2 weeks Ago By The Straits Times
A unilateral decision by a business to cease operations and deregister itself can be reversed on grounds of fairness if there is an aggrieved party affected by the business closure. SINGAPORE - The High Court on Oct 23 reversed the 2023 business deregistration of renovation contractor Concept Werk so that a Housing Board flat owner can continue to press his claims against the contractor in court over a renovation dispute. Before the dispute was resolved, Concept Werk shuttered and deregistered the business.
In the decision, the High Court made it clear that a unilateral decision by a business to cease operations and deregister itself can be reversed on grounds of fairness if there is an aggrieved party affected by the business closure. The case marks a rare win for an aggrieved home owner against a renovation contractor in a sector that the Consumers Association of Singapore has consistently flagged as among those that draw the highest numbers of complaints. The consumer watchdog received 1,168 complaints against renovation contractors in 2023, down from 1,454 in 2022 and 1,300 in 2021.
Despite the decrease in 2023, the sector saw the third-highest number of complaints that year, after cars, and electrical and electronic goods. The complaints against renovation contractors were mostly related to unsatisfactory workmanship and delays in project completion. The dispute between flat owner Lye Yew Cheong and Concept Werk started in July 2021 when Mr Lye hired the contractor to renovate the HDB flat that he owns with his wife, Ms Jennifer Hong Siew Kim.
At that time, the directors of Concept Werk were Mr Keith Xie Zhiyang and Ms Sonia Tay Ming Hui. Both directors were in charge of the renovation of Mr Lye’s flat. The renovation was initially estimated to cost $123,000 and Mr Lye paid a 20 per cent deposit.
The estimates subsequently increased to $144,656. The couple agreed to move out of the flat by Sept 13, 2021, and renovation works were to be completed by Nov 30, 2021. In the meantime, they rented an apartment to stay in and stored some belongings in a storage facility.
However, Mr Lye said in court papers that “unsatisfactory planning” by Concept Werk resulted in multiple delays and renovation defects. He and his wife moved back into their flat only on June 7, 2022, more than six months later than agreed. Mr Lye added that while Ms Tay had assured him on Feb 7, 2022, that renovation defects would be rectified for free and without question, Concept Werk became less responsive after March 2023.
The parties remained in contact until around October 2023. Meanwhile, unknown to Mr Lye and while the parties were locked in dispute, Ms Tay resigned as a director of the firm in October 2021. Mr Xie closed the company’s bank accounts on Dec 6, 2022, and shuttered the firm on Dec 31, 2022.
He then applied to the Accounting and Corporate Regulatory Authority (Acra) to “strike off” Concept Werk from Acra’s register of companies on Jan 30, 2023. The deregistration was completed on May 8, 2023, and the company ceased to exist. In October 2023, Mr Lye took Concept Werk, Mr Xie and Ms Tay to the Small Claims Tribunal (SCT) for the losses he suffered.
He subsequently withdrew the case at the SCT and intended to escalate the claim to the High Court, but he could not do so as Concept Werk had by then ceased to exist. My Lye’s next move in 2024 was to apply to the High Court to have Concept Werk’s business deregistration reversed. Acra did not object to the reversal, but Mr Xie fought it.
The case was heard before High Court Judge Goh Yihan on Sept 16. On Oct 23, Justice Goh ordered Acra to restore the registration of Concept Werk. This meant that Concept Werk would be deemed to have continued in existence as if it had not been deregistered.
In a written judgment on Oct 23, the judge said that Mr Lye has grounds to feel aggrieved by Concept Werk’s deregistration and therefore has the legal standing to ask for the deregistration to be reversed. He said that Mr Lye’s plan to pursue his claims against Concept Werk after the restoration “cannot be deemed to be hopeless or lacking in ‘real prospects’ of success at this stage”. The judge added: “The fact that restoration is required for (Mr Lye) to prosecute a legal claim before the courts which is not hopeless or obviously doomed to fail militates in favour of it being just to order such restoration.
” He also noted that Mr Lye made the High Court application to reverse Concept Werk’s deregistration within the limitation period of six years when such applications are allowed. In his decision, Justice Goh rejected Mr Xie’s argument that Concept Werk was not in operation at the time of its deregistration. He noted that Ms Tay remained in contact with Mr Lye and his wife from March to June 2023 over WhatsApp on matters relating to the renovation of the flat.
“It is not believable that Ms Tay was doing so without the knowledge or involvement of Mr Xie, since she had no personal incentive to continue assisting the company in its dealings with its customers if she had truly disengaged from the company altogether and had no further involvement in its business at that time,” said Justice Goh. “The more likely explanation for Ms Tay’s continued dealings with (Mr Lye) and Ms Hong in the March to June 2023 period is that she continued to be involved in the company’s business and affairs at that time.” He said: “An officer of the company liaising with customers of the company to handle their complaints or concerns about works done would certainly qualify as an ‘operation’ of the company.
” Mr Lye’s legal victory against Concept Werk paves the way for him to claim for damages to recover his losses from the contractor’s alleged failure to complete the renovation works satisfactorily and on time. Mr Lye was represented by Mr Mohamed Nawaz Kamil from August Law Corporation, and Mr Xie by Mr Alain Abraham Johns and Ms Emira Abdul Razakjr from Alain A Johns Partnership. An Acra check on Oct 25 found that Concept Werk was registered in 2021 and had an address in an industrial building in Kallang Place.
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