Ong Boon Chuan v Tong Guan Food Products: Share Transfer & Insolvency

In Ong Boon Chuan v Tong Guan Food Products Pte Ltd, the High Court of Singapore granted the applicant's request under s 130 of the Insolvency, Restructuring and Dissolution Act 2018 for the sale and transfer of shares owned by the second respondent, Ong Heng Chuan, due to unpaid cost orders. The court, presided over by Aedit Abdullah J, found that the second respondent's reasons against the application were insufficient to prevent the exercise of discretion in favor of the applicant. The second respondent's allegations of corporate wrongdoing and collateral purpose were deemed irrelevant to the determination under s 130 of the IRDA. The second respondent has since appealed.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Application granted for the sale and transfer of shares.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Court allows transfer of shares under s 130 IRDA, finding no evasion of liability. Allegations of corporate wrongs deemed irrelevant.

1.7 Decision Date

28 July 2022

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Ong Boon Chuan	Applicant	Individual	Application granted	Won	Chiok Beng Piow of AM Legal LLC
Tong Guan Food Products Pte Ltd (in compulsory liquidation)	Respondent	Corporation	Neutral	Neutral	Chua Sui Tong of Rev Law LLC
Ong Heng Chuan	Respondent	Individual	Application granted	Lost

3. Judges

Judge Name	Title	Delivered Judgment
Aedit Abdullah	Judge of the High Court	Yes

4. Counsels

Counsel Name	Organization
Chiok Beng Piow	AM Legal LLC
Chua Sui Tong	Rev Law LLC

4. Facts

The applicant sought an order under s 130 of the IRDA for the sale and transfer of shares owned by the second respondent.
The second respondent is the brother of the applicant and a shareholder of the first respondent.
In 2017, the second respondent commenced HC/S 1086/2017 against the applicant and OTC, alleging minority oppression, which was dismissed.
Costs of $262,562.79 were ordered against the second respondent in favor of the applicant, which remain unpaid.
The Company was ordered to be wound up on 12 July 2018 on the basis of insolvency.
The applicant filed a writ of seizure and sale on 26 October 2021 to seize and sell the second respondent’s shares.
The second respondent filed HC/SUM 5154/2021 on 11 November 2021 to stay the WSS proceedings.

5. Formal Citations

Ong Boon Chuan v Tong Guan Food Products Pte Ltd (in compulsory liquidation) and another, Originating Summons No 1305 of 2021, [2022] SGHC 181

6. Timeline

Date	Event
2017-01-01	Second respondent commenced HC/S 1086/2017 against the applicant and OTC, alleging minority oppression.
2020-01-31	Second respondent’s claim in Suit 1086 was dismissed by the High Court.
2021-05-05	Second respondent's appeal in CA/CA 29/2020 was dismissed.
2018-07-12	The Company was ordered to be wound up on the basis of insolvency.
2021-10-26	Applicant filed a writ of seizure and sale to seize and sell the second respondent’s shares.
2021-11-08	Shares were seized.
2021-11-11	Second respondent filed HC/SUM 5154/2021 to stay the WSS proceedings.
2022-03-15	Hearing date.
2022-03-28	Hearing date.
2022-07-29	Judgment date.

7. Legal Issues

Share Transfer under s 130 of the Insolvency, Restructuring and Dissolution Act 2018
- Outcome: The court granted the application for the sale and transfer of shares, finding no risk of evasion of liability.
- Category: Substantive
- Related Cases:
  - [2015] 5 SLR 792
Abuse of Process
- Outcome: The court found that the application was not made for a collateral purpose within the context of s 130 of the IRDA.
- Category: Procedural
- Related Cases:
  - [1928] 1 Ch 199
  - [2008] 4 SLR(R) 348
  - [1987] FCA 312

8. Remedies Sought

Order for sale and transfer of shares

9. Cause of Actions

No cause of actions

10. Practice Areas

Insolvency
Liquidation

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Carringbush Corporation Pty Ltd v ASIC	Federal Court of Australia	Yes	[2008] FCA 474	Australia	Cited for the principle that the court can order the validation of transactions retrospectively.
Rudge v Bowman	Queen's Bench	Yes	[1868] LR 3 QB 689	England and Wales	Cited to support the object of s 130 and its predecessors, namely that it is to ensure that there is no evasion of liability by contributories.
Seah Teong Kang (co-executor of the will of Lee Koon, deceased) and another v Seah Yong Chwan (executor of the estate of Seah Eng Teow)	Court of Appeal	Yes	[2015] 5 SLR 792	Singapore	Cited to support the proposition that transfers should be allowed if there is no risk of evasion of liability by contributories.
Centaurea International Pte Ltd (in liquidation) v Citrus Trading Pte Ltd	N/A	Yes	[2017] 3 SLR 513	Singapore	Cited for the principle that the court can order the validation of transactions retrospectively.
Tianrui (International) Holding Company Ltd v China Shanshui Cement Group Ltd	Cayman Islands Court of Appeal	No	2020 (1) CILR 417	Cayman Islands	Discussed in relation to the rationale of s 130 of the IRDA and the rarity of partly paid shares in modern times.
Re Rooftop Group International Pte Ltd and another (Triumphant Gold Ltd and another, non-parties)	N/A	Yes	[2020] 4 SLR 680	Singapore	Cited for the principle that the primary objective of s 130 is to maintain the status quo.
Re Gray’s Inn Construction Co Ltd	English Court of Appeal	No	[1980] 1 All ER 814	England and Wales	Cited for the principle that a disposition of assets not in good faith in the ordinary course of business would not be validated.
Jordanlane Pty Ltd v Kimberley Jane Elizabeth Kitching Andrew	N/A	Yes	[2008] VSC 426	Australia	Cited to support the principle that s 130 seeks to protect the interest of the company and its creditors, and not the shareholder.
In re a Debtor	N/A	No	[1928] 1 Ch 199	N/A	Cited for the proposition that a winding up application brought for a collateral purpose would be dismissed as an abuse of process.
Lai Shit Har and another v Lau Yu Man	Court of Appeal	No	[2008] 4 SLR(R) 348	Singapore	Cited for the proposition that a winding up application brought for a collateral purpose would be dismissed as an abuse of process.
Re John Waymouth Ahern v Deputy Commissioner of Taxation	N/A	No	[1987] FCA 312	Australia	Cited for the proposition that a winding up application brought for a collateral purpose would be dismissed as an abuse of process.
Re Steane’s (Bournemouth) Ltd	N/A	Yes	[1950] 1 All ER 21	England and Wales	Referring to Re Steane’s (Bournemouth) Ltd [1950] 1 All ER 21, that any discretion should be exercised in the context of the liquidation provisions of the Companies Act 1948.
Petroships Investment Pte Ltd v Wealthplus Pte Ltd and others and another matter	N/A	Yes	[2016] 2 SLR 1022	Singapore	As the Company is in liquidation, the statutory derivative action is barred.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Insolvency, Restructuring and Dissolution Act 2018	Singapore
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
Companies Act 1894	N/A

15. Key Terms and Keywords

15.1 Key Terms

Insolvency, Restructuring and Dissolution Act 2018
Writ of seizure and sale
Minority oppression
Liquidation
Share transfer
Cost orders
Fully paid shares
Abuse of process

15.2 Keywords

Insolvency
Share Transfer
Winding Up
IRDA
Liquidation

17. Areas of Law

Area Name	Relevance Score
Winding Up	90
Insolvency Law	90
Company Law	50
Corporate Law	40
Estate Administration	30
Civil Procedure	30
Fiduciary Duties	20
Minority Oppression	20
Property Law	20

16. Subjects

Insolvency Law
Company Law
Civil Procedure