Urs Eller v Cheong Kiat Wah: Trust Breach, Share Dilution, Equitable Compensation

In Urs Eller v Cheong Kiat Wah, the Singapore High Court addressed a claim for breach of trust. Urs Eller sued Cheong Kiat Wah for diluting his shareholding in Swiss Medicare Sdn Bhd through an unauthorized share issuance, violating a trust deed. Justice Philip Jeyaretnam found Cheong Kiat Wah liable and awarded equitable compensation of RM 3,032,233.25 to Urs Eller, calculated based on the diminished value of Eller's shares.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court found Cheong Kiat Wah liable for breach of trust for diluting Urs Eller's shares. Awarded RM 3,032,233.25 compensation.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Urs EllerPlaintiffIndividualJudgment for PlaintiffWon
Cheong Kiat WahDefendantIndividualJudgment against DefendantLost

3. Judges

Judge NameTitleDelivered Judgment
Philip JeyaretnamJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Tian KeyunYuen Law LLC
Cai Enhuai AmosYuen Law LLC
Yong Ying JieYuen Law LLC
Pang Khin WeeHoh Law Corporation

4. Facts

  1. Plaintiff and defendant invested equally in a Malaysian company, Swiss Medicare Sdn Bhd.
  2. Defendant held 50 shares as express trustee for the plaintiff pursuant to a trust deed.
  3. Trust deed required defendant to exercise voting rights in agreement with plaintiff's instructions.
  4. Defendant issued 350,000 additional shares to himself without plaintiff's knowledge.
  5. Share issuance diluted plaintiff's shareholding from 50% to 0.0143%.
  6. Plaintiff lent RM 350,000 to the defendant to further the Company’s business.
  7. The company was able to secure the exclusive distributorship of hearing aid products with the original share capital.

5. Formal Citations

  1. Eller, Urs v Cheong Kiat Wah, Suit No 176 of 2019, [2021] SGHC 253
  2. Eller, Urs v Cheong Kiat Wah, , [2020] SGHC 106
  3. Butt v Kelson, , [1952] 1 Ch 197

6. Timeline

DateEvent
Plaintiff and defendant met
Defendant decided to incorporate a company in Malaysia
Swiss Medicare Sdn Bhd registered
Exclusive distributorship agreement with Phonak for Malaysia and Brunei
Defendant instructed solicitors to draft partnership agreement
Loan Agreement executed
Trust Deed executed
Exclusive distributorship agreement with Phonak commenced
Share Issuance
Defendant's email describing plaintiff as equal shareholder
Exclusive distributorship agreement with Phonak ended
Exclusive distributorship agreement with Phonak commenced
Trial began
Trial
Trial
Urs Eller's AEIC dated
Cheong Kiat Wah's AEIC dated
Notes of Evidence
Valuation date
Mr Gupta's report dated
Hearing
Hearing
Hearing
Plaintiff’s closing submissions
Defendant’s closing submissions
Hearing
Judgment reserved

7. Legal Issues

  1. Breach of Trust
    • Outcome: The court found the defendant liable for breach of trust due to the unauthorized share issuance.
    • Category: Substantive
    • Sub-Issues:
      • Unauthorised share issuance
      • Dilution of shareholding
      • Violation of trust deed
  2. Equitable Compensation
    • Outcome: The court awarded equitable compensation to the plaintiff to compensate for the loss suffered due to the breach of trust.
    • Category: Remedial
    • Sub-Issues:
      • Assessment of damages
      • Valuation of shares
      • Causation of loss
  3. Admissibility of Hearsay Evidence
    • Outcome: The court admitted the Hearlife Testimonial but gave it little weight due to the absence of cross-examination.
    • Category: Procedural
    • Sub-Issues:
      • Statement of a person not compellable to give evidence
      • Refusal to give evidence

8. Remedies Sought

  1. Equitable Compensation

9. Cause of Actions

  • Breach of Trust

10. Practice Areas

  • Commercial Litigation
  • Trust Litigation
  • Shareholder Disputes

11. Industries

  • Healthcare

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Eller, Urs v Cheong Kiat WahHigh CourtYes[2020] SGHC 106SingaporeCited for the earlier decision on liability and the framing of the issue for assessment of damages.
Butt v KelsonChancery DivisionYes[1952] 1 Ch 197England and WalesCited for the principle that a trustee of shares must vote in accordance with the directions of the beneficiary.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97, 1997 Rev Ed) s 32(1)(j)(iv)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Trust Deed
  • Share Issuance
  • Equitable Compensation
  • Share Capital
  • Beneficial Owner
  • Trustee
  • Shareholder
  • Dilution
  • EV/EBITDA multiple
  • GPC method
  • DCF method

15.2 Keywords

  • trust
  • breach of trust
  • share dilution
  • equitable compensation
  • share valuation
  • singapore high court

17. Areas of Law

Area NameRelevance Score
Trust Law90
Fiduciary Duty70
Equitable Compensation65
Evidence Law60
Valuation55
Damages50
Breach of Contract40
Corporate Finance30

16. Subjects

  • Trusts
  • Breach of Trust
  • Remedies
  • Evidence
  • Company Law
  • Valuation
  • Shareholder Disputes