Phua Kiah Mai v The Kheng Chiu Tin Hou Kong: Winding Up for Unfairness to Minority Members

In Phua Kiah Mai v The Kheng Chiu Tin Hou Kong and Burial Ground, the High Court of Singapore granted a winding-up order against The Kheng Chiu Tin Hou Kong and Burial Ground based on the plaintiff's claim that the company's directors acted unfairly towards minority members. The plaintiff, Phua Kiah Mai, argued that the directors excluded him and other directors from decision-making processes and lacked transparency in financial matters. The court found that the directors' actions constituted unfairness, justifying the winding-up order under the Companies Act, but stayed the order pending appeal.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Winding-up order granted, stayed pending appeal.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Winding-up application granted due to unfairness in the company's affairs, specifically the exclusion of minority members from decision-making and financial transparency.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Phua Kiah MaiPlaintiffIndividualWinding-up order granted, stayed pending appealPartial
The Kheng Chiu Tin Hou Kong and Burial GroundDefendantCorporationWinding-up order granted, stayed pending appealLost

3. Judges

Judge NameTitleDelivered Judgment
Aedit AbdullahJudgeYes

4. Counsels

Counsel NameOrganization
Poon Pui YeeHarry Elias Partnership LLP
Hee Theng FongHarry Elias Partnership LLP
Selvaratnam Sharmini SharonHarry Elias Partnership LLP
Zhuang ChangzhongHarry Elias Partnership LLP
Ong Pei ChingTSMP Law Corporation
Tan Joo SengTyto LLC
Adrian TanTSMP Law Corporation
David AwTSMP Law Corporation
Feng Chong WeTSMP Law Corporation
Valerie HoTyto LLC
Chan Chan LeongTyto LLC

4. Facts

  1. The Plaintiff, a member and director, sought to wind up the Company.
  2. The Company is a company limited by guarantee.
  3. The Plaintiff alleged the Company's directors acted unfairly to minority members.
  4. No properly constituted Board meetings were held from 2015.
  5. Financial reports were not properly deliberated or considered.
  6. AGMs were not held in contravention of the Companies Act.

5. Formal Citations

  1. Phua Kiah Mai v The Kheng Chiu Tin Hou Kong and Burial Ground, Suit No 1258 of 2019, [2022] SGHC 36

6. Timeline

DateEvent
Company incorporated
Burial ground compulsorily acquired by the Government
Plaintiff filed Originating Summons No 415 of 2013
Suit 658 was settled by consent
Company filed Originating Summons 789 of 2019
Plaintiff filed Companies Winding Up No 219 of 2019
OS 789 was stayed
CWU 219 was converted to Suit No 1258 of 2019
Hearing commenced
Hearing continued
Hearing continued
Judgment issued

7. Legal Issues

  1. Unfairness to Minority Members
    • Outcome: The court found that the directors acted in a manner unfair and unjust to the minority members, justifying a winding-up order.
    • Category: Substantive
    • Sub-Issues:
      • Exclusion from Board Meetings
      • Lack of Financial Transparency
      • Improper Decision-Making Process
  2. Just and Equitable Winding Up
    • Outcome: The court was not persuaded that the Plaintiff made out a case for just and equitable winding up on the basis of any relationship between the Society and the Company.
    • Category: Substantive
    • Sub-Issues:
      • Loss of Substratum
      • Breach of Legitimate Expectations

8. Remedies Sought

  1. Winding-up order
  2. Declaration that the balance property should be transferred to the Society

9. Cause of Actions

  • Winding Up under Companies Act s 254(1)(f)
  • Winding Up under Companies Act s 254(1)(i)

10. Practice Areas

  • Commercial Litigation
  • Insolvency Law

11. Industries

  • No industries specified

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Sim Yong Kim v Evenstar Investments Pte LtdCourt of AppealYes[2006] 3 SLR (R) 827SingaporeCited as a controlling authority on the foundation of jurisdiction under s 254(1)(i) of the Companies Act, emphasizing unfairness.
Perennial (Capitol) Pte Ltd and Anor v Capitol Investment Holdings Pte Ltd and other appealsCourt of AppealYes[2018] 1 SLR 63SingaporeCited as a controlling authority on the foundation of jurisdiction under s 254(1)(i) of the Companies Act, emphasizing unfairness.
Ebrahimi v Westbourne Galleries LtdHouse of LordsYes[1973] AC 360United KingdomCited for the principle that companies involve individuals with rights, expectations, and obligations not necessarily submerged in the company structure.
Ting Shwu Ping v Scanone Pte Ltd and another appealCourt of AppealYes[2017] 1 SLR 95SingaporeCited for the principle that the provision empowers the Court to subject the exercise of legal rights to equitable considerations.
Ma Wai Fong Kathryn v Trillion Investment Pte Ltd and others and another appealCourt of AppealYes[2019] 1 SLR 1046SingaporeCited for the principle that the breach of a general understanding or common intention as to the type and limits of a corporate venture gives rise to a loss of substratum or basis.
Re Astec (BSR) plcEngland and Wales High CourtYes[1998] 2 BCLC 556United KingdomCited in relation to the use of legitimate expectations to consider the extent and nature of shared understanding.
O’Neill and another v Phillips and othersHouse of LordsYes[1999] 1 WLR 1092United KingdomCited in relation to the use of legitimate expectations to consider the extent and nature of shared understanding.
Seah Chee Wan and another v Connectus Group Pte LtdHigh CourtYes[2019] SGHC 228SingaporeCited for the principle that it must be shown why keeping the company as a going concern would result in unfairness.
Fisher v CadmanEngland and Wales High CourtYes[2006] 1 BCLC 499United KingdomCited for the underlying question of whether the circumstances surrounding the conduct of the affairs of a company are such as to give rise to equitable constraints on the behaviour of other members.
Lai Shit Har and another v Lau Yu ManCourt of AppealYes[2008] 4 SLR(R) 348SingaporeCited for the principle that the Court has a residual discretion to consider whether the company concerned should be wound up.
Foo Peow Yong Douglas v ERC Prime II Pte Ltd and another appeal and other mattersCourt of AppealYes[2018] 2 SLR 1337SingaporeCited for the principle that the Court has a residual discretion to consider whether the company concerned should be wound up.
Re Goodwealth Trading Pte LtdHigh CourtYes[1990] 2 SLR(R) 691SingaporeCited for the principle that the breach of a general understanding or common intention as to the type and limits of a corporate venture gives rise to a loss of substratum or basis.
Michel v Michel and othersUnknownYes[2020] 1 BCLC 54UnknownCited for the principle that a relationship between members of a company giving rise to equitable considerations can occur before or after incorporation.
Lim Ah Sia v Tiong Tuang Yeong and othersCourt of AppealYes[2014] 4 SLR 140SingaporeCited for the principle that a quasi-partnership could arise in respect of subsequent agreements after incorporation.
Strahan v WilcoxUnknownYes[2006] 2 BCLC 555UnknownCited for the principle that there must be clear evidence of a new understanding or new agreement being formed.
Shepherd v Williamson and anotherEngland and Wales High CourtYes[2010] EWHC 2375 (Ch)United KingdomCited for the principle that there must be clear evidence of a new understanding or new agreement being formed.
Khoshkhou v Cooper and othersEngland and Wales High CourtYes[2014] EWHC 1087 (Ch)United KingdomCited for the principle that the entry of a new member and director into the company did not affect its continued characterisation as a quasi-partnership.
Re Edwardian Group LtdUnknownYes[2019] 1 BCLC 171UnknownCited for the principle that equitable considerations arising from an agreement or understanding between members were enforceable in equity because of its mutuality.
Re Johnson Corp LtdUnknownYes(1980) 5 ACLR 227UnknownCited for the principle that the members of the Company were not shown to have a general understanding and common intention as to such an alleged main object
Strong v J Brough & Son (Strathfield) Pty LtdUnknownYes(1991) 5 ACSR 296UnknownCited for the principle that the members of the Company were not shown to have a general understanding and common intention as to such an alleged main object
Re Cumberland Holdings LtdUnknownYes(1976) 1 ACLR 361UnknownCited for the principle that the directors have acted in the affairs of the company in their own interests rather than in the interests of the members as a whole.
Re HL Sensecurity Pte Ltd (formerly known as HL Integral Systems Pte Ltd)High CourtYes[2006] SGHC 135SingaporeCited for the principle that the directors have acted in the affairs of the company in their own interests rather than in the interests of the members as a whole.
Foo Yin Shung & Ors v Foo Nyit Tse & Brothers Sdn BhdUnknownYes[1989] 2 MLJ 369MalaysiaCited for the principle that the reference to “unfair and unjust” connotes some commercial morality or integrity which the law ought to uphold, on a consideration of all the circumstances
Loch and another v John Blackwood LimitedHouse of LordsYes[1924] AC 783United KingdomCited for the principle that the loss of confidence by minority members must not be because they were outvoted on the business affairs of the company but because of a lack of probity in conduct
Poh Leong Soon v SL Hair & Beauty Slimming Centre Pte LtdHigh CourtYes[2018] SGHC 109SingaporeCited for the principle that an overlap with s 254(1)(i) of the CA through loss of confidence does arise, and the two are often raised in the alternative
EQ Capital Investments Ltd v The Wellness Group Pte LtdHigh CourtYes[2019] SGHC 154SingaporeCited for the principle that an overlap with s 254(1)(i) of the CA through loss of confidence does arise, and the two are often raised in the alternative
Re Perfectair Holdings LtdUnknownYes(1989) 5 BCC 837UnknownCited for the principle that a company will not be wound up on the “just and equitable” ground simply on the basis that a prominent purpose for the company is incapable of being achieved, if other objects of the company are still capable being achieved
Ho Po Yeng v Ho Ming ChunHong Kong Court of First InstanceYes[2013] HKEC 378Hong KongCited for the principle that a company will not be wound up on the “just and equitable” ground simply on the basis that a prominent purpose for the company is incapable of being achieved, if other objects of the company are still capable being achieved
Re Weedmans LtdUnknownYes[1974] Qd R 377UnknownCited for the principle that directors may be held to have acted in their own interests where they have acted in the interests of another company of which they are also directors and shareholders
Re Ingleburn Horse and Pony Club Ltd and the Companies ActUnknownYes[1973] 1 NSWLR 641AustraliaCited for the principle that the remedy of winding up for oppression could also apply in the case of a company limited by guarantee
Macquarie University v Macquarie University Union Limited (No 2)Federal Court of AustraliaYes[2007] FCA 844AustraliaCited for the principle that winding up was ordered on the just and equitable ground as well as on account of oppression in a company limited by guarantee
Gregor and Another v British-Israel-World Federation (NSW)UnknownYes(2002) 41 ACSR 641AustraliaCited for the principle that a non-profit company limited by guarantee which was formed for religious purposes was wound up on the just and equitable ground
Re United Medical Protection of QueenslandSupreme Court of New South WalesYes[2004] NSWSC 14AustraliaCited for the principle that winding up was ordered in relation to a medical defence company limited by guarantee, following a merger with other companies
Re Calabria Community Club LtdSupreme Court of New South WalesYes[2013] NSWSC 998AustraliaCited for the principle that the fact that a company is limited by guarantee may impact the degree of unfairness at hand and therefore the exercise of the Court’s discretion in deciding whether to order a winding up
Karaha Bodas Co LLC v Pertamina Energy Trading Ltd and another appealCourt of AppealYes[2006] 1 SLR(R) 112SingaporeCited for the principle that a declaration as sought was also not appropriate as not all necessary parties had been brought before the Court
Buchler v TalbotHouse of LordsYes[2004] 2 AC 298United KingdomCited for the principle that even creditors do not have any proprietary interest until the completion of liquidation

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 254(1)(f)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 254(1)(i)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 175Singapore
Companies Act (Cap 50, 2006 Rev Ed) ss 201Singapore
Companies Act (Cap 50, 2006 Rev Ed) ss 203Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 197Singapore
Insolvency, Restructuring and Dissolution Act 2018 (No. 40 of 2018)Singapore
Charities Act (Cap 37, 2020 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Winding Up
  • Unfairness
  • Minority Members
  • Board Meetings
  • Financial Transparency
  • Companies Act
  • Substratum
  • Legitimate Expectations
  • Company Limited by Guarantee

15.2 Keywords

  • Winding Up
  • Companies Act
  • Minority Rights
  • Corporate Governance
  • Singapore
  • Company Law

17. Areas of Law

Area NameRelevance Score
Winding Up95
Minority Oppression75
Company Law70
Fiduciary Duties40
Commercial Disputes30
Corporate Governance30
Civil Procedure20
Legal Profession Act10

16. Subjects

  • Company Law
  • Insolvency
  • Winding Up
  • Corporate Governance