Cost Engineers v Chan Siew Lun: Accounting of Dividends & Profits Dispute
In Cost Engineers (SEA) Pte Ltd and another v Chan Siew Lun, the High Court of Singapore addressed a dispute arising from a consent judgment where Chan Siew Lun was to provide an account of dividends and profits to Cost Engineers (SEA) Pte Ltd. Cost Engineers sought to include unofficial payouts in this accounting, arguing issue estoppel and contractual interpretation. The court, presided over by Steven Chong J, rejected these arguments, holding that the consent judgment only required accounting for declared dividends, not unofficial payouts. The court found that Cost Engineers failed to prove that Chan received unofficial payouts as a shareholder, leading to the dismissal of their claim.
1. Case Overview
1.1 Court
High Court1.2 Outcome
The 1st plaintiff’s claim fails in its entirety.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Dispute over accounting of dividends and profits after consent judgment. The court ruled against Cost Engineers, finding no basis for claiming unofficial payouts.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Cost Engineers (SEA) Pte Ltd | Plaintiff | Corporation | Claim Dismissed | Dismissed | |
| Lim Teck Poh | Plaintiff | Individual | Claim Dismissed | Dismissed | |
| Chan Siew Lun | Defendant | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Judge | Yes |
4. Counsels
4. Facts
- A consent judgment required the defendant to provide an account of dividends and profits to the 1st plaintiff.
- The 1st plaintiff claimed the defendant should account for unofficial payouts, not just declared dividends.
- The defendant argued no dividends were declared, so there was nothing to account for.
- The 1st plaintiff engaged a forensic accountant to identify payments not in the ordinary course of business.
- The 1st plaintiff argued the consent judgment established the meaning of 'dividends and profits'.
- The defendant transferred 60,000 Tri-Nexus shares to the 1st plaintiff as per the consent judgment.
- Sham invoices were issued to facilitate the distribution of profits among the three shareholders.
5. Formal Citations
- Cost Engineers (SEA) Pte Ltd and another v Chan Siew Lun, Suit No 99 of 2011 (Taking of Accounts No 14 of 2013), [2015] SGHC 262
6. Timeline
| Date | Event |
|---|---|
| Suit filed | |
| Consent judgment entered | |
| Taking of Accounts No 14 of 2013 | |
| Judgment reserved |
7. Legal Issues
- Issue Estoppel
- Outcome: The court held that issue estoppel did not arise from the consent judgment regarding the meaning of 'dividends and profits'.
- Category: Procedural
- Sub-Issues:
- Application of issue estoppel in consent judgments
- Identity of subject matter in issue estoppel
- Related Cases:
- [2005] 3 SLR(R) 157
- [2015] SGHC 175
- Interpretation of Consent Judgment
- Outcome: The court interpreted the consent judgment as requiring accounting only for declared dividends, not unofficial payouts.
- Category: Substantive
- Sub-Issues:
- Meaning of 'dividends and profits'
- Inclusion of unofficial payouts in accounting
- Related Cases:
- [2008] 1 SLR(R) 269
- Breach of Trust
- Outcome: The court found that the defendant's actions, even if improper, did not constitute a breach of trust related to the distribution of profits.
- Category: Substantive
- Sub-Issues:
- Trustee's duty to account
- Beneficiary's rights to profits
- Related Cases:
- [2008] SGHC 31
8. Remedies Sought
- Account of Dividends and Profits
- Payment of Sums Due
9. Cause of Actions
- Breach of Trust
- Accounting
10. Practice Areas
- Commercial Litigation
- Trusts
- Corporate Law
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Soden and another v British & Commonwealth Holdings Plc and another | House of Lords | Yes | [1998] 1 AC 298 | England | Cited for the definition of dividends as profits declared to be distributed to members. |
| Burland and others v Earle and others | N/A | Yes | [1902] AC 83 | N/A | Cited for the principle that a shareholder has no direct right to the profits of a company. |
| Bond v Barrow Haematite Steel Company | N/A | Yes | [1902] 1 Ch 353 | N/A | Cited for the principle that a shareholder only has a right to receive money from the company when dividends are declared. |
| Lim Kok Wah and others v Lim Boh Yong and others and other matters | High Court | Yes | [2015] SGHC 211 | Singapore | Cited for the principle that a company generally has no obligation to declare dividends unless the articles of the company state otherwise. |
| Lim Chee Twang v Chan Shuk Kuen Helina and others | N/A | Yes | [2010] 2 SLR 209 | Singapore | Cited for the principle that the decision to declare dividends is a commercial decision of the company which the courts are reluctant to interfere with unless bad faith or improper purposes are demonstrated. |
| Zhang Run Zi v Koh Kim Seng and another | High Court | Yes | [2015] SGHC 175 | Singapore | Cited for the definition of issue estoppel. |
| Lee Tat Development Pte Ltd v Management Corporation of Strata Title Plan No 301 | Court of Appeal | Yes | [2005] 3 SLR(R) 157 | Singapore | Cited for the requirements that must be satisfied in order for a party to invoke the doctrine of issue estoppel. |
| Wing Joo Loong Ginseng Hong (Singapore) Co Pte Ltd v Qinghai Xinyuan Foreign Trade Co Ltd and another and another appeal | Court of Appeal | Yes | [2009] 2 SLR(R) 814 | Singapore | Cited for the requirements that must be satisfied in order for a party to invoke the doctrine of issue estoppel. |
| Goh Nellie v Goh Lian Teck and others | High Court | Yes | [2007] 1 SLR(R) 453 | Singapore | Cited for the discrete conceptual strands that the identity of subject matter requirement encapsulates. |
| Blair v Curran | N/A | Yes | 62 CLR 464 | Australia | Cited for the distinction between issues which are no more than steps in a process of reasoning, and those which are so cardinal that the decision cannot stand without them. |
| The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd (nTan Corporate Advisory Pte Ltd and others, other parties) and another appeal | Court of Appeal | Yes | [2015] SGCA 50 | Singapore | Cited for the application of cause of action estoppel and issue estoppel. |
| Poh Huat Heng Corp Pte Ltd and others v Hafizul Islam Kofil Uddin | Court of Appeal | Yes | [2012] 3 SLR 1003 | Singapore | Cited for the principle that a judgment or order obtained by consent is final and can form the basis for the application of the doctrine of res judicata. |
| Low Heng Leon Andy v Law Kian Beng Lawrence (administrator of the estate of Tan Ah Kng, deceased) | High Court | Yes | [2013] 3 SLR 710 | Singapore | Cited as a case that appears to cast doubt on the correctness of the view that a consent judgment may give rise to issue estoppel. |
| Soh Lay Lian Cherlyn v Kok Mui Eng | High Court | Yes | [2015] SGHC 196 | Singapore | Cited as a case that a consent judgment could not give rise to issue estoppel because it did not constitute a final and conclusive judgment on the merits. |
| Lee Tat Development Pte Ltd v Management Corporation Strata Title Plan No 301 | Court of Appeal | Yes | [2009] 1 SLR(R) 875 | Singapore | Cited as authority for the proposition that a consent judgment did not give rise to issue estoppel because it was not a judgment on the merits. |
| Khan v Golechha International Ltd | N/A | Yes | [1980] 1 WLR 1482 | England | Cited as a case where the consent judgment was reached because one party thought that his case was unsustainable and threw in his hand. |
| SCF Finance Co Ltd v Masri (No 3) | N/A | Yes | [1987] 2 WLR 81 | England | Cited as a case where a consent judgment may give rise to issue estoppel. |
| Jaidin bin Jaiman v Loganathan a/l Karpaya and another | High Court | Yes | [2013] 1 SLR 318 | Singapore | Cited as a case where the court affirmed the proposition that the fact that an order is entered by consent would not prevent it forming the basis of an issue estoppel as long as the order was final. |
| Indian Overseas Bank v Motorcycle Industries (1973) Pte Ltd and others | N/A | Yes | [1992] 3 SLR(R) 841 | Singapore | Cited for the proposition that once parties have compromised a suit in a settlement agreement, the original cause of action would cease to exist. |
| Woo Koon Chee v Scandinavian Boiler Service (Asia) Pte Ltd and others | Court of Appeal | Yes | [2010] 4 SLR 1213 | Singapore | Cited for the proposition that once parties have compromised a suit in a settlement agreement, the original cause of action would cease to exist. |
| Siebe Gorman & Co Ltd v Pneupac Ltd | N/A | Yes | [1982] 1 WLR 185 | England | Cited as a case where a contractual consent order cannot be set aside in the absence of a vitiating factor. |
| Bakery Mart Pte Ltd v Ng Wei Teck Michael and others | N/A | Yes | [2005] 1 SLR(R) 28 | Singapore | Cited as a case where a contractual consent order cannot be set aside in the absence of a vitiating factor. |
| In re South American and Mexican Company, ex parte Bank of England | English Court of Appeal | Yes | [1895] 1 Ch 37 | England | Cited as a case where a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end. |
| Seiko Epson Corp v Sepoms Technology Pte Ltd and another | Court of Appeal | Yes | [2008] 1 SLR(R) 269 | Singapore | Cited as a case where the Court of Appeal accepted that principles of contractual interpretation applied to the interpretation of the consent judgment. |
| Loh Sze Ti Terence Peter v Gay Choon Ing | High Court | Yes | [2008] SGHC 31 | Singapore | Cited as a case where the High Court held that the trustee’s role as a director and his role as a trustee of the shares cannot be conflated. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 81 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Penal Code (Cap 224, 2008 Rev Ed) s 477A | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 216A | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Dividends
- Profits
- Consent Judgment
- Issue Estoppel
- Unofficial Payouts
- Accounting
- Trust
- Shareholder
- Director's Fees
- Sham Invoices
15.2 Keywords
- dividends
- profits
- consent judgment
- issue estoppel
- accounting
- trust
- shareholder
- director
- Singapore
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Company Law | 70 |
| Contract Law | 60 |
| Estoppel | 50 |
| Commercial Disputes | 40 |
| Consent Judgement | 40 |
| Civil Procedure | 30 |
| Trust Law | 30 |
| Falsification of Accounts | 30 |
| Fraud and Deceit | 20 |
| Accounting | 20 |
16. Subjects
- Company Law
- Trusts
- Civil Litigation
- Accounting