Lim Oon Kuin v Ocean Tankers: Breach of Fiduciary Duties and Summary Judgment
Lim Oon Kuin, Lim Huey Ching, and Lim Chee Meng appealed a High Court decision granting summary judgment to Ocean Tankers (Pte) Ltd, which alleged the Lims breached their fiduciary duties as directors by procuring payments to themselves when Ocean Tankers was in a parlous financial state. The Court of Appeal of Singapore dismissed the appeal, finding that the Lims had breached their fiduciary duties and did not raise a bona fide defense, upholding the summary judgment in favor of Ocean Tankers.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal concerning breach of fiduciary duties by directors of Ocean Tankers. The court upheld summary judgment, finding the directors breached duties.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Lim Oon Kuin | Appellant, Defendant | Individual | Appeal Dismissed | Lost | Davinder Singh s/o Amar Singh, Jaikanth Shankar, Lo Ying Xi John, Gerald Paul Seah Yong Sing |
| Lim Huey Ching | Appellant, Defendant | Individual | Appeal Dismissed | Lost | Davinder Singh s/o Amar Singh, Jaikanth Shankar, Lo Ying Xi John, Gerald Paul Seah Yong Sing |
| Lim Chee Meng | Appellant, Defendant | Individual | Appeal Dismissed | Lost | Davinder Singh s/o Amar Singh, Jaikanth Shankar, Lo Ying Xi John, Gerald Paul Seah Yong Sing |
| Ocean Tankers (Pte) Ltd (Interim Judicial Managers Appointed) | Respondent, Plaintiff | Corporation | Summary Judgment Upheld | Won | Narayanan Sreenivasan, Rajaram Muralli Raja, Arias Lim Jie, Lim Wei Liang Jason, Ranita Yogeeswaran |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Phang Boon Leong | Justice of the Court of Appeal | Yes |
| Tay Yong Kwang | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Davinder Singh s/o Amar Singh | Davinder Singh Chambers LLC |
| Jaikanth Shankar | Davinder Singh Chambers LLC |
| Lo Ying Xi John | Davinder Singh Chambers LLC |
| Gerald Paul Seah Yong Sing | Davinder Singh Chambers LLC |
| Narayanan Sreenivasan | K&L Gates Straits Law LLC |
| Rajaram Muralli Raja | K&L Gates Straits Law LLC |
| Arias Lim Jie | K&L Gates Straits Law LLC |
| Lim Wei Liang Jason | K&L Gates Straits Law LLC |
| Ranita Yogeeswaran | K&L Gates Straits Law LLC |
4. Facts
- The Lims were the sole directors of OTPL at the time of the payments.
- OTPL made payments of US$15.02m and US$4m to accounts related to the Lims.
- The payments were made from OTPL's accounts to accounts in the names of Oon, Huey, and Chee.
- OTPL was facing financial difficulties at the time the payments were made.
- HLT's financial woes impacted OTPL heavily.
- The Lims sought interim moratoria relief under s 211B of the Companies Act.
- The Lims acknowledged that HLT was unprofitable and had sustained significant losses.
5. Formal Citations
- Lim Oon Kuin and others v Ocean Tankers (Pte) Ltd (interim judicial managers appointed), Civil Appeal No 29 of 2021, [2021] SGCA 100
6. Timeline
| Date | Event |
|---|---|
| OTPL made a payment of US$15.02m to a Deutsche Bank account in the joint names of Oon and Huey. | |
| OTPL made a payment of US$4m to a Maybank account in the name of Chee. | |
| HLT and OTPL filed applications seeking interim moratoria relief under s 211B of the Companies Act. | |
| Rajah & Tann Singapore LLP advised that OTPL be restructured. | |
| Discussions with HLT’s and OTPL’s then-solicitors, R&T, from 5 April 2020 to 17 April 2020, the Lims had constantly sought R&T’s advice on the restructuring of HLT, OTPL and their related companies. | |
| OTPL commenced HC/S 630/2020 against the Lims alleging breach of fiduciary duties. | |
| Mr Jonathan Humphrey issued expert report on OTPL’s balance sheet. | |
| The Judge delivered the Judgment, allowing the O 14 Application. | |
| Court of Appeal heard the appeal. | |
| Court of Appeal dismissed the appeal. |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court held that the Lims breached their fiduciary duties by procuring payments to themselves when OTPL was in a parlous financial state.
- Category: Substantive
- Sub-Issues:
- Failure to act in the best interests of the company
- Failure to consider the interests of creditors
- Dissipation of company assets
- Related Cases:
- [2010] 4 SLR 1089
- [2014] 3 SLR 277
- [1987] 1 All ER 114
- [2017] SGHC 15
- [2019] 4 SLR 433
- Summary Judgment
- Outcome: The court upheld the grant of summary judgment, finding that the Lims failed to raise a bona fide defence.
- Category: Procedural
- Sub-Issues:
- Triable issues
- Bona fide defence
- Related Cases:
- [2003] 3 SLR(R) 32
- [2015] 1 SLR 325
- [2015] SGHC 85
- [2016] 5 SLR 1183
- Indemnity Costs
- Outcome: The court awarded indemnity costs against the Lims due to their unreasonable conduct of the appeal.
- Category: Procedural
- Sub-Issues:
- Unreasonable conduct
- Abuse of process
- Related Cases:
- [2006] EWHC 816 (Comm)
- [2016] 5 SLR 103
- [2021] 4 SLR 883
- [2021] SGCA 36
- [2021] SGCA 24
- [2021] 2 SLR 584
- [2021] SGCA 79
- [2021] SGCA 90
8. Remedies Sought
- Equitable Compensation
- Order for Account
- Tracing Order
9. Cause of Actions
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
- Insolvency Litigation
11. Industries
- Shipping
- Oil Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Liquidators of Progen Engineering Pte Ltd v Progen Holdings Ltd | Court of Appeal | Yes | [2010] 4 SLR 1089 | Singapore | Cited for the principle that directors have a duty to consider the interests of creditors when a company is in a parlous financial position. |
| Dynasty Line Ltd (in liquidation) v Sukamto Sia and another and another appeal | Court of Appeal | Yes | [2014] 3 SLR 277 | Singapore | Cited for the principle that directors have a duty to consider the interests of creditors when a company is in a parlous financial position. |
| Winkworth v Edward Baron Development Co Ltd | House of Lords | Yes | [1987] 1 All ER 114 | England and Wales | Cited for the principle that directors must ensure that the company’s assets are not dissipated or exploited for their own benefit to the prejudice of creditors’ interests. |
| Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others | High Court | Yes | [2017] SGHC 15 | Singapore | Cited for the principle that the greater the concern over the company’s financial health, the more weight the directors must accord to the interests of creditors over those of the shareholders. |
| Traxiar Drilling Partners II Pte Ltd (in liquidation) v Dvergsten, Dag Oivind | High Court | Yes | [2019] 4 SLR 433 | Singapore | Cited for the principle that a strict and technical application of the “going concern” test and the “balance sheet” test is of limited utility when assessing a company’s solvency. |
| Goh Chok Tong v Chee Soon Juan | High Court | Yes | [2003] 3 SLR(R) 32 | Singapore | Cited for the principle that a defendant seeking leave to defend must adduce some evidence, direct or indirect, to support the bare assertions made in his affidavit. |
| M2B World Asia Pacific Pte Ltd v Matsumura Akihiko | High Court | Yes | [2015] 1 SLR 325 | Singapore | Cited for the principle that a defendant seeking leave to defend must adduce some evidence, direct or indirect, to support the bare assertions made in his affidavit. |
| Wiseway Global Co Ltd v Qian Feng Group Ltd | High Court | Yes | [2015] SGHC 85 | Singapore | Cited for the principle that a defendant seeking leave to defend must adduce some evidence, direct or indirect, to support the bare assertions made in his affidavit. |
| Calvin Klein, Inc and another v HS International Pte Ltd and others | High Court | Yes | [2016] 5 SLR 1183 | Singapore | Cited for the principle that a defendant seeking leave to defend must adduce some evidence, direct or indirect, to support the bare assertions made in his affidavit. |
| Kon Yin Tong and another v Leow Boon Cher and others | High Court | Yes | [2011] SGHC 228 | Singapore | Cited for the principle that shareholder’s loans would nevertheless be considered debts in the context of insolvency. |
| Koh Siak Poo v Perkayuan OKS Sdn Bhd and others | Malaysian Supreme Court | Yes | [1989] 3 MLJ 164 | Malaysia | Cited for the principle that an appellate court hearing an appeal against an order granting summary judgment ought not to regard the appeal as reviewing the exercise of the judge’s discretion but should approach the appeal as a rehearing. |
| Three Rivers District Council v The Governor and Co of the Bank of England (No 6) | English High Court | Yes | [2006] EWHC 816 (Comm) | England and Wales | Cited for the principle that a court, in deciding whether to make an order for indemnity costs, should necessarily have regard to all the circumstances of the case, with the touchstone being that of unreasonable conduct. |
| Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte Ltd | High Court | Yes | [2016] 5 SLR 103 | Singapore | Cited for examples of unreasonable conduct that may warrant an order for indemnity costs. |
| CIMB Bank Bhd v Italmatic Tyre & Retreading Equipment (Asia) Pte Ltd | High Court | Yes | [2021] 4 SLR 883 | Singapore | Cited for the principle that the discretion to order indemnity costs is unfettered, it must necessarily be exercised judicially. |
| Tecnomar & Associates Pte Ltd v SBM Offshore NV | Court of Appeal | Yes | [2021] SGCA 36 | Singapore | Cited for the principle that the existence of an appeal mechanism should not be interpreted as giving litigants carte blanche to pursue arguments that are wholly unmeritorious, devoid of any legal and factual basis. |
| Dextra Partners Pte Ltd and another v Lavrentiadis, Lavrentios and another appeal and another matter | Court of Appeal | Yes | [2021] SGCA 24 | Singapore | Cited for the principle that the existence of an appeal mechanism should not be interpreted as giving litigants carte blanche to pursue arguments that are wholly unmeritorious, devoid of any legal and factual basis. |
| Ong Jane Rebecca v Lim Lie Hoa and other appeals and other matters | Court of Appeal | Yes | [2021] 2 SLR 584 | Singapore | Cited for the principle that the existence of an appeal mechanism should not be interpreted as giving litigants carte blanche to pursue arguments that are wholly unmeritorious, devoid of any legal and factual basis. |
| Mah Kiat Seng v Public Prosecutor | Court of Appeal | Yes | [2021] SGCA 79 | Singapore | Cited for the principle that the existence of an appeal mechanism should not be interpreted as giving litigants carte blanche to pursue arguments that are wholly unmeritorious, devoid of any legal and factual basis. |
| Miya Manik v Public Prosecutor and another matter | Court of Appeal | Yes | [2021] SGCA 90 | Singapore | Cited for the principle that the existence of an appeal mechanism should not be interpreted as giving litigants carte blanche to pursue arguments that are wholly unmeritorious, devoid of any legal and factual basis. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (2014 Rev Ed) |
| O 14 of the Rules of Court |
| O 59 r 27 of the Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 211B of the Companies Act | Singapore |
| s 227T of the Act | Singapore |
| Bankruptcy Act (Cap 20, 2009 Rev Ed) | Singapore |
| ss 98 and 99 of the Bankruptcy Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Fiduciary duties
- Interim judicial managers
- Summary judgment
- Insolvency
- Parlous financial position
- Moratorium
- Contingent liabilities
- Indemnity costs
15.2 Keywords
- Fiduciary duty
- Directors
- Summary judgment
- Insolvency
- Ocean Tankers
- Lim Oon Kuin
16. Subjects
- Company Law
- Insolvency
- Civil Procedure
17. Areas of Law
- Companies Law
- Directors' Duties
- Civil Procedure
- Summary Judgment
- Costs
- Insolvency Law