SINGAPORE'S Court of Appeal has denied a tycoon's application to wind up a company here, saying he was making use of the court.

Hong Kong businessman Lau Yu Man had asked the High Court to shut down local firm Wellmix Organics (International) in August 2006.

But Wellmix has a pending lawsuit against Mr Lau's company, in which it is claiming $12.8million for supplying defective goods and for breach of contract.

Judge of Appeal V.K.Rajah said in a written judgment on behalf of the court that Mr Lau's winding-up bid was an 'abuse of process'.

He noted that Mr Lau, a 10-per cent shareholder and director of Wellmix, had based the application on the fact that Wellmix had suspended its business since 2001.

But even though the reason for his application had existed for several years, Mr Lau waited until 2006 to make his winding-up application.

Justice Rajah said Mr Lau filed the winding-up request only three days after matters related to the $12.8million lawsuit had 'painfully reached a decisive stage'.

The judge noted the 'remarkable timing' of the winding-up application, and said it 'must have been brought solely for the collateral purpose of either seriously delaying or wholly derailing the suit'.

Mr Lau's lawyer, Senior Counsel Philip Jeyaretnam, argued that this was not the case, saying that even if Wellmix was wound up, the liquidator could still continue with the lawsuit if it deemed it to be in the interest of the company.

But Justice Rajah said the court was not convinced, saying: 'If MrLau had no intention to delay or derail the suit, he could still have commenced the winding-up application immediately after the suit had been resolved against him.'

The court also said that in cases in which the court process was being abused, judges could turn down such applications even if the technical grounds to wind up a firm had been met.

The judge who allowed the winding up of Wellmix had found it was being kept alive purely to sustain the lawsuit against Mr Lau. The judge also found the firm was in 'disarray' and had failed to maintain properly audited accounts ever since it began operating in 1998.

But Justice Rajah said the judge should consider other factors, such as whether the person who petitioned for the winding-up order could have been responsible for the company's suspension.

'He did not consider the very live issues of whether the application was an abuse of process, whether Mr Lau could have caused the company's business to be suspended, and whether the company had a bona fide claim against MrLau,' said Justice Rajah.

Wellmix's lawyers Tan Bar Tien and Winston Quek said now that the winding-up application had been disallowed, their client could look forward to the pending suit 'with some ease and sense of control'.

Its suit against Mr Lau is expected to be heard at the end of the year. If the company had been wound up, the suit would have fallen into the hands of the liquidator.

This article was first published in The Straits Times on August 4, 2008.