Family behind Hin Leong rapped over failed appeal

The apex court yesterday rebuked Hin Leong Trading founder Lim Oon Kuin and his two children over unnecessary litigation in their failed appeal against an order to return US$19.02 million (S$25.6 million) they had transferred from a related company.

A two-judge Court of Appeal ordered the Lims to pay legal costs of $42,000 on an indemnity basis - this is done against litigants who have engaged in unreasonable conduct and the amounts are generally of a higher quantum than standard costs.

Lim, better known as O.K. Lim, his daughter Lim Huey Ching and his son Evan Lim Chee Meng had been sued for breach of fiduciary duties by the judicial managers of ship charterer Ocean Tankers, a sister company of collapsed oil trading giant Hin Leong.

In written grounds yesterday, the court, which comprised Justices Andrew Phang and Tay Yong Kwang, described the family's appeal as an "ill-advised attempt to seek a different outcome".

The grounds were issued to set out its reasons for dismissing the Lims' appeal last month.

The court said: "The Lims' arguments, with respect, were simply without any factual or legal basis, given the fact that they were simply irreconcilable with the contemporaneous documents placed before the court."

It also considered that the Lims had enlisted expert witnesses "to provide a panoply of reasons" as to why Ocean Tankers ought to be considered solvent at the material time.

"Apart from disregarding the admissions made in affidavits by the Lims, it can hardly be doubted that this has resulted in further unnecessary litigation that has tended to obfuscate rather than to illuminate," the court said.

The suit centred on two payments from Ocean Tankers to bank accounts related to the Lims, made on April 3 and 13 last year, shortly before the firm filed for judicial management.

The judicial managers, who uncovered the payments, applied for summary judgment, asking the High Court to rule in their favour without a full trial. They argued that Ocean Tankers was either insolvent or close to insolvency at the time the payments were made.

They said the Lims, as directors of Ocean Tankers, owed fiduciary duties to take into account the interests of its creditors to ensure that its assets were not dissipated or exploited for their own benefit.

The Lims countered that Ocean Tankers was neither insolvent nor close to insolvency at the time and that they were not privy to its financial state.

On April 13 this year, the High Court granted summary judgment.

The judge held that as directors of Ocean Tankers, the Lims clearly knew of its mounting financial problems but nevertheless procured the payments to be made.

The Court of Appeal agreed and said the Lims' argument that Ocean Tankers was in fact solvent was untenable. It noted that the Lims had filed affidavits in support of applications by Hin Leong and Ocean Tankers for a debt moratorium.

These affidavits, filed on April 17 last year, stated that both companies were facing substantial financial difficulties.

Lim faces 130 criminal charges involving US$2.7 billion in alleged fraudulent loans disbursed. Lim Huey Ching has been charged with obstructing the course of justice.