Tan Eck Hong v Maxz Universal: Specific Performance of Shareholders’ Agreement Dispute

In Tan Eck Hong v Maxz Universal Development Group Pte Limited, the High Court of Singapore addressed a dispute between Tan Eck Hong (TEH) and Maxz Universal Development Group Private Limited (MDG) concerning shares in Treasure Resort Pte Ltd (TR). TEH sought specific performance of a shareholders’ agreement entitling him to 13% of TR's shares. The court, presided over by Justice Tan Lee Meng, found the agreement valid and ordered MDG to transfer 740,400 TR shares to TEH. MDG's counterclaim was dismissed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for the Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Shareholder Tan Eck Hong sues Maxz Universal for specific performance of a shareholders' agreement. The court found the agreement valid and ordered specific performance.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Tan Eck HongPlaintiffIndividualJudgment for the PlaintiffWon
Maxz Universal Development Group Pte LimitedDefendantCorporationCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Tan Lee MengJudgeYes

4. Counsels

Counsel NameOrganization
Alvin Tan Kheng AnnWong Thomas & Leong
Davinder Singh SCDrew & Napier LLC
Vanathi SDrew & Napier LLC
Jackson EngDrew & Napier LLC
Bernette C MeyerDrew & Napier LLC

4. Facts

  1. Tan Eck Hong (TEH) and Maxz Universal Development Group (MDG) are shareholders of Treasure Resort Pte Ltd (TR).
  2. TEH sought specific performance of a shareholders’ agreement (Second Shareholders’ Agreement) entitling him to 13% of TR shares.
  3. MDG refused to transfer the shares, claiming the agreement was not binding.
  4. Seeto Keong, MDG’s managing director, signed the Second Shareholders’ Agreement on MDG’s behalf.
  5. Rodney Tan, the new shareholder of MDG, refused to recognize the Second Shareholders’ Agreement.
  6. TEH had previously invested $720,000 in TR, which was used to issue shares to MDG instead of for the lease purchase as agreed.
  7. TEH also lent MDG $160,000, for which he was promised additional shares.

5. Formal Citations

  1. Tan Eck Hong v Maxz Universal Development Group Pte Limited, Suit No 898 of 2008, [2012] SGHC 240

6. Timeline

DateEvent
Non-binding memorandum of understanding signed between Tan Eck Hong and Treasure Resort Pte Ltd
Maxz Universal Development Group transferred 65,600 shares to Tan Eck Hong
Letter Agreement signed
First Shareholders’ Agreement signed
Call Option Agreement signed
Treasure Resort Pte Ltd acquired the lease and the hotel
Supplemental Agreement to the First Shareholders’ Agreement signed
Second Shareholders’ Agreement signed
Share restructuring agreement
Statutory declaration dated
Suit No 898 of 2008 filed
Judgment reserved

7. Legal Issues

  1. Enforceability of Shareholders’ Agreement
    • Outcome: The court held that the Second Shareholders’ Agreement was valid and enforceable.
    • Category: Substantive
    • Sub-Issues:
      • Authority of managing director to bind the company
      • Breach of fiduciary duties
      • Adequacy of consideration
    • Related Cases:
      • [2012] SGHC 240
  2. Specific Performance
    • Outcome: The court ordered specific performance of the Second Shareholders’ Agreement.
    • Category: Procedural
    • Sub-Issues:
      • Appropriateness of specific performance for shares in a private company
    • Related Cases:
      • [2007] 3 SLR(R) 537

8. Remedies Sought

  1. Specific Performance
  2. Transfer of Shares

9. Cause of Actions

  • Breach of Contract
  • Specific Performance

10. Practice Areas

  • Commercial Litigation
  • Corporate Law

11. Industries

  • Hospitality
  • Tourism

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Abdul Jalil bin Ahmad bin Talib and others v A Formation Construction Pte LtdCourt of AppealYes[2007] 3 SLR(R) 592SingaporeApplied the rule in Turquand's case regarding the assumption that internal management rules have been observed.
Intraco Ltd v Multi-Pak Singapore Pte LtdCourt of AppealYes[1994] 3 SLR(R) 1064SingaporeEstablished the test for determining whether a director has breached their fiduciary duties to the company.
Cheong Kim Hock v Lin Securities (Pte) (in liquidation)Court of AppealYes[1992] 1 SLR(R) 497SingaporeExplained the concept of constructive knowledge of a director’s breach of fiduciary duties.
Ong Chay Tong & Sons (Pte) Ltd v Ong Hoo EngCourt of AppealYes[2009] 1 SLR(R) 305SingaporeApproved the passage from Chitty on Contracts regarding commercial expectations as consideration.
Edwards v Skyways LtdN/AYes[1964] 1 WLR 349N/AAddressed the intention to create legal relations in business contexts.
Maxz Universal Development Group Pte Ltd v Shen Yixuan and Another SuitHigh CourtNo[2009] SGHC 164SingaporeDemonstrates Seeto's willingness to part with shares for short-term loans.
Lee Chee Wei v Tan Hor Peow Victor and others and another appealCourt of AppealYes[2007] 3 SLR(R) 537SingaporeAddressed the appropriateness of specific performance as a remedy, particularly for shares in private companies.
Tito v WaddellN/AYes[1977] Ch 106N/ASpecific performance is ordered where this would do “more perfect and complete justice than an award of damages”.
Pamaron Holdings Sdn Bhd v Ganda Holdings BhdN/AYesPamaron Holdings Sdn Bhd v Ganda Holdings Bhd [1988] 3 MLJ 346N/AA seller of shares not freely saleable in the open market is entitled to specific performance
Duncuft v AlbrechtN/AYesDuncuft v Albrecht (1841) 12 Sim 189N/AThe court decreed specific performance for the sale of shares which were limited in number and not always available in the open market.
Royal British Bank v TurquandN/AYesRoyal British Bank v Turquand (1856) 6 El & Bl 327N/AEstablished the rule in Turquand's case regarding the assumption that internal management rules have been observed.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Shareholders’ Agreement
  • Specific Performance
  • Fiduciary Duty
  • Consideration
  • Share Transfer
  • Veto Rights
  • Non-Dilution Clause

15.2 Keywords

  • shareholders agreement
  • specific performance
  • fiduciary duty
  • share transfer
  • company law
  • contract law

17. Areas of Law

Area NameRelevance Score
Shareholders Agreement85
Specific performance80
Company Law75
Corporate Law70
Contract Law70
Commercial Disputes65
Corporate Litigation65
Fiduciary Duties60
Shareholder Disputes50
Minority Oppression40
Damages30
Estoppel25

16. Subjects

  • Contract Law
  • Corporate Law
  • Shareholder Disputes