TAN YEW HUAT v SIN JOO HUAT HARDWARE PTE LTD

Facts

Sin Joo Huat Hardware Pte Ltd is a family company incorporated in 1987. At the time of these applications its shares were held by Mr Tan Yew Huat (33.7%), his sister Ms Tan Joo See (22.1%) and two other sisters (22.1% each). Ms Tan left the family business around January 2007 but kept her shares and directorship. In 1991, on their late father's instructions, the company's surplus funds were used to buy a landed residence registered in the names of Mr Tan and Ms Tan as tenants-in-common, held on trust for the company. From 2014 the siblings fell out over that property: Ms Tan sought full ownership of it in exchange for selling her shares. A letter of 29 December 2014 from Mr Tan's solicitors set out an offer under which he would transfer his entire legal and beneficial interest in the property to her and she would be released from the trust. The company's main business came to a stop.

On 25 February 2022 Mr Tan applied in Companies Winding Up No 50 of 2022 to wind up the company on the just and equitable ground. Ms Tan then brought Originating Application No 74 of 2022 seeking orders that the property be transferred to her, specific performance of what she said was a binding settlement, or damages. The High Court heard both together.

Issues

1. Whether a winding up order on the just and equitable ground should be made when the applicant and his allies could put the company into voluntary winding up
2. Whether a binding settlement was concluded between the siblings on the terms of the December 2014 letter
3. Whether any such settlement was void for common mistake

Holding

The High Court dismissed both applications. It declined to wind up the company and dismissed Companies Winding Up No 50 of 2022, and it declared the settlement void for common mistake and dismissed Originating Application No 74 of 2022.

Reasoning

The court held that the power to wind up on the just and equitable ground rests on unfairness, which typically arises when legitimate expectations between members are breached and the applicant cannot exit the company. An available exit generally negates that unfairness unless it is arbitrary, artificial or contrary to the parties' expectations. Mr Tan and the two other sisters held 77.9% and could pass a resolution for voluntary winding up. Ting Shwu Ping (administrator of the estate of Chng Koon Seng, deceased) v Scanone Pte Ltd and another appeal [2017] 1 SLR 95 dealt with a different question about abuse of process. The difficulty of selling the trust properties could be dealt with by the company taking legal action against Ms Tan as trustee, and the fear that she would challenge a voluntary winding up was speculative; no attempt at one had been made. The other grounds therefore did not need deciding.

On the settlement, the court found that the December 2014 offer was accepted in August 2015: Mr Tan's solicitors recorded her readiness to accept, she accepted by phone through her solicitors and handed over the keys, and his solicitors later wrote that there was a binding agreement. Outstanding points concerned performance only.

However, both parties assumed that Mr Tan held a beneficial interest in the property, when the whole beneficial interest belonged to the company. Applying the five elements in Olivine Capital Pte Ltd and another v Chia Chin Yan and another matter [2014] 2 SLR 1371, there was no warranty, neither party was at fault, and performance was impossible, so the agreement was void and specific performance could not be ordered.

From the judgment