Chong Kok Ming v Richinn Technology: Winding Up for Quasi-Partnership & Oppression
Chong Kok Ming and Tan Tat Wei Victor, minority shareholders, sued Richinn Technology Pte Ltd and its majority shareholders, Lim Swee Joo and Lim Swee Chong, seeking to wind up Richinn. The plaintiffs argued that Richinn was a quasi-partnership, that the Lims had acted oppressively, and that the shareholders had agreed to wind up the company. The High Court found that the Lims had acted in a manner that was unfair and unjust to Chong and that it would be just and equitable for the company to be wound up. The court ordered that the Lims could purchase the plaintiffs' shares; otherwise, Richinn would be wound up.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for the Plaintiffs. The court found a basis to order the winding up of Richinn under sections 254(1)(f) and 254(1)(i) of the Companies Act.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Minority shareholders seek to wind up Richinn Technology, alleging quasi-partnership, oppression, and breach of agreement by majority shareholders. The court found oppression.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chong Kok Ming | Plaintiff | Individual | Judgment for Plaintiff | Won | Wong Siew Hong, Sanjay S Kumar |
| Tan Tat Wei Victor | Plaintiff | Individual | Judgment for Plaintiff | Won | Wong Siew Hong, Sanjay S Kumar |
| Richinn Technology Pte Ltd | Defendant | Corporation | Winding up ordered | Lost | Lee Mun Kong Lawrence |
| Lim Swee Joo | Defendant | Individual | Lost | Lost | Lee Mun Kong Lawrence |
| Lim Swee Chong | Defendant | Individual | Lost | Lost | Lee Mun Kong Lawrence |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Ang Cheng Hock | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Wong Siew Hong | Eldan Law LLP |
| Sanjay S Kumar | Eldan Law LLP |
| Lee Mun Kong Lawrence | Aptus Law Corporation |
4. Facts
- Chong and Tan were minority shareholders in Richinn, while the Lims were the majority shareholders.
- The plaintiffs and the Lims agreed to set up a laser cutting business using Richinn.
- The plaintiffs would manage and run the business, while the Lims would control the finance and administration.
- The Lims declared their intention to exit the business venture, citing Robert’s ill health as the reason.
- The shareholders passed a resolution to wind up Richinn if no agreement was reached on the sale and purchase of shares.
- Tan used Novatac to take orders from Richinn’s customers, breaching his duties as a director.
- The Lims made a series of allegations against Tan and Chong, many of which had no substance.
5. Formal Citations
- Chong Kok Ming and another v Richinn Technology Pte Ltd and others, Suit No 1009 of 2018, [2020] SGHC 224
6. Timeline
| Date | Event |
|---|---|
| Richinn Trading Pte Ltd incorporated by the Lims. | |
| Tan left Applied Cutting Technology Pte Ltd. | |
| Robert approached Tan about entering the laser cutting business. | |
| Tan and Chong joined Richinn. | |
| Shareholders’ Agreement entered into. | |
| CJ Stainless Steel Sdn Bhd incorporated in Malaysia. | |
| Tan and Chong began drawing salaries from Richinn. | |
| Business Continuity Agreement entered into. | |
| Chong asked to assist in the management of CJSS. | |
| Extension Agreement signed. | |
| Chong transferred to work full time at CJSS and CKMMT. | |
| CKM Metal Technologies Sdn Bhd incorporated. | |
| CJSS monthly management meeting held in Singapore. | |
| Tan and Chong proposed to acquire the Lims’ shares in Richinn. | |
| Shareholders and directors of CJSS passed written resolutions to sell shares. | |
| Yap circulated his indicative valuation of Richinn. | |
| Extraordinary general meeting of Richinn’s shareholders convened. | |
| Tan informed the sales and purchasing teams that the Lims would be leaving Richinn. | |
| Tan changed the name of Wow Research Pte Ltd to Novatac Pte Ltd. | |
| Tan met with customers of Richinn and informed them that Richinn might be ceasing its operations very shortly. | |
| Novatac was accepting orders for laser cutting. | |
| KSCGP Juris LLP wrote to Tan about his conduct. | |
| Notice signed off by the Lims as directors of Richinn giving notice of an EGM to be convened on 26 January 2018. | |
| Another notice of an EGM for Richinn was issued. | |
| EGM held; Tan and Chong removed from executive positions. | |
| Tan and Chong commenced proceedings to wind up Richinn. | |
| Proceedings converted into writ proceedings. | |
| Richinn commenced Suit 1008 against Tan and Chong. | |
| Tan and Chong resigned from their directorships of Richinn. | |
| Hearing in Malaysia regarding the winding up of CJSS. | |
| Court made an order that CJSS was to be wound up. | |
| Suit 1008 was settled. | |
| Trial began. | |
| Judgment reserved. |
7. Legal Issues
- Winding up of a company
- Outcome: The court found a basis to order the winding up of Richinn under sections 254(1)(f) and 254(1)(i) of the Companies Act.
- Category: Substantive
- Minority shareholder oppression
- Outcome: The court found that the Lims had acted in a manner that was unfair and unjust to Chong.
- Category: Substantive
- Just and equitable winding up
- Outcome: The court found that it would be just and equitable for the company to be wound up.
- Category: Substantive
- Breach of Directors' Duties
- Outcome: Tan breached his duties as a director of Richinn when he used Novatac to take orders from Richinn’s customers.
- Category: Substantive
- Quasi-Partnership
- Outcome: The court found that Richinn was a quasi-partnership between the plaintiffs and the Lims.
- Category: Substantive
8. Remedies Sought
- Winding Up Order
9. Cause of Actions
- Winding Up
- Minority Oppression
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Technology
- Manufacturing
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 general principles on just and equitable winding up, particularly the notion of unfairness and the circumstances under which the jurisdiction can be invoked. |
| Seah Chee Wan and another v Connectus Group Pte Ltd | High Court | Yes | [2019] SGHC 228 | Singapore | Cited for the principle that the court’s just and equitable jurisdiction cannot be exercised at a whim and that unfairness must be shown. |
| Ebrahimi v Westbourne Galleries Ltd | House of Lords | Yes | [1973] AC 360 | England and Wales | Cited for the elements of a quasi-partnership, including personal relationships, participation in the conduct of business, and restrictions on share transfer. |
| Lim Ah Sia v Tiong Tuan Yeong and others | High Court | Yes | [2014] 4 SLR 140 | Singapore | Cited for the principle that the existence of a close personal relationship is not dispositive in determining whether a company was a quasi-partnership. |
| Vujnovich and another v Vujnovich | Privy Council | Yes | [1990] BCLC 227 | United Kingdom | Cited for the principle that a petitioner's misconduct must be causative of the breakdown in confidence for the 'clean hands' doctrine to apply. |
| Lau Shit Har and another v Lau Yu Man | Court of Appeal | Yes | [2008] 4 SLR(R) 348 | Singapore | Cited for the principle that misconduct leading to unclean hands must be causative of the circumstances giving rise to the court's discretion to wind up the company. |
| In the Matter of the Companies Ordinance, Cap 32 and in the Matter of Power Point Engineering Limited | Hong Kong High Court | Yes | [2000] HKCFI 800 | Hong Kong | Cited for the principle that where misconduct was causative of the circumstances giving rise to the discretion to wind up, the absence of clean hands would disentitle the petitioners to the relief sought. |
| Re Lee Tung Co (Pte) Ltd and other matters | High Court | Yes | [2008] 1 SLR(R) 800 | Singapore | Cited for the principle that even if one were to accept that a party was also one of the causes of the current state of affairs, that does not ipso facto preclude him from seeking the winding up of a company. |
| Chow Kok Chuen v Chow Kok Chi and another | Court of Appeal | Yes | [2008] 4 SLR(R) 362 | Singapore | Cited for the principle that a director cannot rely on his own acts to exit the company at will if he has been responsible for the others’ loss of confidence in him. |
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)(a) of the Companies Act | 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 |
| Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Winding up
- Minority oppression
- Quasi-partnership
- Shareholders’ agreement
- Non-competition covenant
- Directors’ duties
- EGM resolution
- Buy-out
- Voluntary liquidation
- Management powers
15.2 Keywords
- Winding up
- Minority oppression
- Quasi-partnership
- Shareholders
- Directors
- Companies Act
- Singapore
16. Subjects
- Company Law
- Corporate Governance
- Insolvency Law
17. Areas of Law
- Company Law
- Winding Up
- Minority Oppression
- Quasi-Partnership