GAN YUAN HONG v SIOW CHEE WEE & Anor

Facts

Gan Yuan Hong appealed against a judicial commissioner's dismissal of HC/CWU 108/2025, his application to wind up LMO Consulting Pte Ltd (LMO) on the just and equitable ground in s 125(1)(i) of the Insolvency, Restructuring and Dissolution Act 2018. The appeal was Civil Appeal No 27 of 2025. LMO provides regulatory compliance, trade operations and corporate services for offshore entities, and it was undisputed that it was a profitable going concern. The appellant was its sole executive director and held 60% of the shares; the first respondent, Siow Chee Wee, held the other 40% and had been a non-executive director until he resigned on 17 December 2024. LMO's Constitution had no pre-emption clause, required a quorum of two for general meetings, and required a majority of directors to pass a resolution.

Relations between the two soured in 2024 and buyout talks failed. In January 2025 the appellant tried to put LMO into members' voluntary winding up, but the respondent did not attend either extraordinary general meeting, so both were inquorate. The appellant then filed the winding-up application, saying the relationship had irretrievably broken down, creating a deadlock and leaving him unable to exit. The respondent denied any management deadlock and contended that the application was brought for a collateral purpose, namely to divert LMO's business to Godwin Austen Advisory Pte Ltd (GAA), a company wholly owned and run by the appellant. The Judge dismissed the application, finding no quasi-partnership and no deadlock.

Issues

1. Whether there was a justifiable ground for not maintaining LMO as a going concern
2. Whether the Judge erred in law by requiring a breach of legitimate expectations before unfairness could be found
3. Whether the appellant had an available means of exiting LMO that negated any unfairness

Holding

The Court of Appeal (Sundaresh Menon CJ, Hri Kumar Nair JCA and Andrew Phang Boon Leong SJ), delivering judgment ex tempore, dismissed the appeal with costs. It fixed the costs of the appeal at $30,000 inclusive of disbursements and made the usual consequential orders. It added that the dispute ought to be capable of consensual resolution.

Reasoning

The court said unfairness is the foundation of the just and equitable jurisdiction, so an applicant must show both a justifiable ground for not keeping the company going and that there is no available way to exit. None of the recognised scenarios applied. LMO was a profitable going concern, the appellant was the majority shareholder and sole director, and the respondent had bought his shares from a third party for $100,000 and never took part in day-to-day management, so LMO could not be a quasi-partnership. The quorum difficulty was not a true deadlock, since with 60% of the shares the appellant could transfer a small number of shares to another person and convene meetings without impediment.

On the alleged error of law, the court held that the appellant had read the Judge's remarks out of context. Read fairly, the Judge had only said that difficulty in exiting, by itself, does not establish unfairness. That was correct: there must be a real ground of complaint coupled with an inability to exit. The Judge had not suggested that a legitimate expectation must be found in every case.

On exit, the court found no relevant legitimate expectation between the parties; it rejected the claim that they expected not to be locked in if the relationship broke down, pointing to the respondent's letter of demand dated 14 October 2024, which mentioned a court-ordered buy-out. Exit was therefore judged against the Constitution, which had no pre-emption right and no limit on sales or price. Nothing stopped the appellant, a 60% holder rather than a minority shareholder with no market, from selling his shares to a third party. Given that the grounds for winding up were not made out, the court found it unnecessary to decide whether business had been diverted to GAA.

From the judgment