BIT Baltic v Wee See Boon: Director's Duties & Unfair Preference Payments
The Court of Appeal heard an appeal by BIT Baltic Investment & Trading Pte Ltd (in compulsory liquidation) against Mr. Wee See Boon, a former director, regarding breaches of his fiduciary duties and duties of care, skill, and diligence. The claim arose from unfair preference payments made to two companies. The High Court dismissed the claims, but the Court of Appeal allowed the appeal in part, finding that Mr. Wee breached his duty of care, skill, and diligence by failing to investigate the payments when he became aware of them. The court awarded damages for loss of interest on the principal sum but denied claims for the liquidator's costs and the petitioning creditor's costs.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed in Part
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Appeal regarding director Wee See Boon's breach of duties related to unfair preference payments made by BIT Baltic. Court found a breach of duty of care.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| BIT Baltic Investment & Trading Pte Ltd (in compulsory liquidation) | Appellant, Plaintiff | Corporation | Appeal Allowed in Part | Partial | |
| Wee See Boon | Respondent, Defendant | Individual | Appeal Allowed in Part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Justice of the Court of Appeal | Yes |
| Tay Yong Kwang | Justice of the Court of Appeal | No |
| Belinda Ang Saw Ean | Judge of the Court of Appeal | No |
4. Counsels
4. Facts
- Mr. Wee was a director of BIT Baltic.
- BIT Baltic made payments totaling US$1,472,500 to HARPA and HPS.
- The payments were for services rendered between 2014 and 2016.
- BIT Baltic entered into agreements with HARPA and HPS on 1 October 2018.
- The payments were made between 12 December 2018 and 27 December 2018.
- BIT Baltic was wound up in June 2020.
- The principal sum was repaid to BIT Baltic on 23 December 2021.
- Mr. Wee signed the 2018 Financial Statements on 15 August 2019.
- The 2018 Financial Statements contained a qualified opinion by the auditors.
5. Formal Citations
- BIT Baltic Investment & Trading Pte Ltd (in compulsory liquidation) v Wee See Boon, Civil Appeal No 26 of 2022, [2023] SGCA 17
6. Timeline
| Date | Event |
|---|---|
| BIT Baltic incorporated | |
| HARPA and HPS provided services to BIT Baltic | |
| HARPA and HPS services to BIT Baltic concluded | |
| BIT Baltic stopped generating revenue | |
| BIT Baltic entered into agreements with HARPA and HPS | |
| Payments made to HARPA and HPS began | |
| Payments made to HARPA and HPS concluded | |
| OIG Giant I Pte Ltd filed winding up petition | |
| BIT Baltic wound up by Order of Court | |
| BIT Baltic commenced OS 667 against Mr Wee | |
| Mr Wee applied for OS 667 to be converted into a writ | |
| HPS and HARPA repaid the Principal Sum in full to BIT Baltic | |
| Judge dismissed OS 667 | |
| Hearing of appeal | |
| Judgment reserved |
7. Legal Issues
- Breach of Director's Duties
- Outcome: The court found that Mr. Wee breached his duty of care, skill, and diligence but not his fiduciary duties.
- Category: Substantive
- Sub-Issues:
- Failure to exercise reasonable care, skill, and diligence
- Failure to act in the best interests of the company
- Failure to make inquiries about related party transactions
- Unfair Preference Payments
- Outcome: The court found that the payments made to HARPA and HPS constituted unfair preference payments.
- Category: Substantive
- Sub-Issues:
- Payments made while insolvent
- Payments to related parties
8. Remedies Sought
- Monetary Damages
- Interest on Principal Sum
- Liquidator's Costs
- Petitioning Creditor's Costs
9. Cause of Actions
- Breach of Director's Duties
- Breach of Fiduciary Duty
- Negligence
10. Practice Areas
- Commercial Litigation
- Insolvency and Restructuring
11. Industries
- Shipping
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| BIT Baltic Investment & Trading Pte Ltd (in compulsory liquidation) v Wee See Boon | High Court | Yes | [2022] SGHC 110 | Singapore | Sets out the Judge’s reasons for dismissing BIT Baltic’s claims. |
| Prima Bulkship Pte Ltd (in creditor’s voluntary liquidation) and another v Lim Say Wan and another | High Court | Yes | [2017] 3 SLR 839 | Singapore | Cited regarding the impact of a director's limited role on their expected awareness of a company's affairs. |
| DM Divers Technics Pte Ltd v Tee Chin Hock | Court of Appeal | Yes | [2004] 4 SLR(R) 424 | Singapore | Cited for the definition of a director's fiduciary duties to the company. |
| Bristol and West Building Society v Mothew | Chancery Division | Yes | [1998] Ch 1 | England and Wales | Cited for the description of the relationship between the duties and the standard of loyalty expected of directors. |
| Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters | Court of Appeal | Yes | [2018] 2 SLR 333 | Singapore | Cited for the explanation of the difference between the fiduciary duties and the duties of care, skill and diligence. |
| Lim Weng Kee v PP | High Court | Yes | [2002] 2 SLR(R) 848 | Singapore | Cited for the standard of care and diligence expected of a director that is assessed objectively. |
| Regal (Hastings) Ltd v Gulliver | House of Lords | Yes | [1967] 2 AC 134 | United Kingdom | Cited as an example of a fiduciary duty. |
| Bray v Ford | House of Lords | Yes | [1896] AC 44 | United Kingdom | Cited for the rules proscribing a fiduciary from making a profit out of his fiduciary position. |
| Chan v Zacharia | High Court of Australia | Yes | (1984) 154 CLR 178 | Australia | Cited for the rules proscribing a fiduciary from making a profit out of his fiduciary position. |
| Ho Kang Peng v Scintronix Corp Ltd | High Court | Yes | [2014] 3 SLR 329 | Singapore | Cited for the common law duty to act bona fide in the best interests of the company. |
| Living the Link Pte Ltd (in creditors’ voluntary liquidation) & ors v Tan Lay Tin Tina & ors | High Court | Yes | [2016] 3 SLR 621 | Singapore | Cited for the principle that a director who procures an undue preference payment acts in breach of duty. |
| Liquidators of Progen Engineering Pte v Progen Holdings Ltd | High Court | Yes | [2010] 4 SLR 1089 | Singapore | Cited for the fiduciary duties of a director of an insolvent company. |
| John J Francis v United Jersey Bank | Supreme Court of New Jersey | Yes | 432 A 2d 814 (1981) | United States | Cited for the principle that directors may not shut their eyes to corporate misconduct. |
| Daniels v Anderson | Supreme Court of New South Wales | Yes | (1995) 16 ACSR 607 | Australia | Cited for the principle that directors should maintain familiarity with the financial status of the corporation. |
| Re Haeusler, Thomas | High Court | Yes | [2021] 4 SLR 1407 | Singapore | Cited for the principle that every director is subject to the same duties. |
| Vita Health Laboratories Pte Ltd and others v Pang Seng Meng | High Court | Yes | [2004] 4 SLR(R) 162 | Singapore | Cited for the principle that every director is expected to acquire and maintain sufficient knowledge and understanding of a company’s business. |
| Ho Pak Kim Realty Co Pte Ltd (in liquidation) v Ho Soo Fong and another | High Court | Yes | [2020] SGHC 193 | Singapore | Cited for the principle that a director has a duty to exercise reasonable diligence or to exercise due care, skill and diligence. |
| Jurong Technologies Industrial Corp Ltd (under judicial management) v Coöperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International, Singapore Branch) | High Court | Yes | [2011] 2 SLR 413 | Singapore | Cited for the applicable interest rate for pre-judgment interest. |
| CCM Industrial Pte Ltd v Uniquetech Pte Ltd | High Court | Yes | [2009] 2 SLR(R) 20 | Singapore | Cited for the principle that an order for indemnity costs is appropriate only in exceptional circumstances. |
| Lim Oon Kuin and others v Ocean Tankers (Pte) Ltd (interim judicial managers appointed) | Court of Appeal | Yes | [2022] 1 SLR 434 | Singapore | Cited for the touchstone for an order for indemnity costs. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court 2014 |
| r 126 of the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 157 of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Director's Duties
- Fiduciary Duties
- Unfair Preference Payments
- Insolvency
- Related Party Transactions
- Duty of Care, Skill and Diligence
- Liquidator
- Financial Statements
- Qualified Opinion
- Going Concern
15.2 Keywords
- Director
- Duties
- Unfair Preference
- Insolvency
- Companies Act
- Singapore
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fiduciary Duties | 90 |
| Insolvency Law | 85 |
| Winding Up | 80 |
| Director's Liability | 80 |
| Company Law | 75 |
| Unfair preference payments | 70 |
| Damages | 60 |
| Civil Procedure | 50 |
| Costs | 40 |
| Contract Law | 30 |
16. Subjects
- Company Law
- Insolvency Law
- Directors' Duties