Raffles Town Club v Lim Eng Hock Peter: Breach of Directors' Duties & Conspiracy
In Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others, the Court of Appeal of Singapore heard appeals against the High Court's decision dismissing claims by Raffles Town Club (RTC) against its former directors for breach of duties, and counterclaims. The court dismissed RTC's appeal, finding no breach of directors' duties. However, the court partially allowed the appeals of Lawrence Ang, William Tan, and Peter Lim, finding that Margaret Tung and Lin Jian Wei had engaged in an actionable conspiracy to injure the former directors. The court ordered Margaret Tung and Lin Jian Wei to personally bear the costs of defending the suit on an indemnity basis.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal dismissed in part and allowed in part.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal concerning breach of directors' duties and conspiracy in Raffles Town Club case. Court dismissed claims, finding no breach and actionable conspiracy.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Raffles Town Club Pte Ltd | Appellant, Plaintiff | Corporation | Appeal Dismissed | Lost | |
| Lim Eng Hock Peter | Respondent, Defendant, Appellant | Individual | Counterclaim Allowed in Part | Partial | |
| Lawrence Ang | Appellant, Defendant | Individual | Appeal Allowed in Part | Partial | |
| William Tan | Appellant, Defendant | Individual | Appeal Allowed in Part | Partial | |
| Dennis Foo | Respondent, Defendant | Individual | Claim Dismissed | Won | |
| Margaret Tung | Respondent | Individual | Conspiracy Claim Upheld | Lost | |
| Lin Jian Wei | Respondent | Individual | Conspiracy Claim Upheld | 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 |
| Philip Pillai | Judge | No |
4. Counsels
4. Facts
- RTC's former directors were sued for breach of duties concerning their conduct vis-à-vis the members of the Club and RTC prior to 5 November 1997.
- RTC had represented to the public that the Club would be a “premier” and “exclusive” club.
- The Club acquired 19,048 members, making it the largest social club in Singapore.
- 4,885 members commenced a class action against RTC for breach of contract in failing to provide a “premier” and “exclusive” club.
- RTC was found liable for damages for breach of contract and had to pay compensation to members.
- The directors and shareholders proposed a scheme of arrangement to satisfy the damages.
- RTC extended an interest-free and unsecured $33mil loan to RTCI, a wholly-owned subsidiary.
5. Formal Citations
- Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others and other appeals, Civil Appeals Nos 108, 109 and 110 of 2010, [2012] SGCA 62
6. Timeline
| Date | Event |
|---|---|
| Raffles Town Club Limited incorporated as a public limited company. | |
| Management Agreement signed between RTC and Europa Holdings Pte Ltd. | |
| RTC extended an interest-free and unsecured $33mil loan to RTCI. | |
| RTC extended an interest-free and unsecured $33mil loan to RTCI. | |
| RTC converted into a private exempt company and renamed Raffles Town Club Pte Ltd. | |
| The $33mil loan was fully repaid by RTCI to RTC. | |
| Litigation between the current and former shareholders of RTC arose in Suit No 742 of 2000. | |
| 4,885 members of the Club commenced a class action against RTC. | |
| Margaret Tung appointed to the board of directors of RTC. | |
| Margaret Tung and Lin Jian Wei became shareholders of RTC. | |
| Agreement in respect of the Sale and Purchase of Shares in Raffles Town Club Pte Ltd signed. | |
| Lin Jian Wei appointed to the board of directors of RTC. | |
| Deed dated 18 February 2002 signed. | |
| Suit No 46 of 2006 commenced. | |
| Civil Appeals Nos 108, 109 and 110 of 2010 filed. | |
| Judgment reserved. | |
| Decision Date |
7. Legal Issues
- Breach of Directors' Duties
- Outcome: The court found no breach of directors' duties by the former directors.
- Category: Substantive
- Sub-Issues:
- Failure to act in good faith
- Breach of fiduciary duty
- Failure to exercise reasonable care and skill
- Failure to act with due care and diligence
- Failure to act honestly
- Conspiracy
- Outcome: The court found that Margaret Tung and Lin Jian Wei had engaged in an actionable conspiracy to injure the former directors.
- Category: Substantive
- Sub-Issues:
- Conspiracy by unlawful means
- Conspiracy by lawful means
- Predominant purpose to cause injury
- Lifting the Corporate Veil
- Outcome: The court lifted the corporate veil of RTC, treating RTC's claims as personal claims of MT and LJW.
- Category: Procedural
8. Remedies Sought
- Monetary Damages
- Indemnity
- Contribution
9. Cause of Actions
- Breach of Directors' Duties
- Breach of Contract
- Conspiracy
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Hospitality
- Recreation
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Lim Eng Hock Peter v Lin Jian Wei and another and another appeal | Court of Appeal | Yes | [2010] 4 SLR 331 | Singapore | Proceedings were brought by some former directors against the current directors of RTC seeking damages for defamation in relation to certain statements published in connection with the Scheme of Arrangement. |
| Lim Eng Hock Peter v Lin Jian Wei and another and another appeal | Court of Appeal | Yes | [2010] 4 SLR 357 | Singapore | Proceedings were brought by some former directors against the current directors of RTC seeking damages for defamation in relation to certain statements published in connection with the Scheme of Arrangement. |
| Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others (Tung Yu-Lien Margaret and others, third parties) | High Court | Yes | [2010] SGHC 163 | Singapore | Decision of a High Court Judge dismissing all the claims, counterclaims and third party claims in Suit No 46 of 2006. |
| Tan Chin Seng & Others v Raffles Town Club Pte Ltd | High Court | Yes | [2002] SGHC 278 | Singapore | The members’ class action was dismissed by the High Court. |
| Tan Chin Seng and others v Raffles Town Club Pte Ltd | Court of Appeal | Yes | [2003] 3 SLR(R) 307 | Singapore | This Court reversed the decision of the High Court and found RTC liable for damages for breach of contract. |
| Snook v London and West Riding Investments Ltd | Queen's Bench | Yes | [1967] 2 QB 786 | England and Wales | Cited for the definition of a 'sham' agreement. |
| Re Halt Garage (1964) Ltd | N/A | Yes | [1982] 3 All ER 1016 | N/A | Cited for the principle that the amount of remuneration for directors is a matter of management for the company to determine. |
| Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd and Others | Court of Appeal | Yes | [1983] 1 Ch 258 | England and Wales | Illustrates the principle that a company exists for its shareholders’ benefit and, provided they acted intra vires and in good faith, the shareholders could manage its affairs as they chose while it was solvent. |
| Re Duomatic Ltd | N/A | Yes | [1969] 2 Ch 365 | N/A | Cited for the principle that payments approved and ratified by a company's shareholders are binding on the company. |
| Rolled Steel Products (Holdings) Ltd v British Steel Corporation and Others | N/A | Yes | [1986] 1 Ch 246 | N/A | Cited for the principle that an unlawful loan made by a company would not be capable of ratification by its shareholders. |
| Macleod v The Queen | High Court of Australia | Yes | [2003] 214 CLR 230 | Australia | Cited for the principle that an illegal loan would not be capable of being pre-approved or ratified by the shareholders. |
| Angas Law Services Pty Ltd v Carabelas | High Court of Australia | Yes | (2005) 226 CLR 507 | Australia | Cited for the principle that an illegal loan would not be capable of being pre-approved or ratified by the shareholders. |
| Lim Koei Ing v Pan Asia Shipyard and Engineering Co Pte Ltd | N/A | Yes | [1995] 1 SLR(R) 15 | Singapore | Cited for the principle that directors of a company may not make use of their position to make a profit at the expense of the company as they owe a fiduciary duty to act in the interests of the company. |
| Regal (Hastings) Ltd v Gulliver and others | House of Lords | Yes | [1967] 2 AC 134 | United Kingdom | Cited for the principle that directors of a company may not make use of their position to make a profit at the expense of the company as they owe a fiduciary duty to act in the interests of the company. |
| Kinsela and Another v Russell Kinsela Pty Ltd (in liq) | N/A | Yes | (1986) 4 NSWLR 722 | N/A | Cited for the principle that any return of capital other than in accordance with the Companies Act or any transaction which is a fraud on creditors is incapable of being ratified by shareholders, even voting unanimously. |
| Ridge Securities Ltd v Inland Revenue Commissioners | N/A | Yes | [1964] 1 WLR 479 | N/A | Cited for the principle that any return of capital other than in accordance with the Companies Act or any transaction which is a fraud on creditors is incapable of being ratified by shareholders, even voting unanimously. |
| Aveling Barford Ltd v Perion Ltd and others | N/A | Yes | [1989] BCLC 626 | N/A | Cited for the principle that any return of capital other than in accordance with the Companies Act or any transaction which is a fraud on creditors is incapable of being ratified by shareholders, even voting unanimously. |
| Barclays Bank plc & Ors v British & Commonwealth Holdings plc | N/A | Yes | [1995] BCC 19 | N/A | Cited for the principle that any return of capital other than in accordance with the Companies Act or any transaction which is a fraud on creditors is incapable of being ratified by shareholders, even voting unanimously. |
| Progress Property Co Ltd v Moorgarth Group Ltd | Court of Appeal | Yes | [2010] 1 BCLC 1 | England and Wales | Cited for the principle that any return of capital other than in accordance with the Companies Act or any transaction which is a fraud on creditors is incapable of being ratified by shareholders, even voting unanimously. |
| Progress Property Company Limited v Moorgath Group Limited | Supreme Court | Yes | [2010] UKSC 55 | United Kingdom | Cited for the principle that any return of capital other than in accordance with the Companies Act or any transaction which is a fraud on creditors is incapable of being ratified by shareholders, even voting unanimously. |
| Yong Kheng Leong and another v Panweld Trading Pte Ltd and another | Court of Appeal | Yes | [2012] SGCA 59 | Singapore | This Court has recently discussed extensively the scope of s 22(1) of the Limitation Act, and dealt with it conclusively. |
| Peter’s American Delicacy Company Limited v Heath and others | N/A | Yes | (1939) 61 CLR 457 | Australia | Cited for the principle that in deciding as shareholders to waive RTC’s rights to recover the Profits, the Former Directors were not trustees for RTC or for one another. |
| Pender v Lushington | N/A | Yes | (1877) 6 Ch D 70 | N/A | Cited for the principle that a shareholder may be actuated in giving his vote by interests entirely adverse to the interests of the company as a whole. |
| Street v Mountford | House of Lords | Yes | [1985] AC 809 | United Kingdom | Cited for the principle that the law looks at the substance of the matter and not the form. |
| Quah Kay Tee v Ong and Co Pte Ltd | N/A | Yes | [1996] 3 SLR(R) 637 | Singapore | The law on the tort of conspiracy has been considered by this Court. |
| Chew Kong Huat and others v Ricwil (Singapore) Pte Ltd | N/A | Yes | [1999] 3 SLR(R) 1167 | Singapore | The law on the tort of conspiracy has been considered by this Court. |
| Beckkett Pte Ltd v Deutsche Bank AG and another and another appeal | N/A | Yes | [2009] 3 SLR(R) 452 | Singapore | The law on the tort of conspiracy has been considered by this Court. |
| OBG Ltd and another v Allan and others; Douglas and others v Hello! Ltd and others (No 3); Mainstream Properties Ltd v Young | N/A | Yes | [2008] 1 AC 1 | N/A | Discusses the mental ingredient of the unlawful interference tort. |
| Revenue and Customs Commissioners v Total Network SL | N/A | Yes | [2008] 1 AC 1174 | N/A | Discusses the law on conspiracy to injure (ie, conspiracy by lawful means). |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Rev Ed) s 157 | Singapore |
| Companies Act s 162 | Singapore |
| Companies Act s 163 | Singapore |
| Companies Act s 172(1) | Singapore |
| Limitation Act (Cap 163, 1996 Rev Ed) s 22(1)(b) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Raffles Town Club
- Directors' duties
- Scheme of Arrangement
- Management Agreement
- Premier club
- Exclusive club
- Conspiracy
- Lifting the corporate veil
15.2 Keywords
- Raffles Town Club
- Directors' duties
- Breach of duty
- Conspiracy
- Singapore
- Company law
- Tort
- Corporate veil
17. Areas of Law
16. Subjects
- Company Law
- Directors' Duties
- Tort Law
- Conspiracy