Chng Kheng Chye v Kaefer Prostar: Statutory Derivative Action & Leave to Commence Suit
In Chng Kheng Chye v Kaefer Prostar Pte Ltd, the High Court of Singapore dismissed Mr. Chng's application for leave to commence a derivative action against Kaefer Integrated Services Pte Ltd on behalf of Kaefer Prostar Pte Ltd. The court, presided over by Valerie Thean J, found that Mr. Chng did not demonstrate good faith and that the proposed action was not prima facie in the best interests of the company. The claim involved a disputed sum of S$1,544,142.47. The judgment was delivered on 3 September 2020.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Application dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Minority shareholder Chng Kheng Chye's application for leave to commence a derivative action was dismissed due to lack of good faith.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chng Kheng Chye | Applicant | Individual | Application dismissed | Lost | Yeo Choon Hsien Leslie, Tan Shu Ann Jolene |
| Kaefer Prostar Pte Ltd | Respondent | Corporation | Won | Won | Lim Tat, Subir Singh Grewal, Soon Ser Jia Clarissa |
| Kaefer Integrated Services Pte Ltd | Respondent | Corporation | Won | Won | Lim Tat, Subir Singh Grewal, Soon Ser Jia Clarissa |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Valerie Thean | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Yeo Choon Hsien Leslie | Sterling Law Corporation |
| Tan Shu Ann Jolene | Sterling Law Corporation |
| Lim Tat | Aequitas Law LLP |
| Subir Singh Grewal | Aequitas Law LLP |
| Soon Ser Jia Clarissa | Aequitas Law LLP |
4. Facts
- Mr. Chng is a 20% minority shareholder in Kaefer Prostar Pte Ltd.
- Kaefer Germany holds the remaining 80% shareholding in Kaefer Prostar Pte Ltd.
- Kaefer Singapore is wholly owned by Kaefer Germany.
- Kaefer Singapore entered into a subcontract with PT McDermott Indonesia for the Yamal LNG plant project.
- Kaefer Prostar Pte Ltd completed the Yamal Project on Kaefer Singapore’s behalf.
- Kaefer Singapore paid Kaefer Prostar Pte Ltd S$1,931,291.95 upon completion of the Yamal Project.
- Mr. Chng claimed an additional S$1,544,142.47 was rightfully due to Kaefer Prostar Pte Ltd.
5. Formal Citations
- Chng Kheng Chye v Kaefer Prostar Pte Ltd and another, , [2020] SGHC 180
6. Timeline
| Date | Event |
|---|---|
| Kaefer Singapore entered into a subcontract with PT McDermott Indonesia for the Yamal Project. | |
| Shareholders Agreement between Mr Chng, the Company and Kaefer Germany. | |
| Addendum to the Shareholders Agreement between Mr Chng, the Company and Kaefer Germany. | |
| Yamal Project concluded. | |
| Mr Chng sought for Kaefer Germany to purchase his 20% shareholding. | |
| Chng Kheng Chye’s 1st Affidavit dated. | |
| Victor Arthur Bogos’ 1st Affidavit dated. | |
| Victor Arthur Bogos’ 2nd Affidavit dated. | |
| Chng Kheng Chye’s 2nd Affidavit dated. | |
| Chng Kheng Chye’s 3rd Affidavit dated. | |
| Hearing date. | |
| Judgment date. |
7. Legal Issues
- Good Faith in Derivative Action
- Outcome: The court found that Mr. Chng did not demonstrate good faith in bringing the application.
- Category: Substantive
- Related Cases:
- [2019] 4 SLR 825
- [2013] 2 SLR 340
- Best Interests of the Company
- Outcome: The court found that the proposed action was not prima facie in the best interests of the company.
- Category: Substantive
- Related Cases:
- [2013] 2 SLR 340
8. Remedies Sought
- Leave to commence a derivative action
9. Cause of Actions
- Statutory Derivative Action
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Jian Li Investments Holding Pte Ltd and others v Healthstats International Pte Ltd and others | Court of Appeal | Yes | [2019] 4 SLR 825 | Singapore | Cited for the principle of good faith, investigating the applicant’s honest or reasonable belief in the merits of the claim. |
| Ang Thiam Swee v Low Hian Chor | High Court | Yes | [2013] 2 SLR 340 | Singapore | Cited for the objective assessment of the legal merits of the claim and the good faith requirement in statutory derivative actions. |
| Pang Yong Hock and another v PKS Contracts Services Pte Ltd | High Court | Yes | [2004] 3 SLR(R) 1 | Singapore | Cited to define bad faith in the context of Section 216A. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 216A of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Derivative action
- Good faith
- Best interests of the company
- Minority shareholder
- Yamal Project
- Share buyout
- Management Agreements
15.2 Keywords
- derivative action
- companies act
- minority shareholder
- singapore
- leave to commence
16. Subjects
- Company Law
- Civil Litigation
17. Areas of Law
- Companies Law
- Statutory Derivative Action
- Civil Procedure