Chia Kok Kee v HX Investment: Dispute over Dividend Payouts in Joint Venture

In Chia Kok Kee v HX Investment Pte Ltd, the High Court of Singapore addressed a dispute over dividend payouts and expenses claimed by Chia Kok Kee against HX Investment Pte Ltd, concerning a joint venture in a hydro-electric power plant in China. The court dismissed Chia Kok Kee's claim, finding that he was only entitled to 40% of the dividends and had not proven his claims for facilitation fees or bonus shares. The court awarded judgment to Tan Wah on her Third Party Counterclaim and directed future dividend distributions to be split 60:40 in favor of Tan Wah and Chia Kok Kee, respectively.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's action dismissed with costs to HX Investment Pte Ltd. Judgment for Tan Wah on her Third Party Counterclaim.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Dispute over dividend payouts and expenses claimed in a joint venture. The court determined the terms of the oral agreement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Chia Kok KeePlaintiffIndividualClaim DismissedLost
Tan WahThird PartyIndividualJudgment for Third Party on CounterclaimWon
HX Investment Pte LtdDefendantCorporationJudgment for DefendantWon
So Lai Har (alias Chia Choon)Third PartyIndividualThird Party Claim DismissedNeutral

3. Judges

Judge NameTitleDelivered Judgment
Lai Siu ChiuJudgeYes

4. Counsels

Counsel NameOrganization
Low Wai CheongChris Chong & CT Ho Partnership
Chua Teck LeongChris Chong & CT Ho Partnership
Thean Chow LeongChris Chong & CT Ho Partnership
Wong Seow PinSP Wong & Co

4. Facts

  1. Chia Kok Kee sought co-investors for a hydro-electric power plant joint-venture in China.
  2. Tan Wah agreed to invest in the joint-venture.
  3. HX Investment Pte Ltd was incorporated to invest in the joint-venture.
  4. Directors and shareholders of HX were Tan Wah and Chia Kok Kee’s mother, So Lai Har.
  5. HX was to invest RMB 6,225,369, equivalent to 25% of the share capital in SND.
  6. HX was guaranteed a 20% annual return on the investment for the first four years.
  7. Chia Kok Kee and Tan Wah had an oral agreement regarding the investment.
  8. The terms of the oral agreement were disputed.
  9. Funds were remitted to SCMEC from HX's account with the Bank of China.
  10. Dispute arose over the accounting of dividend payouts and expenses claimed by Chia Kok Kee.

5. Formal Citations

  1. Chia Kok Kee v HX Investment Pte Ltd, Suit 558/2005, [2007] SGHC 164

6. Timeline

DateEvent
Oral agreement entered into between Chia Kok Kee and Tan Wah.
Formal joint-venture contract signed by Chinese parties and the plaintiff.
HX Investment Pte Ltd incorporated.
Joint-venture establishing SND came into effect.
First dividend payout received.
Second dividend payout received.
HX requested CSEP to remit dividend payouts to BOC Account 1.
CM Bank Account automatically closed for lack of activity.
Confrontation meeting between TW, SLH, Chia Kok Kee, and KTC.
TW sent a letter to SND requesting to withhold all dividend payouts.
Mediation meeting held at Paul Tan’s office.
Suit 558/2005 filed.
Offer to Settle made by HX Investment Pte Ltd and Tan Wah.
Judgment reserved.
Judgment released.
Additional judgment released regarding costs.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the plaintiff failed to prove the terms of the oral agreement he alleged.
    • Category: Substantive
    • Sub-Issues:
      • Dispute over contractual terms
      • Failure to adhere to oral agreement
  2. Trust
    • Outcome: The court found that HX Investment Pte Ltd was intended to be a vehicle through which the parties would channel their investment, but the pleaded case that HX was a trust vehicle appeared to be an afterthought.
    • Category: Substantive
    • Sub-Issues:
      • Whether company intended to be incorporated as commercial vehicle to hold investment on trust for investors
  3. Estoppel by Convention
    • Outcome: The court found that the criterion that both parties must have proceeded on the basis of an agreed interpretation of the contract was conspicuously absent in this case.
    • Category: Substantive

8. Remedies Sought

  1. Declaration that HX was holding 40% of the Investment on trust for him
  2. Transfer of 40% interest in HX Investment back to him
  3. Direction that HX direct SND to release all outstanding dividend payments withheld since January 2004
  4. Restitution of dividend payments collected from SND

9. Cause of Actions

  • Breach of Contract
  • Breach of Fiduciary Duty
  • Restitution

10. Practice Areas

  • Commercial Litigation
  • Corporate Law

11. Industries

  • Energy
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
ECRC Land Pte Ltd v Wuu Khek Chiang, GeorgeHigh CourtYes[1998] SGHC 157SingaporeCited for the principle that the existence and terms of an oral agreement are questions of fact to be determined by an assessment of the evidence.
Aircharter World Pte Ltd v Kontena Nasional BhdCourt of AppealYes[1999] 3 SLR 1SingaporeCited for the objective approach to the construction of a contract and ascertaining the presumed intention of the parties.
Pioneer Shipping Ltd v BTP Tioxide Ltd; The NemaN/AYes[1982] AC 724N/ACited for the principle of ascertaining the mutual intentions of the parties as to the legal obligations each assumed by the contractual words.
Reardon Smith Line Ltd v Yngvar Hansen-TangenN/AYes[1976] 3 All ER 570N/ACited for the principle that the intention of the parties to the contract is to be determined objectively.
Codelfa Construction Pty Ltd v State Rail Authority of New South WalesN/AYes(1982) 149 CLR 337New South WalesCited for the principle that the court looks to the objective framework of facts and the parties’ presumed intention in this setting when interpreting a contractual provision.
Prenn v SimmondsN/AYes[1971] 3 All ER 237N/ACited for the principle that agreements should be interpreted within the matrix of facts in which they are set, including evidence of the genesis and aim of the transaction.
James Miller & Partners Ltd v Whitworth Street Estates (Manchester) LtdN/AYes[1970] AC 583N/ACited for the principle that the court may not look at the subsequent conduct of parties to interpret a written agreement except when variation or estoppel is in issue.
MAE Engineering Ltd v Fire-Stop Marketing Services Pte LtdN/AYes[2005] 1 SLR 379SingaporeCited for the principle that the court may not look at the subsequent conduct of parties to interpret a written agreement except when variation or estoppel is in issue.
Estate of Seow Khoon Seng v Pacific Century Regional Developments LtdN/AYes[1997] 1 SLR 509SingaporeCited for the principle that the court may not look at the subsequent conduct of parties to interpret a written agreement except when variation or estoppel is in issue.
Wilson v Maynard Shipbuilding Consultants Pte LtdN/AYes[1978] QB 665N/ACited for the principle that where one cannot ascertain from the terms of a written contract itself what was agreed about a relevant term, one may look at what happened and what the parties had done under the contract during the whole contemplated period of the contract for the limited purpose of ascertaining what that term was.
Singapore Island Country Club v HilborneN/AYes[1997] 1 SLR 248SingaporeCited for the criteria for estoppel by convention.
The Endurance 1N/AYes[1999]1 SLR 661SingaporeCited for the purpose of an offer to settle at law is to encourage the termination of litigation by agreement of the parties, more speedily and less expensively than by judgment of the Court at the end of the trial.
Colliers International (Singapore) Pte Ltd v Senkee Logistics Pte LtdN/AYes[2007] 2 SLR 230SingaporeCited for the tests for an offer to settle.
Singapore Airlines Ltd v Fujitsu Microelectronics (Malaysia) Sdn Bhd (No 2)N/AYes[2001] 1 SLR 532SingaporeCited for the tests for an offer to settle.
Man B&W Diesel S E Asia Pte Ltd v PT Bumi International TankersN/AYes[2004] 3 SLR 267SingaporeCited for the tests for an offer to settle.
Data General (Canada) v Molnar System GroupN/AYes(1991) 85 DLR (4th) 392CanadaCited for the tests for an offer to settle.
SBS Transit Ltd v Koh Swee AnnN/AYes[2004] 3 SLR 365SingaporeCited for the compliance with Form 33 is obligatory.

13. Applicable Rules

Rule Name
Rules of Court (2004 Rev Ed)

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50) (revised 1994 ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Joint-venture
  • Dividend payouts
  • Oral agreement
  • Investment
  • Shareholding
  • Facilitation fee
  • Bonus share
  • Trust vehicle
  • Commercial vehicle
  • Dormant company

15.2 Keywords

  • Contract
  • Investment
  • Dividend
  • Joint Venture
  • Shareholding
  • Trust
  • Oral Agreement

17. Areas of Law

Area NameRelevance Score
Contract Law70
Breach of Contract70
Trust Law60
Oral Agreement60
Joint Venture50
Company Law50
Fiduciary Duties40
Duty to Account40
Shareholding40
Estoppel30
Fraud and Deceit30
Evidence30
Affidavits20
Law of Pleadings20
Costs20

16. Subjects

  • Contract Dispute
  • Investment Dispute
  • Corporate Governance