Poh Lian Construction v Lauw Wisanggeni: Directors' Duties & Construction Project Management
In Poh Lian Construction (Pte.) Ltd (in liquidation) v Lauw Wisanggeni and others, the Singapore High Court addressed a claim by Poh Lian Construction against its ex-directors and senior management for breaches of duty related to the management of three construction projects and the concealment of the company's financial position. The court found the second defendant liable for breach of duty in relation to a subcontract on the Bishopsgate project, awarding damages to the plaintiff. The remaining claims and a third-party claim were dismissed.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Judgment for Plaintiff in part.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case involving Poh Lian Construction's claim against ex-directors for breach of duty in managing construction projects. Judgment for Plaintiff in part.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Poh Lian Construction (Pte.) Ltd (in liquidation) | Plaintiff | Corporation | Judgment for Plaintiff in part | Partial | |
| Lauw Wisanggeni | Defendant | Individual | Claim Dismissed | Dismissed | |
| Leong Chee Keng | Defendant | Individual | Judgment for Plaintiff in part | Partial | |
| Ng Giok Beng | Defendant | Individual | Claim Dismissed | Dismissed | |
| Chia Quee Hock | Third Party | Individual | Claim Dismissed | Dismissed | |
| Peh Pit Tat | Third Party | Individual | Claim Dismissed | Dismissed | |
| Chan Kin | Third Party | Individual | Claim Dismissed | Dismissed |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kannan Ramesh | Judge | Yes |
4. Counsels
4. Facts
- Plaintiff, Poh Lian Construction, sued its ex-directors for breaches of duty in managing three construction projects.
- The first defendant was the executive chairman, the second defendant was the chief operating officer, and the third defendant was a senior project manager.
- The plaintiff alleged that the defendants caused the company to tender for the Sophia project at a price below cost.
- The plaintiff alleged that the defendants wholly subcontracted the Bishopsgate project to CCM, breaching the contract.
- The plaintiff alleged that the defendants authorized the engagement of casual laborers at excessive wages for the Goodwood project.
- The plaintiff claimed the defendants concealed losses incurred on the Sophia, Goodwood, and Bishopsgate projects.
- The first defendant purchased a unit in Goodwood Residences, leading to a claim of conflict of interest.
5. Formal Citations
- Poh Lian Construction (Pte) Ltd (in liquidation) v Lauw Wisanggeni and others, Suit No 1067 of 2015, [2019] SGHC 114
6. Timeline
| Date | Event |
|---|---|
| Plaintiff founded | |
| First third party appointed deputy chairman of UFS | |
| Plaintiff awarded the Green Meadows project | |
| First defendant appointed as the plaintiff’s executive chairman and executive director | |
| Second defendant appointed as the plaintiff’s chief operating officer | |
| Plaintiff invited to submit a tender for the Sophia Residence project | |
| Third defendant employed by the plaintiff as a senior project manager | |
| Plaintiff submitted a tender of $115.84m for the Sophia project | |
| Second defendant appointed as a director | |
| Plaintiff tendered for the Goodwood project | |
| Plaintiff received an invitation to tender for the Bishopsgate Residences project | |
| Contract period for Sophia project began | |
| CCM Industrial Pte Ltd submitted a tender to the plaintiff for the Bishopsgate project | |
| First defendant entered into an option to purchase a unit in Goodwood Residences | |
| Plaintiff's tender for the Bishopsgate project accepted | |
| Plaintiff issued a letter of award to CCM | |
| Kajima sent a letter to the second defendant regarding subcontracting of the Bishopsgate project | |
| Third third party joined the UFS board as non-executive director | |
| Second third party joined the UFS board as non-executive director | |
| Second and third third parties appointed to the plaintiff’s board as directors | |
| CCM’s involvement with the Bishopsgate project ceased | |
| Third defendant appointed as the project manager of the Goodwood project | |
| Ernst & Young LLP examined the plaintiff’s management statements | |
| Plaintiff placed under interim judicial management | |
| Developer gave notice to terminate the plaintiff as the main contractor for the Sophia project | |
| Prime gave notice to terminate the plaintiff’s employment as main contractor for the Bishopsgate project | |
| First defendant sold the Goodwood property | |
| Judicial managers called a meeting of creditors | |
| JM order was discharged and the plaintiff was placed in liquidation | |
| Mr Lim Loo Khoon appointed as one of the liquidators | |
| Hearing began | |
| Judgment reserved |
7. Legal Issues
- Breach of Directors' Duties
- Outcome: The court found the second defendant liable for breach of duty in relation to the subcontract with CCM for the Bishopsgate project.
- Category: Substantive
- Sub-Issues:
- Failure to act in the best interests of the company
- Failure to exercise reasonable care and diligence
- Conflict of interest
- Failure to disclose material information
- Related Cases:
- [2017] 2 SLR 592
- [1967] 2 AC 134
- [2017] 3 SLR 957
- Total Subcontract
- Outcome: The court found that the subcontract to CCM was a total subcontract in breach of contract.
- Category: Substantive
- Concealment of Losses
- Outcome: The court did not find that the defendants had concealed losses.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Account of Profits
9. Cause of Actions
- Breach of Fiduciary Duty
- Negligence
10. Practice Areas
- Commercial Litigation
- Construction Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| V Nithia (co-administratrix of the estate of Ponnusamy Sivapakiam, deceased) v Buthmanaban s/o Vaithilingam and another | High Court | Yes | [2015] 5 SLR 1422 | Singapore | Cited for the principle that a court should decide on the basis of unpleaded issues or claims only in the very rare circumstances where no prejudice is caused to the other party or where it would be clearly unjust for the court not to do so. |
| Goh Chan Peng and others v Beyonics Technology Ltd and another and another appeal | Court of Appeal | Yes | [2017] 2 SLR 592 | Singapore | Cited for the principle that directors who are involved in a subcontract that is not in the company's best interests would have breached their duties. |
| Regal (Hastings), Ltd v Gulliver and others | House of Lords | Yes | [1967] 2 AC 134 | United Kingdom | Cited for the no-profit rule, which states that directors are accountable for profits made by reason of their directorship. |
| Nordic International Ltd v Morten Innhaug | High Court | Yes | [2017] 3 SLR 957 | Singapore | Cited for the application of the no-profit rule in Singapore. |
13. Applicable Rules
| Rule Name |
|---|
| O 16 r 8 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 391 of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Directors' duties
- Construction projects
- Subcontract
- Tender price
- Cost overruns
- Liquidated damages
- Concealment
- Judicial management
- Liquidation
- Ex gratia payment
15.2 Keywords
- construction
- directors duties
- breach of contract
- negligence
- Singapore
17. Areas of Law
16. Subjects
- Construction Dispute
- Directors' Duties
- Contract Law