In the latest turn of events of a long-running dispute between the two founders of Soup Empire Holdings Pte Ltd, the courts have ordered one founder to pay the other compensation over the sale of a Toyota Harrier.
Soup Empire operates food establishments such as Lao Huo Tang, Eng’s Wantan Noodle and Kenny Rogers.
The Toyota Harrier in dispute was bought using funds from Soup Empire’s subsidiary company, Lao Huo Tang Pte Ltd, and out of pocket by ex-chief operating officer Lim Cheng San.
It was sold after they fell out.
The dispute
Soup Empire was founded by Thomas Hong and Edger Lim Cheng San.
Hong was the chief executive officer and had a 60.4 per cent stake in the business, whereas Lim was the chief operating officer with a 39.6 per cent stake.
After the duo fell out, Lim sued Hong in court for “minority oppression”, and Hong fired Lim.
According to a report by now-defunct Lianhe Wanbao, Lim had once claimed that Hong had been “unfair” to him by letting him draw only S$7,000 monthly salary while Hong drew a salary of more than S$20,000.
Their dispute culminated in a civil suit and many other subsidiary hearings in court.
Both paid for Toyota Harrier
According to a court documents, Hong offered to finance Lim’s new car in 2017 — a S$162,088 Toyota Harrier — after learning that the latter was due to scrap his Mercedes Benz in January 2018.
The purchased Harrier was registered in Lim’s name. He used the Mercedes Benz’s S$$45,828 trade-in value to pay for a part of the Harrier’s S$65,088 upfront payment.
Lim and Hong agreed that the remaining S$19,260 of the Harrier’s upfront payment would be paid through Soup Empire’s subsidiary company, Lao Huo Tang Restaurant Pte Ltd.
On Nov. 8, 2017, Lim took a five-year loan to finance the remaining S$97,000 purchase price.
Soup Empire paid the first instalment and the 41 subsequent monthly instalments, totalling S$76,365.65.
The fallout
Hong fell out with Lim and fired the latter on Jun. 21, 2021.
Shortly after, Lim sold the Toyota Harrier for S$89,500 without telling Hong on Jul. 3, 2021.
When Hong found out, he demanded Lim to repay him S$95,625.65, which is the sum of the S$19,260 upfront payment and the S$76,365.65 in instalments for the Harrier on Dec. 9, 2021.
He claimed that he had loaned Lim the sum.
Hong claimed Harrier was company car
Hong took Lim to court on Jan. 19, 2022.
He demanded that Lim either pay him the Harrier’s full net sale proceeds worth S$58,366.31, or for his contribution towards the Harrier’s purchase, which is prorated at 67.6% of the net sale proceeds.
Hong claimed Lim verbally agreed that the Harrier would be a company car and asset.
He added that the Harrier was registered under Lim’s name so that he could supposedly save on the S$2,550 administrative fees required to attach the licence plate number 9119 to the Harrier.
Hong and a few of the Soup Empire staff apparently also drove vehicles with matching 9119 licence plates.
Three of these vehicles were registered under the company.
The remaining vehicle — a BMW — was driven by a Soup Empire staff but registered under his wife’s name.
The wife was made to sign a letter confirming that she was holding onto the BMW on trust for one of Soup Empire’s subsidiaries.
Hong referred to the BMW’s trust arrangement and claimed it was similar to what he had with Lim.
He claimed that Lim was holding the Harrier on trust, and that he did not make Lim sign an agreement as he trusted Lim.
Lim claimed Harrier was personal car and a gift
On the other hand, Lim claimed that Hong had gifted him that Harrier.
Lim said that Hong told him he would “settle” the shortfall in the upfront payment and the monthly instalments.
Lim further claimed that he understood these payments would constitute a form of transportation allowance/ incentive for the Soup Empire companies’ directors and other senior employees.
Highlighting the BMW’s letter of agreement, Lim claimed that there were no documents supporting that Hong and him had entered the alleged trust arrangement.
Judge said none of the men were right
The judge, Vince Gui, said neither party have evidence to support their claims, “The evidence supporting each of their allegations is razor thin to practically non-existent.”
“Beyond that, their allegations are contradicted by their own words or conduct,” he added.
On Hong’s claims
Gui stated that there were no documents or documentation indicating Hong’s claim of a trust arrangement with Lim.
He contrasted the Harrier’s arrangement with the BMW and stated that Hong would have drawn up a document if he were “truly serious” about a trust arrangement with Lim.
He also noted that Hong had changed his allegation from a loan to a trust arrangement and thus, contradicted himself.
Lastly, Gui stated that it made no sense for Lim to confer the Harrier to Hong, as the latter had claimed, since Lim had also contributed to its purchase when he traded in his Mercedes Benz.
On Lim’s claims
Gui also stated that there was no evidence to support Lim’s claim that the Harrier was a gift from Hong.
“[Hong] may well have intended [for Lim] to use the car, but that is not quite the same as gifting the asset value of the disputed car to [Lim].”
Gui noted that Lim contradicted himself at trial when he said Hong told him that he would “settle” the upfront payment and loans, which meant that Hong would take care of the shortfall payments.
Lastly, Gui stated that Hong did not intend to gift Lim the car as it would not be consistent with how the Soup Empire managed its four other cars.
Ordered Lim to pay Hong for his contributions
Gui stated, “In my view, the reality was that parties simply did not apply their minds to the beneficial ownership at the time the purchase was made.”
“They were on good terms and did not expect to fall out,” he added.
Noting that both Hong and Lim had contributed to the Harrier’s purchase, Gui believed it would be fair for the Harrier’s net sale proceeds to be split in proportion to Hong and Lim’s financial contributions.
Since Hong and Lim respectively contributed S$95,626.65 and S$45,828, this would mean that they respectively hold 67.6 per cent and 32.4 per cent of the Harrier’s net sale proceeds.
He ordered Lim to pay Hong S$39,455.62, which was 67.6 per cent of the Harrier’s S$58,366.31 net sale proceeds.
Top image from Lao Huo Tang website
