LAGUNA NATIONAL GOLF AND COUNTRY CLUB LTD v LIM HOW TECK

"I agree with Lim that cl 8.3 of the Trust Deed is not applicable in this case and therefore it does not preclude Lim from pursuing CWU 78." — Per Chua Lee Ming J, Para 31

Case Information

• Citation: [2023] SGHC 32
• Court: General Division of the High Court of the Republic of Singapore
• Date of hearing: 12 September 2022, 6 February 2023, 13 February 2023
• Date of judgment: 13 February 2023
• Coram: Chua Lee Ming J
• Case numbers: Companies Winding Up No 78 of 2022; Originating Application No 96 of 2022
• Area of law: Insolvency Law — Winding up
• Counsel for the claimant in CWU 78 and the defendant in OA 96: Tan Chee Meng, SC, Samuel Navindran and Paul Loy Chi Syann (WongPartnership LLP)
• Counsel for the defendant in CWU 78 and the claimant in OA 96: Chong Kuan Keong, Tay Yan Xia, Gan Siu Min Cheryl and Lim Lian Kee (Chong Chia & Lim LLC)
• Counsel for the Trustee: Tan Tse Hsien, Bryan (Chen Shixian) and Joel Wang Pinwen (PK Wong & Nair LLC)
• Judgment length: Not answerable from the extracted text

Summary

This case concerned a dispute over whether a noteholder could petition to wind up the Company notwithstanding a no-action clause in the trust deed governing the notes. The court identified the central question as whether cl 8.3 of the Trust Deed prevented Lim from bringing CWU 78, and a related question as whether the Company was entitled to the anti-suit injunction sought in OA 96. The court ultimately held that cl 8.3 did not apply on the facts because the Trustee could be placed in a conflict position, and therefore Lim had standing to pursue the winding-up application. (Para 16) (Para 31) (Para 33)

The factual background was that the Company issued unsecured notes in 1991 to finance the Club, the notes were due for redemption on 11 June 2021, and the Company later sold the Lease in 2016. The Trustee declared an event of default on 14 June 2021, and the litigation followed when Lim filed CWU 78 and the Company filed OA 96. The court’s analysis turned on the construction and operation of cl 8.2 and cl 8.3 of the Trust Deed, the Trustee’s role, and whether the Trustee’s position created a conflict sufficient to disapply the no-action clause. (Para 4) (Para 8) (Para 10) (Para 15) (Para 17)

In the end, the court granted the winding-up application, appointed joint and several liquidators, dismissed the Company’s injunction application, and ordered costs against the Company in OA 96. The judgment is significant because it explains that a no-action clause will not necessarily bar direct action by a noteholder where the trustee may be conflicted or unjustifiably unwilling to act, but the court also stressed that the trustee’s obligations and the contractual mechanism must be examined carefully before that conclusion is reached. (Para 33) (Para 34) (Para 35) (Para 21) (Para 30)

What Was the Commercial and Contractual Background to the Dispute?

The Company issued 1,800 non-interest bearing unsecured notes of $120,000 each in 1991 to finance the development of the Club. Those notes were known as Laguna National Unsecured Notes 2021 Series A, and they were to be redeemed on 11 June 2021, which the judgment refers to as the Redemption Date. The Trust Deed governed the notes and contained the provisions that later became central to the dispute. (Para 4) (Para 17)

"In 1991, the Company issued 1,800 non-interest bearing unsecured notes of $120,000 each, known as Laguna National Unsecured Notes 2021 Series A (the “Unsecured Notes”) to finance the development of the Club." — Per Chua Lee Ming J, Para 4

"The Unsecured Notes were to be redeemed by the Company on 11 June 2021 (the “Redemption Date”)." — Per Chua Lee Ming J, Para 4

The Company later sold the Lease in April 2016 to Laguna Hotel Holdings Pte Ltd for $130,413,365. The judgment records that the Company ceased business around the Redemption Date, which formed part of the commercial context in which the noteholders’ rights were being asserted. The court did not need to decide the merits of the underlying commercial transaction in detail; rather, those facts mattered because they framed the noteholders’ enforcement position and the Trustee’s response. (Para 8) (Para 9) (Para 10)

"In April 2016, the Company sold the Lease to Laguna Hotel Holdings Pte Ltd (“LHH”) (the “Assignment”) for $130,413,365." — Per Chua Lee Ming J, Para 8

After the Redemption Date, the Trustee declared on 14 June 2021 that there was an event of default and that the Unsecured Notes were immediately due and payable. That declaration is important because it shows that the Trustee had already taken a formal enforcement step before the winding-up proceedings were commenced. The court later considered the Trustee’s role and whether it was capable of acting under the Trust Deed, which in turn affected the operation of the no-action clause. (Para 10) (Para 21) (Para 24)

"On 14 June 2021, the Trustee declared that there was an event of default and that the Unsecured Notes were immediately due and payable." — Per Chua Lee Ming J, Para 10

How Did the Trust Deed Allocate Enforcement Powers Between the Trustee and Noteholders?

The Trust Deed contained two provisions that were central to the dispute. Clause 8.2 stated that the Trustee was not bound to take enforcement steps unless directed by a special resolution or by noteholders holding not less than one-fifth in nominal amount of the outstanding notes, subject to the Trustee being indemnified and other conditions. Clause 8.3 stated that only the Trustee may pursue rights and remedies under the general law or under the Trust Deed to enforce the noteholders’ rights against the Company. The court treated these clauses as the contractual framework governing whether Lim could bring CWU 78. (Para 17)

"8.2 The Trustee shall not be bound to take any step to enforce the performance of any of the provisions of these presents unless directed to do so (i) by a Special Resolution or (ii) in writing by Note-holders of not less than one-fifth in nominal amount of the Unsecured Notes outstanding..." — Per Chua Lee Ming J, Para 17

"8.3 Only the Trustee may pursue the rights and remedies available under the general law or under these presents to enforce the rights of the Note-holders against the Company..." — Per Chua Lee Ming J, Para 17

The court’s analysis of these clauses was not purely textual in the abstract. It examined how the clauses operated in practice, including whether the Trustee had been asked to act under cl 8.2, whether the Trustee had refused, and whether the Trustee’s position created a conflict of interest. The court also considered the purpose of a no-action clause, relying on foreign authorities cited by Lim and the Trustee’s actual conduct in relation to the noteholders’ enforcement efforts. (Para 20) (Para 21) (Para 24) (Para 26)

"The assumption, however, is that the trustee is capable of satisfying its obligations." — Per Chua Lee Ming J, Para 21

What Were the Main Issues Before the Court?

The court framed the dispute in straightforward terms: whether cl 8.3 of the Trust Deed precluded Lim from pursuing CWU 78, and whether the Company was entitled to the injunction sought in OA 96. That framing mattered because it identified the legal and practical consequences of the contractual interpretation question. If cl 8.3 applied, Lim lacked standing; if it did not, the winding-up application could proceed and the Company’s injunction application would fail. (Para 16)

"The main issue in this case is whether cl 8.3 of the Trust Deed precludes Lim from pursuing CWU 78. A related issue is whether the Company is entitled to the injunction sought in OA 96." — Per Chua Lee Ming J, Para 16

The court’s approach shows that the standing question and the injunction question were interlinked. The Company’s injunction application was not a free-standing dispute divorced from the winding-up petition; it was a defensive response to the petition. Accordingly, once the court resolved the standing issue in Lim’s favour, the injunction application necessarily fell away. The judgment therefore proceeds by analysing the contractual no-action clause, the Trustee’s role, and the factual circumstances said to justify direct action by Lim. (Para 16) (Para 31) (Para 34)

The court also had to decide whether the Trustee’s conduct or position meant that the contractual machinery in cl 8.2 and cl 8.3 could not operate as written. That question required the court to consider not only the express wording of the Trust Deed but also the practical realities of enforcement, including the possibility that the Trustee might face claims from noteholders and therefore be unable to act without conflict. (Para 21) (Para 28) (Para 30)

What Did Lim Argue About the No-Action Clause?

Lim’s position was that cl 8.3 did not apply if the Trustee, because of conflict of interest or unjustifiable unwillingness, could not properly pursue a remedy for the noteholders. He relied on foreign authorities, including Akanthos Capital Mgmt., LLC v CompuCredit Holdings Corp and Rabinowitz v Kaiser-Frazer Corp, to support the proposition that a no-action clause should not bar proceedings where the trustee cannot faithfully discharge its fiduciary role. The court recorded those submissions and then tested them against the facts and the Trust Deed. (Para 19)

"Lim submits that, in addition to the express exception, cl 8.3 is also not applicable if the Trustee, by reason of conflict of interest or unjustifiable unwillingness, cannot properly pursue a remedy for holders of the Unsecured Notes (“Noteholders”): Akanthos Capital Mgmt., LLC v CompuCredit Holdings Corp 677 F.3d 1286 (2012) at 1294." — Per Chua Lee Ming J, Para 19

"Lim also relies on: ... Rabinowitz v Kaiser-Frazer Corp 111 N.Y.S.2d 539 (1952) in which the court held at [*545] that a no-action clause does not apply if the trustee cannot faithfully and competently discharge its duty as a fiduciary." — Per Chua Lee Ming J, Para 19

Lim’s argument was not accepted merely because it was doctrinally plausible. The court examined whether the Trustee had in fact been unwilling to act or whether Lim had simply not invoked the contractual mechanism in cl 8.2. The court concluded that the Trustee was not unjustifiably unwilling, because it had not been asked to act in the manner contemplated by cl 8.2. That distinction was critical: the court treated the contractual process as a necessary step before any complaint of unwillingness could be made. (Para 24) (Para 25)

"In my view, it cannot be said that the Trustee is unjustifiably unwilling to carry out its duty in accordance with cl 8.2. Lim has simply refused to invoke cl 8.2." — Per Chua Lee Ming J, Para 24

How Did the Company Resist Lim’s Standing to Wind Up the Company?

The Company opposed Lim’s application on the ground that he did not have standing to make it. That objection was rooted in cl 8.3, which reserved enforcement rights to the Trustee. The Company’s position was that the contractual scheme prevented a noteholder from bypassing the Trustee and directly pursuing winding-up relief. The court therefore had to determine whether the no-action clause was absolute or whether it yielded in the circumstances identified by Lim. (Para 2) (Para 17)

"The Company opposes Lim’s application on the ground that he does not have standing to make the application." — Per Chua Lee Ming J, Para 2

The Company’s argument depended on the proposition that the Trustee alone could pursue the rights and remedies available under the general law or under the Trust Deed. That proposition is reflected in the wording of cl 8.3 itself. But the court did not read the clause in isolation. It considered the purpose of the clause, the Trustee’s actual position, and whether the Trustee could properly act without conflict. The result was that the Company’s standing objection failed because the court found cl 8.3 inapplicable on the facts. (Para 17) (Para 20) (Para 30) (Para 31)

"Only the Trustee may pursue the rights and remedies available under the general law or under these presents to enforce the rights of the Note-holders against the Company..." — Per Chua Lee Ming J, Para 17

The Company also sought an injunction in OA 96, but that application was dependent on the success of its standing objection. Once the court held that Lim had standing and that the winding-up application could proceed, the injunction application could not stand. The court therefore dismissed OA 96 after granting CWU 78. (Para 34) (Para 35)

Why Did the Court Say the Trustee Was Not Unjustifiably Unwilling to Act?

The court rejected the suggestion that the Trustee was unjustifiably unwilling to carry out its duty under cl 8.2. The reason was procedural and substantive: Lim had not invoked cl 8.2 in the manner required by the Trust Deed. The court therefore treated the Trustee’s alleged unwillingness as unproven, because the contractual mechanism had not been properly engaged. This was a decisive step in the reasoning because it prevented Lim from relying on unwillingness as a basis for bypassing the Trustee. (Para 24)

"In my view, it cannot be said that the Trustee is unjustifiably unwilling to carry out its duty in accordance with cl 8.2. Lim has simply refused to invoke cl 8.2." — Per Chua Lee Ming J, Para 24

The court’s reasoning shows that it was not enough for Lim to assert that the Trustee might not act. The contractual structure required a direction under cl 8.2, and the court found that Lim had not taken that step. In other words, the court distinguished between a trustee who has actually refused to act after being properly asked, and a trustee who has not yet been put in a position to decide. On the facts, the latter was the case. (Para 17) (Para 24)

This part of the judgment is important because it narrows the circumstances in which a noteholder can invoke the “unjustifiable unwillingness” exception to a no-action clause. The court did not reject the concept in principle; rather, it held that the factual predicate for it was absent here. That is why the court’s analysis moved from unwillingness to conflict of interest as the more substantial basis for disapplying cl 8.3. (Para 21) (Para 24)

Why Did the Court Hold That a Potential Conflict of Interest Could Disapply Clause 8.3?

The court accepted the principle that a no-action clause cannot apply where the trustee would be placed in a position of conflict or if the trustee has shown unjustifiable unwillingness to act. It also emphasized that the trustee must be capable of satisfying its obligations. The court then asked whether the Trustee, if it were the applicant in winding-up proceedings, would face conflicting interests. That inquiry was fact-sensitive and required the court to identify the nature of the conflict rather than assume it from the mere existence of potential claims. (Para 21) (Para 28)

"The assumption, however, is that the trustee is capable of satisfying its obligations. I agree with Lim that a no-action clause cannot apply where the trustee would be placed in a position of conflict or if the trustee has shown unjustifiable unwillingness to act." — Per Chua Lee Ming J, Para 21

"It is necessary to identify what the conflicting interests are." — Per Chua Lee Ming J, Para 28

The court first noted that the mere fact that the Trustee faced a potential claim by some noteholders did not automatically mean it would be conflicted if it were the applicant in winding-up proceedings. That was an important caution against overbroad use of the conflict exception. The court then identified the relevant conflict: if the Trustee were to pursue winding-up proceedings, it might have to liaise with liquidators while simultaneously protecting itself against claims by noteholders. Those interests could diverge, because the Trustee’s self-protective interest would not necessarily align with its duty to protect the noteholders’ interests. (Para 28) (Para 30)

"The mere fact that the Trustee faces a potential claim by some noteholders does not, in and of itself, necessarily mean that it would be in a position of conflict if it were the applicant in winding up proceedings against the Company." — Per Chua Lee Ming J, Para 28

"As the Trustee is facing potential claims by some noteholders, its interest in protecting itself against such claims would conflict with its duty to protect the interests of the noteholders." — Per Chua Lee Ming J, Para 30

That reasoning led the court to conclude that cl 8.3 was not applicable in this case. The court expressly agreed with Lim that the clause did not preclude him from pursuing CWU 78. The significance of the conclusion lies in the court’s willingness to look beyond the formal allocation of enforcement power to the Trustee and to recognize that the Trustee’s own exposure to claims could undermine the practical fairness of requiring it alone to act. (Para 31)

"For this reason, I agree with Lim that cl 8.3 of the Trust Deed is not applicable in this case and therefore it does not preclude Lim from pursuing CWU 78." — Per Chua Lee Ming J, Para 31

How Did the Court Deal With the Evidence About the Trustee’s Conduct and the 7 October Meeting?

The court considered several pieces of evidence in assessing whether the Trustee had acted reasonably and whether the contractual machinery had been engaged. One important factual point was the Trustee’s view that the nominal amount outstanding included the nominal amount of Unsecured Notes held by the Company. On that basis, the Trustee concluded that there was no quorum for the passing of special resolutions at the 7 October Meeting. The court later described that view as not unreasonable. (Para 23(a)) (Para 26(a))

"The Trustee took the view that the nominal amount outstanding included the nominal amount of Unsecured Notes held by the Company. As a result, there was no quorum for the passing of Special Resolutions at the 7 October Meeting." — Per Chua Lee Ming J, Para 23(a)

The court also noted that the Company’s Annual Report for FY2016 contained relevant information, although the extracted material does not reproduce the full contents of that report. The judgment indicates that the annual report formed part of the factual matrix considered by the court. In addition, the court referred to Peter Kwee’s statements, including the fact that the Trustee had proceeded to convene the 7 October Meeting even though it had not received the indemnity to which it was entitled. These facts supported the court’s view that the Trustee had not simply refused to act. (Para 23(c)) (Para 26(b))

"The Company’s Annual Report for financial year (“FY”) 2016 showed the following:" — Per Chua Lee Ming J, Para 23(c)

"The Trustee had in fact proceeded to convene the 7 October Meeting although it had not received the indemnity that it was entitled to." — Per Chua Lee Ming J, Para 26(b)

These evidentiary findings mattered because they undercut any suggestion that the Trustee had been obstructive or unwilling to perform its role. The court’s conclusion that the Trustee’s interpretation of “outstanding” was not unreasonable also reinforced the view that the Trustee had been acting within the contractual framework rather than refusing to assist the noteholders. That, in turn, made the conflict analysis more important than the unwillingness analysis. (Para 26(a)) (Para 24) (Para 30)

What Was the Court’s Step-by-Step Reasoning on Standing?

The court’s reasoning on standing proceeded in stages. First, it identified the contractual scheme: cl 8.2 gave the Trustee the power to act when properly directed, and cl 8.3 reserved enforcement rights to the Trustee. Second, it considered whether the Trustee was unjustifiably unwilling to act and concluded that it was not, because Lim had not invoked cl 8.2. Third, it considered whether the Trustee would be in a conflict position if it were to act, and concluded that it would, because of the possibility of claims by noteholders and the Trustee’s own self-protective interests. (Para 17) (Para 24) (Para 30)

"The assumption, however, is that the trustee is capable of satisfying its obligations." — Per Chua Lee Ming J, Para 21

That sequence is important because it shows that the court did not treat conflict as a free-standing abstract exception. The court first tested whether the contractual mechanism had been used and whether the Trustee had failed to act. Only after rejecting the unwillingness argument did it move to the conflict question. The conflict analysis then supplied the basis for concluding that cl 8.3 was inapplicable and that Lim had standing to bring the winding-up application. (Para 24) (Para 28) (Para 31) (Para 33)

The court’s final standing conclusion was explicit: because cl 8.3 was not applicable, Lim had the requisite standing to apply to wind up the Company in CWU 78. That conclusion was not merely procedural; it determined the fate of both applications before the court. Once standing was established, the winding-up order followed, and the Company’s injunction application necessarily failed. (Para 33) (Para 34)

"As cl 8.3 of the Trust Deed is not applicable, I find that Lim has the requisite standing to apply to wind up the Company in CWU 78." — Per Chua Lee Ming J, Para 33

What Orders Did the Court Make and Why Did OA 96 Fail?

Having found that Lim had standing, the court ordered that the Company be wound up. It also appointed Mr Cameron Lindsay Duncan and David Dong-Won Kim, care of KordaMentha Restructuring, as joint and several liquidators of the Company. The court further ordered that the costs of the proceedings be taxed, if not agreed or fixed, and paid to Lim out of the assets of the Company. These orders reflect the court’s acceptance of the winding-up application as the proper procedural outcome once the standing objection failed. (Para 33)

"I order that the Company be wound up. I also appoint Mr Cameron Lindsay Duncan and David Dong-Won Kim, care of KordaMentha Restructuring, 16 Collyer Quay, Singapore 049318, as joint and several liquidators of the Defendant." — Per Chua Lee Ming J, Para 33

"Finally, I order that costs of the proceedings be taxed, if not agreed or fixed, and be paid to Lim out of the assets of the Company." — Per Chua Lee Ming J, Para 33

The Company’s injunction application in OA 96 was dismissed because it depended on the proposition that Lim lacked standing to pursue CWU 78. Once the court rejected that proposition, there was no basis for restraining the winding-up proceedings. The court therefore dismissed OA 96 and ordered the Company to pay Lim costs fixed at $7,500 plus disbursements to be fixed if not agreed. (Para 34) (Para 35)

"Accordingly, I dismiss OA 96." — Per Chua Lee Ming J, Para 34

"The Company is to pay Lim costs in respect of OA 96 fixed at $7,500 plus disbursements to be fixed by me if not agreed." — Per Chua Lee Ming J, Para 35

The final orders are significant because they show that the court treated the winding-up application as the substantive proceeding and the injunction application as a defensive attempt to stop it. The costs orders also reflect the court’s view that Lim had succeeded on the central issue. The judgment thus ends with a complete procedural resolution in Lim’s favour. (Para 33) (Para 34) (Para 35)

Why Does This Case Matter for Noteholders, Trustees, and Winding-Up Petitions?

This case matters because it clarifies that a contractual no-action clause in a trust deed is not necessarily absolute. The court accepted that such a clause may not apply where the trustee would be placed in a position of conflict or has shown unjustifiable unwillingness to act. That is a practical and important qualification for noteholders seeking enforcement where the trustee cannot or should not be the sole enforcement vehicle. (Para 21) (Para 31)

"I agree with Lim that a no-action clause cannot apply where the trustee would be placed in a position of conflict or if the trustee has shown unjustifiable unwillingness to act." — Per Chua Lee Ming J, Para 21

The case also matters because it demonstrates that courts will examine the actual operation of the trust deed, not just its formal wording. Here, the court looked at cl 8.2, the Trustee’s conduct, the 7 October Meeting, the indemnity issue, and the Trustee’s potential exposure to claims by noteholders. That fact-sensitive approach means that parties drafting or relying on no-action clauses must pay close attention to how enforcement rights are structured and how conflicts may arise in practice. (Para 17) (Para 23(a)) (Para 26(b)) (Para 30)

For insolvency practitioners, the case is also a reminder that standing objections can fail where the contractual enforcement structure is compromised by conflict. The court’s reasoning shows that a trustee’s role is not merely formal; it must be capable of acting consistently with its obligations. Where that capability is undermined, the court may permit a noteholder to proceed directly. That has obvious implications for winding-up strategy, creditor coordination, and the drafting of trust deeds for debt instruments. (Para 21) (Para 28) (Para 33)

Cases Referred To

Legislation Referenced

• Insolvency, Restructuring and Dissolution Act (Act 40 of 2018)

Source Documents

• Original Judgment — Singapore Courts
• Archived Copy (PDF) — Litt Law CDN

This article analyses [2023] SGHC 32 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.