Poh Leong Soon v SL Hair & Beauty: Winding Up Application Based on Director's Conduct and Just & Equitable Grounds
In Poh Leong Soon v SL Hair & Beauty Slimming Centre Pte Ltd, the High Court of Singapore heard an application by Poh Leong Soon to wind up SL Hair & Beauty Slimming Centre, relying on sections 254(1)(f) and 254(1)(i) of the Companies Act. The court, presided over by Hoo Sheau Peng J, dismissed the winding up application, finding that the grounds for winding up were not established and that the application was an abuse of process. The court also declined to order a buy-out of Poh Leong Soon's shares under section 254(2A) of the Companies Act.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Winding up application dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Poh Leong Soon sought to wind up SL Hair & Beauty Slimming Centre. The court dismissed the application, finding no basis under Companies Act ss 254(1)(f) and (i).
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Poh Leong Soon | Plaintiff | Individual | Application Dismissed | Lost | Andrew John Hanam |
| SL Hair & Beauty Slimming Centre Pte Ltd | Defendant | Corporation | Winding up application dismissed | Won | Ignatius Joseph, Wong Jun Weng Andrew, Chong Xin Yi |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Hoo Sheau Peng | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Andrew John Hanam | Andrew LLC |
| Ignatius Joseph | Ignatius J & Associates |
| Wong Jun Weng Andrew | Ignatius J & Associates |
| Chong Xin Yi | Ignatius J & Associates |
4. Facts
- Mr. Poh and Ms. Lim are the only directors and shareholders of the Defendant, each holding 50% of the shares.
- Mr. Poh sought to wind up the Defendant, alleging that Ms. Lim acted in her own interests or unfairly to him.
- The Defendant opposed the winding up application, arguing it was an abuse of process.
- The Defendant took over the business of a sole proprietorship belonging to Ms Lim.
- Mr. Poh did not pay for his shares in the Defendant, save for perhaps $1.
- From 2014, the Defendant paid substantial sums for Mr. Poh’s personal benefit, especially towards the HDB flat.
- Ms. Lim claimed she was not fully aware of the Defendant’s financial state until June 2017.
5. Formal Citations
- Poh Leong Soon v SL Hair & Beauty Slimming Centre Pte Ltd, Company Winding Up Application No. 170 of 2017, [2018] SGHC 109
6. Timeline
| Date | Event |
|---|---|
| Ms. Lim started the sole proprietorship SL Hair & Beauty Slimming Centre | |
| Mr. Poh began working for Ms. Lim | |
| SL Hair & Beauty Slimming Centre Pte Ltd was incorporated | |
| Ms Lim injected further capital of $20,000 into the company | |
| Transfer of 5,000 shares from Ms. Lim to Mr. Poh | |
| Ms. Lim realized the Defendant's bank accounts were almost depleted | |
| Ms Lim handed Mr Poh a letter from her lawyers | |
| Mr. Poh met with Ms. Lim and her lawyer | |
| Mr. Poh's lawyer proposed Ms. Lim purchase his shares | |
| Ms. Lim disagreed with the proposal of the purchase of Mr. Poh's shares | |
| Mr. Poh denied that the Defendant funded Mr. Poh's personal expenses | |
| Ms. Lim rejected Mr. Poh's share buy-out proposal | |
| Winding up application was filed | |
| Defendant filed the striking out application | |
| First hearing | |
| Parties filed further submissions | |
| Hearing date | |
| Court of Appeal released its grounds of decision in Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other appeals [2018] SGCA 11 | |
| Judgment date |
7. Legal Issues
- Winding Up on Just and Equitable Grounds
- Outcome: The court found that the 'just and equitable' ground was not made out.
- Category: Substantive
- Sub-Issues:
- Management deadlock
- Loss of mutual trust and confidence
- Unfairness to shareholder
- Related Cases:
- [2006] 3 SLR(R) 827
- [2018] SGCA 11
- Winding Up Based on Director's Conduct
- Outcome: The court found no basis to wind up the company under s 254(1)(f).
- Category: Substantive
- Sub-Issues:
- Director acting in own interest
- Director acting unfairly to other members
- Related Cases:
- [2006] SGHC 135
- Abuse of Process in Winding Up Application
- Outcome: The court found that the winding up application was an abuse of process.
- Category: Procedural
- Sub-Issues:
- Improper motive
- Collateral purpose
- Related Cases:
- [2017] 1 SLR 95
8. Remedies Sought
- Winding Up Order
9. Cause of Actions
- Winding Up
10. Practice Areas
- Commercial Litigation
- Insolvency Law
11. Industries
- Beauty
- Slimming
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Sim Yong Kim v Evenstar Investments Pte Ltd | Court of Appeal | Yes | [2006] 3 SLR(R) 827 | Singapore | Cited for the notion of unfairness at the heart of the just and equitable jurisdiction. |
| 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 for the principle that a winding up application can be struck out as an abuse of process if brought to harass or for a collateral purpose. |
| Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other matters | High Court | Yes | [2017] SGHC 84 | Singapore | Examined the issue of a buyout mechanism in the context of a winding up application. |
| Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other appeals | Court of Appeal | Yes | [2018] SGCA 11 | Singapore | Relied on for encapsulating the applicable legal principles regarding the 'just and equitable' jurisdiction under s 254(1)(i) of the Companies Act. |
| Re HL Sensecurity Pte Ltd (formerly known as HL Integral Systems Pte Ltd | High Court | Yes | [2006] SGHC 135 | Singapore | Observed that s 254(1)(f) of the Companies Act is a rarely used provision. |
| Summit Co (S) Pte Ltd v Pacific Biosciences Pte Ltd | High Court | Yes | [2007] 1 SLR (R) 46 | Singapore | Cited for the principle that where parties cannot agree on terms to sever their relationship, there is no basis to wind up the company under the 'just and equitable' ground. |
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 | Singapore |
| s 254(1)(i) of the Companies Act | Singapore |
| s 254(2A) of the Companies Act | Singapore |
| Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding up application
- Just and equitable
- Abuse of process
- Management deadlock
- Share buyout
- Exit mechanism
- Irreconcilable differences
- Personal expenses
- Going concern
- Quasi-partnership
15.2 Keywords
- Winding up
- Companies Act
- Shareholder dispute
- Abuse of process
- Singapore
- Just and equitable
- Director's conduct
16. Subjects
- Company Law
- Insolvency
- Shareholder Disputes
17. Areas of Law
- Company Law
- Winding Up
- Civil Procedure