Lew Kiat Beng v Hiap Seng: Derivative Action & Discovery Obligations
Lew Kiat Beng, Lau Chin Hu, and Law Chin Chai, shareholders and directors of Hiap Seng & Co Pte Ltd, appealed against a High Court decision regarding an interlocutory application in a derivative action brought by fellow shareholders Law Chin Eng and Lau Chin Whatt. The Court of Appeal, with Chan Sek Keong CJ delivering the judgment, allowed the appeals, holding that the order compelling the Appellants to provide access to company documents was unnecessary and that the existing discovery mechanisms under the Rules of Court were sufficient.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeals allowed with costs to the Appellants.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Shareholder derivative action concerning breach of fiduciary duties. Court of Appeal addressed discovery obligations and access to company documents.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Lew Kiat Beng | Appellant | Individual | Appeal Allowed | Won | |
| Lau Chin Hu | Appellant | Individual | Appeal Allowed | Won | |
| Law Chin Chai | Appellant | Individual | Appeal Allowed | Won | |
| Hiap Seng & Co Pte Ltd | Respondent | Corporation | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
4. Facts
- Law Chin Eng and Lau Chin Whatt were granted leave to commence a derivative action against Lew Kiat Beng, Lau Chin Hu, and Law Chin Chai.
- The derivative action alleged that the Appellants had breached their fiduciary duties to the Company.
- The High Court ordered the Appellants to provide access to company documents to Law Chin Eng and Lau Chin Whatt.
- The Appellants appealed the High Court's order, arguing it was unnecessary given the standard discovery process.
- The Appellants disclosed the requested documents in their Lists of Documents.
- The Court of Appeal found that the High Court's order was not necessary for the fair conduct of the derivative action.
5. Formal Citations
- Lew Kiat Beng v Hiap Seng & Co Pte Ltd, Civil Appeals Nos 223 of 2010 and 225 of 2010, [2011] SGCA 61
- Hiap Seng & Co Pte Ltd v Lau Chin Hu and others, , [2011] SGHC 143
- Law Chin Eng and Another v Hiap Seng & Co Pte Ltd (Lau Chin Hu and others, applicants), , [2009] SGHC 223
6. Timeline
| Date | Event |
|---|---|
| Law Chin Eng and Lau Chin Whatt filed Originating Summons No 372 of 2008 to apply for leave to bring a derivative action. | |
| Law Chin Eng and Lau Chin Whatt were granted leave to commence a derivative action. | |
| Assistant Registrar directed parties to file and exchange Lists of Documents by 16 September 2010. | |
| Solicitors for Law Chin Eng and Lau Chin Whatt requested the Appellants to procure company documents for inspection. | |
| Lew Kiat Beng's solicitors stated that Lew Kiat Beng would not accede to the request for documents. | |
| Law Chin Eng and Lau Chin Whatt were refused entry to the Company’s office. | |
| Law Chin Eng and Lau Chin Whatt filed Summons No 4129 of 2010. | |
| Assistant Registrar dismissed Summons No 4129 of 2010. | |
| Judge allowed the Company’s appeal. | |
| Law Chin Eng and Lau Chin Whatt inspected the Requested Documents at the premises of Lew Kiat Beng’s solicitors. | |
| Lew Kiat Beng’s solicitors enclosed a list of inspected documents. | |
| Solicitors for Law Chin Eng and Lau Chin Whatt claimed the Appellants had been deficient in complying with the Order. | |
| Appellants filed appeals to set aside the Order. | |
| Appellants obtained a stay of execution on the Order. | |
| Parties filed their respective Lists of Documents. | |
| Court of Appeal delivered its decision. |
7. Legal Issues
- Discovery Obligations in Derivative Actions
- Outcome: The Court of Appeal held that the existing discovery mechanisms under the Rules of Court were sufficient and that the order compelling the Appellants to provide access to company documents was unnecessary.
- Category: Procedural
- Sub-Issues:
- Scope of discovery
- Access to company documents
- Obligations of defendant directors
- Directors' Duties
- Outcome: The Court of Appeal considered the duties of directors in the context of a derivative action but did not make a definitive ruling on whether the Appellants had breached their duties.
- Category: Substantive
- Sub-Issues:
- Breach of fiduciary duties
- Duty to act in the company's interest
- Right to Conduct Derivative Action
- Outcome: The Court of Appeal clarified the scope of control granted to a derivative plaintiff and its impact on discovery obligations.
- Category: Procedural
- Sub-Issues:
- Leave to commence derivative action
- Control of conduct of action
8. Remedies Sought
- Access to Company Documents
- Damages (in the underlying suit)
9. Cause of Actions
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Hiap Seng & Co Pte Ltd v Lau Chin Hu and others | High Court | Yes | [2011] SGHC 143 | Singapore | The High Court decision that was appealed against in this case. |
| Law Chin Eng and Another v Hiap Seng & Co Pte Ltd (Lau Chin Hu and others, applicants) | High Court | Yes | [2009] SGHC 223 | Singapore | Cited for the granting of leave to commence a derivative action against the Appellants. |
| Discovery Enterprises Inc v Ebco Industries Ltd | British Columbia Supreme Court | Yes | Discovery Enterprises Inc v Ebco Industries Ltd (2001) 86 BCLR (3d) 120 | Canada | Discussed in relation to the rights of a de facto plaintiff in a derivative action, specifically regarding examinations for discovery. |
| 345457 BC Ltd v Brian A Tieszen and others | British Columbia Supreme Court | Yes | 345457 BC Ltd v Brian A Tieszen and others [2001] BCSC 26 | Canada | Discussed in relation to a shareholder's right to review company files when bringing a derivative action. |
| Re Tecnion Investments Ltd | English Court of Appeal | Yes | Re Tecnion Investments Ltd [1985] BCLC 434 | England | Cited for the principle that a director with dominant control may not necessarily have power over all company documents for discovery purposes. |
| James Nelson & Sons, Limited v Nelson Line (Liverpool), Limited | Court of Appeal | Yes | James Nelson & Sons, Limited v Nelson Line (Liverpool), Limited [1906] 2 KB 217 | England | Cited regarding the principle that discovery is governed by specific legislation (Rules of Court). |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 24 r 1 |
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 24 r 5 |
| Rules of Court O 88 r 2(1) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) s 216A | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Derivative Action
- Discovery Obligations
- Fiduciary Duty
- Leave to Commence Action
- Rules of Court
- De Facto Plaintiff
- De Jure Plaintiff
15.2 Keywords
- derivative action
- discovery
- fiduciary duty
- company law
- Singapore
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Derivative action | 80 |
| Companies Act | 75 |
| Company Law | 75 |
| Fiduciary Duties | 70 |
| Corporate Litigation | 60 |
| Civil Procedure | 50 |
| Disclosure of documents | 50 |
| Evidence Law | 40 |
16. Subjects
- Company Law
- Civil Procedure
- Litigation