their statutory duties under Section 157 of the Companies Act.
- Category: Substantive
- Sub-Issues:
- Failure to act honestly
- Failure to act with reasonable diligence
- Directors' Duties in Insolvency
- Outcome: The court considered the directors' duties in light of the company's insolvency and the interests of creditors.
- Category: Substantive
- Sub-Issues:
- Duty to consider creditors' interests
- Improper disposal of assets
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Fiduciary Duty
- Breach of Statutory Duty
10. Practice Areas
- Commercial Litigation
- Insolvency Law
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Liquidator of W&P Piling Pte Ltd v Chew Yin What & Others | High Court | Yes | [2004] 3 SLR 164 | Singapore | Cited for the fact that the first and second defendants were examined in court on the plaintiff’s affairs and on their duties as directors. |
| Townsing Henry George v Jenton Overseas Investment Pte Ltd (in liquidation) | Court of Appeal | Yes | [2007] 2 SLR 597 | Singapore | Cited for the principle that the duty of honesty of a director and his duty to act bona fide is a composite obligation and that the duty to act honestly under s 157 of the Act was the statutory equivalent of the duty to act bona fide which exists at common law. |
| Kea Holdings Pte Ltd v Gan Boon Hock | High Court | Yes | [2003] 3 SLR129 | Singapore | Cited as authority for the common law duty to act bona fide. |
| Golden Village Multiplex Pte Ltd v Phoon Chiong Kit | High Court | Yes | [2006] 2 SLR307 | Singapore | Cited as authority for the common law duty to act bona fide. |
| Re Dominion International Group plc (No 2) | Not Available | Yes | [1996] 1 BCLC 572 | England | Cited for the principle that a director of a subsidiary company, who is also a director of its holding company, is in breach of his fiduciary duty to the holding company, if he improperly gets rid of an asset of significant value to the subsidiary. |
| Tong Tien See Construction Pte Ltd v Tong Tien See | High Court | Yes | [2002] 3 SLR 76 | Singapore | Cited for the principle that when a company is insolvent, the interests of the company’s creditors become the dominant factor. |
| West Mercia Safetywear Ltd v Dodd | Not Available | Yes | [1988] BCLC 250 | England | Cited for the principle that when a company is insolvent or on the verge of insolvency but not otherwise, it is the creditors’ interests that are paramount. |
| Vita Health Laboratories Pte Ltd v Pang Seng Meng | High Court | Yes | [2004] 4 SLR 162 | Singapore | Cited to distinguish from cases where directors made bona fide commercial decisions that turned out to be against the company’s interests. |
| Globalink Telecommunications Limited v Wilmbury Limited | Not Available | Yes | [2003] 1 BCLC 145 | England | Cited for the principle that the law makes no distinction between fiduciary duties owed by different categories of directors and that a nominee director owes the same duties to a company as any other director. |
| Kwee Seng Chio Peter v Biogenics Sdn Bhd | High Court | Yes | [2003] 2 SLR 482 | Singapore | Cited for the principle that if a person allows himself to be a mere nominee of, and acts for, another person, without the exercise of his own discretion or volition, in utter disregard for his duties as a director of the company, that nominee director must be bound by the notice which the other person, for whom he acts, has of the nature of the transaction. |
13. Applicable Rules
| Rule Name |
|---|
| O 16 of the Rules of Court revised 2006 edition |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Section 157(1) Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
| Section 391(1) Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Directors' duties
- Fiduciary duty
- Statutory duty
- Scheme of arrangement
- Insolvency
- Asset transfer
- Nominee director
- Liquidator
15.2 Keywords
- Directors
- Duties
- Breach
- Fiduciary
- Statutory
- Asset Transfer
- Insolvency
- Companies Act
16. Subjects
- Company Law
- Directors' Duties
- Insolvency
17. Areas of Law
- Companies Law
- Directors' Duties
- Fiduciary Duty
- Statutory Duty