Peter Kwee, son and firm sued for over S$71 million over insolvency of Laguna club operator

Motoring tycoon Peter Kwee has been sued – along with his 55-year-old son Kevin and their firm Laguna Hotel Holdings – for allegedly wrongfully and fraudulently extracting and transferring value out of Laguna National Golf and Country Club to enrich themselves.

For their alleged wrongdoing including the Kwees’ breach of fiduciary duties, Laguna National Golf and Country Club and its two liquidators Cameron Duncan and David Kim launched a lawsuit in April against the three parties, seeking recourse and more than S$71.5 million in damages.

Laguna National Golf and Country Club was the operator and owner of the eponymous club, which had a pair of 18-hole golf courses. The firm ceased operating the club upon handing over its assets in 2021 to Laguna Hotel, the Kwees’ other company and current owner-operator of the Laguna National Golf Resort Club.

Laguna National Golf and Country Club was wound up in 2023 upon the application by a holder of its unsecured notes, which have not been repaid.

The firm in 1991 issued 1,800 of such unsecured notes at S$120,000 each to finance the development of the club.

Another firm owned by Peter and his family acquired all the shares in Laguna National Golf and Country Club in 2001; Peter, Kevin and daughter Karen were in charge of the club’s operations.

In 2012, Laguna National Golf and Country Club extended the lease for the state land on which the club stood, from August 2012 to Dec 15, 2040, paying about S$49.9 million and another S$6 million for lifting the title restrictions. It also promised to develop a hotel on the land by 2017. 

Peter claimed the company was unable to obtain external funding to develop the hotel, so it agreed to let Laguna Hotel secure financing instead.  Laguna National Golf and Country Club would then do a sale and leaseback of the land with Laguna Hotel.

In 2016, Laguna National Golf and Country Club agreed to sell the land lease for S$130 million to Laguna Hotel. Laguna National Golf and Country Club subsequently entered into a licence agreement with Laguna Hotel to continue using the land to operate the club, at a discounted fee of S$50.8 million from September 2016 to June 2021.

Kevin signed the agreements on behalf of Laguna National Golf and Country Club, and Peter was the counterparty for Laguna Hotel.

When Laguna National Golf and Country Club was liquidated, its liabilities were 10 times its assets. The vast majority of the creditors of Laguna National Golf and Country Club are holders of the unsecured notes, said the statement of claims.

The firm was in the red between FY2016 and FY2020, with accumulated losses amounting to S$102.8 million as at FY2020.

Laguna National Golf and Country Club and its two liquidators claimed that the three defendants perpetuated a wrongful and fraudulent scheme against the firm to enrich themselves, by extracting and transferring value from the firm to Laguna Hotel, causing significant loss and damage to Laguna National Golf and Country Club.

In contrast, Laguna Hotel now owns and operates the recreational clubhouse and the Dusit Thani Laguna Singapore hotel it built on the land, the liquidators claimed.

“The actions of the Kwee directors resulted in the different outcomes for Laguna National Golf and Country Club, and Laguna Hotel. The Kwee directors have deliberately set Laguna National Golf and Country Club up for failure, and set Laguna Hotel up for success, in breach of their fiduciary duties to Laguna National Golf and Country Club,” said the claimants.

For example, they charged that the Kwee directors diverted the opportunity from Laguna National Golf and Country Club to monetise the land lease and collateralise it to fund the development of the hotel.

Not only that, the payment of S$130 million was never made to Laguna National Golf and Country Club upon the completion of the lease agreement in September 2016. It was instead recorded as a receivable and set off against the licence fees owed to Laguna Hotel as well as debts purportedly owed to Peter and entities linked to the Kwee directors.

However, the liquidators claimed that the numbers for the set-off were not consistent with what was recorded in Laguna National Golf and Country Club’s books.

Hence, they alleged that the Kwees did not act honestly, in good faith and in the best interests of Laguna National Golf and Country Club, and that they unfairly preferred Laguna Hotel over other creditors of the insolvent firm, among other wrongdoings.

Compensation aside, the liquidators want the Kwees and Laguna Hotel to give an account of all the transactions they allegedly misappropriated or how they secretly profited from Laguna National Golf and Country Club.

The defence

Disputing the claims and the allegations, the defendants contended that all the actions were taken “in the best of interests” of the firm and its members, including the noteholders. The trio also denied preferring Laguna Hotel over other creditors.

The Kwees’ counsel pointed out that Peter and Laguna Hotel collectively hold about 28.5 per cent of the defaulted notes.

Laguna National Golf and Country Club has been in dire financial position since it was acquired in 2001, but was able to carry on as a going concern with Peter’s financial support, the defence claimed.

It added that it was not commercially viable to redevelop the land and the club to improve profitability without extending the land lease, and that bank loans were unavailable, given the firm’s financial position.

After the land was sold to Peter, Laguna Hotel was able to secure a bank loan for the redevelopment.

The premiums paid by Laguna National Golf and Country Club for the land lease and the lifting of restrictions were funded by companies linked to Peter, the defence claimed.

The licence fee charged to Laguna National Golf and Country Club was calculated based on the monthly market rent as assessed by an external valuer, and the S$130 million payable by Laguna Hotel did not need to be in cash.

The set-offs against the S$130 million payment were motivated by the defendants’ desire to ensure continuity in the provision of services to Laguna National Golf and Country Club members, the defence claimed.

Laguna National Golf and Country Club would have ceased operating the club without the redevelopment, and members would not have been able to use the club before their membership expired.

Laguna National Golf Resort Club and the now-defunct club are “separate and distinct”, the defence stressed.

The Kwees’ lawyers argued that Peter and the directors are relieved from liability for any alleged negligence, default, breach of duty or breach of trust in any case, because they acted honestly and reasonably.

As Laguna National Golf and Country Club is insolvent, this lawsuit by the claimants is funded by Australian dispute finance solutions provider, LCM Funding SG.

In the meantime, the claimants are in the process of adding Karen, another director of the firm and Laguna Hotel until 2022, as a defendant before a case conference is held.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

ADV: Legal Profession Symposium 2025: Redefining the norm Ex-IPP director Goh Jin Hian wins appeal, court says firm failed to prove his breach caused losses