Published On: Mon, Apr 1st, 2013

Two doctors tussle over a clinic they jointly owned

SINGAPORE – They are both doctors and started divorce proceedings in 2010.

Now, the pair are set for a legal tussle involving a clinic they jointly owned.

The problem began when Dr Gordon Lim set up a rival company – apparently without telling Dr Ivon Kwee.

He allowed his new firm to operate from the premises used by their clinic – and allegedly charged it rent at below the market rate.

This was a breach of the Companies Act, says Dr Kwee.

She alleges that the gynaecologist and obstetrician used his position as a director at the clinic to give his second firm a favourable deal on the rent.

Meanwhile, he was allegedly keeping her in the dark about this conflict of interest.

Now, she has been given High Court approval to sue him for alleged breach of director’s duties under the Act.

Justice Tan Lee Meng said in judgment grounds released on Thursday: “A doctor who is practising in a clinic owned by a company of which he is a director must tread carefully…”

He added that people in this position must fulfil their “fiduciary duties” even when setting up or joining another firm.

The couple were shareholders at Gordon Lim Clinic, which had a unit in Gleneagles Medical Centre. They were also directors of the company – along with Dr Lim’s mother.

But in July 2010, he established a rival business called Gordon Lim Clinic and Surgery for Women.

Three months later, it started operating from the unit at Gleneagles. The rent was $8,000 a month, which Dr Kwee argues was too low. She claims Dr Lim transformed their shared business from a profitable medical practice to a landlord that collected below-market-rate rent.

Its revenue fell from $1,102,019 in the first nine months of 2010 to just $24,000 in the last quarter of the year, she claimed in her application to start the lawsuit.

The huge loss was due to Dr Lim’s alleged breach of fiduciary duties, she added. This also allegedly led to business being diverted to his new practice.

She claimed that if she proved his alleged breach, the firm’s financial position would improve substantially.

Dr Lim objected to her court application, saying she had acted in bad faith and started her lawsuit to pressurise him into giving in to her demands. But she argued that the suit had nothing to do with the “animosity” between them.

Justice Tan found that Dr Kwee had made out a prima facie case and that Dr Lim’s claim was “unsubstantiated”. He gave leave for Dr Kwee to sue him on the firm’s behalf.

Dr Lim is appealing against the decision but his application to stay the suit against him pending the appeal was rejected earlier this month.

Dr Kwee’s lawyer, Mr Christopher de Souza, said: “We have instructions to rigorously defend Justice Tan’s decision before the Court of Appeal.”

By K.C. Vijayan-The Straits Times

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