Nanyang Law LLC v Alphomega Research Group Ltd: Security for Costs Application in Minority Oppression Suit

Nanyang Law LLC sued Alphomega Research Group Ltd for recovery of legal costs. Alphomega counterclaimed against Nanyang Law, Ng Kim Tean, Yeoh Lay Cheng, and Heng Jee Kian for breaches of duty and conspiracy to misuse resources. The defendants in the counterclaim applied for security for costs under s 388(1) of the Companies Act. The High Court dismissed the applications, finding that the defendants had not provided credible evidence that Alphomega would be unable to pay their costs if they succeeded at trial.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Applications for security by Nanyang Law, Ng, Yeoh and Heng are dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Security for costs application. The High Court dismissed applications for security for costs against Alphomega in a minority oppression suit.

1.7 Decision Date

10 May 2011

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Nanyang Law LLC	Plaintiff, 1st Defendant	Corporation	Application for security for costs dismissed	Lost	Andrew Ang of PK Wong & Associates LLC
Alphomega Research Group Ltd	Defendant, Plaintiff	Corporation	Security for costs not ordered	Won	Wendell Wong of Drew & Napier LLC Adrian Tan of Drew & Napier LLC Brenda Lim of Drew & Napier LLC
Ng Kim Tean	2nd Defendant	Individual	Application for security for costs dismissed	Lost	Andrew Ang of PK Wong & Associates LLC
Heng Jee Kian	4th Defendant	Individual	Application for security for costs dismissed	Lost	Andrew Ang of PK Wong & Associates LLC
Yeoh Lay Cheng	5th Defendant	Individual	Application for security for costs dismissed	Lost	Tham Wei Chern of Allen & Gledhill LLP Margaret Joan Ling of Allen & Gledhill LLP Joal Lim of Allen & Gledhill LLP

3. Judges

Judge Name	Title	Delivered Judgment
Leo Zhen Wei Lionel AR	Assistant Registrar	Yes

4. Counsels

Counsel Name	Organization
Andrew Ang	PK Wong & Associates LLC
Wendell Wong	Drew & Napier LLC
Adrian Tan	Drew & Napier LLC
Brenda Lim	Drew & Napier LLC
Tham Wei Chern	Allen & Gledhill LLP
Margaret Joan Ling	Allen & Gledhill LLP
Joal Lim	Allen & Gledhill LLP

4. Facts

Nanyang Law sued Alphomega for $332,229.40 in outstanding legal costs.
Alphomega counterclaimed for breaches of duty and conspiracy related to a minority oppression action.
Alphomega had $1,152,370.06 in its UOB bank account as of 31 October 2010.
Alphomega invested $500,000 in a Cambodian company in November 2010.
Multiple lawsuits had been filed against Alphomega, and judgments had been awarded against Alphomega.
Alphomega failed to file audited accounts for almost two years.
Nanyang Law garnished $126,244.65 from Alphomega’s bank accounts.

5. Formal Citations

Nanyang Law LLC v Alphomega Research Group Ltd, Suit No 540 of 2009 (Summons Nos 3314, 3525 and 5783 of 2010), [2011] SGHC 117
Nanyang Law LLC v Alphomega Research Group Ltd, , [2010] 3 SLR 914
Tan Choon Yong v Goh Jon Keat and Ors, , [2009] 3 SLR(R) 840
Creative Elegance (M) Sdn Bhd v Puay Kim Seng, , [1999] 1 SLR 60
Frantonios Marine Services Pte Ltd v Kay Swee Tuan, , [2008] 4 SLR(R) 237
Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad, , [1995] 2 SLR(R) 407
Tjong Very Sumito & Ors v Chan Sing En & Ors, , [2010] SGHC 344
Ho Pak Kim Realty Co Pte Ltd v Revitech Pte Ltd, , [2008] SGHC 230

6. Timeline

Date	Event
2008-04-01	Legal work done by Nanyang Law for Alphomega began.
2009-04-30	Tan Lee Meng J ruled in favor of Dr. Tan in the minority oppression action.
2009-05-01	Legal work done by Nanyang Law for Alphomega ended.
2009-09-01	New management led by Dr Tan stepped back into Alphomega.
2009-01-01	Suit No 35 of 2009 was filed by Habib Ali for the sum of $750,000.
2009-11-01	A new Board of Directors was appointed in Alphomega.
2010-07-30	New auditors were appointed for Alphomega.
2010-10-31	Alphomega had $1,152,370.06 in its bank account with UOB.
2010-11-08	Alphomega entered into two investment agreements with a Cambodian company.
2010-11-18	Alphomega paid $250,000 to Lim Hwee Hai.
2011-05-11	Judgment delivered.

7. Legal Issues

Security for Costs
- Outcome: The court held that the defendants had not adduced credible evidence that Alphomega would be unable to pay their costs should they succeed at trial.
- Category: Procedural
- Sub-Issues:
  - Plaintiff's ability to pay costs
  - Risk of stifling a genuine claim
  - Plaintiff's want of means caused by defendant's conduct
Minority Oppression
- Outcome: The court referenced the prior finding in Tan Choon Yong v Goh Jon Keat and Ors [2009] 3 SLR(R) 840, where it was found that there was minority oppression.
- Category: Substantive
- Sub-Issues:
  - Breach of duty to act in the best interest of the company
  - Conspiracy to misuse company resources

8. Remedies Sought

Security for costs

9. Cause of Actions

Breach of duty to act in the best interest of Alphomega
Conspiracy to misuse Alphomega’s resources

10. Practice Areas

Commercial Litigation
Security for Costs

11. Industries

Legal Services

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Nanyang Law LLC v Alphomega Research Group Ltd	High Court	Yes	[2010] 3 SLR 914	Singapore	Cited for the setting aside of the default judgment based on Alphomega's right of set-off.
Tan Choon Yong v Goh Jon Keat and Ors	High Court	Yes	[2009] 3 SLR(R) 840	Singapore	Cited as the basis for Alphomega's counterclaim, establishing breaches of duty and conspiracy to misuse Alphomega's resources to oppress Dr Tan.
Creative Elegance (M) Sdn Bhd v Puay Kim Seng	High Court	Yes	[1999] 1 SLR 60	Singapore	Cited for the principle that the court must consider all relevant circumstances when deciding whether to order security for costs, including whether it is being used oppressively.
Frantonios Marine Services Pte Ltd v Kay Swee Tuan	High Court	Yes	[2008] 4 SLR(R) 237	Singapore	Cited for the principle that the court should consider whether the plaintiff's lack of means was brought about by the conduct of the defendants when deciding whether to order security for costs.
Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad	High Court	Yes	[1995] 2 SLR(R) 407	Singapore	Cited for the principle that the court should not generally go into a detailed examination of the merits of the action when considering security for costs.
Tjong Very Sumito & Ors v Chan Sing En & Ors	High Court	Yes	[2010] SGHC 344	Singapore	Cited for the approach of assessing the merits and circumstances of each application for security independently of other similar applications against the same plaintiff.
Ho Pak Kim Realty Co Pte Ltd v Revitech Pte Ltd	High Court	Yes	[2008] SGHC 230	Singapore	Cited for the principle that the court should consider the plaintiff's assets and liabilities to ascertain whether there would be sufficient assets to satisfy a costs order and that failure to file audited accounts can be circumstantial evidence of inability to pay costs.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Security for costs
Minority oppression
Credible evidence
Going concern
Audited accounts
Investment agreements
Potential liabilities
Potential streams of income

15.2 Keywords

security for costs
minority oppression
companies act
alphomega
nanyang law

17. Areas of Law

Area Name	Relevance Score
Minority Oppression	80
Company Law	70
Duty to Account	60
Costs	50
Civil Procedure	40
Contract Law	30
Banking and Finance	30

16. Subjects

Civil Procedure
Company Law
Security for Costs