Law Chin Eng v Lau Chin Hu: Striking Out Claim for Breach of Fiduciary Duty to Company

Law Chin Eng and Lau Chin Whatt sued their brothers, Lau Chin Hu and Law Chin Chai, and nephew, Lew Kiat Beng, for breach of trust and fiduciary duties. The plaintiffs alleged the defendants breached their fiduciary duties to Hiap Seng & Co Pte Ltd. The High Court struck out paragraphs 22 to 28 and prayer 12 of the Statement of Claim, concerning the breach of fiduciary duty to the company, because the company is the proper plaintiff to bring such a claim. The plaintiffs have appealed to the Court of Appeal against the striking out of these paragraphs.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Paragraphs 22 to 28 and prayer 12 of the Statement of Claim were struck out.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Plaintiffs' claim against defendants for breach of fiduciary duty to a company was struck out, as the company was the proper plaintiff.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Lew Kiat BengDefendantIndividualSuccessful in striking out claimWon
Lau Chin HuRespondent, DefendantIndividualSuccessful in striking out claimWon
Law Chin ChaiRespondent, DefendantIndividualSuccessful in striking out claimWon
Hiap Seng & Co Pte LtdDefendantCorporationSuccessful in striking out claimWon
Winstant Holding Pte LtdOtherCorporation
Law Chin EngAppellant, PlaintiffIndividualClaim DismissedLost
Lau Chin WhattPlaintiffIndividualClaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Tan Lee MengJudgeYes

4. Counsels

Counsel NameOrganization
Lok Vi Ming SCRodyk & Davidson LLP
Chu Hua YiRodyk & Davidson LLP
Audrey ChiangRodyk & Davidson LLP
Edric PanRodyk & Davidson LLP
Jiang Ke-YueLee & Lee
Alma YongLee & Lee
Michael KuahLee & Lee

4. Facts

  1. Plaintiffs and defendants are brothers and nephew, and directors and shareholders of Hiap Seng & Co Pte Ltd.
  2. Plaintiffs alleged defendants breached their fiduciary duties to the company.
  3. Plaintiffs sought a declaration that defendants be removed as trustees of a family trust.
  4. Plaintiffs alleged improper and fraudulent dealings by the defendants in the company.
  5. The alleged breaches included unauthorized payments, improper property purchases, and fictitious trades.
  6. The plaintiffs claimed the defendants were involved in a systematic dissipation of the company's assets.

5. Formal Citations

  1. Law Chin Eng and Another v Lau Chin Hu and Others, Suit 839/2006, RA 273/2007, [2008] SGHC 187

6. Timeline

DateEvent
Hiap Seng & Co Pte Ltd incorporated.
Lew Chin Hwa died.
Plaintiffs instituted action against defendants.
Assistant Registrar dismissed defendants’ application and allowed plaintiffs’ application to amend their Writ of Summons.
High Court ordered the striking out of paragraphs 22 to 28 as well as prayer 12 of the Statement of Claim.

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court held that the plaintiffs' claim for breach of fiduciary duty to the company should be struck out because the company is the proper plaintiff.
    • Category: Substantive
    • Related Cases:
      • [1902] 2 Ch 421
      • (1843) 2 Hare 461
      • [1902] 1 AC 83
      • [1982] 1 Ch 204
      • [2002] 2 AC 1
      • [2003] 1 Ch 350
  2. Striking Out
    • Outcome: The court ordered the striking out of paragraphs 22 to 28 and prayer 12 of the Statement of Claim.
    • Category: Procedural
    • Related Cases:
      • [1998] 1 SLR 374

8. Remedies Sought

  1. Declaration for removal of trustees
  2. Inquiry into trust property
  3. Account of profits
  4. Indemnification of the company

9. Cause of Actions

  • Breach of Fiduciary Duty
  • Breach of Trust

10. Practice Areas

  • Commercial Litigation

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and othersCourt of AppealYes[1998] 1 SLR 374SingaporeCited for the principle that the power of striking out should only be invoked in plain and obvious cases.
Percival v WrightChancery DivisionYes[1902] 2 Ch 421England and WalesCited for the principle that directors owe their duties to the company.
Foss v HarbottleHigh Court of JusticeYes(1843) 2 Hare 461England and WalesCited for the rule that an action to redress a wrong done to the company should be brought by the company itself.
Burland v EarlePrivy CouncilYes[1902] 1 AC 83United KingdomCited for the principle that actions to recover damages due to the company should be brought by the company itself.
Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)English Court of AppealYes[1982] 1 Ch 204England and WalesCited for the principle that a party cannot bring an action on behalf of another party for an injury done to that other party.
Johnson v Gore Wood & Co (a firm)House of LordsYes[2002] 2 AC 1United KingdomCited for the principle that only the company may sue for loss caused by a breach of duty owed to it.
Wallersteiner v Moir (No 2)Court of AppealYes[1975] 1 QB 373England and WalesCited for the explanation of a derivative action.
Shaker v Al-BedrawiEnglish Court of AppealNo[2003] 1 Ch 350England and WalesDiscussed in detail regarding the applicability of the Prudential principle when a beneficiary sues a trustee for a profit.
Re Lucking’s Will TrustsN/ANo[1968] 1 WLR 866N/ACited by counsel for the proposition that the Prudential principle has no application where a beneficiary has a proprietary claim against the trustee director.
Walker v StonesN/ANo[2001] 1 QB 902N/ACited by counsel for the proposition that the Prudential principle has no application where a beneficiary has a proprietary claim against the trustee director.
Gardner v ParkerEnglish Court of AppealYes[2005] BCC 46England and WalesCited for the principle that a claim brought by a beneficiary against a trustee for breach of fiduciary duty can be barred by the rule against reflective loss.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43) s 7(2)Singapore
Companies Act ss 157 and 157ASingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Family trust
  • Fiduciary duty
  • Derivative action
  • Prudential principle
  • Reflective loss
  • Striking out
  • Trustees de son tort

15.2 Keywords

  • breach of fiduciary duty
  • striking out
  • company law
  • trust law
  • singapore

17. Areas of Law

Area NameRelevance Score
Civil Practice75
Trust Law70
Company Law65
Fiduciary Duties60
Fraud and Deceit50

16. Subjects

  • Trusts
  • Company Law
  • Civil Procedure