Case faces tough bid to recover $780k in legal costs

Case faces tough bid to recover $780k in legal costs

The Consumers Association of Singapore (Case) wants to recover more than $780,000 in legal costs from a company behind a private school, which lost a high-profile lawsuit against the consumer watchdog two years ago.

But it may never get its money back. This is because the company, now known as TSG Investments, no longer exists.

Formerly known as The Stansfield Group, the company was wound up in January by Acies Law Corporation, which acted for the group during part of its five-year legal battle with Case and NTUC Income.

According to court documents, Acies is owed over $272,000 for legal services rendered during the lawsuit, which went to the High Court and the Court of Appeal.

It all began in 2006, when Case suspended its accreditation status for Stansfield College, then owned by The Stansfield Group.

It did the same thing to SIC Education Group, which operated the Singapore Institute of Commerce.

Both groups disputed the move.

They took Case and Income - which froze its insurance service for the schools - to court.

In 2011, the two groups lost the suit against Case as well as their subsequent appeal, and were ordered to pay costs.

Two years on, those costs have not been paid, said Case executive director Seah Seng Choon. "We just hope that the money can be recovered," he said. "It was a very challenging trial that was taxing on our resources and time."

The dispute simmers on.

Mr Kannappan Chettiar, who was a shareholder at both The Stansfield Group and SIC Education Group, said he offered to pay Case $400,000 out of his own pocket.

But this was rejected.

Mr Chettiar also claimed that he did not receive a statutory demand letter for the winding up as he was out of the country at the time.

Furthermore, TSG would have been able to pay up, if it had been allowed to continue two ongoing court cases in which it was claiming over $6 million. But these proceedings were frozen once the firm was wound up, he said.

Mr Chettiar is now a director and shareholder of another company called Stansfield College, which operates a school of the same name at 3 Anson Road and has about 500 students.

The company and the college are unrelated to The Stansfield Group and the school which were embroiled in the lawsuit, he said.

Madam Cenobia Majella, who is also a director and shareholder of Stansfield College, said her company bought exclusive rights to the Stansfield College name for about $2 million. Mr Chettiar joined the company only recently, she added.

Experts say it may be difficult for Case and Acies to recover money from TSG. Mr Abuthahir Abdul Gafoor, executive director of accounting firm Stone Forest Corporate Advisory, said that when a firm is wound up, liquidators look at its assets and income collected.

"If this was expensed in the proper way and there is nothing left, and the company does not have any other assets, then creditors will have nothing to recover," he said.

Under the Companies Act, the shareholders of limited exempt private companies and limited private companies - such as Stansfield Group and SIC Education Group are - have limited liability.

This means that shareholders will not be held personally liable for business debts incurred and cannot be sued directly.

limjess@sph.com.sg

Five-year legal battle

2006: NTUC Income discovers that Stansfield College and the Singapore Institute of Commerce had not been insuring new students for at least six months, which was then a requirement for private schools that were CaseTrust members. Income suspended their insurance policies, which led Case to suspend the schools' memberships on Nov 20. The suspension was lifted on Dec 13 after Income reinstated their policies.

2007: The companies operating the schools - The Stansfield Group and SIC Education Group - file a lawsuit against Case alleging wrongful suspension that effectively hampered their ability to bring in foreign students and led to existing students pulling out. They blame the lapse on an "administrative oversight".

2009: Hearing into the case opens in High Court. The schools claim about $10 million in losses from Case and NTUC Income over the 23-day suspension period.

2010: The lawsuit comes to a temporary halt when lawyer Devinder Rai from Acies Law Corporation, acting for the schools, discharges himself.

2011: NTUC Income is ordered by the High Court to pay a nominal $100. Case's initial decision to suspend the schools for failing to insure its students was deemed neither unreasonable nor unlawful. The schools appeal against the judgments. The appeals are dismissed by the Court of Appeal. Costs are awarded to Case and NTUC Income.


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