BIT BALTIC INVESTMENT & TRADING PTE LTD v WEE SEE BOON

Facts

BIT Baltic Investment & Trading Pte Ltd, a ship chartering and management company, was wound up on 19 June 2020 on a petition by its creditor OIG Giant I Pte Ltd. Wee See Boon was one of its three directors, alongside Mr Peter Christian Harren and Dr Martin Harren, until they all resigned on 26 March 2020. On 1 October 2018, although the company had stopped generating revenue in December 2017, Mr Wee signed agreements with two related German companies, HARPA and HPS, for services they had supplied between 2014 and 2016. Invoices followed, and between 12 December 2018 and 27 December 2018 the company paid them US$1,472,500, funded largely by loan repayments from its holding company.

The liquidator sued Mr Wee in HC/OS 667/2021 for breach of director's duties. HARPA and HPS repaid the principal on 23 December 2021, but the company pressed claims for lost interest, the liquidator's costs and OIG's costs. The High Court judge found the payments were unfair preferences made while the company was insolvent, but dismissed the claim because Mr Wee was not shown to have known of them and had only a limited local role. The company appealed in Civil Appeal No 26 of 2022.

Issues

1. Whether the company had impermissibly shifted its case on appeal
2. Whether Mr Wee's role as local director reduced the scope of the duties he owed
3. Whether Mr Wee breached his fiduciary duties or his duty of care, skill and diligence
4. Whether the company could recover lost interest, the liquidator's costs and the petitioning creditor's costs

Holding

The Court of Appeal allowed the appeal in part. It found Mr Wee in breach of his duty of care, skill and diligence but not of his fiduciary duties, and awarded interest of US$27,755.61 at 0.8% per annum for 15 August 2019 to 22 December 2021, with interest at 5.33% per annum on that sum from 23 December 2021 to judgment. The claims for the liquidator's and OIG's costs were dismissed. The costs order below was set aside, and Mr Wee was ordered to pay costs of $15,000 plus disbursements below and $30,000 for the appeal.

Reasoning

The originating summons and the liquidator's affidavit were framed broadly enough to cover Mr Wee's failures after the payments, so a change of emphasis on appeal was not a change of case.

The judge had understated his role. He alone signed the HARPA and HPS agreements, signed the audited accounts from 2011 to 2018, was a signatory of the paying account and approved large loans. In any event, every director, including a nominee local resident director, must meet the same minimum standard, as stated in Vita Health Laboratories Pte Ltd and others v Pang Seng Meng [2004] 4 SLR(R) 162. Once insolvent, the company's creditors' interests also had to be considered.

Mr Wee would have known the payments were imminent when he signed the agreements, and was aware of them, and of the insolvency, by 15 August 2019 at the latest, when he signed the 2018 financial statements. Those statements carried a qualified audit opinion on going concern and notes recording the back charges as significant related party transactions. As he played no part in deciding the payments and was neither dishonest nor conflicted, there was no fiduciary breach. But applying the objective standard in Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters [2018] 2 SLR 333 and the reasoning in Ho Pak Kim, he breached his duty of care by failing to inquire, alert his co-directors and seek recovery.

On damages, interest ran only from his breach on 15 August 2019 and at the fixed deposit rate, following Jurong Technologies, because there was no evidence the money would have earned more. Annual compounding was preferred. Investigating the company's affairs is a liquidator's ordinary work, and party-and-party costs principles did not allow OIG's costs to be shifted. Indemnity costs were refused as there were no exceptional circumstances.

From the judgment