Lee Tung Co: Winding Up Application by Non-Minority Shareholder on Just and Equitable Grounds
Chow Kwok Chi, the plaintiff, applied to the High Court of Singapore on 22 November 2007, to wind up Lee Tung Company (Private) Limited, along with two other companies, on the basis that it would be just and equitable to do so. The application was opposed by Chow Kwok Chuen and Chow Kwok Ching. The court found that the brothers could no longer work together to run the companies properly and ordered the company to be wound up.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Winding up order granted.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Application to wind up Lee Tung Co on just and equitable grounds due to family dispute and management deadlock. The court ordered the company to be wound up.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chow Kwok Chi | Plaintiff | Individual | Application granted | Won | Jimmy Yim, Abraham Vergis, Clive Myint Soe |
| Lee Tung Company (Private) Limited | Defendant | Corporation | Winding up order granted | Lost | |
| Chow Kwok Chuen | Respondent | Individual | Opposition unsuccessful | Lost | Ang Cheng Hock, Tan Xeauwei, Jacqueline Lee |
| Chow Kwok Ching | Respondent | Individual | Opposition unsuccessful | Lost | Peter Cuthbert Low, Robert Yu, See Tow Soo Ling, Wong Shyen Sook |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Jimmy Yim | Drew & Napier LLC |
| Abraham Vergis | Drew & Napier LLC |
| Clive Myint Soe | Drew & Napier LLC |
| Ang Cheng Hock | Allen & Gledhill |
| Tan Xeauwei | Allen & Gledhill |
| Jacqueline Lee | Allen & Gledhill |
| Peter Cuthbert Low | Colin Ng & Partners |
| Robert Yu | Colin Ng & Partners |
| See Tow Soo Ling | Colin Ng & Partners |
| Wong Shyen Sook | Colin Ng & Partners |
4. Facts
- Three brothers, Chi, Chuen, and Ching, are directors and shareholders of Lee Tung.
- The brothers inherited the company from their parents, Mr. and Mrs. Chow.
- The brothers have a history of disputes and litigation.
- The company is a family-owned investment holding company.
- The brothers cannot agree on how to manage the company or administer their parents' estates.
- Mr. Chow's estate owes substantial debts to the company.
- The company is profitable but lacks direction due to the directors' disagreements.
5. Formal Citations
- Re Lee Tung Co (Pte) Ltd, CWU OS 55/2007, [2007] SGHC 197
6. Timeline
| Date | Event |
|---|---|
| Lee Tung Company (Private) Limited incorporated | |
| Chow Cho Poon died | |
| Mrs. Chow executed a deed of trust and a deed of family arrangement | |
| Grace Chow died | |
| Ching applied to court for an independent party to be appointed to administer the estate | |
| Valuation of immovable assets owned by the companies | |
| Ching commenced oppression suits against Chi and Chuen | |
| Mr Gerald Loong Sie Kong appointed as the independent administrator of the estate of Mr Chow | |
| Companies purported to exercise their respective liens over Mr Chow’s shares | |
| Mr Loong produced a report regarding the debts of the estate to the companies | |
| Mr Loong applied to court for an order that the sixth option be adopted | |
| Chuen filed originating summonses for leave to commence derivative actions | |
| Chi filed applications to wind up the companies | |
| Chuen averred that he had the necessary financial resources to buy out both Chi’s and Ching’s shares in the companies | |
| Chuen clarified that his buy-out proposal extended only to Chi | |
| Judgment reserved |
7. Legal Issues
- Just and Equitable Winding Up
- Outcome: The court found that it was just and equitable to wind up the company due to the breakdown in the relationship between the directors and the difficulties in managing the company.
- Category: Substantive
- Sub-Issues:
- Management deadlock
- Irretrievable breakdown in management
- Loss of confidence
- Management Deadlock
- Outcome: The court found that the relationship between the brothers had deteriorated to the point where they could no longer work together to run the companies properly.
- Category: Substantive
- Sub-Issues:
- Inability of directors to agree on management decisions
- Minority shareholder consistently outvoted
8. Remedies Sought
- Winding Up Order
9. Cause of Actions
- Application for Winding Up on Just and Equitable Grounds
10. Practice Areas
- Corporate Litigation
- Insolvency
11. Industries
- Real Estate
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re Goodwealth Trading Pte Ltd | High Court | Yes | [1990] SLR 1239 | Singapore | Cited for the principle that a company's substratum is its main object, and if that object can no longer be carried on, the company can be wound up. |
| Ebrahimi v Westbourne Galleries Ltd | House of Lords | Yes | [1973] AC 360 | England and Wales | Cited for the elements the court would take into account when deciding whether to subject the exercise of legal rights to equitable considerations. |
| Sim Yong Kim v Evenstar Investments Pte Ltd | High Court | Yes | [2006] 3 SLR 827 | Singapore | Cited for the principle that s 254(1)(i) does not apply to a case where the loss of trust and confidence in other members is self-induced. |
| Ng Eng Hiam v Ng Kee Wei | Unknown | Yes | [1965] 31 MLJ 238 | Malaysia | Cited for the principle that s 254(1)(i) does not apply to a case where the loss of trust and confidence in other members is self-induced. |
| Baxted v Warkentin Estate | Unknown | Yes | [2006] M J. No. 376 | Canada | Cited to demonstrate that the need to administer an estate of a deceased person has been found to be a material factor for consideration when an application to wind up has been made. |
| Re Yenidje Tobacco Company Limited | Court of Appeal | Yes | [1916] 2 Ch 426 | England and Wales | Cited for the principle that viable and profitable companies can be wound up under s 254(1)(i). |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Section 254(1)(i) Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding up
- Just and equitable
- Management deadlock
- Family dispute
- Shareholder oppression
- Clean break
- Estate administration
- Quasi-partnership
- Investment holding company
15.2 Keywords
- winding up
- just and equitable
- company law
- family dispute
- management deadlock
- Singapore
- High Court
16. Subjects
- Company Law
- Winding Up
- Family Business
- Shareholder Disputes
17. Areas of Law
- Company Law
- Winding Up
- Equity