Lim How Teck v Laguna National: Winding Up Application & No-Action Clause Dispute

In Lim How Teck v Laguna National Golf and Country Club Ltd, the High Court of Singapore addressed a winding-up application (CWU 78) by Lim How Teck against Laguna National Golf and Country Club Ltd, and an application (OA 96) by Laguna for an anti-suit injunction. Lim sought to wind up Laguna for failing to redeem an unsecured note. Laguna opposed, citing a no-action clause in the trust deed. The court found the no-action clause inapplicable due to a potential conflict of interest for the trustee and granted Lim's winding-up application, dismissing Laguna's injunction request. The court ordered that costs of the proceedings be taxed, if not agreed or fixed, and be paid to Lim out of the assets of the Company.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Lim's application in CWU 78 is granted and the Company’s application in OA 96 is dismissed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case regarding a winding-up application and the enforceability of a no-action clause in a trust deed. The court allowed the winding-up application.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Lim How TeckClaimant, DefendantIndividualApplication grantedWon
Laguna National Golf and Country Club LtdDefendant, ClaimantCorporationApplication dismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Chua Lee MingJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Tan Chee MengWongPartnership LLP
Paul Loy Chi SyannWongPartnership LLP
Samuel NavindranWongPartnership LLP
Chong Kuan KeongChong Chia & Lim LLC
Tay Yan XiaChong Chia & Lim LLC
Gan Siu Min CherylChong Chia & Lim LLC
Lim Lian KeeChong Chia & Lim LLC

4. Facts

  1. Lim How Teck sought to wind up Laguna National Golf and Country Club Ltd.
  2. Lim is a holder of an unsecured note issued by the Company, which the Company failed to redeem.
  3. The Company did not comply with a statutory demand issued by Lim’s lawyers.
  4. The Company opposed Lim’s application based on a no-action clause in the trust deed.
  5. The no-action clause permits only the bond trustee to take enforcement action.
  6. Lim has the support of a sufficient number of noteholders who satisfy the one-fifth nominal amount requirement.
  7. Laguna sought a permanent anti-suit injunction to restrain Lim from instituting proceedings.

5. Formal Citations

  1. Lim How Teck v Laguna National Golf and Country Club Ltd and another matter, , [2023] SGHC 32

6. Timeline

DateEvent
Trust deed dated
Lease was extended to 2040
Company sold the Lease to Laguna Hotel Holdings Pte Ltd
Trustee met with Peter Kwee to discuss the Company’s audited financial statements for the financial year ended 31 December 2016
Company informed the Trustee that it would not be able to redeem the Unsecured Notes on the Redemption Date
Redemption Date
Trustee declared that there was an event of default and that the Unsecured Notes were immediately due and payable
Company objected to the Trustee’s declaration
Trustee rejected the Company’s objection
Trustee issued a notice of a Noteholders’ meeting to be held on 7 October 2021
Noteholders’ meeting held
Lim filed CWU 78
Company filed OA 96
Hearing date
Hearing date
Judgment date

7. Legal Issues

  1. Standing to apply for winding up
    • Outcome: The court found that the no-action clause in the trust deed was not applicable due to a potential conflict of interest for the trustee, and therefore Lim had the requisite standing to apply to wind up the Company.
    • Category: Procedural
    • Sub-Issues:
      • Applicability of no-action clause
      • Trustee's conflict of interest
      • Trustee's unjustifiable unwillingness
    • Related Cases:
      • [2023] SGHC 32
      • Akanthos Capital Mgmt., LLC v CompuCredit Holdings Corp 677 F.3d 1286 (2012)
      • Feldbaum v McCrory Corp 1992 WL 119095
      • Rabinowitz v Kaiser-Frazer Corp 111 N.Y.S.2d 539 (1952)
  2. Enforceability of no-action clause
    • Outcome: The court held that the no-action clause was not applicable because the Trustee would be in a position of conflict if it were the applicant in winding up proceedings against the Company.
    • Category: Substantive
    • Sub-Issues:
      • Interpretation of trust deed
      • Trustee's duties
      • Conflict of interest
    • Related Cases:
      • [2023] SGHC 32
      • Akanthos Capital Mgmt., LLC v CompuCredit Holdings Corp 677 F.3d 1286 (2012)
      • Feldbaum v McCrory Corp 1992 WL 119095
      • Rabinowitz v Kaiser-Frazer Corp 111 N.Y.S.2d 539 (1952)
  3. Anti-suit injunction
    • Outcome: The court dismissed the Company's application for a permanent anti-suit injunction.
    • Category: Procedural
    • Related Cases:
      • [2023] SGHC 32

8. Remedies Sought

  1. Winding up order
  2. Anti-suit injunction

9. Cause of Actions

  • Winding up
  • Breach of contract

10. Practice Areas

  • Winding Up
  • Insolvency Litigation
  • Commercial Litigation

11. Industries

  • Hospitality
  • Recreation

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Akanthos Capital Mgmt., LLC v CompuCredit Holdings CorpN/AYesAkanthos Capital Mgmt., LLC v CompuCredit Holdings Corp 677 F.3d 1286 (2012)N/ACited for the principle that a no-action clause is not applicable if the trustee cannot properly pursue a remedy for noteholders due to conflict of interest or unjustifiable unwillingness.
Feldbaum v McCrory CorpN/AYesFeldbaum v McCrory Corp 1992 WL 119095N/ACited for the principle that a no-action clause applies if the trustee is capable of satisfying its obligations.
Rabinowitz v Kaiser-Frazer CorpN/AYesRabinowitz v Kaiser-Frazer Corp 111 N.Y.S.2d 539 (1952)N/ACited for the principle that a no-action clause does not apply if the trustee cannot faithfully and competently discharge its duty as a fiduciary.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Insolvency, Restructuring and Dissolution Act (Act 40 of 2018)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Unsecured Notes
  • Trust Deed
  • No-action clause
  • Winding up
  • Anti-suit injunction
  • Event of default
  • Noteholders
  • Trustee
  • Redemption Date
  • One-fifth nominal amount requirement

15.2 Keywords

  • winding up
  • no-action clause
  • trust deed
  • insolvency
  • Laguna National
  • Lim How Teck

17. Areas of Law

Area NameRelevance Score
Winding Up95
No-Action Clause80
Bankruptcy75
Corporate Insolvency70
Company Law65
Injunctions60
Commercial Disputes50
Trust Deed Interpretation45
Contract Law40

16. Subjects

  • Insolvency
  • Company Law
  • Trusts
  • Civil Procedure