Foo v ERC Prime II: Winding Up, Directorial Misfeasance & Loss of Confidence
Douglas Foo Peow Yong and Yap Chew Loong appealed to the Court of Appeal of the Republic of Singapore, seeking to wind up ERC Prime II Pte Ltd and Gryphon Real Estate Investment Corporation Pte Ltd, respectively, based on directorial misfeasance and loss of confidence. The court, presided over by Sundaresh Menon CJ, Tay Yong Kwang JA, and Steven Chong JA, allowed both appeals, finding justifiable loss of confidence in the management of both companies. The court found that the directors had acted in their own interests rather than in the interests of the shareholders as a whole.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Appeal to wind up ERC Prime II and Gryphon Real Estate Investment Corporation due to directorial misfeasance and loss of confidence. Appeal allowed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Douglas Foo Peow Yong | Appellant, Plaintiff | Individual | Appeal allowed | Won | |
| ERC Prime II Pte Ltd | Respondent, Defendant | Corporation | Appeal dismissed | Lost | |
| Yap Chew Loong | Appellant, Plaintiff | Individual | Appeal allowed | Won | |
| Gryphon Real Estate Investment Corporation Pte Ltd | Respondent, Defendant | Corporation | Appeal dismissed | Lost | |
| Tan Tek Seng Kelvin (Cheng Decheng Kelvin) | Respondent | Individual | Appeal dismissed | Lost | |
| Koh Poh Leng (Gao Baoling) | Respondent | Individual | Appeal dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Tay Yong Kwang | Justice of the Court of Appeal | No |
| Steven Chong | Justice of the Court of Appeal | No |
4. Counsels
4. Facts
- ERCP II and GREIC are investment holding companies set up by Ong Siew Kwee and his associates.
- ERCP II was set up to invest in the Big Hotel project.
- GREIC was set up to invest in the Bugis Cube project through GREIH.
- Andy Ong and Ong HB were directors of both ERCP II and GREIC.
- Ong HB voted on behalf of ERCP II in favor of a resolution conferring an unfettered discretion on ERCU’s directors to issue new shares.
- GREIC took out loans from ERC Holdings without shareholder approval.
- GREIC did not collect a debt of $370,000 due from GREIH.
5. Formal Citations
- Foo Peow Yong Douglas v ERC Prime II Pte Ltd and another appeal and other matters, , [2018] SGCA 67
- Unknown, Civil Appeal No 196 of 2017, Civil Appeal No 196 of 2017
- Unknown, Civil Appeal No 55 of 2018, Civil Appeal No 55 of 2018
- Unknown, Summonses Nos 39, 83 and 91 of 2018, Summonses Nos 39, 83 and 91 of 2018
- Unknown, Summons No 86 of 2018, Summons No 86 of 2018
- Unknown, Companies Winding Up No 143 of 2017, Companies Winding Up No 143 of 2017
- Unknown, Companies Winding Up No 146 of 2017, Companies Winding Up No 146 of 2017
- Unknown, Originating Summons No 1004 of 2017, Originating Summons No 1004 of 2017
- Unknown, Originating Summons No 924 of 2015, Originating Summons No 924 of 2015
- Unknown, High Court Summons No 3590 of 2018, High Court Summons No 3590 of 2018
6. Timeline
| Date | Event |
|---|---|
| Joint ventures between Ong Siew Kwee and Foo established | |
| GREIH purchased the Bugis Cube property | |
| ERC Holdings obtained an option to purchase the Big Hotel property | |
| ERCU exercised option to purchase the Big Hotel property | |
| GREIC incorporated | |
| Andy Ong and Ong HB became directors of ERCP II | |
| Shareholders’ agreement for ERCP II signed | |
| ERCU purportedly issued a share option to ERC Holdings | |
| GREIH sold units in Bugis Cube | |
| GREIH sold units in Bugis Cube | |
| ERC Holdings purportedly exercised its share option and acquired shares in ERCU | |
| EGM of ERCU held | |
| Big Hotel property sold | |
| Settlement agreement between parties in OS 924 | |
| Andy Ong and Ong HB disqualified from holding any directorship | |
| High Court issued its judgment in Sakae Holdings Ltd v Gryphon Real Estate Investment Corp Pte Ltd and others | |
| Judge dismissed the winding up application of ERCP II | |
| JC dismissed the winding up application in respect of GREIC | |
| Court upheld High Court’s decision on appeal in Sakae Holdings Ltd and other appeals and other matters | |
| Ong HB found out about his disqualification | |
| Criminal charges brought against Andy Ong, Ong HB, Ho, Chua and Mahin | |
| Chia Puay Khiang appointed co-director of ERCP II and GREIC | |
| Judgment reserved | |
| Judgment delivered |
7. Legal Issues
- Directorial Misfeasance
- Outcome: The court found evidence of directorial misfeasance by Ong HB in his capacity as a director of ERCP II, justifying the winding up of the company.
- Category: Substantive
- Sub-Issues:
- Breach of fiduciary duty
- Conflict of interest
- Oppressive conduct
- Just and Equitable Winding Up
- Outcome: The court found a justifiable loss of confidence in the management of both ERCP II and GREIC, warranting a winding up order.
- Category: Substantive
- Sub-Issues:
- Loss of confidence in management
- Loss of substratum
8. Remedies Sought
- Winding Up Order
- Appointment of Liquidators
9. Cause of Actions
- Winding Up
- Breach of Fiduciary Duty
10. Practice Areas
- Corporate Litigation
- Insolvency Law
11. Industries
- Real Estate
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters | Court of Appeal | Yes | [2018] 2 SLR 333 | Singapore | Affirmed the High Court's decision to wind up GREIH due to oppressive conduct by Andy Ong and Ong HB. |
| Sakae Holdings Ltd v Gryphon Real Estate Investment Corp Pte Ltd and others (Foo Peow Yong Douglas, third party) and another suit | High Court | Yes | [2017] SGHC 73 | Singapore | Found Andy Ong and Ong HB engaged in oppressive conduct towards Sakae, the minority shareholder in GREIH, leading to GREIH being ordered to be wound up. |
| Ladd v Marshall | Unknown | Yes | [1954] 1 WLR 1489 | England and Wales | Cited for the three conditions for admitting additional evidence in appeals: non-availability, materiality, and apparent credibility. |
| BNX v BOE and another appeal | Court of Appeal | Yes | [2018] 2 SLR 215 | Singapore | Cited for the test for admitting evidence of matters that occurred after the trial or hearing below. |
| Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other appeals | Court of Appeal | Yes | [2018] 1 SLR 763 | Singapore | Cited regarding the introduction of s 254(2A) of the Companies Act and its effect on the grounds for invoking ss 254(1)(f) or 254(1)(i) of the Act. |
| Ting Shwu Ping (administrator of the estate of Chng Koon Seng, deceased) v Scanone Pte Ltd and another appeal | Court of Appeal | Yes | [2017] 1 SLR 95 | Singapore | Cited regarding the introduction of s 254(2A) of the Companies Act and its effect on the grounds for invoking ss 254(1)(f) or 254(1)(i) of the Act. |
| Chow Kwok Chuen v Chow Kwok Chi and another | Court of Appeal | Yes | [2008] 4 SLR(R) 362 | Singapore | Cited for the principle that the just and equitable ground is satisfied where minority members have been oppressed or treated unfairly and have justifiably lost confidence. |
| Loch and Another v John Blackwood, Ltd | Judicial Committee of the Privy Council | Yes | [1924] AC 783 | United Kingdom | Cited for the principle that a justifiable lack of confidence must be grounded on conduct of the directors in regard to the company’s business. |
| Chong Choon Chai and another v Tan Gee Cheng and another | Court of Appeal | Yes | [1993] 2 SLR(R) 685 | Singapore | Affirmed the principle in Loch and Another v John Blackwood, Ltd regarding justifiable lack of confidence. |
| Summit Co (S) Pte Ltd v Pacific Biosciences Pte Ltd | Court of Appeal | Yes | [2007] 1 SLR(R) 46 | Singapore | Cited for the principle that allegations made to ground a claim of loss of confidence must be proved. |
| Lai Shit Har and another v Lau Yu Man | Court of Appeal | Yes | [2008] 4 SLR(R) 348 | Singapore | Cited for the principle that the court retains a residual discretion to decline winding up even if the statutory grounds have been made out. |
| BNP Paribas v Jurong Shipyard Pte Ltd | Court of Appeal | Yes | [2009] 2 SLR(R) 949 | Singapore | Cited for relevant considerations in exercising discretion to decline winding up. |
| Metalform Asia Pte Ltd v Holland Leedon Pte Ltd | Court of Appeal | Yes | [2007] 2 SLR(R) 268 | Singapore | Cited for relevant considerations in exercising discretion to decline winding up. |
| The Vishva Apurva | Court of Appeal | Yes | [1992] 1 SLR(R) 912 | Singapore | Cited for the principle that a lower court’s decision as to the exercise of its discretion should not lightly be disturbed. |
| Australian Securities and Investments Commission v Kingsley Brown Properties Pty Ltd | Supreme Court of Victoria | Yes | [2005] VSC 506 | Australia | Cited for the principle that a justifiable lack of confidence in one company can extend to another company with a sufficient nexus. |
| Douglas Foo Peow Yong v ERC Prime II Pte Ltd | High Court | Yes | [2017] SGHC 299 | Singapore | The decision below that was appealed. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 254(1)(f) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 254(1)(i) of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 254(2A) of the Companies Act | Singapore |
| s 253(1)(c) of the Companies Act | Singapore |
| s 4(1) of the Companies Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding Up
- Directorial Misfeasance
- Loss of Confidence
- Investment Holding Company
- Share Option
- Substratum
- Joint Venture
- Oppressive Conduct
- Fiduciary Duty
15.2 Keywords
- Winding Up
- Directorial Misfeasance
- Loss of Confidence
- Companies Act
- Singapore
- ERCP II
- GREIC
- Andy Ong
- Ong HB
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Winding Up | 95 |
| Directorial Misfeasance | 80 |
| Loss of Confidence | 75 |
| Company Law | 70 |
| Fiduciary Duties | 60 |
| Loss of Substratum | 50 |
| Commercial Disputes | 30 |
16. Subjects
- Company Law
- Corporate Governance
- Insolvency