Ascend Field Pte Ltd and others v Tee Wee Sien and another appeal [2020] SGCA 14: A photo of skyscrapers. (Photo credits: Floriane Vita)

CASE SUMMARY

Ascend Field Pte Ltd and others v Tee Wee Sien and another appeal [2020] SGCA 14 involved a dispute between the shareholders of a company, Ascend Field Pte Ltd (“AFPL”). Its 2 shareholders were Tee and Ng, who were equal shareholders. Tee commenced the action below claiming that he was the victim of oppressive conduct carried out by Ng, AFPL’s sole director. The acts of oppression complained of included the alleged diversion of contracts, employees and resources from AFPL to one Yi Fang Xiang Services (“YFX”), an entity owned by Ng’s wife, Kor. In addition to the minority oppression claim, Tee pleaded that Ng, Kor and YFX had engaged in an unlawful means conspiracy to injure him and AFPL.  

COURT’S DECISION

High Court

The High Court judge (“the Judge”) allowed Tee’s claims in part, finding that Ng’s diversion of five contracts, employees and resources from AFPL to YFX was oppressive to Tee. The Judge also found that Ng, YFX and Kor had engaged in an unlawful means conspiracy to divert specific contracts from AFPL to YFX. The Judge ordered that AFPL be wound up (following which liquidators were appointed).  

AFPL, Ng, YFX and Kor appealed in CA 85 to the Court of Appeal against the Judge’s decision to allow Mr Tee’s claims in part, as stated above. All 4 were represented by the same lawyers. Tee cross-appealed against the Judge’s dismissal of the other heads of oppression and that the Judge ought to have allowed his unlawful means conspiracy claim in its totality (as opposed to the Judge’s finding that the claim was only made out partially).     

Court of Appeal

The Court of Appeal allowed both appeals in part. In doing so, it relied on the trilogy of seminal decisions on minority oppression, namely, Over & Over Ltd v Bonvests Holdings Ltd and another [2010] 2 SLR 776, Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters [2018] 2 SLR 333 and Ng Kek Wee v Sim City Technology Ltd [2014] 4 SLR 723. The court further upheld the Judge’s decision to wind up AFPL.  

As the decision to allow (in part) both appeals is based principally on the court’s examination of the factual matrix and the law in this area has been definitively settled (as per the 3 cases mentioned), we will not discuss those aspects of the court’s decision. Instead, our focus here is on the court’s disapproval of the fact that the same lawyers represented AFPL, Ng, Kor and YFX in the appeal. The court regarded this as inappropriate. The lawyers had placed themselves in a conflict of interest as:   

“… The Judge’s finding that Mr Ng had wrongfully diverted AFPL’s contracts, employees and resources to YFX amounted to a finding that he had failed to act in AFPL’s interests. In these circumstances, there was a diversity of interest between AFPL and Mr Ng. It was not prima facie in AFPL’s interest for Mr Ng to have control over the conduct of CA 85 on its behalf. Liquidators have also been appointed to administer the winding up of AFPL and there was no reason why Mr Ng should continue to give instructions on AFPL’s behalf in CA 85. “

The court went on to emphasise (at [114]) that:  

“… A company in an oppression action should be separately represented from the alleged oppressor, even where the latter continues to manage the company. This serves to safeguard the interests of the company… “

In the end, the court gave effect to its disapproval of the state of affairs by ordering that any costs paid by AFPL to counsel for the appellants in CA 85 are to be recovered from Ng and Kor. 

CONCLUDING REMARKS

In a minority action, the company is invariably named as a nominal defendant. This case serves as a timely reminder that the company should not enter the trenches in what is essentially a battle between rival shareholders. To achieve this, it must be represented separately.     

To read the full judgment, click here.