SINGAPORE – Two businessmen who built the Chang Cheng food and beverage empire, which operates coffee shops, foodcourts and stalls islandwide, decided to go their separate ways in 2018 after a falling out.
Both men claimed they had reached an oral agreement on the parting of ways, but each man gave a different version of the deal when the dispute ended up in court.
Mr Ricky Kok contended that his business partner Yap Wing Sang had agreed to exit the F&B operating companies in exchange for keeping a stake in other firms that own properties such as coffee shops.
But Mr Yap claimed he had sold his stake in 10 operating entities to Mr Kok and was still owed “full and fair” compensation.
On Sept 9, the Appellate Division of the High Court ruled in favour of Mr Kok, overturning an earlier decision by a lower court.
A High Court judge had found that both men failed to prove their versions of the agreement, and that Mr Kok held the transferred shares in trust for Mr Yap.
But the Appellate Division said Mr Kok had proved his case.
In a written judgment, the court said the subsequent conduct of the business partners proved that a legally binding contract had been formed.
This included Mr Yap’s lack of demand for payment for more than two years after giving up his shares in the operating entities.
In the late 1990s, Mr Kok and Mr Yap set up what is known as “economy rice” stalls in coffee shops.
The business expanded into a group that now includes brands such as Chang Cheng Mee Wah, a chain of coffee shops; Ming Kitchen Seafood, a chain of zi char stalls; and Rong Kee, a chain of stalls selling roasted meats.
Mr Kok sued Mr Yap in 2021 because they could not agree on the identity of the companies that comprise their business and the legal effect of their efforts since 2018 to part ways.
Although the business is referred to as the “Chang Cheng Group”, it is not structured as an apex holding company with Mr Kok and Mr Yap as shareholders and layers of subsidiaries beneath it.
Rather, the enterprise grew into three categories of companies: operating entities that run coffee shops, foodcourts, and food stalls; property holding entities that own the property that is leased out to the operating entities; and a company named Chang Cheng Group (CCG).
CCG, which was incorporated in 2010, owned the Woodlands property that serves as the headquarters of the group and, up until 2019, several operating entities.
From 2011, Mr Kok held a 50 per cent interest in the group, while his wife Delphine Lim and Mr Yap each owned 25 per cent.
After the partners’ relationship broke down in 2018, a series of negotiations and transactions ensued as they tried to disentangle their shared ownership and management of the entities.
Mr Kok, who was represented by Senior Counsel Lee Eng Beng and Mr Mark Cheng of Rajah & Tann, said an agreement was reached for Mr Yap to give up his interests in the operating entities.
He said that in return, Mr Yap’s interests in the property holding firms and CCG would be “fixed” in accordance with his registered shareholding in those companies.
On the other hand, Mr Yap said the parties had agreed that he would sell his shares in 10 of the operating entities to Mr Kok.
Mr Yap, who was represented by Mr Zhulkarnain Abdul Rahim and Mr Low Chai Chong of Dentons Rodyk & Davidson, alleged that he was never fully and fairly compensated.
On Dec 20, 2018, Mr Yap transferred his shares in 10 operating entities to Mr Kok and resigned from his positions in the operating firms and CCG.
The food and beverage business comprised entities that operated coffee shops, foodcourts and stalls in Singapore, such as this one in Yishun.
PHOTO: SHIN MIN DAILY NEWS
On Jan 11, 2019, the shareholding of CCG was restructured so that it no longer holds a stake in any of the operating entities.
From November to December 2020, various share transfers were made in four property holding firms, with the end result that Mr Kok and Mr Yap no longer held interests in the same firms.
The Appellate Division said the events from December 2018 to January 2019, Mr Yap’s failure to demand payment, and the share transfers in 2020 supported Mr Kok’s version.
