Kho Choon Keng v Lian Keng Enterprises: Winding Up, Quasi-Partnership, Legitimate Expectations, Mutual Trust

In Kho Choon Keng v Lian Keng Enterprises Pte Ltd, the High Court of Singapore considered a winding-up petition by Kho Choon Keng (CK) against Lian Keng Enterprises Pte Ltd (LKE), opposed by Kho Chuan Thye Patrick (Patrick) and Kho Sunn Sunn Patricia (Patricia). CK sought to wind up LKE under the Insolvency, Restructuring and Dissolution Act 2018, arguing LKE was akin to a quasi-partnership, and that Patrick and Patricia breached his legitimate expectations and caused a breakdown of mutual trust. The court found LKE was akin to a quasi-partnership, that Patrick breached CK's legitimate expectations, and that there was a breakdown of trust and confidence. The court granted the winding-up order, but stayed it for 30 days to allow the parties to reach a compromise.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Winding up order granted, stayed for 30 days.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Winding up petition based on quasi-partnership, breach of legitimate expectations, and breakdown of trust. Winding up order granted, stayed for 30 days.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Kho Choon KengClaimantIndividualWinding up order granted, stayed for 30 days.Partial
Lian Keng Enterprises Pte LtdDefendantCorporationWinding up order granted, stayed for 30 days.Lost
Kho Chuan Thye PatrickNon-partyIndividual
Kho Sunn Sunn PatriciaNon-partyIndividual

3. Judges

Judge NameTitleDelivered Judgment
Hri Kumar NairJudgeYes

4. Counsels

Counsel NameOrganization
Koh Swee YenWongPartnership LLP
Lin ChunlongWongPartnership LLP
Aw Wen NiWongPartnership LLP
Darius TanWongPartnership LLP
Andrea AngWongPartnership LLP
Jaikanth ShankarDavinder Singh Chambers LLC
Tan Ruo YuDavinder Singh Chambers LLC
Bryce YeoDavinder Singh Chambers LLC
Tanmanjit SinghDavinder Singh Chambers LLC
Zhuo JiaxiangProvidence Law Asia
Priscilla ChiaProvidence Law Asia

4. Facts

  1. LKE was founded in 1980 by the late Mr Kho Beng Kang (the “Patriarch”).
  2. CK and Patrick each held a 49% interest in LKE after the 2005 Buyout.
  3. From 2005 to 2019, all decisions concerning LKE were made solely by CK and Patrick after consulting with each other.
  4. Neither CK nor Patrick called for any board meetings from 2005 to 2019; instead, all decisions were reached during informal meetings or discussions via text and email.
  5. Patrick called a formal board meeting to decide on the refurbishment of ITS.
  6. Patrick and Patricia voted in favor of the Growth Plan.
  7. The purchase of Tras Street Property was completed on 14 December 2021 for a sum of S$11,768,888.

5. Formal Citations

  1. Kho Choon Keng v Lian Keng Enterprises Pte Ltd, Companies Winding Up No 74 of 2023, [2024] SGHC 191

6. Timeline

DateEvent
Lian Keng Enterprises Pte Ltd incorporated.
The Patriarch penned a handwritten note in Mandarin to the Four Brothers.
The Patriarch passed away.
Koh Kim Huat appointed to LKE's board of directors.
Joo and Kian filed a winding up petition against LKE.
Patricia appointed to LKE’s board of directors.
CK and Patrick bought Joo, Kian, and Mdm Yap’s shares in LKE.
Joo and Kian resigned as directors of LKE.
Patricia resigned as a director of LKE.
Patricia was re-appointed as a director of LKE.
Koh resigned as a director of LKE.
Patrick proposed the ITS Refurbishment at a monthly finance meeting.
CK sent an email to Patrick setting out their differences and alluding to an amicable split.
Patrick called for a formal board meeting for Southern Cross to approve the ITS Refurbishment.
Southern Cross Board Meeting took place with CK absent.
CK highlighted ITS’ low occupancy rates and suggested getting a fresh report from CBRE.
Patrick circulated the Growth Plan along with a proposal to purchase the Tras Street Property.
Growth Plan discussed at a board meeting.
Purchase of Tras Street Property completed.
Action filed.
Judgment date.

7. Legal Issues

  1. Winding up on just and equitable grounds
    • Outcome: The court found that it was just and equitable to wind up LKE due to the breach of legitimate expectations and the breakdown of mutual trust and confidence.
    • Category: Substantive
    • Sub-Issues:
      • Breach of legitimate expectations
      • Loss of mutual trust and confidence
      • Self-induced loss of trust and confidence
  2. Whether LKE is akin to a quasi-partnership
    • Outcome: The court found that LKE was akin to a quasi-partnership from 2005 to 2019.
    • Category: Substantive
  3. Breach of Legitimate Expectations
    • Outcome: The court found that there was a breach of the 1st and Modified 2nd LE.
    • Category: Substantive

8. Remedies Sought

  1. Winding up of Lian Keng Enterprises Pte Ltd

9. Cause of Actions

  • Winding up on just and equitable grounds

10. Practice Areas

  • Commercial Litigation
  • Insolvency Law

11. Industries

  • Real Estate
  • Hospitality

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Re HL Sensecurity Pte Ltd (formerly known as HL Integral Systems Pte Ltd)High CourtYes[2006] SGHC 135SingaporeCited for the meaning of “unfair and unjust” in s 125(1)(f) of the IRDA.
Phua Kiah Mai v The Kheng Chiu Tin Hou Kong and Burial GroundHigh CourtYes[2022] SGHC 36SingaporeCited for the overlap between s 125(1)(f) and s 125(1)(i) IRDA.
Sim Yong Kim v Evenstar Investments Pte LtdCourt of AppealYes[2006] 3 SLR(R) 827SingaporeCited for the notion of unfairness in the court’s jurisdiction under s 125(1)(i) IRDA.
Perennial (Capitol) Pte Ltd and another v Capitol Investment Holdings Pte Ltd and other appealsCourt of AppealYes[2018] 1 SLR 763SingaporeCited for the notion of unfairness in the court’s jurisdiction under s 125(1)(i) IRDA.
Chow Kwok Chuen v Chow Kwok Chi and anotherCourt of AppealYes[2008] 4 SLR(R) 362SingaporeCited for the wide significance of the words “just and equitable” and the categories of cases which justify winding up under this ground.
Ma Wai Fong Kathryn v Trillion Investment Pte Ltd and others and another appealCourt of AppealYes[2019] 1 SLR 1046SingaporeCited for the categories of cases which justify winding up under the just and equitable ground.
Seah Chee Wan and another v Connectus Group Pte LtdHigh CourtYes[2019] SGHC 228SingaporeCited for the categories of cases which justify winding up under the just and equitable ground.
Ting Shwu Ping v Scanone Pte LtdHigh CourtYes[2017] 1 SLR 95SingaporeCited for the establishment of a quasi-partnership allowing the court to look past the strict legal rights of the parties and impose equitable constraints on them.
Ebrahimi v Westbourne Galleries LtdHouse of LordsYes[1973] AC 360United KingdomCited for the expectation that majority shareholders in quasi-partnership companies keep their promises and assurances to minority shareholders.
Re Tourmaline LtdHigh CourtYes[2000] 4 HKC 348Hong KongCited for the argument that a winding up petition must precisely outline the matters complained of by the petitioner.
Re Fildes Bros LtdCourtYes[1970] 1 WLR 592England and WalesCited for the argument that a winding up petition must precisely outline the matters complained of by the petitioner.
Re Wear Engine Works CoCourt of AppealYes(1875) 10 Ch App 188England and WalesCited for the argument that a sufficient case must be contained in the petition and defects or omissions in the petition cannot be cured by affidavits.
JG8 LLC v QUWU Trading Ltd and anotherCourtYes[2023] HKCU 4473Hong KongCited for the argument that an affidavit should only contain the factual evidence of the deponent, and should not include legal arguments and legalese.
Callite Pty Ltd v AdamsSupreme CourtYes[2001] NSWSC 52New South WalesCited for the argument that an affidavit only needs to state the relevant facts, and not the legal consequences which flow from them.
Hopetoun Kembla Investments Pty Ltd v JPR Legal Pty LtdCourtYes(2011) 286 ALR 768AustraliaCited for the argument that an affidavit only needs to state the relevant facts, and not the legal consequences which flow from them.
Lin Choo Mee v Tat Leong Development (Pte) Ltd and Others and Other MattersHigh CourtYes[2015] SGHC 99SingaporeCited for the reasons family companies are akin to a quasi-partnership.
See Eng Siong Ronnie v Sassax Pte Ltd and anotherHigh CourtYes[2020] SGHC 96SingaporeCited for the informal nature of business operations as an indicator of a quasi-partnership.
Tan Bee Hong Blossom and another v Tan Seng Keow Doreen and othersHigh CourtYes[2020] SGHC 89SingaporeCited for the caution that the law does not automatically treat all family businesses as quasi-partnerships.
Augusta Healthcare, Inc v Valley Health SystemCourt of AppealYesAugusta Healthcare, Inc v Valley Health System CICA (Civil) Appeal No. 004 of 2022UnknownCited for the relevant time to assess whether a company is a quasi-partnership.
Re Astec (BSR) plcCourtYes[1998] 2BCLC 556England and WalesCited for legitimate expectations acting as an equitable constraint on a party’s exercise of a legal right.
O’Neill v PhillipsHouse of LordsYes[1999] 1 WLR 1092United KingdomCited for a useful “cross-check” to determine the existence of a legitimate expectation.
Oon Swee Gek v Violet OonHigh CourtYes[2024] SGHC 13SingaporeCited for the guidance in the context of a minority oppression claim under s 216 of the Companies Act 1967.
Lim Kok Wah and others v Lim Boh Yong and others and other mattersCourt of AppealYes[2015] 5 SLR 307SingaporeCited for legitimate expectations must be grounded on a common understanding, as opposed to a purely subjective expectation.
Ng Kek Wee v Sim City Technology LtdCourt of AppealYes[2014] 4 SLR 723SingaporeCited for the complainant being entitled to rely on the defendant’s unfair conduct in a wholly owned subsidiary to show oppression.
Re a Company (No 00370 of 1987), ex parte GlossopCourtYes[1988] BCLC 570England and WalesCited for directors having a duty to consider how much they can properly distribute to members.
Re Gee Hoe Chan Trading Co Pte LtdCourt of AppealYes[1991] 2 SLR(R) 114SingaporeCited for the court intervening where the majority are acting in their own interests, and against those of the minority shareholders, in failing to pay dividends.
Lau v ChuPrivy CouncilYes[2020] UKPC 24United KingdomCited for the absence of the applicant’s clean hands in this context will only act as a bar against relief where the applicant was solely responsible for the breakdown.
Re Lee Tung Co (Pte) Ltd and other mattersHigh CourtYes[2008] 1 SLR(R) 800SingaporeCited for if all the parties contributed to the poor state of relations, it would be wrong to deprive the applicant of relief simply because he was also “one of the causes of the current state of affairs”.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Insolvency, Restructuring and Dissolution Act 2018Singapore
s 125(1)(f) Insolvency, Restructuring and Dissolution Act 2018Singapore
s 125(1)(i) Insolvency, Restructuring and Dissolution Act 2018Singapore
Companies Act 1967Singapore
s 216 Companies Act 1967Singapore
r 22 read with Forms 2 and 3 in the First Schedule of the Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed)Singapore
r 26 read with Form 7 in the First Schedule of the Winding Up Rules 1990Singapore
rr 8(1)(b) and 18 of the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020Singapore
Section 125(3) IRDASingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Quasi-partnership
  • Legitimate expectations
  • Mutual trust and confidence
  • Statement of Wishes
  • ITS Refurbishment
  • Growth Plan
  • Tras Street Acquisition
  • Anonymous Loan
  • Southern Cross Board Meeting

15.2 Keywords

  • Winding up
  • Quasi-partnership
  • Legitimate expectations
  • Mutual trust
  • Family business
  • Directors' duties

17. Areas of Law

Area NameRelevance Score
Winding Up95
Insolvency Law90
Corporate Law40
Commercial Disputes30
Fiduciary Duties25

16. Subjects

  • Insolvency
  • Winding Up
  • Company Law
  • Partnerships