High-end fashion entrepreneur Tina Tan-Leo has been ordered to repay $2.09 million to one of the firms under her Link Group, after the High Court found that she had breached her fiduciary duties as a director.
The case centred on transfers of cash and assets that were made from lifestyle concept store Living the Link - in the two years leading up to its voluntary winding up in May 2010 - to two other companies in her stable, Link Boutique and Alldressedup International.
Mrs Tan-Leo is the sole shareholder of all three companies. Liquidators, represented by Mr Suresh Nair, sued her and the two companies to reverse the transfers as these were "undue preferences".
The suit was funded by Living the Link's former landlord, Cheong's Company. It had staked a claim on Living the Link for $1.3 million, mostly in rental arrears and damages arising from the store's premature termination of its lease in 2009. With the judgment, Cheong's will be able to recover the debt from Living the Link, but the landlord is unlikely to get the full sum as it is not the only creditor.
In a written judgment published yesterday, Justice Steven Chong ordered Link Boutique and Alldressedup to repay their sister company $1.25 million and about $800,000 respectively. These were for the transfers of inventory to Link Boutique and Alldressedup on Dec 31, 2008; the transfer of shares to Link Boutique in April 2009; and cash payments made to Link Boutique in December 2008.
If the companies do not pay, Mrs Tan-Leo has to personally repay the entire sum of $2.05 million.
Justice Chong concluded that Mrs Tan-Leo had breached her fiduciary duties as a director of Living the Link in allowing these transactions and is therefore jointly liable to repay the sum. The judge also ordered her to repay $41,700 that Living the Link had paid for her personal expenses and her husband's in 2009.
Rejecting her defence that she had acted honestly and reasonably, he found that she was "influenced by a desire to prefer the associate companies of which she is a director and the sole shareholder".
However, he accepted that cash transfers of $980,000 to Link Boutique were part of a legitimate series of mutual dealings between the two companies.
In a statement, Mrs Tan-Leo said she was relieved that the court case of three years was finally over. "The outcome is somewhat disappointing, but it is what it is, and we shall accept it and move on," she said.
She noted that the case had its origins in a dispute between Living the Link and its former landlord over the store's premises at One Nassim.