Ayaz Ahmed and others v Mustaq Ahmad (alias Mushtaq Ahmad s/o Mustafa) and others and other suits [2022] SGHC 161

There were three suits heard together before me in the present case: HC/S 1158/2017 (“Suit 1158”), HC/S 780/2018 (“Suit 780”) and HCF/S 9/2017 (“Suit 9”). The six plaintiffs in Suit 1158 are the beneficiaries of the estate of Mustafa s/o Majid Khan (“the Mustafa estate”). The first plaintiff in Suit 780 is one of the two trustees and executors of the estate of Samsuddin s/o Mokhtar Ahmad (“the Samsuddin estate”) and also a beneficiary of the estate, while the second plaintiff is another beneficiary of the estate. Both the Mustafa estate and the Samsuddin estate are registered owners of shares in a company known as Mohamed Mustafa & Samsuddin Co Pte Ltd (“MMSCPL”, the sixth defendant in Suit 1158 and Suit 780). Suit 1158 and Suit 780 concerned claims of minority oppression against the directors of MMSCPL.

In addition, the plaintiffs in Suit 780 made other claims; in particular, that the Samsuddin estate was entitled to certain assets held for it by the first defendant Mustaq Ahmad @ Mushtaq Ahmad s/o Mustafa (“Mustaq”) on an express trust; and that Mustaq had breached his duties as executor and trustee of the Samsuddin estate.

Suit 9 was a claim brought by the beneficiaries of the Mustafa estate against Mustaq in his capacity as the sole administrator and trustee of the Mustafa estate, for breach of his duties as administrator and trustee.

Following a 20-day trial, I gave judgment for the plaintiffs in Suit 1158 and Suit 780. In brief, in Suit 1158 and Suit 780, I found in favour of the plaintiffs in respect of a number of (though not all) their allegations of minority oppression. I held, however, that winding-up of MMSCPL was not an appropriate remedy in this case, and ordered instead that the first defendant Mustaq and the second defendant Ishret Jahan (“Ishret”) buy out the estates’ shares in MMSCPL. In respect of Suit 780, I also held that Mustaq had breached his duties as executor and trustee of the Samsuddin estate, but I rejected the claim of an express trust.

In Suit 9, I held that the plaintiffs were entitled to a declaration that the defendant Mustaq had breached his duties as administrator of the Mustafa Estate and a declaration that Mustaq was liable to account to the Mustafa Estate for the losses caused to the estate by reason of the breaches found. I also ordered that Mustaq give an account of his administration of the Mustafa Estate. The Suit 9 plaintiffs were given liberty to apply for further orders in respect of any losses suffered by the estate as determined by the account.

These are the written grounds for my decision in all three suits.

Background

The parties

Mustafa was born on 1 February 1918 while Samsuddin was born on 25 July 1925.

Samsuddin’s cousin, Momina, married Mustafa in 1945 and they had a son, Mustaq. After Momina’s death, Mustafa married one Mdm Asia (“Asia”) in 1957 and had five children with her – Ayaz Ahmed (“Ayaz”), Khalida Bano (“Khalida”), Ishtiaq Ahmad (“Ishtiaq”), Maaz Ahmad Khan (“Maaz”), and Wasela Tasneem (“Wasela”). These five children, now adults, are the plaintiffs in Suit 1158 together with Asia (the “Suit 1158 plaintiffs”).

Samsuddin had five children with his wife, Sitarun Nisha (“Sitarun”): Nausaba Khatoon, Mohamed Zakaria, Mohammad Asrar Ahmad, and the two plaintiffs in Suit 780, Fayyaz Ahmad (“Fayyaz”) and Ansar Ahmad (“Ansar”).

Mustaq and his wife, Ishret Jahan (“Ishret”), are the first and second defendants in both Suit 1158 and Suit 780. They are both shareholders and directors of MMSCPL. One of their three daughters, Shama Bano (“Shama”), and their son, Abu Osama (“Osama”) are the third and fourth defendants in both Suit 1158 and Suit 780. Both Shama and Osama are directors of MMSCPL. Mustaq and Ishret have two other daughters, Shams Bano (“Shams”) and Bushra Bano (“Bushra”), who are not parties to any of the three suits. Iqbal Ahmad (“Iqbal”), the fifth defendant in both Suit 1158 and Suit 780, is Ishret’s brother. Iqbal is a director and company secretary of MMSCPL. MMSCPL, as the sixth defendant in both Suit 1158 and Suit 780, is a nominal defendant.

The origins of MMSCPL

The issue of the origins of MMSCPL was relevant to both Suit 1158 and Suit 780 because of the parties’ starkly differing positions as to the true ownership of MMSCPL. The two sets of plaintiffs had a very different account from the defendants as to how MMSCPL was started.

The plaintiffs’ account

According to both sets of plaintiffs, on 11 July 1973, Mustafa and Samsuddin commenced a wholesale business through a partnership known as Mohamed Mustafa & Samsuddin Co (“MMSC”). On 23 July 1973, Mustafa and Samsuddin lodged a form with the Registrar of Business (“ROB”) to notify the ROB that MMSC had changed its registered address from 19 Campbell Lane to 67 Serangoon Road Singapore, and that MMSC’s branch would operate from 19 Campbell Lane.

On 12 September 1973, Mustafa and Samsuddin added Mustaq as a partner in MMSC. On 31 July 1975, MMSC submitted its application for the business name “Mohamed Mustafa & Samsuddin Company” to be approved by the ROB.

The defendants’ account

Mustaq alleged that he used to help Mustafa and Samsuddin at their street stall when he was about 12 years old, but that he went on to set up his own independent stall along Campbell Lane in 1963. Around 1971, Mustaq rented 1 Campbell Lane and conducted his business there under the name “Mustaq Ahmad”. Sometime in 1973, when the landlord informed him the master lease was about to expire, Mustaq bought 19 Campbell Lane to house his business, and rented 67 Serangoon Road to store his goods (collectively, the “New Premises”). According to Mustaq, he made all these payments with no assistance from Mustafa and Samsuddin.

Sometime in May or June 1973, before Mustaq was able to move his goods from 1 Campbell Lane to the New Premises, he made a trip to India to visit his wife. Mustafa offered to help supervise the running of Mustaq’s business together with Samsuddin. To facilitate the administrative aspects of the move to the New Premises, Mustafa and Samsuddin commenced MMSC on 11 July 1973 on the understanding that the business operating out of the New Premises was Mustaq’s business. When Mustaq returned to Singapore in August or September 1973, Mustafa and Samsuddin informed Mustaq of the commencement of MMSC, and Mustaq added his name to MMSC sometime around 12 September 1973.

Events of 1989

MMSCPL was incorporated in Singapore on 21 February 1989. At that time, Mustaq and Samsuddin were MMSCPL’s sole directors and shareholders, with each subscribing to one share of MMSCPL. The Memorandum of Association and Articles of Association of MMSCPL (the “MMSCPL Constitution”) were executed only by Mustaq and Samsuddin. The defendants alleged that MMSCPL was incorporated because Mustaq realised that the partnership structure was not ideal for the business’ growth, and Mustaq had incorporated MMSCPL without seeking input, financing or support from Mustafa and Samsuddin.

About two months later, Mustafa was appointed a director of MMSCPL. According to the defendants, this was done out of “goodwill and respect” by Mustaq for Mustafa.

On or around 27 April 1989, Mustafa subscribed to 190,000 shares in MMSCPL, while Mustaq and Samsuddin also subscribed to further shares in MMSCPL. As a result, Mustafa held 19%, Samsuddin held 30%, and Mustaq held 51% of the shares in MMSCPL.

Around 30 September 1989, the MMSC partnership was terminated.

Appointments of Ishret, Iqbal, Shama and Osama

On 19 June 1991, Ishret was appointed as a director of MMSCPL. On 17 January 1994, Iqbal was appointed as company secretary of MMSCPL. He was appointed as a director of MMSCPL on 3 September 2001.

On 14 February 2001, Shama and Osama were appointed directors of MMSCPL. Osama resigned as a director of MMSCPL on 10 February 2004, but was reappointed as a director of MMSCPL on 24 December 2014.

Mustafa and Samsuddin stepped down as directors

Mustafa stepped down as a director of MMSCPL on 11 March 1999, while Samsuddin stepped down as a director of MMSCPL on 14 July 2003.

For ease of reference, the dates of appointment of the various parties as directors (and in Iqbal’s case, as company secretary) and the dates of their resignation or retirement (where applicable) are set out in the table below.

Individual

Date of Appointment

Position

Date of resignation/ retirement (where applicable)

Mustaq

February 1989

Director

N/A

Samsuddin

February 1989

Director

July 2003

Mustafa

April 1989

Director

March 1999

Ishret

June 1991

Director

N/A

Iqbal

January 1994

Company secretary

N/A

September 2001

Director

N/A

Shama

February 2001

Director

N/A

Osama

February 2001

Director

February 2004

December 2014

Director (re-appointed)

N/A

The Share Allotments

From the time of MMSCPL’s incorporation on 21 February 1989 until 11 December 2001, various share allotments were carried out in MMSCPL. I summarise these below, reproducing the table tendered by the Suit 780 plaintiffs (the accuracy of which was not disputed by the other parties).

Date

Mustaq

Ishret

Mustafa

Samsuddin

Shares allotted

Total shares

Percentage

Shares allotted

Total shares

Percentage

Shares allotted

Total shares

Percentage

Shares allotted

Total shares

Percentage

February 1989

1

1

50%

0

0

0

0

0

0

1

1

50%

April 1989

509,999

510,000

51%

0

0

0

190,000

190,000

19%

299,999

300,000

30%

June 1991

300,000

810,000

35.22%

300,000

300,000

13.04%

400,000

590,000

25.65%

300,000

600,000

26.09%

January 1993

340,200

1,150,200

34.85%

160,000

460,000

13.94%

247,800

837,800

25.39%

252,000

852,000

25.82%

May 1993

448,500

1,598,700

34.01%

239,400

699,400

14.88%

353,900

1,191,700

25.35%

358,200

1,210,200

25.75%

January 1995

700,000

2,298,700

42.57%

0

699,400

12.95%

0

1,191,700

22.07%

0

1,210,200

22.41%

April 1996

681,100

2,979,800

42.57%

207,230

906,630

12.95%

353,100

1,544,800

22.07%

358,570

1,568,770

22.41%

February 1997

851,370

3,831,170

42.57%

259,037

1,165,667

12.95%

441,370

1,986,170

22.07%

448,223

2,016,993

22.41%

December 2001

4,340,000

8,171,170

61.25%

0

1,165,667

8.74%

0

1,986,170

14.89%

0

2,016,993

15.12%

Both the Suit 1158 and the Suit 780 plaintiffs seek to set aside the 5 January 1995 Allotment and the 11 December 2001 Allotment. The Suit 780 plaintiffs additionally seek to set aside the 27 June 1991 Allotment, the 16 January 1993 Allotment, the 19 May 1993 Allotment, the 9 April 1996 Allotment and the 24 February 1997 Allotment. I will set out their allegations in respect of each allotment in further detail later in these written grounds.

Mustafa’s death in 2001

Mustafa died intestate on 17 July 2001.

On 16 August 2001, the Syariah Court of Singapore issued an Inheritance Certificate stating that the Mustafa Estate was to be divided into 80 shares, with each of Mustafa’s sons (Mustaq, Ishtiaq, Maaz and Ayaz) receiving 14 shares, Asia receiving 10 shares, and each daughter (Khalida and Wasela) receiving 7 shares.

Power of Attorney and Grant of Letters of Administration

It was not disputed that on 22 December 2001, Mustaq visited Jaunpur, India, where the Suit 1158 plaintiffs were staying. The Suit 1158 plaintiffs signed a Power of Attorney (“Mustaq POA”) on 22 December 2001, which was drafted on Mustaq’s instructions. The Mustaq POA provided, inter alia, that the Suit 1158 plaintiffs jointly and severally appointed Mustaq to apply for and obtain Grants of Probate or Letters of Administration (“LA”) for the Mustafa Estate. The Suit 1158 plaintiffs said that, at the time they signed the Mustaq POA, Mustaq failed to disclose the 5 January 1995 Allotment and the 11 December 2001 Allotment. Mustaq, for his part, denied this – he said that he had never attempted to conceal either allotment.

On 30 October 2003, the Mustafa Estate was registered as a shareholder of MMSCPL. On 18 November 2003, Mustaq filed a petition for the Grant of LA in relation to the Mustafa Estate. Mustaq was granted the LA on 24 November 2003, and he extracted the Grant of LA on 28 January 2004.

Samsuddin’s death in 2011

Samsuddin died in April 2011. Pursuant to his will dated 5 November 2004, Fayyaz and Mustaq were appointed joint and several executrixes and trustees of his estate (the “Samsuddin Estate”). On 24 October 2012, Mustaq applied for a grant of probate, which was issued to Mustaq and Fayyaz on 25 June 2013.

Based on the Syariah Court Inheritance Certificate, the beneficiaries under the Samsuddin Estate were the five children of Samsuddin and Sitarun (including Fayyaz and Ayaz), and Sitarun herself. For completeness, I note that the defendants have pointed out that Mohd Jakariya Haji Samsuddin (alias Mohamed Zakaria) was not named in the Inheritance Certificate, and that the aliases of Ansar and Naushaba Khatun were not reflected in the Inheritance Certificate.

The plaintiffs’ requests for information from Mustaq from 2013

In both Suit 1158 and Suit 780, the plaintiffs alleged that from 2013, Mustaq sought to conceal from them the truth about MMSCPL’s affairs.

The plaintiffs’ account

According to both sets of plaintiffs, in or around 2013, Ayaz (the first plaintiff in Suit 1158) made repeated requests to Mustaq for information about the Mustafa Estate and Samsuddin Estate, which Mustaq wrongfully refused to provide.

Instead, in an attempt to placate the plaintiffs, Mustaq procured MMSCPL to declare a dividend in each year from 2014 onwards. However, he arranged for MMSCPL to pay it over twelve monthly instalments instead of in one lump sum. By doing so, he made sure the plaintiffs understood that the dividend payments would cease if they chose to resort to their legal rights. Additionally, from around February or March 2017, dividends were halved; and in February 2018, the dividend payments stopped completely – which suggested that Mustaq was trying to exert further pressure on the plaintiffs.

The Suit 780 plaintiffs also asserted that around 2013 to 2014, in an attempt to placate the Suit 780 plaintiffs and in breach of his duties to the Samsuddin Estate and/or in breach of trust, Mustaq offered to pay the Samsuddin Estate the value of the shares in MMSCPL that Samsuddin had originally held. To finance this payment, Mustaq caused MMSCPL to issue three-year bearer bonds for approximately $75 million in 2014, which was not in the commercial interests of MMSCPL.

In mid-2015, in a further attempt to forestall legal action against himself, Mustaq made a verbal proposal (“Mustaq Proposal”) to Ayaz to restructure all companies that were directly and/or indirectly owned by Mustaq, Ishret and/or MMSCPL. On or around 29 March 2016, Mustaq produced a Deed which he claimed contained the terms of the Mustaq Proposal and which he asked (among other persons) Ayaz to sign. However, the Deed did not accurately reflect the terms of the Mustaq Proposal; and the Suit 1158 plaintiffs did not sign it.

Around April 2016, Ayaz asked Mustaq further questions pertaining to the affairs of the Mustafa Estate. Ayaz then engaged one Rajesh Bafna (“Rajesh”), a consultant, to look into the Mustafa Estate’s interest in MMSCPL. From Rajesh, Ayaz learned of the 5 January 1995 Allotment and the 11 December 2001 Allotment.

Around the end of June 2016, Ayaz asked Mustaq to account for how he had used the Mustaq POA and also to provide an explanation for the 5 January 1995 Allotment and the 11 December 2001 Allotment. On 1 July 2016, the Suit 1158 plaintiffs revoked the Mustaq POA, and the revocation was registered with the court on 24 April 2017. By a letter dated 13 July 2016 from the plaintiffs’ lawyers, the plaintiffs informed Mustaq they had executed a new Power of Attorney in favour of Ayaz, and asked Mustaq to provide information and documents in relation to the Mustaq POA – which he refused to do. On various occasions thereafter, including in August 2016 and September 2016, Mustaq repeatedly asked Ayaz to sign the Deed, which Ayaz refused.

The defendants’ account

Mustaq – as the first defendant in both minority oppression suits and as the chief protagonist according to the plaintiffs’ narrative – presented a totally different version of events in his pleaded defence. Mustaq denied having received any request for information from Ayaz or Fayyaz around 2013. Mustaq claimed that he had decided to issue dividends as a way of paying the plaintiffs and other beneficiaries of the Samsuddin Estate. He denied making the Mustaq Proposal. Instead, according to Mustaq, around March 2016, Mustaq, Ayaz and Fayyaz reached a verbal agreement regarding Fayyaz’s increasingly unreasonable demands of Mustaq for more “gratuitous property, assets and financial benefits”. On 29 March 2016, the Deed was signed by Fayyaz and other beneficiaries of the Samsuddin Estate. A supplemental Deed was subsequently made to amend one of the terms of the verbal agreement, which was signed by Mustaq and Fayyaz. However, Ayaz reneged on the verbal agreement and refused to sign the Deed and the supplemental Deed. This led Mustaq to reverse the steps which had been taken to give effect to the terms of the Deed and the supplemental Deed. Mustaq also alleged in his pleaded defence that since mid-2014, Ayaz had constantly harassed him and demanded from him more benefits.

Per his pleaded defence, Mustaq claimed that prior to 2016, the Suit 1158 plaintiffs had never requested updates or information concerning the administration of the Mustafa Estate, and that in his correspondence with them from 2016 onwards, he had acceded to their requests for information when these were reasonable.

Commencement of the present suits

On 8 December 2017, the Suit 1158 plaintiffs commenced Suit 1158 and Suit 9. As noted earlier, Suit 1158 is a minority oppression claim by Asia and her five children (including Ayaz), on behalf of the Mustafa Estate. Suit 9 concerns Mustaq’s alleged breach of his duties as the sole administrator and trustee of the Mustafa Estate.

On 6 August 2018, the Suit 780 plaintiffs filed Suit 780. Suit 780 is a minority oppression claim by Fayyaz and Ansar, on behalf of the Samsuddin Estate.

The present suits

As there is some overlap between the issues raised in each suit, I first set out the common aspects of the plaintiffs’ cases in Suit 1158 and Suit 780.

Allegations of oppressive conduct common to Suit 1158 and Suit 780

In claiming that the defendants had oppressed the rights of the Mustafa and the Samsuddin estates as minority shareholders, the Suit 1158 and the Suit 780 plaintiffs raised some of the same allegations of oppressive conduct in their pleadings. However, they asked for different reliefs in respect of some of these allegations. I set these out as follows.

The 5 January 1995 Allotment and the 11 December 2001 Allotment

Both sets of plaintiffs alleged that the 5 January 1995 Allotment and the 11 December 2001 Allotment were, inter alia, carried out in breach of the MMSCPL Constitution. There was nothing to suggest that these allotments were needed in MMSCPL’s commercial interests. Instead, the two allotments had been devised by Mustaq and/or Ishret for Mustaq’s own benefit as they allowed him to acquire more shares in MMSCPL at an undervalue while diluting the estates’ shareholding. Both sets of plaintiffs both sought a declaration that the 5 January 1995 Allotment and the 11 December 2001 Allotment were void and of no effect and should be set aside.

Systematic misappropriation of MMSCPL’s funds

Both the Suit 1158 and Suit 780 plaintiffs raised the same allegations about the defendants’ systematic misappropriation of MMSCPL’s funds:

(a) Between 2000 and 2015, the first to fifth defendants utilised for their own benefit sums taken from MMSCPL under the guise of unsecured and interest-free loans, which were not in MMSCPL’s interests.

(b) The Suit 1158 plaintiffs also alleged that between 2004 and 2005, Mustaq concocted sham invoices to create the appearance that MMSCPL was indebted to B.I. Distributors Pte Ltd (“BID”), a company wholly owned and controlled by Mustaq and Ishret. The Suit 780 plaintiffs alleged that this was done between 2000 and 2006.

(c) Over the years, Mustaq procured or caused MMSCPL to falsify its applications to the Ministry of Manpower (“MOM”) for work passes for MMSCPL employees who worked for Kebabs N Curries (a restaurant wholly owned by MMSCPL), Mustafa’s Café (a restaurant wholly owned by MMSCPL), Handi Restaurant and Catering (“Handi Restaurant”) (a restaurant wholly owned by MMSCPL) and/or MMSCPL itself. The Suit 780 plaintiffs sought an order that MOM investigate these allegations. The Suit 1158 plaintiffs did not seek such an order.

(d) After Mustafa’s death on 17 July 2001 and until 2014, Mustaq and Ishret adopted a policy of paying themselves substantial directors’ fees amounting to an average of 51% of MMSCPL’s net profits per year. Further, Mustaq, Ishret, Shama, Osama and/or Iqbal each procured, caused and/or allowed MMSCPL to not pay and/or did not take steps to prevent MMSCPL to pay no dividends at all to the shareholders of MMSCPL until 31 December 2013. This was despite MMSCPL earning substantial profits between 2000 and 2013. The Suit 780 plaintiffs sought a declaration that the various resolutions at the Annual General Meetings of MMSCPL approving Mustaq’s and Ishret’s directors’ fees were null and void and had no effect. Though the Suit 1158 plaintiffs pleaded the same dividend-related complaints as one of the instances of oppressive conduct, they did not seek such a declaration.

Additionally, the Suit 1158 plaintiffs sought a declaration that Mustaq, Ishret, Shama, Osama and/or Iqbal were jointly and severally liable to account to MMSCPL for the sums wrongfully misappropriated from MMSCPL, and for such sums to be paid by Mustaq, Ishret, Shama, Osama and/or Iqbal to MMSCPL. The Suit 780 plaintiffs did not seek such an order.

Other reliefs sought by the Suit 1158 and Suit 780 plaintiffs

Both sets of plaintiffs sought an order for an independent expert to be appointed by the court to look into the affairs and accounting records of MMSCPL and to assess the losses suffered by MMSCPL as a result of the defendants’ oppressive conduct.

The Suit 780 plaintiffs sought in addition an order that Mustaq buy out the Samsuddin Estate at a price to be assessed by an independent expert, taking into account the losses suffered by MMSCPL as a result of the defendants’ oppressive conduct; further or in the alternative, an order that MMSCPL be wound up pursuant to s 216(2)(f) of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”); and further or alternatively, a declaration that Mustaq had fraudulently breached his fiduciary duties and duties as executor and trustee of the Samsuddin Estate, with damages to be assessed and paid to the Samsuddin Estate, and a statement of account of the Trust Assets.

The Suit 1158 plaintiffs sought an order that MMSCPL be wound up pursuant to s 216(2)(f) of the Companies Act.

Additional allegations in Suit 780

The additional allegations by the Suit 780 plaintiffs may be summarized as follows.

Share allotments

First, in addition to the 5 January 1995 Allotment and the 11 December 2001 Allotment, the Suit 780 plaintiffs alleged that the 27 June 1991 Allotment, the 16 January 1993 Allotment, the 19 May 1993 Allotment, the 9 April 1996 Allotment, the 24 February 1997 Allotment and the 11 December 2001 Allotment were carried out (inter alia) in breach of the MMSCPL Constitution.

The Suit 780 plaintiffs sought a declaration that the 27 June 1991 Allotment, the 16 January 1993 Allotment, the 19 May 1993 Allotment, the 9 April 1996 Allotment and the 24 February 1997 Allotment, were void and of no effect, and an order that each of these allotments be set aside. They also sought a declaration that Ishret was not the beneficial owner of shares registered in her name and that all allotments of shares to her were null and void.

Authorised Capital Increases

The Suit 780 plaintiffs also alleged that Mustaq had, on two instances, wrongfully caused MMSCPL to increase its authorised share capital.

First, on 17 January 1994, Mustaq wrongfully caused MMSCPL to increase its authorised share capital from $5,000,000 to $10,000,000, divided into 10,000,000 ordinary shares of $1 each (“First Authorised Capital Increase”). This was done in breach of provisions of the MMSCPL Constitution and for the benefit of Mustaq and his family.

Second, around 26 September 1997, Mustaq wrongfully caused MMSCPL to increase its authorised share capital from $10,000,000 to $15,000,000, divided into 15,000,000 ordinary shares of $1 each (“Second Authorised Capital Increase”). This allowed Mustaq to wrongfully procure the 11 December 2001 Allotment so as to acquire further shares in MMSCPL at a significant discount and dilute Samsuddin’s shareholding in MMSCPL. It was also done in breach of the MMSCPL Constitution.

Additional allegations concerning the systematic misappropriation of MMSCPL’s funds

In addition to the common allegations of oppressive conduct, the Suit 780 plaintiffs also pleaded the following:

(a) Mustaq directed MMSCPL to pay salaries and Central Provident Fund (“CPF”) contributions to some of his children (Shams, Shama and Bushra), prior to their being employed by MMSCPL or any of its related companies.

(b) Mustaq wrongfully caused MMSCPL to pay substantial consultancy fees to Zero and One, a sole proprietorship which he had set up on 1 February 2006. These payments had been made since the inception of the sole proprietorship and were against MMSCPL’s commercial interests. Mustaq also used Zero and One as a vehicle to pay one Rajena Begam d/o Sheik Noordin (“Rajena”) monthly consultancy fees of between $20,000 to $50,000, without any basis. The Suit 780 plaintiffs claimed that Rajena “was and is in a relationship with Mustaq”. Mustaq did not cooperate with the police when Rajena was reported for wrongfully taking goods from MMSCPL, and even caused MMSCPL to pay the rent for her accommodation.

(c) Between 8 January 2004 and 26 May 2017, Mustaq contracted on behalf of MMSCPL to sell gold to Ruby Impex LLP (“Ruby Impex”) and Shams Gems LLP (“Shams Gems”), being partnership firms jointly owned by his daughters, Shams and Bushra, by adding only a 0.5% margin without reference to market value, thereby causing MMSCPL to enter into contracts at a significant undervalue.

(d) From January 2010 to May 2018, Mustaq failed to adopt a proper accounting system for MMSCPL and caused debit notes of MMSCPL to be generated with the amount being zero.

(e) Between 2007 and 2016, Mustaq used the funds of MMSCPL and the Related Companies’ funds to purchase properties in Cambodia in his own name and/or that of City Mart Co Ltd, which was registered in his sole name. Mustaq then engaged in self-dealing by causing MMSCPL to pay him for a share of the properties purchased in Cambodia. The Related Companies have been defined in the Suit 780 plaintiffs’ pleadings as comprising Mustafa’s Pte Ltd (“MPL”); BID; Mustafa Air Travel Pte Ltd (“MAT”); Mustafa Foreign Exchange Pte Ltd (“MFE”); Mustafa Holdings Pte Ltd (“MHPL”); and Mustafa Development Pte Ltd (“MDPL”).

(f) Between 1996 to 2000, Mustaq remitted US$10m from MMSCPL through Mustafa Foreign Exchange Pte Ltd (“MFE”) to Hang Seng Bank in Hong Kong to his own personal bank account without paying tax, and thereafter used the same money to pay for a building he bought in Jakarta.

(g) Between 2000 and 2006, Mustaq caused MMSCPL to incur substantial losses as a result of foreign exchange/stock/commodity trading. He failed to disclose this to the shareholders of MMSCPL, and instead raised the inventory level of MMSCPL artificially to cover up these losses.

(h) Mustaq wrongfully diverted MMSCPL’s revenue to Mustafa’s Pte Ltd (“MPL”) between 1998 and 2005 by installing credit card terminals in MMSCPL’s business premises and paying the monies collected at these terminals to MPL’s bank account instead of MMSCPL’s bank accounts. Mustaq is the registered shareholder and director of MPL.

(i) In their statement of claim, the Suit 780 plaintiffs had originally pleaded an incident whereby Mustaq awarded a contract for repair works to the MMSCPL premises to As Spec Technics Pte Ltd (“As Spec Technics”) without any tender process, because As Spec Technics was a company run by a close friend of his nephew. Mustaq allegedly failed to disclose this transaction to the other shareholders of MMSCPL. However, this allegation was withdrawn by Fayyaz under cross-examination and was not pursued in closing submissions.

(j) Mustaq and the other MMSCPL directors failed to ensure that employees who were family members did not extract value from MMSCPL. Specifically, from 1996 to 2006, Osama (Mustaq’s son) bought electronic goods in his own firm’s name and supplied the goods to MMSCPL at a profit.

(k) From 2005, Mustaq (either by himself or with Ishret, Shama Osama and/or Iqbal) procured, caused or allowed MMSCPL to enter into transactions with related parties, under which MMSCPL would provide goods to these companies on credit terms. These related parties were said to be BID, Shams Gems, Ruby Impex, MPL and/or Mustaq (the “Related Parties”). The Related Parties did not pay for the goods provided to them under these credit sales transactions; and a sum of $232,935,015 which was not captured in the audited financial statements of MMSCPL for 2005 to 2018 was wrongfully appropriated by Mustaq, Ishret, Shama, Osama and/or Iqbal.

Express trust

Over and above the claims of oppression of the Samsuddin estate’s minority rights as a shareholder of MMSCPL, the Suit 780 plaintiffs claimed that Mustaq held one-third of the Family Assets less the MMSCPL shares (ie the “Trust Assets”) on an express trust for the Samsuddin Estate. “Family Assets”, according to the Suit 780 plaintiffs, meant: (i) MMSCPL, (ii) all of Mustaq’s assets, and (iii) the Related Companies, referring to MPL, BID, Mustafa Air Travel Pte Ltd (“Mustafa Air Travel”), Mustafa Foreign Exchange Pte Ltd (“MFE”), Mustafa Holdings Pte Ltd (“MHPL”) and Mustafa Development Pte Ltd (“MDPL”).

The claim of an express trust was said to be based on an assurance or a representation by Mustaq at or around the time of incorporation of MMSCPL and the Related Companies, and on numerous subsequent occasions, to Samsuddin, the Suit 780 plaintiffs and all the other beneficiaries of the Samsuddin Estate that Samsuddin or the Samsuddin Estate would receive a one-third beneficial share of the Family Assets. The Suit 780 plaintiffs sought a declaration that the Trust Assets were held on trust “as to a one-third share thereof for the Samsuddin Estate, credit being given for the shares in MMSCPL held by Samsuddin and which now belong to his Estate, and for Mustaq to be ordered to provide a statement of account of the Trust Assets”.

The defendants’ case

Suit 1158 and Suit 780 concerned the same defendants, and there was some overlap in their defences in both suits. I first set out the common defences raised, before summarising the pleadings unique to each suit.

It should be noted that in both suits, the third to the fifth defendants Shama, Osama and Iqbal) filed brief defences stating that they adopted the defence pleaded by the first and the second defendants (Mustaq and Ishret). Central to Mustaq’s and Ishret’s defence to the claims of minority oppression was the assertion of a “common understanding” reached between Mustaq, Mustafa and Samsuddin in 1973 (“the 1973 Common Understanding”), and a similar “common understanding” reached between Mustaq and the Suit 1158 plaintiffs in 2001 (“the 2001 Common Understanding”), regarding the true beneficial ownership of the shares in MMSCPL. According to the defendants, it was agreed pursuant to the 1973 Common Understanding and the 2001 Common Understanding that MMSCPL was wholly owned by Mustaq, and that Mustaq could run the company as he saw fit.

Common aspects of the defendants’ case in Suit 1158 and Suit 780

(1) The 1973 Common Understanding

The defendants pleaded that Mustaq had started his own business in 1963 selling handkerchiefs, and later garments, slippers and shoes. Mustaq found success early as an entrepreneur and a merchant; and by 1971, he had registered his business as a sole proprietorship under the name “Mustaq Ahmad”. At that time, he conducted his business from premises at 1 Campbell Lane without any assistance from Mustafa and Samsuddin. In 1973, Mustaq decided to move his business to 19 Campbell Lane and 67 Serangoon Road (the “New Premises”), but was unable to do so himself as he had planned to travel to India to visit his pregnant wife. It was then that (according to the defendants) Mustafa offered to help supervise the running of Mustaq’s business together with Samsuddin. Mustaq accepted the offer because he trusted Mustafa and Samsuddin. The partnership known as MMSC was thus set up on 11 July 1973, purely in order to facilitate the move of Mustaq’s business from 1 Campbell Lane to the New Premises. MMSC was set up by Mustafa and Samsuddin in Mustaq’s absence, on the understanding that the business operating out of the New Premises was solely Mustaq’s business. Following Mustaq’s return to Singapore sometime in August or September 1973, he added his own name to the MMSC partnership sometime around 12 September 1973.

At that stage, although the business was operating under the name of the MMSC partnership, there was a common understanding between Mustaq, Mustafa and Samsuddin (the “1973 Common Understanding”) that:

(a) The business belonged solely to Mustaq;

(b) Mustaq would be the sole decision-maker in the business;

(c) Mustafa and Samsuddin would not need to contribute to or be responsible for the business’ finances or assume any risks/liabilities in respect of the business;

(d) Mustafa and Samsuddin would not receive any remuneration from the business: any payments made to them by Mustaq were purely out of goodwill and solely at Mustaq’s discretion, out of familial concern and respect;

(e) As partners of MMSC, Mustafa and Samsuddin would sign any and all documents Mustaq required them to sign.

All the subsequent actions in relation to MMSC and MMSCPL up till Mustafa’s death in 2001 were carried out pursuant to the 1973 Common Understanding. In particular, Mustaq paid for all the allotments of MMSCPL shares to Mustafa and Samsuddin, who provided no consideration for their shares. Mustaq also bore all of MMSCPL’s business expenses and assumed all risks for the business.

The defendants contended that Mustafa’s and Samsuddin’s conduct had always been consistent with the 1973 Common Understanding. As such, Mustafa and Samsuddin (and their respective estates) were estopped from relying on their strict legal rights in respect of their designations as MMSCPL shareholders. Instead, they (and their respective estates) were holding the MMSCPL shares in their names by way of a common intention constructive trust or, in the alternative, on a resulting trust, for the benefit of Mustaq; and Mustaq was the sole and beneficial owner of all MMSCPL shares held by the Mustafa Estate and Samsuddin Estate.

(2) The 2001 Common Understanding

A few days after Mustafa’s death on 17 July 2001, Mustaq held a meeting at his home in India with Asia, Khalida, Ishtiaq, and Ishret. In the defences filed in both Suit 1158 and Suit 780, Mustaq pleaded that at this meeting, he had actually offered Asia and her children two options as to how the Mustafa estate could be dealt with. One option was for him to effect a one-off payment to Asia and each of her children equivalent to the notional value of their respective portion of the Mustafa Estate, following which parties would consider all issues relating to the Mustafa Estate closed and would go their separate ways. Alternatively, parties could maintain the status quo, leave the Mustafa Estate intact and let Mustaq continue running MMSCPL in accordance with the 1973 Common Understanding.

Mustaq claimed that it was Khalida, Ishtiaq, and Asia who confirmed on behalf of all of Asia’s children that they all wanted the second option, ie, to maintain the status quo and to have Mustaq continue running the business the way he had been running it per the 1973 Common Understanding. Mustaq claimed that in so choosing, Asia and her children had accepted the 1973 Common Understanding as applying to them (the “2001 Common Understanding”); and that they were accordingly estopped from insisting on their strict legal rights.

(3) Alleged systematic misappropriation of funds

With regard to the plaintiffs’ allegations of the defendants’ systematic misappropriation of MMSCPL’s funds, the defendants’ position was as follows:

(a) The directors of MMSCPL, including Mustafa and Samsuddin, had a long-standing practice of taking personal loans from MMSCPL, and this was Mustaq’s way of providing for Mustafa, Samsuddin and their families.

(b) There were no sham invoices to BID and MMSCPL did not make any payments to BID in respect of these alleged sham invoices between 2000 to 2006.

(c) The defendants denied that there was any falsification of applications to MOM.

(d) The remaining allegations made by the Suit 780 plaintiffs (eg, payments by MMSCPL to Mustaq’s children, payments made without basis to Zero & One, diversion of revenue from MMSCPL to MPL, siphoning money to buy property in Cambodia, etc) were also denied by the defendants in their pleaded defence.

(e) As for the directors’ fees paid to Mustaq and Ishret, they claimed that Mustaq had full discretion to decide the quantum of the directors’ fees pursuant to the 1973 Common Understanding and the 2001 Common Understanding. After Samsuddin’s death on 19 April 2011 and until 2016, neither the Mustafa Estate nor the Samsuddin Estate had ever raised any objections as to Mustaq’s and Ishret’s directors’ fees and/or the issue of dividends.

(f) In respect of the express trust asserted on behalf of the Samsuddin estate in Suit 780, this was also denied by Mustaq in his defence.

(4) Improper collateral motive and defence of laches and/or acquiescence

The defendants further alleged in their defence that both sets of plaintiffs had an improper collateral motive in commencing the suits, and had brought the action in bad faith. They also pleaded the defence of laches and/or acquiescence.

(5) The first defendant’s counterclaims

In both Suit 1158 and Suit 780, the first defendant, Mustaq, filed a counterclaim for a declaration that he was the legal and beneficial owner of all shares in MMSCPL held by the Samsuddin Estate by way of a common intention constructive trust, or, alternatively, a resulting trust – and consequently, an order that the MMSCPL share register be rectified to reflect Mustaq’s ownership of all the shares in MMSCPL and for the plaintiffs to consent to and facilitate this rectification.

In Suit 780, Mustaq also filed a counterclaim against Fayyaz in Mustaq’s capacity as an executor and trustee of the Samsuddin Estate. Mustaq sought a declaration that Fayyaz had breached his fiduciary duties to the Samsuddin Estate, and an order that Fayyaz fully indemnify the Samsuddin Estate for the expenses incurred by Mustaq in defending himself against Fayyaz’s claims, or alternatively, for damages to be assessed and paid to the Samsuddin Estate.

Other aspects of the defendants’ cases in Suit 1158 and Suit 780

In the defence they filed in Suit 1158, the defendants alleged that the Suit 1158 plaintiffs had no locus standi to bring Suit 1158 as they themselves were not shareholders in MMSCPL; and further, that they were not in any event the proper plaintiffs to pursue the claims of minority oppression because the alleged oppressive acts – even if proven – constituted corporate wrongs.

As for Suit 780, the defendants similarly asserted that the Suit 780 plaintiffs had no standing to make any claim in relation to matters occurring during the lifetime of Samsuddin. The first defendant also denied holding one-third of the Trust Assets on an express trust for the Samsuddin estate, and denied fraudulently breaching his duties as executor and trustee of the Samsuddin estate.

Allegations of breach of duties as administrator and trustee in Suit 9

As for Suit 9, in claiming that Mustaq had breached his duties as administrator and trustee of the Mustafa estate, the plaintiffs relied on the same conduct which they had pleaded as oppressive conduct in Suit 1158 (ie, the dilution of the Mustafa estate’s shares via the 5 January 1995 Allotment and the 11 December 2001 Allotment, the taking of large unsecured and interest-free loans by Mustafa and other directors of MMSCPL, the payment of excessive directors’ fees to Mustaq and Ishret when no dividends were paid to the shareholders, etc). The plaintiffs contended that in breach of his duties as administrator and trustee of the Mustafa estate, Mustaq had failed to disclose to them all these matters and had also failed to take any steps to set things right. Up until 2016, he concealed the truth from the plaintiffs about his own and his family members’ wrongdoing so that the plaintiffs would not be able to take action to protect the Mustafa estate’s interests.

Mustaq was also alleged to have failed to distribute the assets of the Mustafa estate since the grant of the LA in January 2004 and/or to have taken steps to get the plaintiffs registered as the holders of the estate’s shares in MMSCPL. The plaintiffs asserted that MMSCPL owed the estate an amount of more than $1 million which the estate could have used to subscribe for more shares in MMSCPL during the 11 December 2001 Allotment. Despite Ayaz’s attempts to request information about the estate from around 2013 onwards (including information on the estate’s shares in MMSCPL), Mustaq wrongfully refused to provide such information.

In Suit 9, Mustaq essentially repeated the same matters pleaded in his defence in Suit 1158. In particular, he repeated the allegations pleaded in Suit 1158 regarding the 1973 Common Understanding and the 2001 Common Understanding. While Mustaq admitted that he had not distributed the assets of the Mustafa estate and that the plaintiffs had not been registered as the holders of the estate’s shares in MMSCPL, he claimed in his defence that this was because the plaintiffs themselves had “specifically requested” that the Mustafa estate not be dissolved and that he continue running MMSCPL as per the 1973 Common Understanding and the 2001 Common Understanding. In addition, he claimed in his defence that per the 2001 Common Understanding, the plaintiffs had asked him to (and were content to leave him to) handle the legal and administrative matters relating to the Mustafa estate, and that they had only started questioning him from around 2016 when he refused to accede to their (and in particular, Ayaz’s) unreasonable requests for excessive gratuitous benefits.

In his Suit 9 defence, Mustaq also pleaded that MMSCPL had paid estate duties on behalf of the Mustafa estate; that the payment of estate duties was used to offset the amount due from MMSCPL to the Mustafa estate; that MMSCPL had also paid the legal fees and disbursements on behalf of the estate; and that consequently, instead of MMSCPL owing any monies to the Mustafa estate, it was the estate that owed a net amount to MMSCPL.

Before I turn to my findings of fact in this case, I address a number of preliminary legal issues which surfaced in the course of the proceedings. I address these legal issues at this stage in my written grounds because the views I formed on these issues informed and provided context for the factual findings I made at the end of the trial.

Preliminary issues

Evidence in one suit applying to the other

In a pre-trial conference on 12 November 2018, the Senior Assistant Registrar (“SAR”) directed that all three cases – ie, Suit 1158, Suit 9 and Suit 780 – were to be heard by the same Judge and to be heard together or one after the other, immediately or otherwise, subject to the directions to be made by the trial judge. There was no express direction that the evidence adduced in one suit was to apply to the other.

In the course of the trial, the two sets of plaintiffs gave differing accounts as to what each party’s rightful shareholding in MMSCPL should be. The Suit 1158 plaintiffs, who challenged the validity of only two of the share issuance resolutions, claimed that the Mustafa estate should have about 25% of the shares in MMSCPL; whereas the Suit 780 plaintiffs – who challenged the validity of nearly all the share issuance resolutions – claimed that all the parties (Samsuddin, Mustafa and Mustaq) should have an equal one-third share each. In closing submissions, the defendants took the position that the evidence led in Suit 1158 was capable of being considered as evidence in Suit 780 and vice versa. In their further submissions, both sets of plaintiffs voiced their objections. They argued that the court was precluded from considering the evidence led in one suit as evidence in the other suit because there was no express order of court to such effect.

At the outset, it should be noted that the plaintiffs were unable to point to any statutory provisions or rules of court which specifically precluded this being done. Nor did it appear that there were any local authorities in which our courts have held that this could not be done. The local cases cited by the Suit 1158 plaintiffs were really cases where two or more actions had been ordered to be tried together before the same judge and where there were express directions by the court that evidence led in one action would be treated as having been led in the other actions. Neither the Suit 1158 plaintiffs nor the Suit 780 plaintiffs cited to me any local authority in which our courts have expressly held that where two or more actions are ordered to be tried together, evidence in one action cannot be considered as evidence in the other actions in the absence of an express order of court or express agreement by the parties.

Outside of Singapore caselaw, the Suit 1158 plaintiffs cited (inter alia) the case of Callaghan v Independent News & Media Ltd [2008] NIQB 32 (“Callaghan”), a decision of the Northern Ireland Queen’s Bench Division, in which Stephens J stated that in actions which are ordered to be tried at the same time or one after the other, the evidence is to be kept “strictly separate” unless the parties agree that the evidence in one action shall also be evidence in another. With respect, Stephens J did not cite any authorities for this view; and in fact, as the Suit 780 plaintiffs acknowledged in their further submissions, the English courts appear to accept that where two or more actions have been ordered to be tried together on the basis that there are common issues of fact requiring determination, generally the position is that evidence led in one action is to be treated as evidence in the other even where no express direction to that effect has been made. The Suit 780 plaintiffs cited Langstone Leisure Limited v Wacks Caller [2012] EWHC 170 (Ch) (“Langstone”) and Al Sadeq v Dechert LLP [2021] EWHC 1149 (QB) (“Al Sadeq”). There were other cases: see, eg, the English Court of Appeal’s decision in Maes Finance Ltd v Leftleys (A Firm) [1998] WL 1042407 (“Maes Finance”).

Maes Finance involved five actions brought by the plaintiff mortgagees against the defendant solicitors’ firms for alleged negligence, breach of contract and breach of fiduciary duty by a Mr Leftleys. The English Court of Appeal (“CA”) dismissed the defendants’ appeal against Jacob J’s decision that the five actions should be tried together in one trial. It does not appear from Jacob J’s judgment that he gave any express direction that evidence led in one action should stand as evidence in the other actions. In concluding that the five actions should be tried together, he nevertheless held: “If it is shown in a number of cases that Mr Leftley deliberately favoured the lenders then I do not see why a Chancery judge cannot take that into account in relation to others”. On appeal, Aldous LJ (delivering the judgment of the English CA which upheld Jacob J’s decision) said that he was not convinced that some of the facts in one case would be probative in another, but he did not disagree with Jacob J’s view that evidence in one suit could be considered in the other suits – provided such evidence was found to be relevant.

In the present case, it was not disputed that the issue of the parties’ rightful shareholding in MMSCPL was central to both the Suit 1158 plaintiffs’ claims and the Suit 780 plaintiffs’ claims against the defendants. The defendants in both suits were the same. The defendants raised essentially the same defences in both suits. In particular, the first defendant Mustaq took the position in both suits that he was the sole beneficial owner of all the shares in MMSCPL; that Mustafa and Samsuddin (and subsequently their estates) held their shares in MMSCPL on his behalf on either a common intention constructive trust or a resulting trust; and that they had consented to his running the company at his sole discretion, based on what the defendants called the “1973 Common Understanding” and the “2001 Common Understanding”. Mustaq also brought the same counterclaims in Suit 1158 and Suit 780: in both suits, he sought the same reliefs, including declarations of his legal and beneficial ownership of all the shares in MMSCPL held by the Mustafa Estate and the Samsuddin Estate respectively and rectification of the share register to reflect his sole ownership of all these shares. As for Suit 9, as I noted earlier, the plaintiffs’ claim in this suit was based on the same factual allegations as those pleaded in Suit 1158, while Mustaq’s defence was again based on his complete beneficial ownership of MMSCPL and his right to run the company at his sole discretion per the 1973 Common Understanding and the 2001 Common Understanding.

It was against this background that the SAR ordered on 12 November 2018 that Suit 1158, Suit 780 and Suit 9 be heard together in the same trial before the same judge. In so ordering, the SAR had expressly informed parties that she was of the view, inter alia, that there were common issues of fact – and also of law – to be tried. The SAR’s minutes of the pre-trial conference do not show any party disagreeing with her. Nor did any of the parties appeal the SAR’s order. As the Suit 780 plaintiffs noted in their analysis of the English cases of Langstone and Al Sadeq, such an order – made pursuant to O 4 r 1(1)(a) of our Rules of Court (2014 Rev Ed) (“ROC”) – would be predicated on the need to avoid inconsistent findings on the common issues of fact (and of law). With this in mind, it would make no sense to say that if the court does not explicitly so order or the parties themselves do not expressly so agree, then the evidence led in one action must be compartmentalised from the other actions being heard in the same trial. If that were to be the case, there would be no reason for there to be a joint trial of the multiple actions.

Indeed, it appeared to me that all parties themselves recognised this. At the JPTC on 7 September 2020, I had directed that the three suits were to be heard together and that the common witnesses for all the suits should only take the stand once and be cross-examined at one go. The clear understanding underlying these directions was that evidence led in one suit would stand as evidence in the other suits. I was of the view that this must have been the understanding all parties had – despite the plaintiffs’ belated protestations to the contrary. Notably, prior to the trial, an agreement was reached that the parties in Suit 1158, Suit 780 and Suit 9 would be permitted to “use the documents in each Suit and the information therefrom in the other Suits”; that the parties in these suits would be released from the Riddick undertaking to this extent; that copies of all documents and other papers filed in each suit would be provided by the plaintiffs in one suit to the plaintiffs in the other Suits; and that nothing in this agreement would affect the parties’ “right to object to certain lines of cross-examination on the basis of evidentiary rules and trial procedure and practice”. This agreement was notified to me at the JPTC on 28 September 2020. That the parties came to this agreement, and in particular, agreed on the waiver of the Riddick undertakings, must indicate that the evidence adduced in one suit would be treated as evidence in the other suit – subject of course to the caveat that each party retained the right to object to “certain lines of cross-examination” which might contravene evidential or procedural rules.

In this connection, I had observed at the further hearing on 14 June 2021 that it was always open to the plaintiffs in Suit 1158 to apply for leave to cross-examine the plaintiffs in Suit 780 and their witnesses; and vice versa; and that their omission to make any such application was clearly a matter of choice. In their further submissions, the Suit 1158 plaintiffs argued that the law did not allow them to apply for leave to cross-examine the Suit 780 plaintiffs and their witnesses; and that had they attempted any such application it would have failed in limine. According to the Suit 1158 plaintiffs, since they were not joined as parties to Suit 780, any application by them to cross-examine witnesses called by the Suit 780 plaintiffs would have been “tantamount to a stranger to an action applying for permission to cross-examine a witness in that action for purposes other than the Court’s determination of the issues in the action in which he is not a party”.

With respect, I found the analogy inapposite and the reasoning, incorrect. I noted firstly that the cases cited by the Suit 1158 plaintiffs in this respect did not involve a situation where two or more actions had been ordered to be tried together on the basis of there being common issues of fact and where a party in one action sought leave to cross-examine witnesses called by the party in another action. Secondly, insofar as the argument was premised primarily on the definition of cross-examination in s 139(2) of our Evidence Act (Cap 97, 1997 Rev Ed) (“Evidence Act”), and the use of the words “adverse party” in that definition, the Suit 1158 plaintiffs were mistaken in their apparent understanding that these words required their formal joinder as parties to Suit 780 before they could seek leave to cross-examine the Suit 780 witnesses. Indeed, if Parliament had intended to prohibit cross-examination of a witness in a civil action by anyone other than those formally joined as opposing parties to that action, it was exceedingly odd that Parliament should have expressed its intention in such an oblique manner. Certainly nothing in the extract from Sarkar’s Law of Evidence which the Suit 1158 plaintiffs cited supported such a narrow interpretation of the expression “adverse parties”.

If anything, Indian caselaw appears to accept that in a situation where two or more actions have been ordered to be tried together, it is open to the party in one action to seek leave to cross-examine the party in the other action (and his witnesses) if the position taken by the latter is adverse to the interests of the former. In Vijaya Versus Saraswathi & others (2008) 3 MLC 1068, for example, there were two actions – OS No 4 of 2005 and OS No 7 of 2006 – which were jointly tried together. The two actions concerned the same property, with the applicant in OS No 4 of 2005 seeking, inter alia, a declaration of his absolute ownership of the property and the applicants in OS No 7 of 2006 seeking orders for the partition and separate possession of the property. The fourth defendant (and two other defendants) in OS No 4 of 2005 sought leave to cross-examine PW1, who had brought the action in OS No7 of 2006. Their request was rejected by the court below, and the fourth defendant in OS No 4 of 2005 brought a petition for revision of the lower court’s order. The High Court of Madras dismissed her petition. In its judgment, the High Court examined the provisions of the Indian Evidence Act 1872 which define cross-examination and which are in pari materia with our s 139(2). It is pertinent to note that the court dismissed her petition on the basis that she actually sided with the case of PW1 in OS No 7 of 2006 and had said nothing adverse against PW1 in her written statement. The court went on to state that “if there is any conflicting interest between [the fourth defendant in OS No 4 of 2005] and PW1 the plaintiff in OS No 7 of 2006, an opportunity should have been given to [the fourth defendant] to cross-examine PW1”, but that “since it is demonstrated that their interest is common and that there is no conflicting interest, the question of permitting [the fourth defendant] to cross-examine PW1 does not arise in any manner”.

In our local context, in Lee Kuan Yew v Tang Liang Hong & anor [1997] 2 SLR(R) 141 (“Tang Liang Hong”), Lai Kew Chai J ordered a joint trial before the same judge of a number of actions brought by different plaintiffs against the same defendants in relation to the same property at Hua Guan Avenue. In so ordering, Lai J noted that the second defendant had expressed concern that in a joint trial of the various actions, solicitors of one plaintiff would be able in cross-examination to ask leading questions of a witness called by another plaintiff and that all solicitors would be given multiple opportunities to cross-examine her. Lai J dismissed the second defendant’s objection on the basis that the trial judge would not allow any such abuse and that the defendants’ counsel themselves would be able to object vigorously to any such abuse. As the defendants pointed out in their further submissions, it was clear from Lai J’s judgment in Tang Liang Hong that he did not think the plaintiff in one action – not being a party in the other actions - would be precluded per se from cross-examining the witnesses called by the plaintiff in another action: rather, what the trial court would seek to prohibit would be abusive lines of cross-examination.

I would add that while there is no equivalent of our s 139(2) of the Evidence Act in the UK, their courts have taken a similar approach to that as seen in Vijaya Versus Saraswathi and Tang Liang Hong: see, eg, the judgment of the English CA in Bristol & West Building Society v Bhadresa (t/a Bhadresa & Co) [1997] PNLR 329 (“Bhadresa”).

To sum up therefore, in assessing the evidence adduced in this trial, I was of the view that evidence led in one suit could and should be treated as evidence in the other suits. As an aside, I add that in forming this view, I did not have regard to the correspondence between the various counsel cited by the first and second defendants in their submissions, as this correspondence was not adduced in evidence before me during the trial.

I also highlighted to the parties that the above views did not equate with a conclusion that the plaintiffs in one suit would be able to obtain reliefs which adversely affected the interests of the plaintiffs in the other suits if the latter set of plaintiffs were not joined as parties in the first suit. The question of whether evidence led in one suit could stand as evidence in the other suits in a joint trial of multiple suits was a different question from that of whether (in such a joint trial) the parties in one suit could obtain reliefs which adversely affected the interests of parties in another suit without having joined the latter as parties. The first question was one of procedure; the second question was a question concerning parties’ substantive rights. I will elaborate on this later in these written grounds.

Locus standi of the Suit 1158 plaintiffs

The second preliminary legal issue concerned that of the Suit 1158 plaintiffs’ locus standi to bring these proceedings.

Having considered parties’ submissions, I was satisfied that the Suit 1158 plaintiffs had the necessary locus standi, based on what has been referred to as the Wong Moy exception (Wong Moy v Soo Ah Choy [1996] 3 SLR(R) 27, (“Wong Moy”)).

Generally, the proper party to obtain a remedy on behalf of and for an estate is the executor or administrator of the estate: Fung Wai Lyn Carolyn v Kao Chai-Chau Linda [2017] 4 SLR 1018 (at [7]). In Wong Moy, the CA held that while a beneficiary of an estate generally had no equitable or beneficial interest in any particular asset comprised in that estate which was yet unadministered, this did not mean that a beneficiary of an estate which was unadministered or under administration had no remedy: such a beneficiary may, if special circumstances are shown, institute proceedings qua beneficiary to recover assets of the estate.

In Wong Moy, the CA endorsed the judgment of the High Court in Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad [1995] 2 SLR(R) 407 (“Omar Ali”), where the High Court held that the beneficiaries of an estate had locus standi to bring an action qua beneficiaries, to protect the property of the estate and to prevent the sale of the property. In arriving at its decision, the High Court in Omar Ali cited with approval the decision of the Supreme Court of Victoria in Re Atkinson [1971] VR 612, in which Gillard J held:

I have highlighted the above words in Gillard J’s judgment because as a statement of principle, there is nothing in these words which suggest that the beneficiary’s derivative action must be restricted to only certain causes of action. Indeed, the authorities make it clear that there is no such restriction. In Joseph Hayim Hayim v Citibank NA [1987] AC 730 (“Joseph Hayim”), for example, the Privy Council explained the beneficiary’s right in the following terms (at 748F–G):

In Chahwan v Euphoric Pty Ltd trading as Clay & Michael & anor [2009] NSWSC 805 (“Chahwan”), Brereton J (sitting in the New South Wales Supreme Court) noted (at [18]) that the beneficiary’s derivative action was “now available in respect of all causes of action which a trustee may have against third parties”. However, it must always be borne in mind –

In spite of the state of the authorities, the defendants sought to rely on the decision of the High Court in Sia Chin Sun v Yong Wai Poh [2018] SGHC 142 (“Sia Chin Sun”) in arguing that the Wong Moy exception must be limited to “proprietary claims”. This argument was chiefly based on the following statement by the High Court in Sia Chin Sun (at [27]):

As the Assistant Registrar (“AR”) who heard the defendants’ striking-out application in SUM 1582/2018 (“SUM 1582”) observed, however, the High Court in Sia Chin Sun did not actually lay down any definition of “proprietary claim” versus “purely pecuniary claim”. Nor were the defendants able to show me any authority in which these terms were specifically defined by the courts in the context of a derivative action by the beneficiary of an estate. As the AR astutely observed, it did not appear that the High Court in Sia Chin Sun – in using these terms – had in mind the distinction between claims in respect of a res (ie, title to property) and purely in personam claims, since the claims she found to be “proprietary claims” included claims which were clearly not claims concerning title to property (Ayaz Ahmed v Mustaq Ahmad [2018] SGHCR 10 at [43]).

For example, in respect of Mr Sia’s 7/20 share in the Emerald Garden property, Mr Sia had pleaded in the statement of claim filed prior to his death that the transfer of his share in the property to Mr Yong had been carried out at an undervalue, and moreover, that the consideration paid by Mr Yong was transferred back to Mr Yong’s account. Following Mr Sia’s death, his daughter Ms Sia applied for leave to be added as a second plaintiff to Mr Sia’s action against Mr Yong and stated in the affidavit filed in support of her application that she believed they “would have been entitled to seek a rescission of that transfer, and [Mr Yong] would be ordered to transfer the property back to [Mr Sia’s] estate”. Despite the fact that the claim for the share of the Emerald Garden property clearly did not involve any question of title to property per se, the High Court held (at [31]) that on the facts as pleaded, there was “sufficient material to sustain a proprietary claim over the share in the Emerald Garden property, and to specifically seek proprietary relief over the asset”. The court added that the position Ms Sia contemplated taking vis-à-vis the share in the Emerald Garden property “would serve to protect the assets of the estate”, and that in principle, it saw “no reason why the rule in Wong Moy should not be applicable to provide a basis for a beneficiary of the estate to be added to proceedings so as to protect or recover assets of the estate”.

Reading the High Court’s judgment in Sia Chin Sun in context, therefore, I agreed with the AR that what the High Court meant by its use of the term “proprietary claim” was any claim which had as its object the protection and preservation of the assets of the estate (Sia Chin Sun at [27]). On this basis, the Suit 1158 plaintiffs’ action for minority oppression under s 216 of the Companies Act would certainly be a claim which had as its object the protection and preservation of the assets of the estate – these assets being the estate’s shares in MMSCPL and the rights attached to those shares.

As for “special circumstances”, the CA in Wong Moy made it clear (at [24]) that this should not be given too constricted a meaning lest inflexibility should lead to injustice. All the circumstances of the case should be considered, including the nature of the assets, the position of the personal representatives and the reason for the personal representative’s default (at [28]). In the present case, as the Suit 1158 plaintiffs have pointed out, given the plaintiffs’ claims of oppressive conduct by Mustaq himself and his family members, there was plainly no prospect of Mustaq initiating legal action to pursue these claims on behalf of the Mustafa estate.

I add that I did not find the High Court’s decision in Lakshmi Anil Salgaocar v Vivek Sudarshan Khabya [2017] SGHC 120 (“Lakshmi Anil Salgaocar”) to be of any assistance to the defendants. The plaintiff in that case brought suit as the beneficiary of her late husband AVS’ estate for her own benefit and that of her children (the other beneficiaries). As the court noted in that case, the plaintiff framed her claim as being no more and no less than an action to recover, preserve and protect the assets of the estate, per the Wong Moy exception. However, the court held that the Wong Moy exception did not apply because the assets which she claimed to be seeking to recover and protect were in fact apartment units and rental income from these units which belonged to AVS’ company MDWL and its 22 subsidiaries. Title in these units and the rental income did not belong to AVS, nor did they vest in the estate following his death. Instead, the assets of the estate were only those assets which belonged to AVS prior to his death – namely, the shares in MDWL; and even on the grant of letters of administration, the administrator of the estate would not automatically gain title to the units and rental income but would instead gain title to the shares which, on distribution, would entitle the beneficiaries to participate in the company MDWL as shareholders – and from there, to gain control of (and eventually, title to) MDWL’s assets and income.

It was clear even from this brief recitation of the court’s decision in Lakshmi Anil Salgaocar that the Suit 1158 plaintiffs were in a very different position from Madam Salgaocar. The Suit 1158 plaintiffs were not seeking the recovery of the MMSCPL funds alleged to have been wrongfully misappropriated by the defendants. Insofar as they pleaded such wrongful misappropriation of company funds, it was clear that the defendants’ allegedly unlawful conduct was relied on as evidence of how they disregarded the Suit 1158 plaintiffs’ interests as minority shareholders (Leong Chee Kin v Ideal Design Studio Pte Ltd & others [2017] SGHC 192 (“Ideal Design”) at [88]).

Corporate wrongs versus personal wrongs in the context of an oppression claim

In this connection, in evaluating the oppression claims in both Suit 1158 and Suit 780, I noted that while there are four grounds of oppression provided for under s 216 of the Companies Act, they are bound by the common thread of unfairness; and the touchstone for minority oppression is whether the conduct complained of is commercially unfair (Over and Over Ltd v Bonvests Holdings Ltd and another [2010] 2 SLR 776 at [77] and [81]). Commercial unfairness arises when there has been a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect: per the CA in Ho Yew Kong v Sakae Holdings Ltd & others [2018] 2 SLR 333 (“Sakae (CA)”) at [81]. In this respect, a distinction must be drawn between unfairness and unlawfulness: a person may act within his legal rights and yet act in a manner which is commercially unfair; and conversely, conduct which is technically unlawful may not necessarily be commercially unfair. In other words, whether an act is commercially unfair depends on the context in which it took place; and this goes beyond the question of whether the act is lawful or regular (see Sakae (CA) at [82]); Ideal Design at [48]).

I add that in the present matter, neither the Suit 1158 nor the Suit 780 plaintiffs pleaded that MMSCPL was a quasi-partnership, nor did they plead the superimposition of equitable considerations. In the absence of equitable considerations, the unfairness of a party’s conduct must be measured against legitimate expectations arising from the members’ legal rights and the company’s constitution (Ideal Design at [51]). Inter alia, the directors of a company have a fiduciary duty to act in its best interests. It follows from this that shareholders have a legitimate expectation that those in control of the company will act bona fide in the best interests of the company; and that is especially so when the majority shareholders are themselves the directors (Ideal Design at [65]). Those in control of a company must act with valid commercial reasons when pursuing a company’s best interests (Ideal Design at [66]). At the same time, it should be remembered that while breach of a director’s fiduciary duties is a relevant consideration in deciding whether there has been oppressive conduct, it is not determinative (Ideal Design at [66]).

Submission of no case to answer and election to call no evidence

In considering the various claims in the three suits (and, in the case of Suit 1158 and Suit 780, the counter-claims), I also bore in mind the fact that the defendants had submitted no case to answer and elected to call no evidence in all three suits.

The test of whether there is no case to answer is whether the plaintiff’s evidence at face value establishes no case in law or whether the evidence led by the plaintiff is so unsatisfactory or unreliable that its burden of proof has not been discharged (per the CA in Lena Leowardi v Yeap Cheen Soo [2015] 1 SLR 581 at [23] (“Lena Leowardi (CA)”). As the CA further noted in Lena Leowardi, three important implications flow from this submission.

First, the plaintiff only has to establish a prima facie case as opposed to proving his case on a balance of probabilities. Second, in assessing whether the plaintiff has established a prima facie case, the court will assume that any evidence led by the plaintiff was true, unless it was inherently incredible or out of common sense. Third, if circumstantial evidence is relied on, it does not have to give rise to an irresistible inference as long as the desired inference is one of the possible inferences. Moreover, while no adverse inference should be drawn by a defendant’s making of a submission of no case to answer, I think it is logical – and it follows from the reasoning of the court in Baker, Michael A (executor of the estate of Chantal Burnison, deceased) v BCS Business Consulting Services Pte Ltd and others [2020] 4 SLR 85 (“Baker v BCS Business Consulting”) – that if a court were to examine a particular communication by or from the defendant and its contents can fairly be said to point to the existence of certain facts that satisfy the prima facie test, but the court does not have the benefit of an explanation from the defendant that that was not what the defendant meant, the plaintiff’s construction of the particular communication would prevail (Baker v BCS Business Consulting at [69(e)]). (I note as an aside that the decision of the court in Baker v BCS Business Consulting was upheld on appeal by the Court of Appeal.)

In considering whether the plaintiff has made out a prima facie case, the evidence is subjected to a minimal evaluation as opposed to a maximal evaluation (see Relfo Ltd (in liquidation) v Bhimji Velji Jadva Varsani [2008] 4 SLR(R) 657 (“Relfo”) at [20]): the court will assume that any evidence led by the plaintiff is true, unless it is inherently incredible or against common sense (Lena Leowardi (CA) at [24]). This does not mean that the court will not scrutinise the quality of the evidence proffered by the plaintiff, nor does it mean that all evidence must be accorded the same weight. In Baker v BCS Business Consulting, having set out the prima facie test and related tests such as that concerning inferences to be drawn from circumstantial evidence, the court noted that a number of the deceased Chantal’s emails and other communications and documents were cryptic, and that she was no longer around to explain them or to fill any gaps. The court further noted (at [69(f)]:

The defendants’ reliance on documentary evidence

Despite having undertaken not to adduce any evidence when they chose to submit no case to answer, the defendants sought to rely in their closing submissions on various documents which had not been admitted as evidence in the trial record. Even assuming for the sake of argument that it was no breach of their undertaking for them to make such submissions, I must stress that in order for the court to consider something as evidence for or against a party’s case, it must be admitted in accordance with the relevant rules and principles embodied within the Evidence Act (per the CA in Jet Holdings Ltd and others v Cooper Cameron (Singapore) Pte Ltd & another [2006] 3 SLR(R) 769 (“Jet Holdings”) at [36]). Where it is a document that a party wishes the court to consider as evidence in the case but the opposing party does not admit its authenticity, whether or not the document can be admitted into evidence as an authentic document will depend on whether or not it satisfies the requisite criteria contained in the Evidence Act or falls within the relevant exceptions contained therein (Jet Holdings at [36]).

The decision by the CA in CIMB Bank Berhad v World Fuel Services (Singapore) Pte Ltd [2021] 1 SLR 1217 (“CIMB”) did not assist the defendants. In CIMB, the CA reiterated the position stated in Jet Holdings; that once the authenticity of a document is put in issue, the burden of proof on authenticity is not discharged by simply producing the original document in court: a party who has the burden of proving the authenticity of a document first has to produce primary or secondary evidence thereof, ie, the alleged original or a copy, within the provisions of the Evidence Act. Thereafter, it also has to prove that the document is what it purports to be; and this would include proving the authenticity of the signatures if authenticity is in dispute (CIMB at [50]–[54]). The defendants sought to rely on a statement in the CA’s judgment to the effect that the omission to adduce direct evidence is not necessarily fatal to proving a document’s authenticity. However, this statement must be read in the context of the rest of the judgment; in particular, the CA’s cautionary observation (at [57]) that:

In the context of Suit 1158 and Suit 780, the plaintiffs plainly did not admit the authenticity of the documentation for the various share resolutions they sought to have declared null and void, the various Notices of Extraordinary General Meetings (“EOGM”), and other related documents. Since the defendants elected to call no evidence and the first defendant Mustaq did not testify, there was no direct evidence of the authenticity of these documents. I add that based on my reading of the trial transcript, the plaintiffs’ AEICs and the parties’ submissions, these materials did not support the defendants’ suggestion that either set or both sets of plaintiffs had somehow admitted or agreed to the authenticity of some or most of the disputed documents in the course of the trial. Nor did I find any indirect or circumstantial evidence establishing the authenticity of these disputed documents – unlike in CIMB where the CA found that there was “overwhelming” circumstantial evidence establishing the authenticity of the disputed Debenture.

Comparing signatures under s 75 of the Evidence Act

The defendants in their supplemental submissions urged me to exercise the power given under s 75 of the Evidence Act to compare signatures. However, I did not think this was an appropriate case to exercise the power under s 75.

As I have noted, this was a case where the defendants elected to call no evidence, presumably with full awareness that this would leave them in a position where there was no direct evidence of the authenticity of various disputed documents. They also did not persuade me that there was at least some indirect or circumstantial evidence before me which might establish the authenticity of the disputed documents.

Indeed, the submission that I should compare signatures struck me as an afterthought. The submission was made months after the trial had already concluded and after parties had already put in their closing and reply submissions. The defendants did not need the CA’s judgment in CIMB to tell them about the existence of s 75 of the Evidence Act; and no explanation was given as to why they did not raise the question of my exercising the power under s 75 at any stage in the course of the trial – apart from a passing reference during the cross-examination of Ayaz – or even at the point when their election to call no evidence was made.

In the circumstances, I declined to exercise the power under s 75 to compare signatures.

The burden of proof

Finally, insofar as my findings of law are concerned, I should also say something about the burden of proof. It appeared to be the defendants’ position in both Suit 1158 and Suit 780 that the plaintiffs bore the burden of proving that Mustafa and Samsuddin had always regarded themselves as true owners of MMSCPL (and prior to that, the partnership Mohamed Mustafa & Samsuddin Company or “MMSC”).

This is not the correct position in law. There was no dispute in the two oppression suits that the Mustafa Estate and the Samsuddin Estate were registered minority shareholders in MMSCPL. It was the defendants who pleaded that the two estates could not complain of oppression of their minority interests because, in truth, they had no such interests despite being registered minority shareholders. It was the defendants who pleaded that from the outset Mustafa and Samsuddin held their shares on trust for Mustaq; that they were well aware they held their shares on trust for Mustaq; that the Mustafa Estate and the Samsuddin Estate thus now held their shares on trust for Mustaq; that it was Mustaq who was the sole beneficial owner of MMSCPL; that it was Mustaq who was entitled to run the company at his sole discretion, and he was not bound to abide by MMSCPL’s Constitution in running the company.

The defendants, being the ones who asserted these facts in their pleadings and who wished me to believe in their existence, must bear the legal burden of proving these assertions: see in this respect ss 103 and 105 of the Evidence Act and the judgments of the CA in Britestone Pte Ltd v Smith & Associates Far East, Ltd [2007] 4 SLR(R) 855 (“Britestone”) at [58], in SCT Technologies Pte Ltd v Western Copper Co Ltd [2016] 1 SLR 1471 (“SCT Technologies”) at [17] and in Cooperative Central Raiffeisen-Boerenleenbank BA, Singapore Branch v Motorola Electronics Pte Ltd [2011] 2 SLR 63 at [31]). It follows that they also bore the corresponding evidential burden of proof (SCT Technologies at [18]).

This then is a convenient point for me to segue into my findings of fact. I will set out the major findings of fact which I arrived at following the relevant evidential rules and principles, including those I have set out above.

The beneficial ownership of MMSCPL

I start by setting out my findings on the beneficial ownership of MMSCPL, as this issue was central to all three suits. To recap: the claims of minority oppression by the plaintiffs in Suit 1158 and Suit 780 were resisted by the defendants in the first place because they contended that the plaintiffs were not entitled to complain of their interests being oppressed: despite the Mustafa Estate’s and the Samsuddin Estate’s registered minority shareholdings in MMSCPL, the defendants contended that Mustaq was the true beneficial owner of the shares held in the estates’ names. As the oppressive behaviour alleged against the defendants in Suit 1158 and Suit 780 formed the factual premise of the Suit 9 plaintiffs’ claim of breach of administrator’s and trustee’s duties by Mustaq, the beneficial ownership of these shares was also a pertinent issue in Suit 9.

As I noted above, since it was the defendants who pleaded that Mustaq was the true beneficial owner of all MMSCPL held in the Mustafa and Samsuddin estates’ names, the defendants bore the burden of proving this alleged beneficial ownership. Having considered the evidence adduced at trial, I did not find that the defendants had discharged their burden of proof.

I will next summarize the parties’ submissions on this issue before setting out the evidence adduced and the findings of fact I arrived at.

The defendants’ submissions on the issue of beneficial ownership of MMSCPL

In both Suit 1158 and Suit 780, the defendants argued that Mustafa and Samsuddin held their shares in MMSCPL on a common intention constructive trust or, alternatively, a resulting trust, for the benefit of Mustaq. In so arguing, the defendants relied on the framework in Chan Yuen Lan v See Fong Mun [2014] 3 SLR 1048 at [160].

First, the defendants argued that from the evidence available, it was a reasonable inference that neither Mustafa nor Samsuddin had paid, or could have paid, for their MMSCPL shares, and that it was Mustaq who had paid for the shares. As such, there was a presumption that Mustafa and Samsuddin held their MMSCPL shares on a resulting trust for Mustaq. Further, the plaintiffs had not adduced evidence to show that when the shares were allotted, Mustaq intended to gift the shares to Samsuddin or Mustaq: accordingly, the presumption of advancement did not operate to rebut the presumption of resulting trust.

In the alternative, the defendants argued that regardless of whether or not Mustaq had paid for the shares, there was a common intention between him, Mustafa and Samsuddin that Mustafa’s and Samsuddin’s shares would be held on trust for him. According to the defendants, this common intention could be inferred from, inter alia, the absence of any objections from Mustafa and Samsuddin to the manner in which Mustaq had run the business since 1973 (ie based on the 1973 Common Understanding and the 2001 Common Understanding). Clearly (according to the defendants), all three individuals had always understood that the business belonged solely to Mustaq and was his to deal with as he wished. Even during the tenure of the MMSC partnership, Mustafa and Samsuddin had not conducted themselves as true partners, and had left all the decision-making to Mustaq; and this pattern of behaviour continued after the incorporation of MMSCPL in 1989.

The plaintiffs’ submissions

Both the Suit 1158 and Suit 780 plaintiffs denied from the outset the existence of the alleged 1973 Common Understanding and the 2001 Common Understanding.

I summarise the Suit 1158 plaintiffs’ key submissions as follows:

(a) Overall, the conduct of Mustaq, Mustafa and Samsuddin – as demonstrated in the evidence adduced at trial – was inconsistent with there having been a “1973 Common Understanding”. The evidence adduced at trial did not support – and in many instances, undermined – the defendants’ case that Mustafa and Samsuddin did not conduct themselves as partners of MMSC and/or that they had operated MMSC on the understanding that the business belonged to Mustaq. The evidence also undermined the defendants’ case that Mustafa and Samsuddin had started MMSC only as a “formality” to facilitate the administrative aspects of the move of Mustaq’s sole proprietorship (“Mustaq Ahmad”) from 1 Campbell Lane to the New Premises in July 1973.

(b) The evidence adduced at trial similarly did not support – and in many instances, undermined – the defendants’ case that Mustaq’s, Mustafa’s and Samsuddin’s, conduct was consistent with the understanding that Mustaq was the absolute and sole owner of all the shares in MMSCPL, and/or that the share allocations in MMSCPL did not bestow legal rights or entitlements on Mustafa and Samsuddin.

(c) The correspondence leading up to the commencement of Suit 1158 and Suit 9 showed that the defendants’ allegations about the 1973 Common Understanding and the 2001 Common Understanding were an afterthought, concocted purely to resist the plaintiffs’ claims.

(d) The defendants’ conduct in trying mid-trial to recast their version of the 1973 Common Understanding and the 2001 Common Understanding – by making a sudden application to amend their defences in the minority oppression suits – demonstrated that their narrative of the “Common Understanding” was built on invention, not fact.

As for the Suit 780 plaintiffs, in gist, they too submitted that there was no “1973 Common Understanding”. They too relied on the defendants’ conduct in applying belatedly to amend their defences mid-trial to support their argument that the 1973 Common Understanding was a lie the defendants had concocted for the purpose of resisting the plaintiffs’ claims. Like the Suit 1158 plaintiffs, the Suit 780 plaintiffs submitted that there was no evidence to support the defendants’ assertions concerning the manner in which Mustaq, Mustafa and Samsuddin had participated in the business.

The evidence and my findings of fact

Since the defendants called no evidence, Mustaq did not testify about the 1973 Common Understanding and the 2001 Common Understanding. It was also not disputed that there was no documentary or other objective evidence recording the alleged 1973 Common Understanding and the 2001 Common Understanding, or, for that matter, alluding to Mustaq’s sole beneficial ownership of the company.

The conduct of the parties was inconsistent with the alleged 1973 Common Understanding

I will first deal with the plaintiffs’ submissions that the conduct of Mustaq, Mustafa and Samsuddin was inconsistent with the alleged 1973 Common Understanding.

(1) The setting-up of the MMSC partnership

It will be remembered that prior to the incorporation of MMSCPL in February 1989 and their taking up MMSCPL shares in their names, Mustafa, Samsuddin and Mustaq were already partners in the partnership known as MMSC. The defendants’ defences in the two minority oppression suits asserted that prior to the setting-up of MMSC in July 1973, Mustaq had already been successfully running his own business pursuant to a sole proprietorship named “Mustaq Ahmad”. In July 1973, when Mustaq decided to travel to India to visit his then pregnant wife, MMSC was set up “purely” as a “formality to facilitate the operation of the business in [Mustaq’s] absence” and to “facilitate the administrative aspects” of the move of his business from 1 Campbell Lane to the New Premises. The defendants pleaded that although it was Mustafa and Samsuddin who had set up the MMSC partnership in July 1973, the two of them operated the partnership “at all material times…on the understanding that the business operating out of the New Premises was [Mustaq’s] business”; and although Mustaq added his name to the partnership on 12 September 1973 after returning from India, he “did not see any need to change the name of the Partnership” as “he did not wish to confuse his customers and suppliers”. Further, “the business was already operating at the New Premises”; and by that stage, the three men already shared a common understanding that the business operating at the New Premises belonged solely to Mustaq.

The defendants’ pleadings posited, in other words, that Mustaq’s business – which he had originally set up as a sole proprietorship (“Mustaq Ahmad”) – operated in the name and the form of the MMSC partnership after its move to the New Premises; and that Mustafa and Samsuddin, who had helped to set up MMSC, knew all along that it was solely Mustaq’s business.

The above narrative did not appear to me to be supported by the undisputed documentary evidence. In a form lodged with the ROB on 22 February 1975, Mustaq had stated that the principal place of business for his sole proprietorship (“Mustaq Ahmad”) was 65 Serangoon Road. In that same form, Mustaq had also stated that he himself lived at 67 Serangoon Road; and that in addition to the sole proprietorship “Mustaq Ahmad”, he was also a partner in MMSC, which was located at 67 Serangoon Road. A few months later, on 31 July 1975, Mustafa and Samsuddin signed and lodged an application to register MMSC, stating that its principal place of business was 67 Serangoon Road, with a branch at 19 Campbell Lane. In this form, they stated that Mustaq was also the proprietor of “Mustaq Ahmad”, which was operating out of 65 Serangoon Road. These statements suggested that even after Mustaq was added as a partner of MMSC in September 1973, the three men viewed MMSC as a separate and different entity from the sole proprietorship “Mustaq Ahmad”; and all three – including Mustaq himself – differentiated between Mustaq’s ownership of “Mustaq Ahmad” and his ownership of MMSC.

(2) Management of the business

Further to their allegations about the origins of the MMSC partnership, the defendants focused a not inconsiderable amount of attention on the question of who managed the business of MMSC and later MMSCPL. Per the defendants’ pleadings, the 1973 Common Understanding included acceptance by Mustafa and Samsuddin that Mustaq would be the sole decision-maker. The defendants’ premise appeared to be that Mustaq alone managed the business of MMSC, and later, MMSCPL, because he alone owned the business; whereas Mustafa and Samsuddin, being well aware that they were not the true owners of the business, raised no objections to how he chose to run it. The plaintiffs, of course, disputed the allegation that Mustafa and Samsuddin had played no part in running the business of MMSC and later MMSCPL. In [139] to [179] below, I deal with the various aspects of the parties’ submissions.

First, the defendants argued that in the official documentation lodged with the then ROB (later ACRA), Mustaq was the one who signed off on the relevant forms and/or who was listed as the only person responsible for the management of the business.

As Fayyaz pointed out in his evidence, however, the fact that Mustaq filled out the documents and that his name was on the forms did not mean that Mustaq was therefore the only person responsible for running the company. In any event, evidence that Mustaq was the one who had signed off on the ROB/ACRA forms, and/or who had been listed in these forms as the person responsible for the management of the business, did not prove that he was therefore the sole owner of the business. For example, the defendants contended that Mustafa and Samsuddin did not sign on all the documents submitted to the ROB because they did not consider themselves to be owners of MMSC. However, as the plaintiffs pointed out, the relevant legislation at the time (s 7(c)(i) of the Business Names Act, and s 8(1)(d) of the Business Registration Act), provided that the ROB forms could be signed by “one individual of MMSC who is a partner”. As such, the fact that Mustaq was the one who had signed off on these forms did not per se establish that he was the sole owner of MMSC; nor did it establish that Mustafa and Samsuddin were not the owners of MMSC.

Further, and in any event, leaving aside the ROB/ACRA forms, I found that the evidence available showed that Mustafa and Samsuddin were in fact involved in the running and management of MMSCPL. In this connection, I first summarise in brief the relevant portions of the witnesses’ evidence.

(A) Ayaz’s evidence

Ayaz testified that by 1990, Mustafa’s health had begun to deteriorate and Mustaq was “running the show”, meaning that he was given the responsibility to manage MMSCPL – but that Mustaq would make “all the decisions and policies… after discussing with other two partners”. Ayaz also testified that while Mustaq was a managing partner of MMSC, he took orders from Mustafa and Samsuddin. Thus, while Ayaz accepted that Mustaq had a larger role to play in managing MMSCPL, Mustaq was not given free rein to do as he pleased with MMSCPL.

(B) Fayyaz’s evidence

Fayyaz’s evidence was that Samsuddin continued to be in charge of textiles and garments as MMSCPL grew; and that Samsuddin remained involved in the running of the business, at least up till 2008. Although the defendants alleged that Samsuddin was really responsible for a very small percentage of the clothing department revenue (10.9%) as he was only stationed in the suiting and shirting department, Fayyaz denied that this allegation – even if true – in any way diminished or negated Samsuddin’s role in the management of the business.

(C) Ishtiaq’s evidence

Ishtiaq, like Ayaz, gave evidence that Mustafa was very much involved in the business of MMSCPL. According to Ishtiaq, Mustafa was a “straightforward illiterate person”, so it was no surprise that the “accounts of the company and the government documentation and the formalities all was taken care [sic] by…Mr Mustaq”. Ishtiaq testified that he himself had never looked at the financial documents for MMSCPL because he respected and trusted Mustaq as his elder brother. Like Ayaz, Ishtiaq too testified that decisions about the running of the business were made by “all three partners” (ie, Mustaq, Mustafa and Samsuddin):

(D) Maaz’s evidence

Maaz’s evidence was that around the 1980s, Mustafa used to make decision together with Samsuddin about MMSCPL but Mustaq would “help them out”. Maaz admitted that he did not have personal knowledge of this state of affairs, but had come to know about it when he was seven to eight years old, because Mustafa had told him about these matters. Like Ayaz and Ishtiaq, he said that Mustafa was very much involved in the matters of MMSCPL. While Mustafa generally did not raise objections to the way Mustaq ran the business, all three of them (Mustafa, Mustaq and Samsuddin) were owners of MMSCPL, and not just Mustaq.

(E) Aboo Sofian’s evidence

Aboo Sofian, who had been a close friend of Mustafa and Samsuddin since 1962, testified that he was aware that as at 1971, there had been two partners in the business of MMSC (ie, Mustafa and Samsuddin); and in 1973, they had added Mustaq into the partnership. He agreed that he did not have personal knowledge of the “father and son matters and the property issue”, but reiterated that he did know that the business was started by Mustafa and Samsuddin and that “later Mr Mustaq was made a partner”.

(F) Asia’s evidence

As for Asia, who was Mustafa’s second wife, she testified that she did not know anything about business matters and that she only knew the business was doing well. She knew Mustafa, Samsuddin and Mustaq were equal partners in the company, and that Mustaq had been made a partner because he could read and write.

Asia was aware that in July 1975, Mustafa, Samsuddin and Mustaq had signed official business documents naming Mustaq as the person responsible for the management of the business. However, this was to “look after and to run the business”, not to “hand over the business completely”. She reiterated that Samsuddin, Mustafa and Mustaq were equal partners and all had equal shares in MMSCPL.

According to Asia, Mustafa had told her that Mustaq was given the responsibility to look after the company, but nobody “gave [Mustaq] the whole company”. She testified that Mustafa would sign documents given to him by Mustaq, “[s]olely on the basis of trust”.

(3) My findings

In the course of cross-examining the plaintiffs and their witnesses, the defendants sought to suggest that their evidence about Mustafa’s and Samsuddin’s roles in managing the business of MMSC and MMSCPL was unreliable because they had no personal knowledge of how these two entities had been managed. In my view, this allegation was not accurate, since Fayyaz – at the very least – was already working in MMSC from 1979 and in MMSPCL by 1995 and would have been in a position to observe the manner in which MMSCPL was managed prior to Mustafa’s and Samsuddin’s death.

More importantly, it should be remembered that the assertion that Mustafa and Samsuddin played no part in managing the business was made by the defendants themselves, as part of their pleaded case regarding Mustaq’s sole beneficial ownership of MMSCPL. It was the defendants, therefore, who had the legal burden of proving this assertion (see above at [120] to [122]). Since Mustaq – who undoubtedly had personal knowledge of how the business of MMSC and MMSCPL was managed – chose not to testify, I was left with the evidence of the ROB/ACRA records (which the defendants placed heavy reliance on), as well as the evidence of the plaintiffs and their witnesses.

In respect of the ROB/ACRA records, as I noted earlier, these documents could not prove that Mustaq was the only person responsible for managing the business. A fortiori, they could not prove that he was the only person who owned the business.

I would also add that some of the inferences which the defendants tried to draw from the evidence of the plaintiffs and their witnesses seemed to me to be flimsy and/or illogical. For example, Ishtiaq was cross-examined on his AEIC evidence about an incident sometime between 1990 and 1992: according to Ishtiaq, when he was in Singapore, Mustaq had handed him a document in a sealed envelope and asked him to get Mustafa’s and Samsuddin’s signatures on the document when he returned to India. Subsequently Ishtiaq met with Mustafa and then Samsuddin, both of whom signed the document without asking him what the document said. The defendants suggested that Mustafa must have refrained from asking questions about the document because he regarded MMSC and MMSCPL as belonging solely to Mustaq. However, this suggestion did not appear to be borne out either by logic or on the basis of the evidence. Asia’s evidence was that Mustafa would sign documents given to him by Mustaq, “[s]olely on the basis of trust”. I saw no reason to doubt her evidence on this score, given that Mustaq was Mustafa’s eldest son and the only one of the three partners who could read and write English.

On the basis of the evidence adduced, I rejected the defendants’ assertion that MMSC was set up purely as a “formality” to “facilitate” the operation of Mustaq’s business during his absence in July 1973. I found that contrary to the defendants’ assertion, Mustafa and Samsuddin did in fact participate in the running of MMSC, and later MMSCPL. While I accepted that Mustaq appeared to have played a considerably more active management role, this in itself was hardly surprising, given that he was at the material time much younger than the other two men, and he was the only one who read and wrote English. I accepted the plaintiffs’ evidence that while Mustaq might have played a larger role in managing the business, decisions were still discussed with Mustafa and Samsuddin.

Insofar as the 1973 Common Understanding included (purportedly) an understanding between the three men that Mustaq would be the sole owner of MMSC (and later MMSCPL) and its sole decision-maker, my finding as to Mustafa’s and Samsuddin’s participation in the management of MMSC and MMSCPL was inconsistent with there having been any such “Common Understanding”.

My finding herein was bolstered by other evidence which I summarise below.

(A) Mustafa and Samsuddin were remunerated as partners of MMSC

On the evidence available, I found that Mustafa and Samsuddin received payments which were clearly made on the basis of their ownership of MMSC, and later, of MMSCPL. First, the evidence showed that while MMSC was in existence, Mustafa and Samsuddin were remunerated as partners of MMSC, and they declared this remuneration as trade income in their Notices of Assessment. Mustafa’s and Samsuddin’s receipt of such remuneration from MMSC was inconsistent with the defendants’ assertion that MMSC was set up purely to facilitate the operation of Mustaq’s business from the New Premises and that/or that MMSC belonged solely to Mustaq. I add that contrary to the defendants’ assertion, I did not believe that the remuneration paid to Mustafa and Samsuddin was merely a form of “goodwill payments” from Mustaq. If that were the case, there would have been no reason for Mustafa and Samsuddin to pay income tax on these payments – which, indisputably, they did.

(B) Mustafa and Samsuddin received dividends as shareholders of MMSCPL

Second, the evidence showed that following the incorporation of MMSCPL, Mustafa and Samsuddin were paid dividends by the company. Based on MMSCPL’s financial statements, MMSCPL declared dividends between 1992 and 1996 in the following amounts:

Based on Mustafa’s and Samsuddin’s Notices of Assessment from 1994 to 1998, the two of them declared having received dividends as follows:

As with the remuneration they received as partners of MMSC, I did not believe that the share dividends paid to Mustafa and Samsuddin were merely a form of “goodwill payments” from Mustaq. If that were the case, there would have been no reason for Mustafa and Samsuddin to pay income tax on these dividends – which, indisputably, they did. Insofar as the 1973 Common Understanding (purportedly) included an understanding between the three men that Mustaq was the sole owner of MMSCPL and that neither Mustafa nor Samsuddin was entitled to be paid anything by MMSCPL except for “goodwill payments” made purely in Mustaq’s discretion, the fact that Mustafa and Samsuddin received dividends from MMSCPL and paid tax on them was inconsistent with the alleged existence of any such “Common Understanding”.

Further, when the declaration of dividends by MMSCPL resumed in 2014, the manner in which Mustaq chose to make the dividend payments to the Mustafa estate was also inconsistent with the alleged existence of the 1973 Common Understanding. The undisputed documentary evidence showed that between 2014 and 2017, the dividend payments to the Mustafa Estate were distributed to the Suit 1158 plaintiffs in the proportion of their respective shareholdings as stated in the Syariah Court Inheritance Certificate: Mustaq signed and acknowledged these dividend payments in his capacity as the administrator of the Mustafa Estate. This militated against the defendants’ assertion (in their pleaded case) that these were purely “gratuitous payments” made in response to Ayaz’s repeated demands for financial benefits. In addition, as the plaintiffs pointed out, the transcript of the 4 September 2016 meeting showed that when Ayaz expressed unhappiness with the quantum of monthly dividend amounts received (“What benefit would we get from the dividend? We cannot buy house! You are giving 13 thousands, you start giving 26 thousands” ), Mustaq did not dispute that these were payments of dividends by MMSCPL – as opposed to purely “gratuitous payments”.

In sum, therefore, the remuneration received by Mustafa and Samsuddin from MMSC, as well as the dividends paid to them (and later, their estates) by MMSCPL constituted yet another piece of evidence which militated against the alleged existence of the 1973 Common Understanding. The evidence of these payments to Mustafa and Samsuddin contradicted Mustaq’s claims to sole beneficial ownership of the shares held in their names.

(C) Mustafa and Samsuddin contributed funds to and assumed liabilities for MMSCPL

In addition to the above evidence of payment of remuneration and dividends to Mustafa and Samsuddin, there was also clear evidence that both of them had assumed significant risks and liabilities on behalf of MMSCPL. I refer to the following examples of guarantees given by both Mustafa and Samsuddin in respect of MMSCPL’s financial liabilities. It should be highlighted that in fact, Mustafa signed some of these guarantees after 11 March 1999, ie, after he had already resigned as a director of MMSCPL. :

I also accepted that the evidence showed that quite apart from assuming significant risks and liabilities on behalf of MMSCPL, Mustafa and Samsuddin had also contributed funds to MMSCPL by paying for their shares in MMSCPL. In this connection, it should be noted that since Mustaq did not testify at trial, no evidence was forthcoming from him to substantiate his allegation that he was the one who had paid for all the MMSCPL shares held in their names. Nor did he disclose any documents showing that he had paid for those shares.

Indeed, during Mustaq’s correspondence with the Commissioner of Estate Duties (“CED”) between November and December 2002, when the CED sought to ascertain from Mustaq whether Mustafa had paid for the shares for any of the other MMSCPL shareholders, he failed to tell the CED in his responses that he (ie, Mustaq) was the one who had paid for Samsuddin’s shares – and/or that he had paid for Mustafa’s shares as well. In his lawyers’ 11 December 2002 letter to the CED, they had even stated that they were “ascertaining” whether Mustafa had provided any funds for the other shareholders’ shares. As the Suit 1158 plaintiffs pointed out, if Mustaq had paid for Samsuddin’s and Ishret’s shares in MMSCPL, there would have been nothing for him to “ascertain”. Again, since Mustaq did not testify at trial, no evidence was forthcoming from him to explain his reticence. At least one possible inference from this evidence was that he said nothing about having paid for Samsuddin’s and/or Mustafa’s shares because in reality these two individuals had paid for their own shares. In this connection, evidence was also led from Rajesh to the effect that during his review in mid-2016 of the forms lodged by MMSCPL with ACRA for each of the share allotments, he had observed that these forms showed Mustafa, Samsuddin, Mustaq and Ishret to have paid for each of their share allotments using the credit balances in their accounts with MMSCPL.

Per the defendants’ pleaded case, the 1973 Common Understanding included an understanding that Mustafa and Samsuddin would not need to contribute to or be responsible for the business’ finances or assume any risks/liabilities in respect of the business. The above evidence constituted yet another piece of evidence which militated against the alleged existence of this “Common Understanding”. The evidence of the assumption of risks and liabilities by Mustafa and Samsuddin, as well as the contribution of funds by them, flew in the face of Mustaq’s claims about their lack of any beneficial interest in the MMSCPL shares. If indeed the two of them had merely been holding the MMSCPL shares on trust for Mustaq all along, there was no reason for them to pay for these shares, or to take on any risks or liabilities on behalf of the company.

(D) The belated nature of Mustaq’s allegations about his sole beneficial ownership of MMSCPL

I address next the plaintiffs’ submission that the correspondence leading up to the commencement of Suit 1158 and Suit 9 showed the defendants’ allegations about the 1973 Common Understanding and the 2001 Common Understanding to be a fabrication.

I refer first to the correspondence between the Suit 1158 plaintiffs’ lawyers and the defendants’ lawyers. Between July 2016 and December 2016, the Suit 1158 plaintiffs’ lawyers and the defendants’ lawyers exchanged correspondence on a number of matters. Ayaz gave detailed evidence about this in his AEIC. The correspondence itself was not disputed; and I summarise the key points below (I refer to the Suit 1158 plaintiffs’ lawyers as “P” and the defendants’ lawyers as “D”):

From the correspondence, it was evident that as late as August 2016, in responding to correspondence in which the Suit 1158 plaintiffs’ solicitors were requesting financial statements for MMSCPL and insisting that he refrain from reducing or diluting the estate’s shareholding in any entity in which it held an interest, Mustaq made no mention of his purported sole beneficial ownership of MMSCPL and/or the Mustafa Estate’s lack of any beneficial interest.

Had the 1973 Common Understanding and the 2001 Common Understanding genuinely been in existence all along, the most natural – and rational – thing for Mustaq to have done was to explain in his responses that these two Common Understandings rendered the Suit 1158 plaintiffs’ complaints entirely baseless. However, not only did Mustaq not say this, he made various statements acknowledging the Suit 1158 plaintiffs’ interest in MMSCPL, as beneficiaries of the Mustafa Estate. For instance, Mustaq referred to his proposal to arrange for the MMSCPL shares of the Mustafa Estate to be vested in the beneficiaries. Far from denying any interest on the estate’s part in the shares of MMSCPL, Mustaq also stated that the Suit 1158 plaintiffs’ interest in the MMSCPL shares had arisen from July 2001 (ie, after Mustafa died).

While Mustaq did allude to a “common understanding” in the letter of 7 November 2016, I agreed with the Suit 1158 plaintiffs that this was something very different from the version of the Common Understandings that was advanced at trial. I understood from the 7 November 2016 letter that Mustaq acknowledged that Mustafa’s shares in MMSCPL were indeed Mustafa’s own shares: otherwise, there would have been no reason for Mustaq to offer (at the alleged July 2001 meeting) to arrange for the Mustafa Estate’s shares in MMSCPL to be “vested directly in the respective beneficiaries”. In the letter, Mustaq even elaborated on this purported offer by explaining that Ishtiaq and Asia were the ones who had decided such an arrangement was not necessary, and who had expressed their preference for Mustaq to continue running MMSCPL without the Suit 1158 plaintiffs’ input. By contrast, the version advanced by the defendants at trial posited not only that the plaintiffs left it to Mustaq to run MMSCPL, but also that Mustaq was the absolute and sole owner of all the shares in MMSCPL, including the shares held by the Mustafa Estate and the Samsuddin Estate.

The official correspondence and other documents relating to the administration of the Mustafa Estate further supported the contention by both sets of plaintiffs that Mustaq’s story of the 1973 Common Understanding (as well as the 2001 Common Understanding) was something he concocted to resist the plaintiffs’ claims. On 26 October 2002, Mustaq’s then lawyers (who acted for him in his capacity as administrator of the Mustafa Estate) submitted an estate duty form, signed by Mustaq, to the CED. The form stated that Mustafa Estate owned 1,986,170 shares in MMSCPL worth $16,157,492.95. . The form also stated that the property in respect of which the Grant of Probate was to be made “devolves to and vests in the personal representative of the deceased by Law”. On 30 January 2003, Mustaq’s lawyers also informed the CED that they had omitted to include Mustafa’s 42,000 shares in MAT which were worth $155,000 in the earlier estate duty form. On 15 July 2003, the CED issued a Schedule of Assets, listing Mustafa’s shares in MMSCPL and MAT. On 16 September 2003, in his petition to the High Court for the grant of letters of administration for the Mustafa Estate, Mustaq stated that Mustafa’s assets – excluding what Mustafa did not own beneficially – were worth more than $3 million; and he affirmed on oath in filing this petition that the contents were “in all respects true” to the best of his knowledge, information and belief The Grant of Letters of Administration was eventually issued on 28 January 2004. Not once in any of these court filings and official correspondence did Mustaq reveal that Mustafa’s MMSCPL shares were actually held on trust for him.

The same applied to the documents relating to the Samsuddin estate. Leaving aside for the moment the Suit 780 plaintiffs’ contention that Samsuddin’s will failed to reflect the true extent of his assets, it should be noted that Samsuddin was described in the will as a shareholder of MMSCPL, holding beneficially 2,016,993 ordinary shares in MMSCPL. This description could not have escaped Mustaq’s notice, since he was the joint executor and trustee of the will, together with Fayyaz. Given Mustaq’s claims to sole beneficial ownership of all MMSCPL shares, one would have expected from him some expression of consternation – if not indignation – at Samsuddin’s apparent disposition of these shares. There was none. On the contrary, in the Schedule of Assets he subsequently filed jointly with Fayyaz in the probate proceedings, reference was made to Samsuddin’s MMSCPL shares. Similarly, in the joint affidavit dated 31 October 2012 he filed together with Fayyaz, it was stated that the contents of the Schedule of Assets were “true and accurate…to the best of [their] knowledge and belief”. In short, the position taken by Mustaq in these official documents was entirely inconsistent with his subsequent story of the 1973 Common Understanding and his purported beneficial ownership of all shares held in Samsuddin’s (and later the estate’s) name.

Even in MMSCPL’s corporate documents, Mustaq’s (alleged) sole beneficial ownership of all shares was not on record until very recently. In all of MMSCPL’s financial statements for a quarter of a century from 1990 to 2016, Mustaq repeatedly declared that his interest in MMSCPL was limited to the shares registered under his name. It was only after 2016 – in the wake of the Suit 1158 plaintiffs’ refusal to sign the draft Deed of 29 March 2016 – that Mustaq declared for the first time in the financial statements of 2017 and 2018 his “deemed interest” in the shares held by the estates.

Since Mustaq did not testify, there was no explanation from him as to the stark discrepancy between the documentary records and his subsequent narrative of the 1973 Common Understanding and the 2001 Common Understanding. This inconsistency between the documentary evidence and his pleaded defence further supported the plaintiffs’ contention that the 1973 Common Understanding and the 2001 Common Understanding were nothing more than stories concocted by him to resist their claims.

(E) The defendants’ attempt mid-trial to recast their narrative of the 1973 Common Understanding and the 2001 Common Understanding

Finally, I agreed with the plaintiffs in both minority oppression suits that the defendants’ conduct in scrambling mid-trial to recast their narrative of the 1973 Common Understanding and the 2001 Common Understanding showed that the narrative of the “Common Understanding” was built on invention, not fact.

The defendants applied on the 13th day of the trial to amend their defences in Suit 1158 and Suit 9. Their counsel sought to persuade me that the proposed amendments did nothing more than regularise the pleadings. With respect, this characterization of the proposed amendments was far off the mark. In fact, the amendments would have introduced a new narrative about the ownership of the MMSCPL shares. This new version posited that while MMSCPL was entirely Mustaq’s, Mustaq had gifted 14.89% of the shares in MMSCPL to the Mustafa Estate sometime in 2002, and 15.12% of the shares to the Samsuddin Estate sometime in 2004 – but had later decided to revoke the gifts when the Mustafa Estate and Samsuddin Estate commenced claims against him.

Clearly, this new version of events was at odds with the defendants’ pleaded case which posited that Mustaq had always enjoyed uninterrupted beneficial ownership of all MMSCPL shares, pursuant to the 1973 Common Understanding and the 2001 Common Understanding. The defendants proffered no explanation as to why such an important aspect of their defence was surfaced only mid-trial. It appeared to me that their true motivation for the proposed amendments was the realisation that their story of the 1973 Common Understanding had been completely undermined by evidence – particularly, documentary evidence – of Mustaq’s contemporaneous conduct: it was in the wake of this belated realisation that the defendants tried to recast their narrative – or more precisely, to concoct a new narrative. In the circumstances, while the application for leave to amend the defences was dismissed, I agreed with the plaintiffs that it was useful in exposing Mustaq’s claim of a “Common Understanding” for the sham that it was.

Conclusion on the issue of beneficial ownership of the MMSCPL shares

For the reasons set out above in [139] to [178], I found that the evidence available did not support the defendants’ pleaded case on the 1973 Common Understanding and the 2001 Common Understanding. Indeed, as I have pointed out, there were numerous instances where the evidence undermined or contradicted the defendants’ pleaded case. The defendants having premised Mustaq’s claim to sole beneficial ownership of the shares on the purported “Common Understanding”, it followed that they were unable to discharge their burden of proving such beneficial ownership. On the evidence available, I was satisfied that the Mustafa and the Samsuddin estates were the beneficial owners of the shares held in their names.

The alleged acts of oppression

I address next the specific acts which were pleaded by the plaintiffs as oppressive conduct. I begin with the 5 January 1995 Allotment and the 11 December 2001 Allotment, as the allegation of oppressive conduct in respect of these two allotments was common to both Suit 1158 and Suit 780.

The 5 January 1995 Allotment and 11 December 2001 Allotment

The plaintiffs’ and the defendants’ respective positions

In respect of the 5 January 1995 Allotment and the 11 December 2001 Allotment, both sets of plaintiffs submitted that these share allotments were conducted in breach of various provisions of MMSCPL’s Constitution; that they were conducted at an undervalue; that there was no genuine commercial purpose for either allotment; and that both allotments had the effect of diluting Mustafa’s and Samsuddin’s shareholding while increasing Mustaq’s shareholding (as well as Mustaq’s and Ishret’s collective shareholding).

In response, the defendants’ pleaded case relied heavily on the existence of the 1973 Common Understanding. They claimed that per the 1973 Common Understanding, Mustaq was the sole owner of all the shares in MMSCPL, and its sole decision-maker. Mustafa and Samsuddin were said to have been fully aware of the 5 January 1995 Allotment: the defendants’ position was that they raised no objections because per the 1973 Common Understanding, they accepted that the shares in their names were held on trust for Mustaq; and the decision to allot shares was Mustaq’s alone to make. Mustaq – and for that matter, Ishret as well – were not bound to act in accordance with the MMSCPL Constitution because none of the MMSCPL shareholders and directors had ever considered themselves bound by it, nor had they ever conducted themselves in accordance with it. Moreover, the 5 January 1995 Allotment was said to be in MMSCPL’s commercial interests as MMSCPL needed to raise funds for business growth.

Based on the evidence adduced (which included not only the various plaintiffs’ evidence but also the evidence of their experts), I found that both sets of plaintiffs were able to establish a prima facie case that the 5 January 1995 Allotment and the 11 December 2001 Allotment were conducted in breach of MMSCPL’s Constitution (at the very least, Articles 7 and 57 of the Constitution); that they were conducted at an undervalue; that they were not in MMSCPL’s commercial interests; and that they diluted Mustafa’s and Samsuddin’s shareholding while increasing Mustaq’s shareholding (as well as Mustaq’s and Ishret’s collective shareholding).

Before I explain my findings in relation to each allotment, I reproduce below the relevant provisions of the MMSCPL Constitution.

Provisions of the MMSCPL Constitution

Article 7 of the MMSCPL Constitution states:

Article 57 of the MMSCPL Constitution states:

Articles 65 and 66 of the MMSCPL Constitution state:

Article 68 of the MMSCPL Constitution states:

The 5 January 1995 Allotment

The 5 January 1995 Allotment involved the issuance of 700,000 MMSCPL shares to Mustaq at $1 each. Mustaq was the only shareholder who was issued shares in the 5 January 1995 Allotment. As a result of this allotment, Mustaq’s shareholding increased from 34.01% to 42.57%; Ishret’s shareholding decreased from 14.88% to 12.95%; Mustafa’s shareholding decreased from 25.35% to 22.07%; and Samsuddin’s shareholding decreased from 25.75% to 22.41%.

Documents relating to the 5 January 1995 Allotment

At trial, the following documents were brought up in relation to the 5 January 1995 Allotment.

First, there was a document which the defendants alleged to be a Notice issued on 23 December 1994 of an EOGM to be held on 5 January 1995 (“23 December 1994 Notice”), where the stated agenda was to “approve the allotment of shares” and to “transact any other business”.

Second, there was a document which the defendants alleged to be the Minutes of the EOGM on 5 January 1995, allegedly signed by Mustafa, Samsuddin, Mustaq, and Ishret (who was named in the Minutes as the Chairman of the EOGM), and purporting to record the passing of a resolution for the allotment of 700,000 shares to Mustaq at $1 per share (“5 January 1995 EOGM Minutes”). The 5 January 1995 EOGM Minutes did not state the reasons for the issuance of the shares.

Third, there was a Notice of Resolution in Form 11 dated 5 January 1995, which was registered with ACRA on 12 January 1995, and signed only by Mustaq (“12 January 1995 Notice of Resolution”).

Lastly, there was a Return of Allotment of Shares in Form 24, stating that 700,000 shares were allotted to Mustaq for cash, signed only by Mustaq (“5 January 1995 Return of Allotment of Shares”).

Oral testimony and affidavit evidence

Having elected to submit no case, the defendants did not adduce any evidence, though they claimed to rely on a number of documents (which I address later). As for the evidence led by the plaintiffs, this is summarised below:

(1) Ayaz’s evidence

Ayaz’s evidence was as follows:

(a) Mustaq, Ishret and Iqbal did not give Mustafa an Offer Notice as required by Article 7 of the MMSCPL Constitution.

(b) The 23 December 1994 Notice was not authentic and was not given to Mustafa and Samsuddin in accordance with Article 140 of the MMSCPL Constitution. Further, it did not provide for 14 days’ notice of the meeting, nor did it specify the number and class of shares and the price at which the shares were offered and/or limit the time within which the offer would be deemed to be declined.

(c) Although Mustafa was in Singapore on 5 January 1995, the signature which appeared against Mustafa’s name on the 5 January 1995 EOGM Minutes was not his signature. Ayaz was “100 per cent sure about [Mustafa’s] sign [sic] being forged”.

(2) Fayyaz’s evidence

Fayyaz’s evidence was as follows:

(a) Like Ayaz, Fayyaz disputed the authenticity of the 5 January 1995 EOGM Minutes. At trial, he agreed that the signature above Samsuddin’s name in the 5 January 1995 EOGM Minutes “looks like” Samsuddin’s signature. However, he did not accept in any event that there was such a meeting. Ishret could not understand English: she would not have been able to explain the allotment at any such meeting.

(b) Fayyaz did not recall Samsuddin or, for that matter, Fayyaz himself receiving the 12 January 1995 Notice of Resolution. Further, the 12 January 1995 Notice of Resolution was signed only by Mustaq while the 5 January 1995 EOGM Minutes stated that all the shareholders of MMSCPL agreed to the 5 January 1995 Allotment.

The plaintiffs’ submissions

The plaintiffs disputed the authenticity of the 23 December 1994 Notice and the 5 January 1995 EOGM Minutes.

In the main, the submissions of the Suit 1158 plaintiffs were as follows.

(a) First, there was a prima facie case that the 5 January 1995 Allotment was conducted in breach of Articles 7 and 57 of the MMSCPL Constitution.

(i) The shares to be issued were not offered to Mustafa “in proportion as nearly as the circumstances [would] admit to the number of shares then held by [him]”. There was no evidence of any Offer Notice being sent to Mustafa. Pursuant to Article 7, no Offer Notice was necessary if there was a special resolution waiving Mustafa’s right to have the shares offered to him, but there was no evidence of a special resolution either.

(ii) Based on the 12 January 1995 Notice of Resolution (which the defendants had accepted was authentic), Ishret, Mustafa and Samsuddin did not approve the 5 January 1995 Allotment.

(iii) The defendants had pleaded that Mustafa and Samsuddin knew of but did not object to the 5 January 1995 Allotment because it was conducted in accordance with the 1973 Common Understanding. Since the plaintiffs had shown that their story about the 1973 Common Understanding was false, the defendants’ case was completely undermined.

(iv) The defendants had the burden of proving the authenticity of the 23 December 1994 Notice and the 5 January 1995 EOGM Minutes – ie, they had to prove that Mustaq signed the 23 December 1994 Notice, and that Mustaq, Ishret, Samsuddin and Mustafa signed the 5 January 1995 EOGM Minutes. They had not done so. The suggestion that the documents had been admitted into evidence pursuant to (i) s 49 read with s 75 of the Evidence Act, (ii) s 66 read with s 64 of the Evidence Act, (iii) s 67A read with s32(1)(b) and/or s 32(1)(j) of the Evidence Act and (iv) ss 18, 19 and 21 of the Evidence Act was misconceived. These documents were not in evidence; and the court was urged to find that the defendants had fabricated evidence.

(b) There was a prima facie case that the 5 January 1995 Allotment was conducted at an undervalue, based on the expert evidence of Mr Owen Hawkes (“Hawkes”) and Mr Mark E Collard (“Collard”).

(c) There was a prima facie case that the 5 January 1995 Allotment was not in MMSCPL’s commercial interests.

In the main, the submissions of the Suit 780 plaintiffs were as follows:

(a) There were serious issues in relation to the 5 January 1995 EOGM Minutes – for example, this document differed from the document that MMSCPL filed in ACRA, as it purported to be signed by all the shareholders while the one filed in ACRA was signed only by Mustaq. In any event, there was in fact no meeting.

(b) There was no proper commercial purpose for the 5 January 1995 Allotment. The only reason for the allotment was to allow Mustaq wrongfully to acquire further shares in MMSCPL at a significant discount.

(c) The shares were issued at a significant undervalue.

The defendants’ submissions

The defendants, for their part, argued that the 5 January 1995 Allotment was not in breach of the MMSCPL Constitution. As noted earlier, this argument was premised on the alleged existence of the 1973 Common Understanding between Mustafa, Samsuddin and Mustaq.

In any event, according to the defendants, the evidence showed that as at 5 January 1995, all existing shareholders had agreed to the issuance of the 700,000 shares to Mustaq, since the 5 January 1995 EOGM Minutes were signed by all four shareholders (ie, including Mustafa and Samsuddin). In this connection, the defendants did not deny that no actual meeting was held on 5 January 1995: instead, each of the four shareholders was said to have simply signed the resolution authorizing the share allotment.

The defendants also argued that the 5 January 1995 Allotment was in the commercial interests of MMSCPL.

My findings

(1) The 5 January 1995 Constitution was conducted in breach of the MMSCPL Constitution

I address first the plaintiffs’ contention that the 5 January 1995 Allotment was conducted in breach of the MMSCPL Constitution. In this connection, as noted earlier, the defendants’ pleaded defence was premised on the 1973 Common Understanding. Pursuant to this “Common Understanding”, since Mustafa and Samsuddin knew that MMSCPL belonged wholly to Mustaq and that he alone made all decisions, neither of them raised any objections (nor did they have any basis for objecting) when it was decided that 700,000 shares should be issued to him at $1 each. In other words, the 1973 Common Understanding rendered compliance with Article 7 of the MMSCPL Constitution moot.

Clearly, once I found that Mustaq’s story of the alleged 1973 Common Understanding was a complete fabrication, the factual stratum for the above defence no longer existed. The defendants did not actually plead in the alternative that the 5 January 1995 Allotment had in any event been conducted in compliance with the MMSCPL Constitution and/or that Article 7 of the MMSCPL Constitution had been satisfied. In principle, therefore, the arguments they subsequently raised about the 5 January 1995 Notice of EOGM and the 5 January 1995 Resolution were really beside the point. In the interests of completeness, I will nevertheless address these arguments.

First, there was – indisputably – no evidence of an Offer Notice having been sent to Mustafa and Samsuddin. This was a breach of Article 7 of the MMSCPL Constitution, unless there was a Special Resolution dispensing with the requirement for such an offer, or it was “otherwise agreed to by the holders of all the shares for the time being issued”. There was – indisputably – no evidence of such a Special Resolution. This then left the defendants’ argument that the four existing shareholders as at January 1995 – Mustaq, Ishret, Mustafa and Samsuddin – had agreed to the share allotment by signing the 5 January 1995 Resolution subsequent to the 23 December 1994 Notice of EOGM. Since Mustaq and Ishret did not give evidence, the defendants had to rely on the documents themselves; and since the plaintiffs disputed the authenticity of these documents, the defendants had to establish their authenticity.

In this connection, it would be helpful to revisit the judgment of the CA in CIMB; and in particular, the following passages in which it considered CIMB’s argument that it had discharged its burden of proving the authenticity of the disputed Debenture by simply producing the original document in court. The CA rejected CIMB’s argument, noting that it “arose from a misinterpretation of the [Evidence Act]”. Citing the judgment of the High Court in Jet Holding and others v Cooper Cameron (Singapore) Pte Ltd and another [2005] 4 SLR(R) 417 (“Jet Holding (HC)”, at [146]), the CA noted that the best evidence rule required that the contents of documents must under s 66 of the Evidence Act be proved by primary evidence, ie, the originals themselves, except in situations falling within s 67 Evidence Act: the original documents were to be produced to the court for inspection (s 64 Evidence Act); secondary evidence being allowed only upon satisfaction of the existence of the circumstances mentioned in s 67. A document produced as primary evidence or secondary evidence will have to be proved in the manner laid down in ss 69 to 75: the making, execution or existence of a document has, for instance, to be proven by the evidence of the person who made it or one of the persons who made it, or a person who was present when it was made. Importantly, the CA emphasised (at [51]) the observation of the High Court in Jet Holding (HC) that “a mere tender of even the original document is not enough. Documents are not ordinarily taken to prove themselves or accepted as what they purport to be. There has to be an evidentiary basis for finding that a document is what it purports to be”. It also agreed (at [50]) with these observations by the judge below:

As I noted earlier, in CIMB the CA went on to hold (at [54]) that proving the authenticity of a document would include proving the authenticity of the signatures in the document if authenticity was in dispute. The CA noted that s 69(1) of the Evidence Act did not provide that the authenticity of the document would be established only by direct evidence (ie, by the signatories themselves or a witness to the signatories), although it held that “direct evidence would usually be the strongest evidence available to a party, and the maker of a document should generally be called as a witness to prove its authenticity” (at [57]). In each case, the impact of a party’s failure or omission to adduce direct evidence would depend on the facts of that case.

In the present case, Mustaq and Ishret would have provided the best evidence that the 23 December 1994 Notice and the 5 January 1995 Resolution were indeed what they purported to be; in particular, that the signatures on these documents were authentic. They did not give evidence. Instead, the defendants attempted to get Ayaz and Fayyaz to concede the authenticity of the signatures. It was plain to see, however, that such indirect evidence as they were able to glean from the two plaintiffs was quite weak and/or incomplete. Thus, for example, their attempt to invoke s 49 of the Evidence Act by getting Ayaz to concede the authenticity of Mustaq’s signature on the 23 December 1994 Notice was undermined by the lack of any evidence that Ayaz was a “person acquainted” with Mustaq’s handwriting for the purposes of s 49. As for the 5 January 1995 Resolution, while Fayyaz appeared prepared to agree that the signature shown below Samsuddin’s name “looks like” Samsuddin’s signature, Ayaz for his part was adamant that the signature purporting to be Mustafa’s signature could not be Mustafa’s.

Further, although the 5 January 1995 Resolution was supposedly signed by all four shareholders, the 12 January 1995 Notice of Resolution – which the defendants admitted had been lodged by MMSCPL with ACRA to notify the latter of the 5 January 1995 Resolution – was signed only by Mustaq. This 12 January 1995 Notice of Resolution also referred to a resolution signed by Mustaq for the issuance of 700,000 ordinary MMSCPL shares to Mustaq, and annexed a shareholders’ resolution signed by Mustaq. This was an odd discrepancy which demanded an explanation, given the defendants’ reliance on 5 January 1995 Resolution as evidence of all four shareholders’ agreement to the share allotment. Unfortunately for the defendants, Mustaq – who would have been best placed to proffer an explanation – did not testify.

Instead, in cross-examining Ayaz, the defendants’ counsel suggested that either the company secretary or the management services company would have submitted the Notice of Resolution – and that they could have done so either by “set[ting] out the resolution being passed…or attach[ing] an annexure”. I did not find any merit in this suggestion. First of all, there was no evidential basis for such a suggestion. Second, Ayaz obviously had no personal knowledge of how the Notice of Resolution was prepared and filed: any agreement he expressed with counsel’s suggestion would simply have been speculation.

As for the defendants’ attempt to argue that the 23 December 1994 Notice and the 5 January 1995 Resolution could be admitted into evidence under either s 32(1)(b) or s 32(1)(j) of the Evidence Act, I found this argument to be devoid of merit as well. In respect of s 32(1)(b) of the Evidence Act, the High Court in Bumi Geo Engineering Pte Ltd v Civil Tech Pte Ltd [2015] 5 SLR 1322 (at [104]) has held that:

In the present case, there was no evidence available from which it could be inferred that the two documents were statements made “in the ordinary course or routine of business or duty” such that they might be “presumed to have been done from disinterested motive and [might] therefore be taken to be generally true”. Indeed, since these two documents purported to document a transaction which resulted in Mustafa’s and Samsuddin’s shareholding being decreased while Mustaq’s was increased, neither set of plaintiffs in this case would have agreed that the documents could be “presumed to have been done from disinterested motive”.

As for s 32(1)(j), this would only apply if the maker of the document were shown to be dead or unfit to testify by reason of his bodily or mental condition. This could not the case here because Mustafa’s and Samsuddin’s demise notwithstanding, Mustaq and Ishret remained very much alive; and there was no evidence that either was physically or mentally unfit to testify.

To recap: the plaintiffs having refused to admit the authenticity of the 23 December 1994 Notice and the 5 January 1995 Resolution, the defendants bore the burden of proving their authenticity. On the basis of the evidence adduced before me, I found that these documents were not proven to be authentic. I was not satisfied that the 5 January 1995 Resolution had in fact been signed by Mustafa and Samsuddin.

The defendants’ failure to establish the authenticity of these documents had the following implications. First, since the 23 December 1994 Notice was not shown to be authentic, there was no evidence that notice of the 5 January 1995 EOGM was given to Mustafa and Samsuddin. This was a breach of Articles 65(1) and 66(1) of the MMSCPL Constitution.

Second, since the 5 January 1995 Resolution was not shown to be signed by all four registered shareholders and not shown to be authentic, there was no evidence of the 5 January 1995 Allotment having been “agreed by all the holders of all the shares for the time being issued”. In the absence of any evidence of an Offer Notice having been given to Mustafa and Samsuddin and/or a special resolution waiving the requirement for such an offer, this was a breach of Article 7 of the MMSCPL Constitution.

For the reasons set out above, I agreed with both sets of plaintiffs that the 5 January 1995 Allotment was conducted in breach of the MMSCPL Constitution. Of course, the plaintiffs’ submissions as to the defendants’ oppressive behaviour did not stop there. In every allegation of minority oppression, the nub of the issue is whether the behaviour complained of was commercially unfair. The authorities draw a distinction between unfairness and unlawfulness: a person may act within his legal rights and yet act in a manner which is commercially unfair; and conversely, conduct which is technically unlawful may not necessarily be commercially unfair (see Sakae (CA) at [82]); Ideal Design at [48]).

(2) Allotment was not for a proper purpose

In respect of the 5 January 1995 Allotment, the plaintiffs asserted that not only was it in breach of the MMSCPL Constitution, it was not carried out for a proper purpose: first, the share allotment was done at an undervalue; second, it was not in the commercial interests of MMSCPL and its real purpose was to benefit Mustaq. To prove these assertions, the plaintiffs adduced evidence from three experts: Mr Owen Hawkes (“Hawkes”) of KPMG Forensic, a chartered accountant, a certified fraud examiner and a certified financial forensic accountant; Mr Mark Collard (“Collard”) of KPMG Deal Advisory, a chartered valuer and appraiser; and Mr Chee Yoh Chuang (“Chee”) of RSM Chio Lim LLP / RSM Corporate Advisory Pte Ltd, a chartered accountant and certified fraud examiner.

Having considered the evidence adduced, I accepted that the 5 January 1995 Allotment was done at an undervalue, that it was not in the commercial interests of MMSCPL, and that the true purpose of the allotment was to benefit Mustaq. I address first the issue of the allotment having been done at an undervalue.

(3) Shares were issued at an undervalue

(A) Chee’s evidence

In Chee’s first report dated 20 April 2020 (“Chee’s First Report”), he opined that as at 5 January 1995, the fair value range per share was $30.70 to $56.40. Chee derived the fair value using the Market Approach. He retrieved data from two listed comparable companies operating in Singapore as at the Valuation Date (in this case 5 January 1995), ie, Isetan (Singapore) Limited and Metro Holdings Limited. In order to estimate the fair value range of MMSCPL, he retrieved EV /EBITDA , EV/EBIT and P/E multiples for the comparable companies as at the valuation date and arrived at an opinion of the fair value range using the mid-point of the indicated valuation ranges derived from the three multiples approaches.

In cross-examination, the defendants challenged Chee’s comparison of MMSCPL with Metro and Isetan. The defendants argued that the profile of Metro was quite different from MMSCPL’s, as Metro had “evolved into a management property and investment holding company rather than focused on the retail business”. In response, Chee provided the following explanation:

I accepted Chee’s explanation as being rational and sensible: as he pointed out, Isetan and Metro might not have been the perfect comparisons but these were the best options available. It should be noted that Collard too compared MMSCPL to Isetan and Metro in his report.

(B) Hawkes’ evidence

In Hawkes’ expert report dated 20 April 2020 (“Hawkes’ First Report”), he stated that in his view, the 5 January 1995 Allotment was carried out at an undervalue because the price at which Mustaq acquired the shares ($1 per share) was lower than the value of the shares as at 5 January 1995 by $3.01. Hawkes found, therefore, that Mustaq had acquired the further shares in MMSCPL at a discount of 75.04%. This was not challenged by the defendants in cross-examination.

In his analysis, Hawkes adopted the Net Asset Value approach (the “NAV Approach”). Hawkes explained that the NAV approach was a conservative approach to estimating the value of the MMSCPL shares acquired in the allotment. While the assets and liabilities in the financial statements of MMSCPL would generally be stated at values at which they are expected to be realized or paid out in future (ie, their realisable values), there were exceptions to this assumption, which resulted in limitations to the NAV Approach when calculating the value of MMSCPL. The NAV approach was likely to result in a lower valuation as compared to an approach that looks at future earnings and expenses (eg, the Discounted Cash Flow Approach).

According to Hawkes’ calculations, the NAV of the acquired shares was $2,804,298.60, whereas the consideration paid by Mustaq for the shares was only $700,000. The deficit in consideration paid was therefore $2,104,298.60, which worked out to an estimated deficit of $3.01 per share.

While the size of the undervalue estimated by Hawkes ($3.01) was smaller than the size of the undervalue estimated by Chee, I accepted that this was because Hawkes had, in his own words, adopted a more “conservative approach”.

(C) Collard’s evidence

Collard’s evidence was also consistent with that of Hawkes and Chee.

In Collard’s expert report dated 4 August 2020 (“Collard’s Expert Report”), he stated that apart from the NAV Approach adopted by Hawkes, it was also appropriate to use either the Adjusted Net Asset Value approach (“Adjusted NAV Approach”) or the Sum of the Parts Approach (“SOTP Approach”) to obtain the fair market value of the shares as at the date of the 5 January 1995 Allotment. Using these two approaches, Collard found that the fair market value was $8.06 and $10.95 respectively.

In cross-examination, just as they did with Chee, the defendants challenged Collard’s calculations on the basis that he had compared MMSCPL to companies such as Isetan and Metro. The defendants argued that comparisons to such companies had to be eschewed, because unlike them, MMSCPL was really only a supermarket and department store business. In response, Collard provided a similar explanation to Chee’s:

As with Chee’s explanation, I found Collard’s explanation to be rational and sensible. As Collard pointed out, the point of the comparisons was to provide a benchmark which could then be used to arrive at a valuation, with appropriate adjustments being made along the way. I should point out, moreover, that there was no evidence adduced by the defendants to show that there were other, better comparisons available which Chee and Collard failed to take account of.

(D) The defendants’ allegations about mmsc’s “practice” of issuing shares at par

In the course of cross-examining the plaintiffs’ expert witnesses, the defendants’ counsel suggested that MMSCPL’s practice had always been to issue the share of $1 based on par value, and that the shareholders had agreed to this allotment at the par value of $1. I did not find found this suggestion in any way helpful. For one, there was no evidential basis at all for the suggestion of a “consistent” internal practice of issuing shares at par – or of an agreement by the shareholders to the 5 January 1995 Allotment being done at par.

In any event, the defendants’ allegation of an internal “practice” of issuing shares at par did not actually assist their efforts to resist the minority oppression claims. In this connection, the case of Re Sunrise Radio Ltd; Kohil v Lit and others [2009] EWHC 2893 (Ch) (“Sunrise Radio”) is instructive. In that case, the petitioner held a 15% shareholding in the company. In 2005, the company issued more shares at par. The petitioner did not subscribe to the shares, which were allotted at par to the majority shareholder – a company (ABC Ltd) owned by L, one of the company’s directors. The effect of the allotment to ABC Ltd was to dilute the petitioner’s shareholding to 8.33%. The petitioner brought a minority oppression claim against L and the other directors, claiming that the rights issue and increase in share capital had unfairly prejudiced her interests as a minority shareholder and seeking an order for the respondents to buy her out. At an EOGM in 2007, the authorised share capital of the company was increased, and the directors were authorised to disapply the pre-emption rights in the company’s articles of association. In the minority oppression proceedings, one of the matters in dispute was whether the petitioner had been unfairly prejudiced by the 2005 share allotment and the 2007 increase in share capital. The English High Court answered this question in the petitioner’s favour, holding that she had indeed been unfairly prejudiced by (inter alia) the 2005 share allotment and the 2007 increase in share capital. The court held that while a rights issue might be appropriate even if the foreseeable or inevitable effect was the dilution of the percentage holding of a minority shareholder or of the value of that shareholding, such rights issue must nonetheless be priced at a level which was fair to all. Citing Hoffman J’s judgment in the seminal case of Re a company (No 007623 of 1984) [1986] BCLC 362, the court highlighted (at [79]) that the power to allot shares was a fiduciary one, and the decision as to whether or not capital needed to be raised was separate from the price at which the shares should be offered. Directors had a duty to act even-handedly and fairly in considering what price could and should be extracted from those willing and able to subscribe to a share offer, and should not unthinkingly issue shares at par. The impact of this duty became all the more acute “if the board members, or those in a position to control or influence them, stand to benefit from the exercise of the power in a particular way” (at [95]).

In sum: I found the evidence given by the plaintiffs’ experts to be credible and I accepted that the 5 January 1995 Allotment was carried out at an undervalue.

(4) No commercial reason for the 5 January 1995 Allotment

(A) Background

As to the lack of a commercial reason for the 5 January 1995 Allotment, it should first be pointed out that based on MMSCPL’s financial statements for the year ended 1994 and for the year ended 1995, it was not disputed that the company had enough funds to declare a dividend of $1.314 million for the year ended 1994 and $1.606 million for the year ended 1995. The company also paid out directors’ fees totalling $700,000 for the year ended 1994 and $1.2 million for the year ended 1995. The financial statements also showed that MMSCPL had fixed deposits totalling more than $22 million in both the year ended 1994 and the year ended 1995.

It should additionally be pointed out that although the defendants alleged that the 5 January 1995 Allotment had a genuine commercial purpose (ie, to raise funds for MMSCPL’s business growth), there was no documentary evidence of Mustaq’s and Ishret’s discussions or deliberations in this respect. In response to an order for specific discovery of minutes of meetings, management accounts and/or other documentation evidencing and/or reflecting and/or recording the use of the $700,000 raised from the 5 January 1995 Allotment, the defendants affirmed affidavits saying they had no documents falling within this description other than the documents previously discovered.

(B) Chee’s evidence

It was against this backdrop that Chee gave evidence – which was unchallenged – that there was no requirement for MMSCPL to raise funds using the 5 January 1995 Allotment. Even assuming for the sake of argument that there was a need to raise funds, as Chee pointed out, this commercial purpose could have been achieved by allotting the shares in proportion to each shareholder’s shareholding in MMSCPL.

Under cross-examination, Chee was firm in maintaining that at the material time in 1995, MMSCPL had sufficient cash, even without the funds raised through the 5 January 1995 Allotment. His evidence struck me as being fair and balanced. Based on the financial statements for the year ended 30 June 1994 (dated 28 December 1994), which Chee accepted as a “snapshot” of MMSCPL’s financial position before the 5 January 1995 Allotment, Chee accepted that the gearing ratio was high. He also accepted that at that point in time, MMSCPL had many debts, and increasing the capital would be something that “the banks take into account favourably”. However, as he pointed out:

This was in my view a telling point: if the true purpose of the 5 January 1995 Allotment had been to increase MMSCPL’s share capital, this purpose could have been achieved by offering the new shares to all shareholders for subscription in the same proportion as their shareholdings – in compliance with Article 7(a) of the MMSCPL Constitution. There was simply no good reason for conducting the share allotment in such a manner that it breached the MMSCPL Constitution and disadvantaged the shareholders other than Mustaq, by diluting their interests in the company.

Based on the MMSCPL 1995 accounts, Chee also accepted that in 1995, there was a property revaluation reserve of $35.98 million, which was provided for because of the completion of the Mustafa Centre. He accepted that there was an amount of $35.98 million transferred due to the revaluation of Mustafa Centre during the year, and that the equity position for the financial year 1995 was enhanced by the revaluation of the Mustafa Centre in May 1995. He also accepted that there was a negative movement of $821,979 during 1995, which represented provision made for potential exchange rate losses for the year 1995 (though he queried why the company would have these exchange rate losses to begin with ). When the defendants then sought to suggest that there was a need for capital expenditure of $25 million in the years 1993 to 1994, and that the $700,000 cash injection from the share allotment did “increase capital” and “presented a better financial picture to the bank”, Chee’s response was as follows:

(C) Collard’s evidence

Collard’s evidence was largely consistent with Chee’s.

According to Collard’s expert report, between 1992 and 2001, MMSCPL was a profitable company that paid out returns to its shareholders and directors. Like Chee, Collard opined that the 5 January 1995 Allotment was not needed in the commercial interests of MMSCPL: as at the time of this allotment, MMSCPL was generating profits; MMSCPL had just declared a final dividend of $1.3 million for the year ended 30 June 1994; the funds required to pay for the building of the Mustafa Centre had already been arranged with a bank; MMSCPL had paid out $700,000 in directors’ fees to the four shareholders in 1994, and was able to pay out even higher directors’ fees of $1.2 million in 1995.

At trial, when referred to the financial accounts from 30 June 1994 (about six months before the 5 January 1995 Allotment), Collard agreed that they showed an exchange fluctuation reserve of $5,782,016.61. He explained that this meant that the value of the assets which the company held overseas had been marked down from the previous year. He agreed that this exchange fluctuation reserve exceeded the then share capital of $4.7 million, but also noted that the accounts did not show whether (in respect of these overseas assets) the company had “made losses at whatever the local currency value is”. As to the property revaluation reserve of $3.3 million, Collard explained that while it was not a “crystallised gain” in the sense of being cash, it was still a “gain” and was “marked against the value of a tangible asset”. Based on MMSCPL’s position at that time, the net profit after tax was about $1,026,934 (for the company) and $951,276 (for the group). When asked whether he agreed that the $700,000 raised in the 5 January 1995 Share Allotment would “improve the equity of MMSCPL”, Collard’s response was:

More fundamentally as Collard highlighted in his expert report, the 5 January 1995 Allotment came during the financial year ended 1995 when the directors’ fees paid by MMSCPL rose to $1.2 million, and when MMSCPL had also paid out $1,762,950 in a dividend. Indeed, between 1992 and 1996, MMSCPL had paid out dividends totalling more than $7.2 million. One possible inference to be drawn from such evidence was, surely, that the company was not in any real need of cash as at 5 January 1995. The defendants tried to deflect this by suggesting in cross-examination that the dividends declared by the company “don’t actually get paid out”: according to the defendants’ counsel, the amounts were “recorded into the general ledger of the directors and that then makes up the amounts due to and from directors at the end of each financial year”. In respect of the dividends of $1,762,950 paid out in 1995, counsel even suggested to Collard that the dividend payment was “actually used towards the subscription of shares”.

With respect, I found these suggestions startling, not least because they were made without any evidential basis. In fact, when the defendants’ counsel had sought to suggest during Collard’s cross-examination that the practice of dividend payments being “recorded into the general ledger of the directors” and then being used to “subscribe for the allotment of shares” could be seen in the context of the May 1993 share allotment, it was pointed out by the Suit 1158 plaintiffs’ counsel that the company’s “general ledgers” for 1993 were not in evidence; and to this, the defendants’ counsel had responded by stating that the records were “no longer available”, but that the basis for her suggestion “is that that is the practice”.

In any case, as Collard noted in his reply to counsel, the assumption he was asked to make – namely, that the company would declare dividends and record the amounts in the general ledger without paying them – was an “odd” one. As Collard put it, “a dividend is a dividend” at the end of the day.

I add that although the defendants’ counsel expended a fair amount of time asking Collard about the report of their own expert Mr Tim Reid, Reid was never called as a witness, and his AEIC was – like the AEICs of the defendants themselves – expunged from the record. It was not permissible, therefore, for the defendants to attempt to use Collard’s responses in cross-examination to introduce onto the record evidence from Reid’s AEIC.

In The Wellness Group Pte Ltd and another v OSIM International Ltd and others and another suit [2016] 3 SLR 729 (“The Wellness Group”), the High Court held (at [186]) that –

In the present case, based on the evidence adduced, the plaintiffs were able to make out at least a prima facie case that there was no commercial reason for the 5 January 1995 Allotment. The evidence did not show any need of funds as at 5 January 1995; in fact, as Chee and Collard observed (above), quite the contrary. Further, even if there had been a need for funds, raising such funds via the allotment of 700,000 shares at par to Mustaq alone – rather than other means of financing – was not a reasonable option.

(5) The dominant purpose of the 5 January 1995 Allotment

In The Wellness Group, the High Court also pointed out that in practice, “where there is no commercial reason for a rights issue, it has invariably been found that the purpose of the rights issue has been to dilute non-subscribing shareholders”; and that even if there were good commercial reasons for a rights issue, it was a fact that every rights issue would dilute the shareholders who did not subscribe to it (at [185] and [188])). A rights issue would be unfair if its dominant purpose were to dilute the non-subscribing shareholder: such a purpose “would be an improper purpose which the court [would] not permit” (at [188]). On the issue of proof of such a purpose, the High Court noted that –

In this case, I found that the 5 January 1995 Allotment was done at an undervalue; and that there was no commercial reason for it. It was carried out in a manner that breached the MMSCPL provisions, and it had the effect of diluting both Mustafa’s and Samsuddin’s shareholdings while increasing Mustaq’s both in terms of the percentage shareholding and value. The increase in Mustaq’s shareholding gave him very tangible advantages. As Collard noted in his expert report, with his 34% shareholding prior to the allotment, Mustaq would have needed the support of either Mustafa or Samsuddin (each of whom had at least 25%) to pass a normal resolution. Even combining his shareholding with Ishret’s, prior to the allotment, Mustaq would have had – together with Ishret – only 48.9%. The position shifted dramatically following the 5 January 1995 Allotment. Post 5 January 1995, Mustaq – together with Ishret – held 55.6% – which effectively gave him day-to-day control of MMSCPL. Conversely, whereas Mustafa and Samsuddin were each able as individual shareholders to block special resolutions prior to 5 January 1995, the diminution in their percentage shareholding post 5 January 1995 meant that each of them was no longer able as an individual shareholder to overturn special resolutions; and each would have needed the support of the other and of Ishret to overturn any decision made by Mustaq.

In terms of the value of their shareholding, Mustaq’s shareholding saw its value increase by $5 million; and his combined shareholding with Ishret’s (as a married couple), by $8.5 million. Conversely, the value of Mustafa’s and Samsuddin’s percentage shareholding fell by nearly $2 million each. I agreed with the plaintiffs that the increase in the value of Mustaq’s shareholding was not merely dramatic; it was in fact quite disproportionate to his outlay of $700,000 for the additional shares.

The table below serves to illustrate the stark difference between Mustaq’s shareholding position as well as Mustaq’s and Ishret’s combined shareholding position on the one hand, and Mustafa’s and Samsuddin’s shareholding position on the other hand, before and after the 5 January 1995 Allotment:

Name

Number of shares held in MMSCPL before 5 January 1995 allotment

Proportion

Number of shares held in MMSCPL following 5 January 1995 allotment

Proportion

Mustaq

1,598,700

34.01%

2,298,700

42.57%

Samsuddin

1,210,200

25.75%

1,210,200

22.41%

Mustafa

1,191,700

25.36%

1,191,700

22.07%

Ishret

699,400

14.88%

699,400

12.95%

Total

4,700,000

100%

5,400,000

100%

Mustaq and Ishret (combined)

2,298,100

48.89%

2,998,100

55.52%

Having regard to the evidence set out above, I found that the plaintiffs were able to make out at least a prima facie case that the dominant purpose of the 5 January 1995 Allotment was to dilute Mustafa’s and Samsuddin’s shareholding while increasing Mustafa’s. Chee put it most aptly when in cross-examination, he asked (perhaps rhetorically): “…but in respect of this allotment, the very question is why is it allotted only to one person?”

Summary of findings in respect of 5 January 1995 Allotment

To sum up, I found that both sets of plaintiffs were able to establish at least a prima facie case that the 5 January 1995 Allotment was carried out in a manner which breached the MMSCPL Constitution (including Article 7, which required an Offer Notice to be given to Mustafa and Samsuddin); it was carried out at an undervalue and for no commercial reason; its dominant purpose was to dilute Mustafa’s and Samsuddin’s shareholding while benefiting Mustaq’s shareholding position. In the circumstances, there was at least a prima facie case of a “visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect” (Sakae (CA) at [81]).

The 11 December 2001 Allotment

I next address the 11 December 2001 Allotment. It will be remembered that by this date, Mustafa had passed away intestate. He passed away on 17 July 2001, although the Letters of Administration (LA) in respect of his estate were obtained by Mustaq only on 24 November 2003.

The 11 December 2001 Allotment involved the issuance of 4,340,000 MMSCPL shares at $1 each to Mustaq. As with the 5 January 1995 Allotment, the other shareholders of MMSCPL did not receive any shares in this allotment. Both the Suit 1158 and the Suit 780 plaintiffs alleged that the 11 December 2001 Allotment came about through Mustaq, who – either acting by himself or in concert with Ishret/Shama/Osama and/or Iqbal wrongfully caused MMSCPL to issue the 4,340,000 shares. This was done in breach of the MMSCPL Constitution. The plaintiffs asserted that the 11 December 2001 Allotment was also carried out at an undervalue and was not in the commercial interests of MMSCPL. As a result of the 11 December 2001 Allotment, Mustaq’s shareholding increased from 42.57% to 61.25%; Ishret’s shareholding decreased from 12.95% to 8.74%; Samsuddin’s shareholding decreased from 22.07% to 14.89%; and Mustafa’s (or rather, his estate’s) shareholding decreased from 22.41% to 15.12%.

Documents relating to the 11 December 2001 Allotment

The following documents were brought up in relation to the 11 December 2001 Allotment.

First, there was a document which the defendants alleged to be a notice of an EOGM to be held on 11 December 2001, dated 27 November 2001 (“27 November 2001 Notice of EOGM”).

Second, there was a document which the defendants alleged to be the minutes of the EOGM on 11 December 2001 (“11 December 2001 EOGM Minutes”), ostensibly signed by Mustaq, Samsuddin and Ishret.

Third, there was a Notice of Resolution in Form 11 dated 11 December 2001 and registered with ACRA on 21 December 2001 (“21 December 2001 Notice of Resolution”). The plaintiffs did not dispute the authenticity of this document.

Fourth, there was a Return of Allotment of Shares in Form 24 dated 11 December 2001, stating that 4,340,000 shares were allotted to Mustaq at $1 each for cash (“11 December 2001 Return of Allotment of Shares”).

Oral testimony and affidavit evidence

(1) Ayaz’s evidence

Ayaz disputed the authenticity of the 27 November 2001 Notice of EOGM and the 11 December 2001 EOGM Minutes . He did not accept that the signature shown as Samsuddin’s signature on the 11 December 2001 EOGM Minutes was genuine.

In his AEIC, Ayaz gave evidence that at the 4 September 2016 Meeting, he had questioned Mustaq about why the Suit 1158 plaintiffs were not informed about the 11 December 2001 Allotment and why they were not offered the shares. Mustaq’s reply was that the Suit 1158 plaintiffs “would not have had money to buy those shares”. This statement, according to Ayaz, was untrue. Mustaq knew that at the material time, MMSCPL owed the Mustafa Estate $1,049,499.56, which amount could have been utilised by the Mustafa Estate to buy the shares issued in the 11 December 2001 Allotment. Ayaz did not accept the suggestion made by the defendants’ counsel in cross-examination that it was the Mustafa Estate which at the material time owed MMSCPL an amount of more than $50,000 by reason of MMSCPL’s payment of estate duty on the estate’s behalf.

(2) Fayyaz’s evidence

Fayyaz disputed that Samsuddin was given any notice of the 11 December 2001 EOGM. Like Ayaz, he too disputed the authenticity of the 11 December 2001 EOGM Minutes which the defendants relied on as evidence of the agreement by all registered shareholders to the 11 December 2001 Allotment. Inter alia, Fayyaz pointed out that the 21 December 2001 Notice of Resolution was stated to be signed only by Mustaq.

At trial, Fayyaz agreed that the signature shown under Samsuddin’s name in the 11 December 2001 EOGM Minutes “[l]ooks like” Samsuddin’s signature, but he disputed that Samsuddin had agreed to the share allotment. According to Fayyaz, if Samsuddin had known that this document recorded the dilution of his shareholding, he would not have signed it and/or he would have discussed it with Fayyaz.

As for the Suit 780 plaintiffs’ allegation about the financial assistance which Mustaq received from MMSCPL for the 11 December 2001 Allotment, Fayyaz filed a supplemental AEIC in which he stated that given that there were monies owing by MMSCPL’s directors (including Mustaq) to MMSCPL as at the time of the 11 December 2001 Allotment, this meant Mustaq would have had financial assistance from MMSCPL to subscribe to the shares allotted in the 11 December 2001 Allotment.

The plaintiffs’ submissions

The plaintiffs disputed the authenticity of the 27 November 2001 Notice of EOGM and the 11 December 2001 EOGM Minutes.

Adopting a position similar to that which they had taken on the 5 January 1995 Allotment, the Suit 1158 plaintiffs submitted that the evidence established a prima facie case of the following:

(a) First, the 11 December 2001 Allotment was conducted in breach of Articles 7 and 57 of the MMSCPL Constitution .

(b) Second, the 11 December 2001 Allotment was done at an undervalue.

(c) Third, the 11 December 2001 Allotment was not needed in MMSCPL’s commercial interests.

The Suit 780 plaintiffs submitted that the evidence established a prima facie case of the following:

(a) First, Samsuddin had not agreed to the 11 December 2001 Allotment. The plaintiffs disputed the authenticity of the 27 November 2001 Notice of EOGM and the 11 December 2001 EOGM Minutes. There were inconsistencies between the documents originally lodged by MMSCPL with ACRA and the documents subsequently produced by the defendants for the trial.

(b) Second, there was no commercial justification for the 11 December 2001 Allotment and it was oppressive: the power of MMSCPL to issue shares was not exercised properly.

(c) Third, MMSCPL unlawfully gave financial assistance to Mustaq to subscribe for the shares issued under the 11 December 2001 Allotment.

The defendants’ submissions

As with their pleaded case in respect of the 5 January 1995 Allotment, the defendants’ pleaded case in respect of the 11 December 2001 Allotment also depended in the main on the alleged existence of the 1973 Common Agreement. The defendants admitted that there was (again) no physical meeting actually held on 11 December 2001. According to the defendants, the Notice of EOGM was served on Samsuddin, but the 1973 Common Understanding meant that this was “a mere formality”, since Samsuddin would have understood that his shares were held on trust for Mustaq and that Mustaq was the sole decision-maker in MMSCPL. Samsuddin, Mustaq and Ishret had signed the 11 December 2001 EOGM Minutes, which meant that all the “listed shareholders” of MMSCPL – who held more than 75% of the company’s shares – had agreed to the 11 December 2001 Allotment.

As for the Mustafa estate, the defendants’ pleaded case was that Mustafa having passed away, the Mustafa estate was not a “listed shareholder” of MMSCPL as at 11 December 2001. There was “no need for [Mustaq] to consider the Mustafa Estate, and consequently, the [Suit 1158] Plaintiffs for the purpose of the 2001 Share Allotment” because pursuant to the 1973 Common Understanding and the 2001 Common Understanding, Mustaq was the beneficial owner of all the shares held in Mustafa’s name anyway by virtue of either a constructive trust or a resulting trust.

The defendants also pleaded that the 11 December 2001 Allotment was in the commercial interest of MMSCPL because the company needed to fund the expansion of Mustafa Centre at that time. They denied that Mustaq received any financial assistance from MMSCPL for the 11 December 2001 Allotment.

My findings

(1) The 11 December 2001 Constitution was conducted in breach of the MMSCPL Constitution

From the defendants’ pleadings, it was clear that their pleaded defence in respect of the 11 December 2001 Allotment was premised on the 1973 Common Understanding. In respect of Samsuddin, it was alleged that pursuant to the 1973 Common Understanding, the notice given to him of the 11 December 2001 EOGM was a mere formality because he was at no point concerned with, nor did he object to or even query, the allotment: he was aware that the allotment was unilaterally decided by Mustaq and paid for by him. It was also pursuant to the 1973 Common Understanding, as well as the 2001 Common Understanding, that Mustaq had no need to consider the Mustafa estate for the purposes of the 11 December 2001 Allotment, since the shares held in Mustafa’s name were really his (Mustaq’s) in any event.

The defendants having taken the above position, it followed that once Mustaq’s story of the alleged 1973 Common Understanding and the 2001 Common Understanding was found to be a fabrication, their pleaded case in respect of the 11 December 2001 Allotment essentially fell apart. Without the 1973 Common Understanding and the 2001 Common Understanding, the defendants had no basis for alleging that the notice given to Samsuddin of the 11 December 2001 EOGM was a mere “formality” and/or that Samsuddin would not have queried or objected to the allotment. In a similar vein, they also had no basis for alleging that Mustaq was the true owner of the shares held in Mustafa’s name and that he thus had no need to consider the Mustafa estate for the purposes of the 2001 share allotment. As with the 5 January 1995 Allotment, the defendants did not actually plead in the alternative that the 11 December 2001 Allotment had in any event been conducted in compliance with the MMSCPL Constitution. In the interests of completeness, however, I address below the arguments raised.

First, in respect of the Mustafa estate, there was – indisputably – no Offer Notice sent to the Suit 1158 plaintiffs. At trial, the defendants tried to suggest that the absence of an Offer Notice in this instance was explained – and presumably excused – by the fact that at the time of the 11 December 2001 Allotment, the Mustafa estate had not yet been registered as the holder of the shares previously held by Mustafa: consequently, according to counsel, “there was no party to be given notice in relation to those shares”.

Counsel’s suggestion was rejected by Ayaz; and I found no merit in it. In the defence they filed in Suit 1158, the defendants admitted that upon Mustafa’s death on 17 July 2001, “Mustafa’s shares became vested in the Mustafa’s Estate”. Mustaq would have been well aware of this, since he himself was a beneficiary of Mustafa’s estate, and it was not disputed that he had held a meeting with some of the Suit 1158 plaintiffs (Khalida, Ishtiaq and Asia) on 20 July 2001 precisely for the purpose of discussing how Mustafa’s estate should be managed. Further, as the Suit 1158 plaintiffs pointed out, there was no evidence as to any urgent or pressing reason why the share allotment had to be carried out on 11 December 2001 before the Mustafa estate had been formally registered as the holders of Mustafa’s shares: Ayaz said as much in his AEIC, and his evidence on this score was not refuted. Given these circumstances, the decision by Mustaq and Ishret to proceed with the allotment of 4,340,000 shares to Mustaq without any notice to the Suit 1158 plaintiffs was a “visible departure from the standards of fair dealing” (Sakae (CA) at [81]).

In any event, in filing their defence in Suit 1158, the defendants did not plead that the reason why no notice of the allotment was given to the Suit 1158 plaintiffs was because they had not been registered as the holders of Mustafa’s shares. Nor, for that matter, was there any evidence adduced to show that this was the reason for the lack of an Offer Notice. In fact, the transcript from Ayaz’s recording of his lengthy meeting with Mustaq on 4 September 2016 showed that when Ayaz demanded to know why the Suit 1158 plaintiffs had not been told of the 11 December 2001 Allotment and/or offered the shares, Mustaq’s reply was that even if he had made them such an offer, they “would not have had money to buy those shares”. In other words, insofar as the defendants must have instructed counsel to suggest to Ayaz that he and his family members received no Offer Notice because they were not registered shareholders as at 11 December 2001, this appeared to be very much an afterthought – and once again, an invention.

As to the allegation that the Suit 1158 plaintiffs would not have had money to buy shares in the 11 December 2001 Allotment, the defendants sought to expand upon this in cross-examination by suggesting to Ayaz that this was a “case of the estate owing MMSCPL over $50,000 because they [MMSCPL] paid the estate duty on the estate's behalf”. Quite apart from the fact that this was (again) not pleaded by the defendants as a material fact for their defence, a review of the contemporaneous documentary evidence proved the suggestion false. It was not disputed that if an offer of 4,340,000 shares at $1 per share had indeed been made proportionate to the shareholders’ interests, the Mustafa estate would have needed an amount of $955,775 to participate in the share allotment. As at 26 October 2002, the Estate Duty Return forwarded to the CED by M/s Mallal & Namazie (the lawyers then advising on the administration of Mustafa’s estate) recorded that an amount of $1,049,499.56 was due from MMSCPL to the Mustafa estate. This Estate Duty Return was signed by Mustaq and dated 25 October 2002. On 13 December 2002, Mallal & Namazie wrote to the CED again, this time enclosing inter alia a letter dated 10 December 2002 and addressed to the CED from MMSCPL. This letter appeared to bear Mustaq’s signature and stated that MMSCPL was writing to CED to “confirm that the amount due from us to the abovenamed deceased as at the date of his death on 17 July 2001 is $1,049,499.56”.

As for the payments of estate duty by MMSCPL, on the other hand, these were listed in a letter dated 7 November 2016 from Mustaq’s then lawyers to the Suit 1158 plaintiffs’ lawyers as comprising a payment of $800,000 to Mallal & Namazie on 28 March 2002; a payment of $300,000 to the CED on 9 October 2002; and a payment of $2,210.04 to the CED on 26 July 2002.

Having regard to the above documentation, it would appear that as at the date of the 11 December 2001 Allotment, there was in fact an amount of $1,049,499.56 due from MMSCPL to the Mustafa estate. There was no basis at all for Mustaq’s remark to Ayaz that he and his family would not have had money to pay for shares in the 2001 allotment even if offered those shares.

To sum up then: the defendants admitted that no Offer Notice was given to the Mustafa estate in respect of the 11 December 2001 Allotment. Their pleaded case – that Mustaq did not need to consider the Mustafa estate because of the 1973 Common Understanding and the 2001 Common Understanding – could not be sustained once these two “Common Understandings” were found not to exist. As for their suggestions that the Mustafa estate could not have been given an Offer Notice since it was not registered as a shareholder of MMSCPL as at 11 December 2001 and/or that it would not have had money to participate in the allotment, these suggestions were unsupported – indeed, contradicted – by the evidence.

Both the Suit 1158 and the Suit 780 plaintiffs also disputed the defendants’ allegation that the 11 December 2001 Allotment was signed off and agreed to by all three registered shareholders (Mustaq, Ishret and Samsuddin). In this connection, although Fayyaz agreed in cross-examination that the signature shown under Samsuddin’s name in the 11 December 2001 EOGM Minutes “looks like” Samsuddin’s signature, I did not think this rather tentative response was enough to establish Samsuddin’s agreement to the allotment.

In the first place, as both sets of plaintiffs pointed out, there were obvious discrepancies between the 11 December 2001 EOGM Minutes which allegedly recorded the shareholders’ resolution to allow 4,340,000 shares to Mustaq and the 21 December 2001 Notice of this alleged resolution which was lodged by MMSCPL with ACRA. The former purported to be signed by Mustaq, Ishret and Samsuddin. The latter showed that the alleged resolution was signed only by Mustaq and Ishret. No evidence was forthcoming from the defendants to explain this anomaly. In cross-examining Ayaz, the defendants’ counsel tried to suggest that “someone” must have filled in the details of the resolution when preparing the 21 December 2001 Notice for filing and that this “someone” (referred to rather ambiguously as “they”) must have put down Mustaq’s and Ishret’s names as the signatories to the resolution while omitting to put down Samsuddin’s name. Ayaz rejected this suggestion; and there was no evidential basis for it anyway: the defendants did not even reveal the identity of the “someone” who had, for reasons best known to “themselves”, prepared the 21 December 2001 Notice without mentioning Samsuddin as one of the signatories to the resolution.

Second, as the Suit 1158 plaintiffs pointed out, when their lawyers wrote to the defendants’ then lawyers on 17 November 2016 to request copies of all resolutions passed in MMSCLP since its incorporation, the latter did not include a copy of the 11 December 2001 resolution in its reply on 27 December 2016. This was yet another anomaly, especially since the defendants’ then lawyers had asserted in their reply that they had provided “all the shareholder resolutions for [MMSCPL] from 2001 to 2015”. There was no explanation from the defendants as to why the 11 December 2001 resolution was not provided by their then lawyers if it was in fact already in existence.

Given the above suspicious circumstances, I had grave reservations as to whether the signature shown under Samsuddin’s name in the 11 December 2011 resolution was in fact Samsuddin’s. Further, the defendants themselves admitted that there was no actual EOGM held on 11 December 2001: they claimed that documents were circulated for signature instead – even though it was undisputed that Samsuddin neither read nor wrote English. This lent support to the Suit 780 plaintiffs’ assertion that even if the signature shown under Samsuddin’s name in the 11 December 2011 resolution “looks like” Samsuddin’s signature, Samsuddin was simply “given the form and told to sign”. It should be noted that both Ayaz and Asia gave evidence in their AEICs which corroborated the Suit 780 plaintiffs’ assertion, as they both stated that even if Samsuddin had signed the 11 December 2001 resolution, he would not have known or understood what it meant.

For the reasons set out at [272] to [284], I found that both sets of plaintiffs were able to establish at least a prima facie case that there was no agreement by the shareholders to the 11 December 2001 Allotment. There was therefore at least a prima facie case that the conduct of the said allotment was in breach of Article 7 and Article 57 of the MMSCPL Constitution.

(2) Allotment was not for a proper purpose

Both sets of plaintiffs submitted that not only was the 11 December 2001 Allotment done in breach of the MMSCPL Constitution, it was not carried out for a proper purpose. As with the 5 January 1995 Allotment, the 2001 allotment too was alleged to have been done at an undervalue; it was not in the commercial interests of MMSCPL; its real purpose was to benefit Mustaq.

As with the 5 January 1995 Allotment, evidence was adduced from the plaintiffs’ experts (Chee, Hawkes and Collard).

(A) Shares were issued at an undervalue

Based on the evidence adduced, I found that the shares were allotted to Mustaq at an undervalue.

Applying the Market Approach, Chee again derived the EV /EBITDA , EV/EBIT and P/E multiples for the comparable companies Metro and Isetan as at the valuation date 11 December 2001, in order to compute the fair value range for MMSCPL shares as at 11 December 2001. Chee gave evidence that the shares in the 2001 allotment were issued to Mustaq at a “significant discount” to the fair value of the shares, because as at 11 December 2001, the fair value range per share was $107.00 to $108.20.

Hawkes’ evidence was that the price at which Mustaq acquired the shares in the 11 December 2001 Allotment was lower than the value of the shares calculated using the NAV Approach by $5.05 in 2001. It will be remembered that Hawkes had explained that the NAV Approach was a more conservative approach that would likely result in lower valuation figures compared to an approach that looked at future earnings and expenses (eg, the Discounted Cash Flow approach).

Collard too gave evidence that using the Adjusted NAV Approach, he computed the fair value per share of the MMSCPL shares as $8.50 as at 11 December 2001; whereas using the SOTP Approach, the fair value per share was $10.78. On either approach, therefore, it was clear that Mustaq had obtained the shares at a “steep discount”.

In the defences filed in these proceedings, the defendants merely pleaded that they denied the plaintiffs’ claims about the 2001 allotment being at an undervalue and put the plaintiffs to proof. In the course of the trial, having submitted no case to answer, they did not adduce any evidence of an alternative valuation of the shares. Having considered the evidence adduced by the plaintiffs, I noted that although the valuation figures of the Suit 1158 experts using the more conservative NAV Approach or Adjusted NAV Approach were lower than those obtained by the Suit 780 expert using the Market Approach, all three experts were unanimous in opining that the allotment of the shares to Mustaq at par allowed him to acquire those shares at a large discount – in other words, at a considerable undervalue. I accepted the plaintiffs’ submission, therefore, that the 11 December 2001 Allotment was done at an undervalue.

(B) No commercial reason for the 5 January 1995 Allotment

(I) Background

As to the lack of a commercial reason for the 11 December 2001 Allotment, based on MMSCPL’s financial statements for the financial year ended 30 June 2000 respectively, it was not disputed that the company paid out directors’ fees totalling $4.4 million; and for the financial year ended 30 June 2001, it paid out directors’ fees totalling $5.4 million. The financial statements also showed that for the year ended 30 June 2000, MMSCPL’s directors owed the company a total amount of $3,359,162; and for the year ended 30 June 2001, the amount owed by the directors had risen to $14,217,978.

Although the defendants alleged that the 5 January 1995 Allotment had a genuine commercial purpose (ie, to raise funds for MMSCPL’s business growth), there was no documentary evidence of Mustaq’s and Ishret’s discussions or deliberations in this respect. In response to an order of court issued on 18 June 2019 directing them to give specific discovery of minutes of meetings, management accounts and/or other documentation evidencing and/or reflecting and/or recording the use of the $4.34 million raised from the 11 December 2001 Allotment, the defendants affirmed affidavits saying they had no documents falling within this description other than the documents previously discovered.

It was against this backdrop that both Chee and Collard gave evidence that there was no commercial reason for the 11 December 2001 Allotment.

(II) Chee’s evidence

In Chee’s First Report, Chee noted that MMSCPL was “profitable over the years” and had accumulated profits amounting to $37.3 million as at 30 June 2002. The cash flow statement in MMSCPL’s FY2002 audited financial statements shows that MMSCPL and its subsidiaries (collectively, the “Group”) generated a positive cash flow of S$20,377,305 in FY200224, after taking into account cash flows from the Group’s operating, investing, and financing activities. Even without the funds of S4.34 million raised from the 2001 allotment, the Group’s cash and cash equivalents would have increased by S$16,037,305.

In cross-examination, Chee was brought to evidence of guarantees and security provided by Mustaq (and in some instances, by Mustaq and Ishret) to secure financing for the company. For example, the defendants’ counsel referred him to an RHB loan dated 4 November 2000, with a credit line of $17.75 million, for which Mustaq and Ishret had executed joint and several guarantees. With reference to the accounts for the year ended 30 June 2001 (dated 29 November 2001), it was also suggested that MMSCPL was “still highly geared”, and that this meant there was a risk it might not be able to meet its current liabilities within the next 12 months as they fell due, and it also had a “relatively high debt to equity ratio”. Chee’s response, however, made it clear that although this might appear to be the case based on “the number”, MMSCPL’s financial position was far from being in the parlous state depicted by the defendants:

In essence, therefore, Chee maintained his opinion that MMSCPL was doing well in the time leading up to the 11 December 2001 Allotment. Chee accepted that a large part of the cash flow for financing activities came from the term loans and land loans, and that the financial statements for the year 2001 showed that the cash and cash equivalents at the end of the year was still a negative position of $28,075.508. However, as Chee noted, this was an improved cash flow of $33 million, compared with the previous year. In addition, in 2001, the net assets of the company were $77.3 million.

In cross-examination, Chee – as well as Collard – were also referred to a number of letters from OCBC. In gist, there were five letters from OCBC to MMSCPL dated (respectively) 14 June 2000, 26 September 2000, 21 October 2000, 19 May 2001 and 22 October 2002. As a preliminary point, it should be noted that Chee and Collard were cross-examined about these letters on the basis that they would subsequently be admitted as evidence through the defendants’ witnesses. They were not so admitted because in the end, the defendants elected to submit no case and undertook not to adduce any evidence. Even putting aside this evidential hurdle, the documents themselves did not say what the defendants tried to suggest they said.

In particular, the defendants tried to suggest that the correspondence from OCBC showed that the 11 December 2001 Allotment was necessary in order to meet the bank’s requirement that the company’s net assets, or net worth, be not less than $80 million by 30 June 2003. However, this suggestion was a misleading one. There was nothing in the letters of 14 June 2000, 26 September 2000, 21 October 2000 and 19 May 2001 which mentioned the imposition of a requirement for minimum net assets of $80 million. The figure of “not less than $80 million by 30 June 2003” actually appeared in the letter dated 22 October 2002. Logically, it was just not possible that a requirement mentioned in a letter sent in October 2002 could have become the reason for the 11 December 2001 Allotment. Indeed, as Chee pointed out in the following piquant observation:

The defendants’ counsel sought to parry Chee’s comment by suggesting to him that “this is because of the continuation of the review of the banking facilities and the information that was available to OCBC”. As Chee pointed out, however, such a suggestion really called for him to speculate as to the bank’s position – which he could not do. In fact, when I queried counsel as to the basis for her suggestion, she did not identify any evidential basis for it apart from a rather amorphous and (with respect) unhelpful reference to “the bank offer letters, and how they evolved, and how there was reference to the previous bank offer letters, and also the dates”. The defendants’ subsequent argument that the terms of the 22 October 2002 letter would have been the subject of negotiations between OCBC and MMSCPL before 22 October 2002 was entirely speculative; and I did not see any factual or logical basis for accepting it.

In a similar vein, I found the HSBC letters relied on by the defendants to be of no help in showing that the 11 December 2001 Allotment was necessary to raise funds for the company’s business growth. The defendants pointed inter alia to a letter of offer from HSBC dated 25 September 2003 for a term loan to MMSCPL for $45 million and another HSBC letter dated 16 April 2004. Their argument appeared to be that HSBC had imposed requirements for Mustaq and Ishret to own a specific minimum proportion of MMSCPL’s issued and paid up share capital of MMSCPL, which proportion could only be achieved via the 11 December 2001 Allotment. The short answer to this, however, was that these letters did not exist at the time of the 11 December 2001 Allotment.

In any event, as Chee pointed out in his report, even if it were shown that MMSCPL had need of additional funds as at 11 December 2001, there was no reason why the shares in the 2001 allotment were offered only to Mustaq. If the 11 December 2001 Allotment was truly needed in order to raise funds, “the new shares should have been offered to all shareholders for subscription in the same proportion as their shareholdings at the time so that no shareholders would be disadvantaged by having their interests diluted”.

For completeness, I noted that Chee had suggested in his report that if MMSCPL required additional funds, it should not have extended substantial loans to its directors and affiliated companies during FY2001. However, under cross-examination, Chee accepted that recovering these loans would not impact the equity position, and that MMSCPL was in fact benefitting from this relationship with its related companies (eg, the related companies provided corporate guarantees and charged their real property as security for banking facilities granted to MMSCPL). In the circumstances, in determining whether there was a commercial reason for the 2001 allotment, I did not place weight on this portion of Chee’s evidence.

(III) Collard’s evidence

Turning to Collard’s evidence, Collard stated in his Expert Report that the 11 December 2001 Allotment was not needed in the commercial interests of MMSCPL because as at that date, MMSCPL was generating profits with EBITDA (adjusted for excess directors’ remuneration) of $16.2 million; the funds required to pay for the building of the Mustafa Centre extension and warehouse project had already been arranged with a bank; MMSCPL had paid out $5.4 million in directors’ fees in 2001 (as compared to $4.4 million in 2000); and amounts due from directors had risen from $3.4 million in June 2000 to $14.2 million in 2001.

As they did with Chee, the defendants similarly sought to suggest during Collard’s cross-examination that the 11 December 2001 Allotment was commercially justified because of OCBC’s requirement for the company’s net asset to be not less than $80,000,000. As seen above (at [300]), this suggestion was really based on a letter from OCBC dated 22 October 2002. Collard’s evidence was that while he could “see how the banking facility has developed over time” (based on the same banking documents Chee was referred to), the financial covenant of $80 million did not “look as though it existed before October 2002”. The defendants tried to suggest that it was “reasonable to assume” that the credit facilities in their offer letter of 19 May 2001, just prior to the June 2001 accounts, “would be something… that would continue to be negotiated between the bank and the company”. Collard’s response exposed the fallacy in this suggestion:

Collard also testified that if it was so crucial to OCBC that MMSCPL’s net asset value as of June 2002 reach at least $80 million, then “there were various things [MMSCPL] could have to done to achieve that”, such as the directors’ forgoing their directors’ fees. Even if one of the ways of achieving that was to “inject $4.34 million in terms of new equity, it still begs the question: why was it done at par?” In this connection, while Collard accepted that the injection of $4,340,000 by Mustaq did occur and that it did bring the net asset level to $80 million, he made the following important observation:

Indeed, as Collard pointed out:

(3) The dominant purpose of the 11 December 2001 Allotment

In sum, therefore, the defendants’ attempt to demonstrate MMSCPL’s need for funds was based on assumption and speculation. Even if I were to ignore the objections to the speculative nature of their case, the highest at which they could pitch their case was this: the 11 December 2001 Allotment did, as a matter of fact, bring in $4.34 million of new equity for MMSCPL. This did not actually demonstrate that MMSCPL was in need of funds at the material time. Even more damningly, what the defendants could not explain were the two points which Chee and Collard raised, and which troubled me the most: even assuming the company needed the injection of $4.34 million as at 11 December 2001, why did it need to issue the shares at par, and only to Mustaq? The defendants’ failure to come up with any coherent explanation gave the lie to their story about the allotment being a genuine fund-raising exercise.

I have reproduced earlier (at [246] and [248]) the relevant passages from the High Court’s judgment in The Wellness Group. As the High Court noted in its judgment, two strong indicators that a rights issue is actually intended to dilute non-subscribing shareholders would be the absence of a commercial reason for the rights issue and a low issue price. There was enough evidence of both indicators in this case to establish a prima facie case that the dominant purpose of the 11 December 2001 Allotment was to dilute Samsuddin’s and the Mustafa estate’s shareholding still further, while increasing Mustafa’s shareholding.

Indeed, as Collard highlighted in his report, the 11 December 2001 Allotment gave Mustaq a 61.25% shareholding in MMSCPL – and thereby made him a controlling shareholder with all the benefits that accompanied the ownership of a controlling interest. These include, inter alia, the power to elect company directors and appoint officers, to declare and distribute dividends, and to sell or acquire assets. In contrast, whereas prior to 11 December 2001 Mustafa and Samsuddin could (at least in theory) still overturn decisions by Mustaq if they had each other’s support and Ishret’s, post the 2001 allotment, neither the Mustafa estate nor Samsuddin was able to overturn any decision made by Mustaq, even with assistance from all the other shareholders.

As for the value of their shareholding, the value of Mustaq’s total shareholding increased by $27 million. The size of this increase in value was certainly disproportionate when viewed against the amount of consideration paid by Mustaq for the additional shares ($4.34 million). In contrast, the Mustafa Estate and Samsuddin suffered reductions in the values of their shareholdings to the tune of $2.6 million each.

The substantial differences in Mustaq’s, Samsuddin’s and the Mustafa estate’s shareholding positions before and after 11 December 2001 may be seen from the table below.

Name

Number of shares held in MMSCPL before 11 December 2001 allotment

Proportion

Number of shares held in MMSCPL following 11 December 2001 allotment

Proportion

Mustaq

3,831,170

42.57%

8,171,170

61.25%

Samsuddin

2,016,993

22.41%

2,016,993

15.12%

The Mustafa estate

1,986,170

22.07%

1,986,170

14.89%

Ishret

1,165,667

12.95%

1,165,667

8.74%

Total

9,000,000

100%

13,340,000

100%

(4) Summary of findings in respect of 11 December 2001 Allotment

To sum up, I found that both sets of plaintiffs were able to establish at least a prima facie case that the 11 December 2001 Allotment was carried out in a manner which breached the MMSCPL Constitution (including Article 7); it was carried out at an undervalue and for no commercial reason; its dominant purpose was to dilute the Mustafa estate’s and Samsuddin’s shareholdings while benefiting Mustaq’s shareholding position. In the circumstances, there was at least a prima facie case of a “visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect” (Sakae (CA) at [81]).

In the interests of completeness, I should add that in coming to the above conclusions about the 11 December 2001 Allotment, I did not take into consideration the Suit 780 plaintiffs’ allegation that MMSCPL had provided financial assistance to Mustaq for the purpose of the allotment. In the main, the Suit 780 plaintiffs relied on evidence of MMSCPL having extended substantial interest-free loans to Mustaq and Ishret. However, even accepting that loans were extended to them at the time of the said allotment, there was no evidence that these loans were then applied towards the acquisition of the shares in the 11 December 2001 Allotment.

I also add that whilst the defendants sought to castigate the Suit 1158 plaintiffs’ conduct in impugning only the 5 January 1995 and the 11 December 2001 Allotments out of all the share allotments conducted over the years, I did not find anything anomalous or untoward about the Suit 1158 plaintiffs’ decision. As they pointed out, the 5 January 1995 and the 11 December 2001 Allotments were the two allotments where the new shares were issued to Mustaq alone and which resulted in the dilution of Mustafa’s and subsequently the Mustafa Estate’s shares. The Suit 1158 plaintiffs’ decision to focus on these two allotments for the purposes of their oppression claims was entirely reasonable and did not in my view suggest any sort of ulterior motive or bad faith.

The plaintiffs’ allegations of breaches of fiduciary and other duties by the first, second and fifth defendants vis-à-vis the 5 January 1995 Share Allotment and the 11 December 2001 Share Allotment

To recap: I found that the 5 January 1995 Share Allotment and the 11 December 2001 Share Allotment were both oppressive in the sense of being a “visible departure from the standards of fair dealing and a violation of the conditions of fair play” which Mustafa (and subsequently his estate) and Samsuddin were entitled to expect as shareholders.

In addition, both sets of plaintiffs took the position that Mustaq had – either by himself and/or with Ishret and/or Iqbal – acted so as to procure the 5 January 1995 Share Allotment. It was alleged that Mustaq and Ishret had, in carrying out this allotment, breached their fiduciary and other duties as directors of MMSCPL, while Iqbal had breached his duties as company secretary. Both sets of plaintiffs also claimed that Mustaq had acted by himself and/or in concert with Ishret and/or Iqbal and/or Shama and/or Osama to bring about the 11 December 2001 Share Allotment. It was alleged that all five defendants were in breach of their duties as directors in respect of the 11 December 2001 Allotment (and Iqbal in breach of his duties as company secretary). Relying on authorities such as Ng Sing King and others v PSA International Pte Ltd and others [2005] 2 SLR(R) 56 (“Ng Sing King”), the plaintiffs claimed that these breaches of duties constituted another instance of the oppression of Mustafa’s and Samsuddin’s (and subsequently their estates’) rights as shareholders of MMSCPL, and therefore another reason to set aside the two share allotments.

I will first deal with the allegations against Mustaq, Ishret and Iqbal.

I found that the evidence available established at least a prima facie case of Mustaq, Ishret and Iqbal participating in these two oppressive share allotments and having accordingly breached the fiduciary and other duties they owed to the company as directors (and in Iqbal’s case, the duties he owed as company secretary). Mustaq and Ishret were directors of MMSCPL at the time of both the 5 January 1995 Share Allotment and the 11 December 2001 Share Allotment. Iqbal became a director of MMSCPL on 3 September 2001. He was the company secretary at the time of both the 5 January 1995 and the 11 December 2001 allotments. To be clear, insofar as Iqbal was concerned, only the Suit 1158 plaintiffs claimed that Iqbal had worked together with Mustaq and Ishret to bring about the 5 January 1995 allotment and that he breached his duties as company secretary in respect of this 1995 allotment; whereas both sets of plaintiffs claimed that Iqbal (as well as the third defendant Shama and the fourth defendant Osama) worked with Mustaq and Ishret and breached their duties as directors in respect of the 11 December 2001 allotment. I will deal with the allegations against Shama and Osama later in these written grounds.

The duties borne by Mustaq, Ishret and Iqbal as directors of MMSCPL should not be a matter of controversy. As the CA noted in Sakae (CA) (at [134]), “(s)ection 157(1) of the Companies Act provides that “[a] director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office”. In the context of the present allegations of minority oppression, the focus was on the duty to act honestly. In Sakae (CA), the CA elaborated on this and on the scope of a director’s fiduciary duties (at [135]):

In respect of the issuance of the shares at par both in January 1995 and December 2001, it would be useful too to recall the judgment of the English High Court in Sunrise Radio, where the court highlighted (at [79]) that the power to allot shares was a fiduciary one: in deciding the price at which shares were to be allotted, directors had a duty to act even-handedly and fairly in considering what price could and should be extracted from those willing and able to subscribe to a share offer, and should not unthinkingly issue shares at par. The impact of this duty became all the more acute “if the board members, or those in a position to control or influence them, stand to benefit from the exercise of the power in a particular way” (at [95]).

As for the duties borne as Iqbal as company secretary, these too should not be a matter of controversy. In Re Kumagai Zenecon Construction Pte Ltd; Kumagai Gumi Co Ltd v Kumagai-Zenecon Construction Pte Ltd and others [1994] 2 SLR(R) 970 (“Kumagai Zenecon”), the High Court held (at [86]) that it agreed entirely with the proposition that:

In Kumagai Zenecon, the High Court noted that the sixth respondent – one Jason Lim – had, in his capacity as company secretary, prepared and filed documents such as a notice of resolution and a return of allotment of shares, in circumstances where there was doubt about whether the relevant meeting had been held and/or whether the relevant resolution had been properly passed. Observing that Lim “[did] not seem to have any regard for the procedural, as well as the substantive propriety of what was done in relation to the company’s business”, the High Court held (at [85]) that Lim’s conduct was “rather disturbing”. Lim’s conduct in filing invalid documents and his subsequent conduct in justifying them was regarded by the court as “part and parcel of the oppressive conduct in the transactions that the documents purported to sanction” (at [87]).

In respect of Mustaq and Ishret, the defence did not seriously dispute that both were involved in the conduct of the 5 January 1995 Share Allotment and the 11 December 2001 Share Allotment. I have found that these allotments were conducted in breach of the MMSCPL Constitution; that they were done at an undervalue and for no commercial reason; and that the dominant purpose was to dilute the Mustafa estate’s and Samsuddin’s shareholdings while increasing Mustaq’s shareholding. Both allotments also augmented the couple’s combined shareholding position and their resulting control of the company. In the circumstances, there was at least a prima facie case that Mustaq and Ishret had, by their conduct of the two share allotments, breached their directors’ duties (as described above in Sakae (CA) and Sunrise Radio).

As for Iqbal, he pleaded in his defence in both Suit 1158 and Suit 780 that he was not a shareholder of MMSCPL and also not a director at the time of the 5 January 1995 Allotment, and that he was “not involved” in either allotment. However, as noted above, he was indisputably the company secretary at the time of both allotments, and concurrently a director at the time of the 2001 allotment. The duties he had as company secretary could not be a matter of controversy: Ayaz gave evidence about this in his AEIC, which was not refuted; Iqbal himself did not testify. At the very least, these duties would have included the preparation and lodgement of documents with ACRA to give notice of resolutions passed by the shareholders – such as those purportedly authorising the allotment of shares to Mustaq in January 1995 and December 2001. Being so responsible in his capacity as company secretary, I did not think it could be seriously disputed that Iqbal would have been well aware of the terms on which both allotments were carried out. It could further be inferred that the knowledge gleaned from the responsibilities he had as company secretary would also have informed the performance of his duties as a director at the time of the 11 December 2001 Share Allotment. Yet, on the evidence available, he did nothing to ensure that the conduct of these share allotments complied with the provisions of the MMSCPL Constitution, including Article 7 and Article 57. Instead of telling Mustafa (and later the Mustafa estate) and/or Samsuddin about the breaches and the depredations on their shareholdings, as Ayaz put it, he chose to help his sister and brother-in-law. In the circumstances, I found that there was a prima facie case that Iqbal had breached his duties as company secretary in respect of the conduct of both the 1995 and the 2001 allotments, as well as his duties as director in respect of the conduct of the 2001 allotment.

Having reviewed the evidence adduced, I was also satisfied that in respect of the breaches of duties complained of, there was a real injury suffered by Mustafa and Samsuddin (and subsequently their estates) which was clearly distinct from the injury suffered by the company (see Ng Sing King at [166], also Sakae (CA) at [116]): namely, the dilution of their respective shareholding in the company and as a corollary, the erosion of their voting power.

For the reasons set out above, I agreed with the plaintiffs that the breaches of directors’ duties by Mustaq, Ishret and Iqbal (and in Iqbal’s case, his duties as company secretary as well) constituted oppressive behaviour which amounted to another reason to set aside the 5 January 1995 and the 11 December 2001 allotments.

The plaintiffs’ allegations of breaches of fiduciary and other duties by the third and fourth defendants vis-à-vis the 11 December 2001 Share Allotment

In respect of the third defendant Shama and the fourth defendant Osama, both of them were not directors of MMSCPL at the time of the 5 January 1995 Share Allotment.

As for the 11 December 2001 Share Allotment, while Shama and Osama were appointed as directors of MMSCPL in February 2001, I did not find that there was any real evidence of their participation in the oppressive conduct of this allotment. There was also very little said in the plaintiffs’ closing submissions about the roles played by Shama and Osama in relation to the 11 December 2001 allotment. For example, although the Suit 780 plaintiffs pleaded in their statement of claim that Mustaq acted “by himself and/or in concert with Ishret and/or Shama and/or Osama and/or Iqbal”, nothing was said in their witnesses’ AEICs and/or in their closing submissions which elucidated the roles played by Shama and Osama. Similarly, in Suit 1158, Ayaz’s AEIC merely repeated the brief statements in the statement of claim about Mustaq having worked “together with the [second] to [fifth] Defendants”.

While it was true that the plaintiffs only needed to make out a prima facie case of oppression vis-à-vis Shama and Osama, on the evidence adduced, it appeared to me the most that could be said about their roles in relation to the 11 December 2001 allotment was that there was no evidence of their having tried to prevent it, or of their having tried – following their appointment as directors – to raise an alarm to the other shareholders regarding either this allotment or the earlier one of 5 January 1995. I did not think that the absence of such evidence per se was enough for me to find Shama and Osama liable for oppressive conduct vis-à-vis the 5 January 1995 Share Allotment and the 11 December 2001 Share Allotment.

In arriving at the above finding, I considered the case of Scottish Co-operative Wholesale Society Ltd v Meyer [1959] 1 AC 324 (“Scottish Co-operative Wholesale Society”). I did not find that this case assisted the two sets of plaintiffs vis-à-vis Shama and Osama.

In Scottish Co-operative Wholesale Society, there was evidence clearly showing that the three directors who were the nominees of the society knew that the society (the majority shareholder) had decided that the company had served its purpose and should be liquidated if possible. They were aware of the society’s conduct in adopting a policy of transferring the company’s business to a new department within its own organisation and thereby forcing down the value of the company’s shares. Despite being fully aware, these nominee directors maintained a uniform silence in the face of the company’s progressive deterioration and did nothing to explain to the other shareholders the reasons for the deterioration. As Lord Denning highlighted in his judgment (at 367), this was a case where the nominee directors had plainly put their duty to the society above their duty to the company; and there was no question that in subordinating the company’s interests to those of the society’s, the nominee directors had conducted the company’s affairs in a manner oppressive to the other shareholders. In contrast, in the present trial, there was no evidence of Shama’s and Osama’s participation in the two impugned allotments, much less of their knowledge of the circumstances of the two allotments.

Summary of decision in respect of the 5 January 1995 Share Allotment and the 11 December 2001 Share Allotment

Having found the 5 January 1995 and the 11 December 2001 Share Allotments to be oppressive of Mustafa’s and Samsuddin’s (and subsequently their estates’) rights as shareholders, l also found that it was in order that the Suit 1158 and Suit 780 plaintiffs be granted the declarations and orders sought in respect of these two allotments: ie, declarations that these two allotments were null and void and of no effect, and orders that they be set aside (or to use the language of s 216(2)(a) of the Companies Act, “cancelled”).

The 1991 to 1993 Allotments

I address next the 1991 and the 1993 Share Allotments which the Suit 780 plaintiffs alleged to be oppressive but which the Suit 1158 plaintiffs did not seek to impugn. These were the allotments of 27 June 1991, 16 January 1993 and 19 May 1993:

Date

Mustaq

Ishret

Mustafa

Samsuddin

Shares allotted

Total shares

Percentage

Shares allotted

Total shares

Percentage

Shares allotted

Total shares

Percentage

Shares allotted

Total shares

Percentage

February 1989

1

1

50%

0

0

0

0

0

0

1

1

50%

April 1989

509,999

510,000

51%

0

0

0

190,000

190,000

19%

299,999

300,000

30%

June 1991

300,000

810,000

35.22%

300,000

300,000

13.04%

400,000

590,000

25.65%

300,000

600,000

26.09%

January 1993

340,200

1,150,200

34.85%

160,000

460,000

13.94%

247,800

837,800

25.39%

252,000

852,000

25.82%

May 1993

448,500

1,598,700

34.01%

239,400

699,400

14.88%

353,900

1,191,700

25.35%

358,200

1,210,200

25.75%

Unlike the 5 January 1995 and the 11 December 2001 Share Allotments, Mustafa and Samsuddin were issued shares in the 1991 and the 1993 allotments. However, the Suit 780 plaintiffs contended that in breach of the provisions of Article 7 of the MMSCPL Constitution, Samsuddin was not given any notice nor offered the opportunity to subscribe for shares in proportion to the number of shares he then held; that there was no EOGM actually held in respect of each of these allotments; and that even if EOGMs had been held, the quorum requirement under Article 68 of the MMSCPL Constitution would not have been satisfied.

Further, the Suit 780 plaintiffs claimed that these allotments were not for any legitimate commercial purpose but appeared instead to be for the purpose of allowing Mustaq and Ishret to acquire more shares at an “extreme discount”. Although Samsuddin was said to have signed the directors’ report in MMSCPL’s audited financial statements for the relevant years, Fayyaz testified that Samsuddin did not appear to have been informed of the contents of the documents he was signing. According to Fayyaz, if Samsuddin had been aware that the contents of these documents revealed any dilution of his shares (or for that matter, anything else not in his favour), he would have told Fayyaz – but in the case of the 1991 and the 1993 allotments, he did not say anything.

There were some inconsistencies in the Suit 780 plaintiffs’ evidence. However, adopting a minimal evaluation approach, I held that the evidence was enough to make out a prima facie case on the pleaded particulars of oppression. I first summarise below the evidence of each allotment which both sides referred to.

The 27 June 1991 Allotment

Documentary evidence

In respect of the 27 June 1991 Allotment, there was a Notice of Resolution in Form 11 registered with ACRA (“27 June 1991 Notice of Resolution”). This was signed by Mustaq. It stated that Mustaq, Samsuddin and Ishret had been allotted 300,000 ordinary shares while Mustafa had been allotted 400,000 shares, for $1 per share. The Suit 780 plaintiffs did not dispute the authenticity of this document.

Second, there was a Return of Allotment of Shares in Form 24 which stated that these shares were paid for in cash. Per this form, Mustafa was stated to have received 400,000 shares while Mustaq, Samsuddin and Ishret each received 300,000 shares.

Third, there was a document dated 11 June 1991 giving notice of an EOGM to be held on 27 June 1991 (“11 June 1991 Notice of EOGM”). The plaintiffs disputed the authenticity of this document.

Fourth, there was a document said to be a shareholders’ resolution in relation to the 27 June 1991 Allotment (“27 June 1991 EOGM Minutes”). In this document, it was stated that Mustaq had chaired the EOGM on 27 June 1991, and that Mustaq, Samsuddin, Mustafa and Ishret had unanimously passed the resolution to authorise the 27 June 1991 Allotment. This document was ostensibly signed off by both Mustaq and Samsuddin. The plaintiffs disputed the authenticity of this document. It should be noted that for the purposes of the trial, the defendants admitted that no physical EOGM was actually held: instead, documents were circulated to the directors for their signature.

Fayyaz’s evidence

Fayyaz explained that neither Mustaq nor Samsuddin had given him any explanation about the 27 June 1991 Allotment at the time of the allotment in 1991.

When referred to the AFS for the year ended 30 June 1991, Fayyaz said he “can’t confirm” whether it was Samsuddin and Mustaq’s signatures on the accounts. He added that while the signature stated “Samsuddin”, and it “seem[ed] like” Samsuddin’s signature, anyone could have signed it. Even if it was Samsuddin’s signature, however, Fayyaz said that this was done without “explaining the contents and division of the shares” as Samsuddin was in “his full senses” and would never have signed this document had he known his shareholding was being diluted. When referred to the 27 June 1991 EOGM Minutes, and asked whether the signature appeared to be that of Samsuddin’s as well as Mustaq’s, Fayyaz said “[i]t seems like that”. I note that Fayyaz did not agree that there was such a meeting on 27 June 1991 or that the document was explained to Samsuddin, or that Samsuddin knew that his shares in MMSCPL would be diluted, as Samsuddin would “certainly have informed” Fayyaz of this.

The plaintiffs’ submissions

Picking up on the defendants’ admission that no physical meetings were ever held and that documents would simply be circulated for signature, the Suit 780 plaintiffs submitted inter alia that this meant there was actually no reason for the creation of the 27 June 1991 EOGM Minutes. The only logical explanation for the creation of these EOGM Minutes must surely be, then, that the defendants wanted – disingenuously – to make it look like Samsuddin knew of and agreed to the 27 June 1991 Allotment, when in fact he did not.

Moreover, the Suit 780 plaintiffs submitted, the 27 June 1991 Allotment was commercially unfair and ought to be set aside for that reason in any event. In breach of Article 7 of the MMSCPL Constitution, no Offer Notice was given to Samsuddin, and the 27 June 1991 Allotment proceeded without his knowledge or consent. Even if Samsuddin could be said to have agreed to the 27 June 1991 Allotment by reason of his signature on the company’s audited financial statements for FY 1991, the requirements of Article 7 of the MMSCPL Constitution and s 161 of the Companies Act were not complied with because there was no quorum under Article 68 of the MMSCPL Constitution, nor was there any prior approval of the company in general meeting.

Based on the evidence adduced (including Chee’s expert evidence), the 27 June 1991 Allotment was also not in the commercial interests of MMSCPL: rather, it was carried out for the purpose of allowing Mustaq and Ishret to acquire more shares at an undervalue.

The defendants’ submissions

The defendants, on their part, claimed that Mustaq and Samsuddin had in fact signed the 27 June 1991 EOGM Minutes: in cross-examination, Fayyaz had agreed that it “seems like” the signatures were those of Mustaq and Samsuddin. Samsuddin had also signed the audited financial statements for the financial years 1991 and 1992: it should be inferred that he must thereby have seen information about the 27 June 1991 Allotment.

As for Chee’s evidence, the defendants contended that Chee had actually agreed with them that the 27 June 1991 Allotment was required because otherwise, MMSCPL’s cash would have been negative or in overdraft: it would have been prudent to raise additional funds through share allotments.

My findings

As I said earlier, there were some inconsistencies in the evidence led by the Suit 780 plaintiffs’ evidence. For example, when referred to the audited financial statements for the financial year 1991, Fayyaz had stated that if Samsuddin had been told his share was being diluted, he would “have never signed the document” This statement appeared inconsistent with other parts of Fayyaz’s testimony, where he stated that if Samsuddin had been “given a proper explanation as to why he had to sign the documents”, Samsuddin “would have definitely signed” – even if his share was being diluted (eg, “if the reason given to [Samsuddin] would have stated that it is for the benefit of the company”).

However, notwithstanding the presence of some inconsistencies in the plaintiffs’ evidence, I accepted that on a minimal evaluation approach (per Relfo at [20]), the evidence was enough for the Suit 780 plaintiffs to make out a prima facie case of oppression vis-à-vis the 27 June 1991 Allotment.

First, there was indisputably no evidence of an Offer Notice being sent to Samsuddin or Mustafa – nor was there evidence of a Special Resolution dispensing with the requirement for such a notice – as required under Articles 7(a) and (b) of the MMSCPL Constitution.

Second, as the Suit 780 plaintiffs pointed out, since there was no physical EOGM held on 27 June 1991, it was odd that the defendants should have created a set of minutes of EOGM which purported to record Mustaq’s chairmanship of the EOGM on 27 June 1991. A possible inference to be drawn from this odd behaviour was that the defendants wanted to make it look like there had been an actual meeting which Samsuddin had attended and at which he had agreed to the proposed share allotment.

Third, even assuming it was Samsuddin who had signed the audited financial statements for FY 1991, I accepted Fayyaz’s evidence that Samsuddin “would have signed anything that Mustaq asked him to given their relationship and the fact that he could not read or understand English”. Samsuddin’s illiteracy in the English language was not disputed; and his trust in Mustaq was attested to not only by Fayyaz but also by other witnesses such as Asia. Further, even if Samsuddin had come to know of the 27 June 1991 Allotment when he signed the audited financial statements for the financial year 1991, this did not show that he was given notice of the 27 June 1991 Allotment before it happened.

Lastly, although Chee did agree that without the 27 June 1991 Allotment, MMSCPL’s cash and cash equivalents would have been negative or in overdraft, and although he agreed it would have been prudent to raise additional funds through share allotments, he also made an important point: none of this explained why the shares in the 27 June 1991 Allotment were issued at a significant undervalue ($1), compared to their fair value of $27.30 to $33.10, or why the shares were not offered to the shareholders in the same proportion as their shareholdings at the time.

In this connection, it should be remembered that although Samsuddin did receive shares in the 27 June 1991 Allotment, the 300,000 shares he received were not in proportion to his shareholding at the time (30%); and his percentage shareholding following the 27 June 1991 Allotment fell from 30% to 26.09%. Conversely, Ishret – who had not held any shares prior to 27 June 1991 – received the same number of shares as Samsuddin (300,000) and became a 13.04% shareholder, literally overnight. Although Mustaq’s own percentage shareholding decreased from 51% to 35.22% as a result of the 27 June 1991 Allotment, his combined shareholding with his wife Ishret was still more than 48%.

Additionally, although Chee agreed in cross-examination that MMSCPL’s capital expenditure in 1992 was $29.5 million and that this was about five times its equity ($5.92 million), he also highlighted that it was not necessarily the case that the equity would be insufficient to fund the capital expenditure. As he put it, it “depends on the situation”: there were times when the banks were prepared to finance the development for almost 100% or close to 100%, such that the capital outlay by the company “may not be significant”. Chee also accepted that while it was “always good to have capital to…make the company stronger, to make the bank happier”, the question was whether it was “needed or not”, and whether it was “really necessary at the expense of certain shareholders”. Tellingly, this was a question that the defendants had no answer to.

For the reasons set out above, I accepted that there was at least a prima facie case that the 27 June 1991 Allotment was done in breach of the MMSCPL Constitution; that it was done at an undervalue; and that it was not in MMSCPL’s commercial interests.

The 16 January 1993 Allotment and the 19 May 1993 Allotment

I address next the two share allotments in 1993. I first summarise the evidence which both sides referred to.

Documentary evidence

First, there was a notice of an EOGM to be held on 16 January 1993, dated 31 December 1992 (“31 December 1992 Notice of EOGM”), and a notice of an EOGM to be held on 19 May 1993, dated 3 May 1993 (“3 May 1993 Notice of EOGM”). The plaintiffs disputed the authenticity of these documents.

Second, there was a Notice of Resolution in Form 11 dated 16 January 1993 (“16 January 1993 Notice of Resolution”). Appended to this notice was a document stated to be the minutes of the meeting on 16 January 1993 (“16 January 1993 EOGM Minutes”). The 16 January 1993 EOGM Minutes, which were signed by Mustaq and Ishret, and stated that Mustaq had been allotted 340,200 shares, Samsuddin had been allotted 252,000 shares, Mustafa had been allotted 247,800 shares, and Ishret had been allotted 126,000 shares. There was also a Notice of Resolution in Form 11 dated 19 May 1993 (“19 May 1993 Notice of Resolution”). Similarly, a document stated to be the minutes of the meeting on 19 May 1993 (“19 May 1993 EOGM Minutes”) was appended to this notice.

Although the plaintiffs did not dispute the authenticity of the 19 May 1993 Notice of Resolution, they appeared to dispute the authenticity of the 19 May 1993 EOGM Minutes themselves.

Lastly, there was a Statement Containing Particulars of Shares Allotted Otherwise than for Cash in Form 25, dated 19 May 1993 (“19 May 1993 Form 25”). The plaintiffs did not dispute the authenticity of this document.

Fayyaz’s evidence

As for MMSCPL’s audited financial statements for 30 June 1993, which showed the altered shareholding position following the 1993 Allotments, Fayyaz testified that the signature stated to be Samsuddin’s in these financial statements “looks like” Samsuddin’s signature but that he could not confirm. Fayyaz reiterated that even if Samsuddin had signed the audited financial statements, he would have done so without having been informed of their contents.

The plaintiffs’ submissions

The Suit 780 plaintiffs submitted that the 1993 Share Allotments should be set aside for the following reasons. First, the documentary records showed only Mustaq and Ishret signing off on the 16 January 1993 Notice of Resolution and the 19 May 1993 EOGM Minutes. This showed that Samsuddin had not given his approval to the 1993 Allotments. In fact, there was no evidence that Samsuddin had attended any EOGMs or that he was even aware of these allotments.

As for the defendants’ reliance on Samsuddin’s purported signature on the 1993 audited financial statements, this was misconceived as the financial statements did not make it clear that Samsuddin’s shares had been diluted.

In addition, there was no evidence that Samsuddin was actually offered the opportunity to subscribe for the shares, as required under Article 7 of the MMSCPL Constitution. Even if he had signed the 1993 audited financial statements, this did not show that the MMSCPL Constitution had been complied with.

In any event, according to the Suit 780 plaintiffs, the 1993 Allotments were not justified for a commercial purpose, as there was no requirement for new capital at the time, and the shares were also issued at a significant undervalue.

The defendants’ submissions

The defendants, for their part, relied on Mustaq’s and Ishret’s signatures on the 16 January 1993 EOGM Minutes and the 19 May 1993 EOGM Minutes as evidence that the requisite resolutions had been passed to authorise both allotments. As for Samsuddin, he must have known of the allotments because he had signed the 1993 audited financial statements which contained information about both allotments. Moreover, so the defendants argued, the Suit 780 plaintiffs’ expert witness Chee had accepted that this increase in share capital was good for MMSCPL.

My findings

As with the 27 June 1991 Allotment, I found that there were some inconsistencies in the Suit 780 plaintiffs’ evidence on the 1993 Allotments. For example, the Suit 780 plaintiffs accepted the authenticity of the 16 January 1993 Notice of Resolution and the 19 May 1993 Notice of Resolution – both of which had the minutes of the meetings appended. Despite having apparently accepted the authenticity of these documents as annexed to the Notices of Resolution filed with ACRA, the plaintiffs also separately challenged the authenticity of the 16 January 1993 EOGM Minutes and the 19 May 1993 EOGM Minutes.

That said, it did appear to be true that no Offer Notice was given to Samsuddin in respect of the 1993 Share Allotments – which was contrary to the requirements of Article 7 of the MMSCPL Constitution. There was no evidence of Samsuddin having actually known of the allotments and waived the right to an Offer Notice. Even if he had signed the audited financial statements for the financial year 1993, there was no evidence that he would have realised from signing these financial statements that his shareholding position had been altered for the worse due to the 1993 Share Allotments. Even if he had somehow come to know of the 1993 Allotments as a result of signing these financial statements for the financial year 1993, this did not show compliance with Article 7 of the MMSCPL Constitution.

Additionally, as Chee highlighted in his expert report, the shares in both these 1993 Allotments – being issued at par – were issued at an undervalue, since the fair value per share was $34.40 to $42.30 as of 16 January 1993, and $44.00 to $52.40 as at 19 May 1993. It was Chee’s evidence (which he maintained under cross-examination) that the 1993 Allotments did not result in a significant increase in MMSCPL’s funds, given that 81.9% of the consideration was not received in cash. Moreover, MMSPCL actually paid out dividends amounting to $1,977,780 during that year. This evidence suggested that MMSCPL had excess funds available for distribution to its shareholders and militated against the defendants’ assertion that the 1993 Allotments were justified on the basis of MMSCPL’s need for additional funds at that time.

Lastly, Chee pointed out that even assuming MMSCPL had needed additional funds at that time, there was no reason why the new shares could not have been offered to all shareholders for subscription in proportion to their shareholdings. In this connection, although Samsuddin did receive shares in the 1993 Allotments, the shares he received were again not in proportion to his shareholding at the time; and his percentage shareholding following the 1993 Allotments fell further, from 26.09% to 25.75%. Although Mustaq’s percentage shareholding decreased from 35.22% to 34.01% following the 1993 Allotments, Ishret’s percentage shareholding rose from 13.04% to 14.88%; and the couple’s combined shareholding stayed at over 48%.

In cross-examination, the defendants suggested to Chee that the dividends paid out by MMSCPL were used by the shareholders to subscribe for the further shares. Chee’s point, however, was that even if this were so, the company’s capital position would have been neutral as a result of the allotments:

In light of the evidence set out above, I accepted that there was at least a prima facie case that the 1993 Share Allotments were carried out in breach of the MMSCPL Constitution; that they were done at an undervalue; and that there was no genuine commercial reason for them.

Claims not made out against the third to fifth defendants

For reasons similar to those set out in [336] to [375] above, I also found that Mustaq and Ishret breached the fiduciary and other duties they owed as directors to MMSCPL in bringing about the 27 June 1991, the 16 January 1993 and the 19 May 1993 Share Allotments.

In their statement of claim, the Suit 780 plaintiffs pleaded that Shama, Osama and/or Iqbal had also exercised their powers as MMSCPL directors in a manner which was oppressive and unfairly prejudicial to the Samsuddin Estate by reason of the matters pleaded from paragraphs 36 to 97E of the statement of claim. This would include the allegations relating to the 1991 and 1993 Allotments.

On the evidence available, the Suit 780 plaintiffs were unable to establish that Shama, Osama and Iqbal should similarly be held liable for engaging in oppressive conduct vis-à-vis the 1991 and 1993 Allotments. As noted earlier, Shama and Osama only became directors of MMSCPL in February 2001. Iqbal was appointed as company secretary on 17 January 1994 and as director on 3 September 2001. In relation to the 1991 and 1993 Allotments, the highest at which the Suit 780 plaintiffs could pitch their case against Shama, Osama and Iqbal seemed to be that they should have found out about earlier breaches of duty by other directors when they themselves became directors – and that they should then have raised the alarm. Having regard to the evidence available, I did not think this was enough - even on a prima facie basis – for me to find that Shama, Osama and Iqbal were responsible as well for oppressive conduct vis-à-vis the 1991 and 1993 Allotments.

Whether the 1991 and 1993 Allotments should be set aside

While I accepted that the Suit 780 plaintiffs had a prima facie case for asserting oppressive conduct by Mustaq and Ishret vis-à-vis the 1991 and the 1993 Share Allotments, this did not mean that the Suit 780 plaintiffs must automatically be given the declarations and orders they sought in respect of these allotments. This was because the Suit 1158 plaintiffs had made known their objections to the Suit 780 plaintiffs being granted a declaration that the 27 June 1991 Allotment was null and void and of no effect and/or an order setting aside this allotment. As the Suit 1158 plaintiffs pointed out, the 27 June 1991 Share Allotment actually increased Mustafa’s MMSCPL shareholding: he went from 19% to 25.7%. Obviously, a declaration that the 27 June 1991 Share Allotment was null and void and/or an order setting it aside would be highly detrimental to the Suit 1158 plaintiffs’ interests.

I said earlier (at [93]) that the question of whether evidence led in one suit could stand as evidence in the other suits in a joint trial of multiple suits was a different question from that of whether – in such a joint trial – the parties in one suit could obtain reliefs which adversely affected the interests of parties in another suit when the latter were not joined as parties in the former’s action. As I said, the first question would be one of procedure; the second question would be a question concerning parties’ substantive rights.

Having reviewed the caselaw cited by the parties in their further submissions on this second question, I was of the view the Suit 1158 plaintiffs were right when they said the Suit 780 plaintiffs should have joined them as parties in Suit 780 if they wanted to seek reliefs which would adversely affect the Suit 1158 plaintiffs’ interests. I agreed with the Suit 1158 plaintiffs that in principle, it must be wrong for a court hearing an action to make orders which directly affect the rights of a non-party and which purport to bind that non-party. In this regard, I found the decisions in Avanti Offshore Pte Ltd v Bab Al Khail General Trading [2020] SGHC 50 (“Avanti”), Chickabo Pty Ltd v Zephere Pty Ltd [2019] VSC 580 (“Chickabo”) and John Alexander’s Clubs Pty Limited v White City Tennis Club Limited (2010) 266 ALR 462 (“JACS”) to be helpful.

In Avanti, the liquidators of Avanti Offshore Pte Ltd (“the liquidators”), who were the applicant in that case, sought inter alia declarations relating to the validity of certain debit notes issued to the applicant’s subsidiary PT Palm. Noting that PT Palm had not been joined as a party even though its interests were clearly and directly affected by the declaration pertaining to the debit notes, the High Court declined to grant the declarations sought (at [71] of Avanti). This was despite both the applicant and the respondent highlighting that PT Palm had consented to submit to the findings of this court, ostensibly implying that PT Palm therefore did not need to be joined as a party. The court held (at [71]) that PT Palm’s consent to be bound by the decision of the court was insufficient as PT Palm could conceivably resile from this consent. There was no legal basis to hold PT Palm to its consent, except for possibly some form of estoppel or other representation-based doctrine as between PT Palm and the parties. The court could not by its order hold PT Palm to the supposed consent: hence, no order made by the court could be expressed to extend to PT Palm, nor could it have the effect of doing so.

In similar vein, the Supreme Court of Victoria in Chickabo held that where a court was invited to make, or proposed to make orders that would directly affect the rights or liabilities of a non-party, that non-party was a necessary party and ought to be joined to the proceeding (at [44]). The failure to join a party directly affected was in effect a denial of procedural fairness and natural justice and would usually result in the setting aside of any judgment or order” (at [41]).

In this connection, I rejected the Suit 780 plaintiffs’ argument that it was the Suit 1158 plaintiffs who should have applied to be joined as parties in Suit 780 if they were of the view that the reliefs sought in that suit might adversely affect their interests. As the Supreme Court of Victoria held in Chickabo (at [47]):

In JACS, a case cited by the court in Chickabo, a declaration of constructive trust was granted over a piece of land in proceedings to which a company holding an unregistered mortgage over the land had not been joined as a party. On appeal, the Australian High Court held that the company, as the affected non-party, was entitled as of right to have the declaration of constructive trust set aside – even though the company had known of the proceedings but had not applied to be joined as a party as it had simply thought the proceeding would fail.

For the reasons set out above, I agreed with the Suit 1158 plaintiffs that the 27 June 1991 Share Allotment should not be declared null and void or set aside.

As for the 1993 Allotments, setting them aside in Suit 780 would produce an anomalous – indeed, untenable – situation whereby in Suit 780, the rightful shareholding positions of Mustafa and Samsuddin before the 5 January 1995 Allotment differed from what they were in Suit 1158 – even though we were concerned with the same shares in the same company and the same set of shareholders. With respect, I did not find that the Suit 780 plaintiffs had addressed this conundrum adequately in their further submissions. At the end of the day, a declaration is a discretionary remedy, and the grant of a declaration must be justified by the circumstances of the case (per the High Court in Avanti at [67(c)]). I found that the Suit 780 plaintiffs were unable to satisfy me that I should grant a declaration pronouncing the 1993 Allotments null and void and of no effect. The range of reliefs provided for under s 216(2) of the Companies Act are also entirely at the court’s discretion; and in this case, I found that the Suit 780 plaintiffs had not satisfied me that I should grant an order setting aside the 1993 allotments.

For the reasons explained above, I declined to set aside the 27 June 1991 Allotment, the 16 January 1993 Allotment and the 19 May 1993 Allotment.

The 9 April 1996 Allotment and the 24 February 1997 Allotment

As for the 9 April 1996 and the 24 February 1997 Share Allotments, these were also challenged by the Suit 780 plaintiffs but not by the Suit 1158 plaintiffs. All the four shareholders of MMSCPL (Mustaq, Ishret, Samsuddin and Mustafa) were allotted shares in these two allotments, in proportion to the registered shareholding of each shareholder following the 5 January 1995 Allotment, such that their percentage shareholding positions remained the same: Mustaq, 42.57%; Ishret, 12.95%; Samsuddin, 22.07%; Mustafa, 22.41%.

The evidence

For the 9 April 1996 and the 24 February 1997 Share Allotments, both sides referred to the following documents.

(a) 9 April 1996 Allotment:

(i) There was a notice of an EOGM to be held on 9 April 1996, dated 23 March 1996 (the “23 March 1996 Notice of EOGM”). The plaintiffs disputed the authenticity of this document.

(ii) Second, there was a document stated to be the minutes of the EOGM on 9 April 1996 (“9 April 1996 EOGM Minutes”), and ostensibly signed by Mustaq and Ishret. The plaintiffs disputed the authenticity of this document.

(iii) Third, there was a Notice of Resolution in Form 11 dated 9 April 1996, with the 9 April 1996 EOGM Minutes appended (“9 April 1996 Notice of Resolution”). The plaintiffs did not dispute the authenticity of this document.

(b) 24 February 1997 Allotment:

(i) First, there was a notice of an EOGM to be held on 24 February 1997, dated 8 February 1997 (“8 February 1997 Notice of EOGM”). The plaintiffs disputed the authenticity of this document.

(ii) Second, there was a document stated to be the minutes of the EOGM on 24 February 1997 (“24 February 1997 EOGM Minutes”), and ostensibly signed by Mustaq and Ishret. The plaintiffs disputed the authenticity of this document.

(iii) Third, there was the Notice of Resolution in Form 11 dated 24 February 1997 (“24 February 1997 Notice of Resolution”). The plaintiffs did not dispute the authenticity of this document.

Chee’s evidence

Chee did not give any evidence on the pricing and the commercial purpose (if any) of the 9 April 1996 and the 24 February 1997 Share Allotments in his expert report, as he explained that he was not instructed to carry out any work in relation to these two allotments. He noted, however, that the shares were allotted to the shareholders according to their shareholdings immediately preceding the allotments, and that certain shareholders would have already been disadvantaged by the earlier share allotments where the shares were not allotted in proportion to the existing shareholders’ shareholdings.

The parties’ submissions

The plaintiffs submitted that the power of MMSCPL to allot new shares was exercised improperly as Samsuddin was unaware of, and did not consent to, these two allotments. Both the 9 April 1996 Notice of Resolution and the 24 February 1997 Notice of Resolution only bore Mustaq’s signature, while the 9 April 1996 EOGM Minutes and the 24 February 1997 EOGM Minutes only bore Mustaq and Ishret’s signatures. Further, even if the meetings had been held, there would not have been any quorum at the meetings because at the material time, Mustaq and Ishret held only 55.6% of the shares in MMSCPL, which was far below the 75% needed under Article 68 of the MMSCPL Constitution.

The defendants submitted that the shares allotted were in proportion to the respective shareholdings of the shareholders following the 5 January 1995 Allotment. They also reiterated their argument that the previous share allotments were not wrongful.

My decision

In respect of the 9 April 1996 and the 24 February 1997 Share Allotments, I was of the view that even if I were to accept the Suit 780 plaintiffs’ allegations as to the breaches of the MMSCPL Constitution (eg, in the lack of an Offer Notice, the absence of any meetings or discussions etc), these allegations per se were not enough for me to find the two allotments oppressive of the Samsuddin Estate’s rights as shareholders. It was not disputed that the shares allotted to each registered shareholder in these two allotments were in proportion to that shareholder’s shareholding at that point in time: the 9 April 1996 and the 24 February 1997 Allotments did not dilute the Samsuddin Estate’s shareholding from what it stood at just prior to 9 April 1996. In this context, the judgment of Millett J in Re Charnley Davies Ltd (No 2) [1990] BCLC 760 (“Charnley”) is instructive in its reminder of the distinction to be drawn between unlawful conduct and conduct amounting to commercial unfairness. The following passage from Millet J’s judgment was cited and endorsed by our CA in Ng Kek Wee v Sin City Technology Ltd [2014] 4 SLR 723 (“Ng Kek Wee”) (at [67]):

In any event, even if I were to accept the argument that these two allotments were oppressive because they continued or confirmed the shareholding positions created by the oppressive 5 January 1995 Allotment, the harm suffered by the Samsuddin Estate was sufficiently addressed by declaring the 5 January 1995 Allotment null and void and ordering it set aside or cancelled. Nothing more would be achieved by making similar orders in respect of the 9 April 1996 and the 24 February 1997 Allotments. In the circumstances, I declined to issue orders for the cancellation of the 9 April 1996 Allotment and the 24 February 1997 Allotment.

The First Authorised Capital Increase and Second Authorised Capital Increase

The Suit 780 plaintiffs also made a number of allegations about the validity of the First Authorised Capital Increase on 17 January 1994 and the Second Authorised Capital Increase on 26 September 1997. They contended that the invalidity of these two capital increases meant that the share allotments coming after them would also be invalid. No such submissions were made by the Suit 1158 plaintiffs.

I have already explained my reasons for deciding to declare the 5 January 1995 and the 11 December 2001 Share Allotments void and of no effect and to order them cancelled. I have also explained my reasons for declining to issue similar declarations and orders in respect of the other share allotments challenged by the Suit 780 plaintiffs. Having noted that the Suit 780 plaintiffs did not actually plead any specific claim for relief in respect of these two capital increases, I did not find it necessary to pronounce any findings or to issue any separate declarations or orders in respect of the 17 January 1994 and the 26 September 1997 capital increases.

Other allegations of oppressive behaviour pleaded by both the Suit 1158 and Suit 780 plaintiffs

Apart from the allegations of oppression arising from the conduct of the share allotments, both the Suit 1158 and the Suit 780 plaintiffs made multiple other allegations of oppressive behaviour which were common to both suits. These were grouped under the general rubric of misappropriation of MMSCPL funds: namely, the taking of unsecured and interest-free loans by Mustaq, Ishret and Iqbal; the creation of allegedly sham BID invoices; the falsification of applications to MOM in relation to work passes for MMSCPL employees; and the non-payment of dividends to shareholders while substantial directors’ fees were being paid in the same periods to Mustaq and Ishret.

To be clear, while these instances of wrongdoing by the defendants were said to constitute breaches of the directors’ duties they owed to MMSCPL, the plaintiffs did not rely on the alleged unlawfulness of the defendants’ conduct to found their cause of action per se: rather, they relied on the unlawful conduct as evidence of the manner in which the first to the fifth defendants had allegedly conducted the company’s affairs for their own benefit and in disregard of the minority shareholders, ie, Mustafa, Samsuddin, and subsequent to their deaths, their respective estates (Charnley at 784; Ng Kek Wee at [69]).

On the evidence adduced, I found that both sets of plaintiffs were able to make out a prima facie case in respect of the allegations relating to the taking of unsecured and interest-free loans; the falsification of MOM applications; and the non-payment of dividends while substantial directors’ fees were being paid out. I set out below my findings and reasoning in respect of each of these matters.

The unsecured and interest-free loans

The plaintiffs pleaded that between 2000 and 2015, the first to fifth defendants (Mustaq, Ishret, Shama, Osama and Iqbal) utilised for their own benefit sums taken from MMSCPL under the guise of unsecured and interest-free loans, which were not in MMSCPL’s commercial interests. For completeness, I noted that in the Suit 780 plaintiffs’ statement of claim, they initially said that the loans were taken between 2000 and 2018, but only pleaded particulars relating to loans taken from 2000 to 2015. I therefore considered the period from 2000 to 2015.

The evidence

It was not disputed that the audited financial statements of MMSCPL showed the following amounts to be owed from the directors to MMSCPL in the period between 2000 and 2015:

It was not disputed that the loans were taken by Mustaq, Ishret and Iqbal; and that no amounts were shown to be owing from Shama and Osama. It was also not disputed that the loans were unsecured and interest-free.

Prior to the trial, the defendants had disclosed – pursuant to an order for specific discovery – documents purporting to be MMSCPL’s general ledgers for the years 2006 (which came to one page) and 2012 to 2019. The defendants claimed that save for the one page produced in respect of the 2006 general ledger, all the general ledger records for the period before 2012 were no longer available, having already been disposed of. The plaintiffs did not accept the authenticity of the purported general ledgers produced by the defendants; and as the defendants called no witnesses at trial, these general ledgers were not admitted into evidence.

The parties’ submissions

The Suit 1158 plaintiffs submitted that based on the company’s audited financial statements it could not be disputed that Mustaq, Ishret and Iqbal had taken unsecured and interest-free loans from MMSCPL. These loans were clearly not in MMSCPL’s interests: MMSCPL did not earn or receive anything for the monies loaned to these three defendants; and the outstanding sums owed by these three defendants were not only very substantial, they generally increased over time. Further, the Suit 1158 plaintiffs highlighted that contrary to the defendants’ allegations, there was no evidence that Mustafa, Samsuddin and the plaintiffs themselves knew of, personally participated in and benefited from the practice of taking loans from MMSCPL. While the plaintiffs disputed the authenticity of the purported general ledgers which the defendants had produced for 2006 and 2012 to 2019, they also contended that in any event, none of these general ledgers demonstrated that Mustafa, Samsuddin and/or the plaintiffs knew of and participated in the practice of taking such directors’ loans.

As for Shama and Osama, the Suit 1158 plaintiffs contended that even though they were not shown to have taken any directors’ loans, they were nevertheless “complicit” in the taking of loans by the other three defendants, because they were directors of MMSCPL during the relevant period, and the loans would have had to be approved by the directors. It was also argued that the general ledgers produced by the defendants appeared to show that Shama and Osama “benefited from the loans even though they did not take them”.

The defendants, for their part, submitted that the taking of these directors’ loans was not improper: MMSCPL was an exempt private company and entitled to lend money to its directors. The defendants also argued that in any event, the loans were not oppressive to the plaintiffs, because Mustafa, Samsuddin and the Samsuddin Estate had (allegedly) also taken loans from MMSCPL. Moreover, the Mustafa and the estates (and their family members) benefitted from the loans taken under Mustaq’s name, and had previously never objected to this practice.

My findings

(1) Whether it is improper for a director to take loans from the company for his personal use

As to the defendants’ argument that MMSCPL was an exempt private company and entitled to lend money to its directors, I should make it clear that I did not disagree that in the case of an exempt private company, it would not be improper for a director to take a loan from the company simply because it was for his personal use (see Chow Kwok Ching v Chow Kwok Chi and others and other suits [2008] 4 SLR(R) 577 (“Chow Kwok Ching”) (at [69]). However, this did not mean that the taking of unsecured and interest-free loans by directors of an exempt private company would never amount to evidence of oppressive conduct for the purposes of a s 216 action.

In Chow Kwok Ching, where the plaintiff and the defendants were the brothers and co-directors of companies started by their father, the High Court held (at [69]–[70]) that although there was evidence that their parents had a practice of getting the companies to pay their personal expenses and to make direct loans to them, this “old way of using the companies’ funds as if they were the personal funds of the shareholders and directors could not continue” after the parents’ deaths. The court pointed out that the three brothers were not in the same position as their parents had been, and there was the additional consideration of the other interests in the companies (namely, their parents’ estates and any creditors of the estates, as well as the interest of their sister). As such, the defendants were not entitled to treat the companies as a ready source of cash in the same way their parents had done. Instead, the brothers – as directors – “had a duty to meet and discuss the policy on loans and only take loans that had been properly authorised”. There was no evidence that the directors had ever done so. In the circumstances, the High Court held (at [70]) that the two the defendants’ taking of numerous unsecured and interest-free loans from the companies constituted evidence of oppression or disregard of the plaintiff’s minority interest.

What Chow Kwok Ching demonstrates, therefore, is that in considering whether the taking of loans by a director constitutes evidence of oppression of minority rights, the court will look at all the circumstances in which the loans were taken by the directors, including the existence of any agreed policy and practice as to the terms on which the loans would be given and repaid.

As an aside, I noted that the defendants claimed that the plaintiffs had painted a misleading picture of the loans taken. According to the defendants, while there were amounts due from the directors to MMSCPL, there were also amounts due from MMSCPL to the directors; the plaintiffs were said to have focused “selectively” on the period after 2000.

I did not think the plaintiffs sought in in any way to mislead me. The plaintiffs did not deny that the financial statements showed amounts owing from MMSCPL to the directors in the period from 1990 to 1999. This was acknowledged, for example, in Chee’s First Report. However, even if there had been amounts owing from MMSCPL to the directors in this earlier period, it did not preclude the possibility of the defendants breaching their duties as directors from 2000 onwards through the taking of large unsecured and interest-free loans. As for the contention that the plaintiffs had “selectively” focused on the period after 2000, this seemed to me to be a spurious complaint. If the plaintiffs had evidence of the defendants’ conduct post-2000 which they believed amounted to breaches of the latter’s duties as directors, I did not see why it should be considered untoward of them to focus their claims on the period post-2000. As Ayaz explained in re-examination, he had selected the period from 2000 to 2015 because he was not given the accounts from 1990 to 2000; and in the year 2017 and 2018, he had already “filed a case against them so we couldn’t ask them”.

(2) The defendants’ allegation that Mustafa, Samsuddin and their estates/family members had also taken loans from MMSCPL

As with the defendants in Chow Kwok Ching, so too the defendants in the present case failed to produce any evidence that the directors of MMSCPL had ever got together and explicitly set out the conditions for loans.

Instead, the defendants argued that Mustafa, Samsuddin and their family members had also taken loans from MMSCPL. I understood this as really an attempt by the defendants to show that Mustafa, Samsuddin and subsequently, the plaintiffs themselves had agreed to a practice within MMSCPL of the taking of unsecured and interest-free loans by the directors.

This argument was based primarily on the general ledgers produced by the defendants in specific discovery, which their counsel then used to cross-examine the plaintiffs. As I noted earlier, since the plaintiffs did not accept the authenticity of these general ledgers and none of the defendants gave evidence, these general ledgers were not actually proved and admitted into evidence. In any event, the Suit 1158 plaintiffs denied that the general ledgers showed Mustafa and Samsuddin to have been aware of and to have participated in the taking of directors’ loans from MMSCPL.

As for the Suit 780 plaintiffs, they did not deny that some loans had been taken over the years by Samsuddin and/or the Samsuddin estate. In Fayyaz’s AEIC , he acknowledged that the general ledgers did appear to show that Samsuddin and the Samsuddin estate had taken loans from MMSCPL. However, it should be highlighted that insofar as Fayyaz was prepared to agree that the general ledgers showed Samsuddin and the Samsuddin estate taking loans from MMSCPL, these were apparently loans taken from 2013 onwards. These were not directors’ loans, since Samsuddin had already stepped down as a director on 14 July 2003. Fayyaz’s evidence – which was not refuted – was that these loans were given by MMSCPL to Samsuddin, and later on his estate, to allow them to “pay for living expenses in Singapore and in India”; and that the money had to be spent among his four brothers and sisters and their families – in all, some sixty people. The amounts of the loans which Fayyaz acknowledged having taken were also much smaller than the amounts of directors’ loans recorded under Mustaq’s, Ishret’s and Iqbal’s names. For example, Fayyaz stated that he took a $50,000 loan for his daughter’s wedding and a $165,000 loan for a down-payment for a property in India. In his expert report, Chee noted that the amount due from Samsuddin and/or the Samsuddin Estate for the period from FY2012 to FY2018 ranged between $1.1 million and $2 million each year, whereas in comparison, the amount due from the directors was “much higher” and ranged between S$3.7 million and S$31.4 million during the same period.

In short, Fayyaz’s admissions (such as they were) were not enough to substantiate the defendants’ allegation that Mustafa, Samsuddin, and the plaintiffs had all known of and accepted a general practice of the directors taking substantial, unsecured and interest-free loans from MMSCPL.

Further, even if I were to accept that Mustafa and/or Samsuddin and/or their estates had taken some loans from the company in the past, the defendants failed to offer any coherent explanation as to why this should disentitle the Mustafa and Samsuddin estates from complaining about the loans taken by the defendants. In Chow Kwok Ching, the High Court rejected the argument that the plaintiff was not entitled to complain about the loans taken by the defendants simply because he himself had a large debit balance on his account: the court held that the plaintiff’s debit balance was entirely irrelevant because it had been outstanding for many years and the loans it represented had been authorised by the father when he was alive. In the present case, the amount of any loans allegedly taken by Mustafa and/or Samsuddin and/or their estates was indisputably very much less than the massive directors’ loans taken by the defendants themselves. Even more fundamentally, there was no suggestion that any of their loans were unauthorised or that they were concealed from the defendants. As with the plaintiff in Chow Kwok Ching, therefore, the two sets of plaintiffs in this case were not precluded from complaining about the directors’ loans taken by Mustaq, Ishret and Iqbal.

(3) The defendants’ allegation that the plaintiffs enjoyed other benefits from MMSCPL by virtue of being family members of Samsuddin and Mustafa

Aside from their allegation that Mustafa, Samsuddin and the plaintiffs had also taken loans from MMSCPL, the defendants claimed that the plaintiffs had also enjoyed other benefits from the company by virtue of their being Mustafa’s and Samsuddin’s family members. The defendants’ case was that there existed a longstanding practice of the plaintiffs and their family members taking money from MMSCPL for their personal expenses; and pursuant to this (alleged) practice, the sums taken by the plaintiffs and their families would be recorded under Mustaq’s director’s account in MMSCPL’s general ledger, ie, these were reflected as loans owing to MMSCPL from Mustaq.

For example, the defendants suggested to Ayaz in cross-examination that his personal expenses, as well as his family’s household expenses, were charged to Mustaq’s account. The defendants referred him to expense records for April 2015 which showed a total expenditure of $103,508.89, and a cheque payment for this amount made out to MMSCPL for those expenses, from MMSCPL itself. According to the defendants, the breakdown of the expenses showed that Ayaz’s household expenses were $7,264 for April 2015, and that based on the general ledger, this amount was part of the total amount of $103,508.89 debited from Mustaq’s account.

As another example, the defendants suggested to Fayyaz during cross-examination that the payments for his car, road tax and motor insurance, as well as the utilities payments for his residence, were charged to Mustaq’s account in MMSCPL.

In my view, the defendants’ narrative about the benefits received by the plaintiffs did not assist their attempt to resist the plaintiffs’ claims about their directors’ loans being evidence of oppression. In the first place, even if I were to accept that some of the expenses incurred by the plaintiffs were recorded under Mustaq’s account in the general ledger and formed part of the loan amounts owing by Mustaq to MMSCPL, these alleged expenses appeared to be only a very small part of the huge loan amounts owing by Mustaq to MMSCPL. For example, in March and April 2015, the expenses incurred by Fayyaz, Asrar and Zafar came up to $103,508.89, and this sum was charged to Mustaq’s director’s account on 28 May 2015. However, the total amount owing from the directors to MMSCPL as at 30 June 2015 was $21,338,406.

Further, there was no evidence that the plaintiffs were aware that the various expenses were charged to Mustaq’s account and paid out of the loans he took from the company. On the contrary, both Ayaz and Fayyaz gave evidence that as far as they were concerned, the payment of their household expenses formed part of their salary packages.

At the end of the day, even if it were true that at least some of the plaintiffs’ personal and/or household expenses had been charged to Mustaq’s account in MMSCPL and paid for by the loans he took, there was no basis for saying that the plaintiffs must be understood thereby to have known of and agreed to the defendants taking large, unsecured and interest-free loans from the company.

(4) Loans to directors did not benefit MMSCPL

From the case run by the defendants at trial, it was plain that they did not (and could not) deny that the substantial directors’ loans taken by Mustaq, Ishret and Iqbal were for their personal use – though it was submitted that in Mustaq’s case, he also used the loans to pay for at least some of the personal and household expenses of Mustafa, Samsuddin and their families.

As Chee pointed out in his expert report, there was no evidence that the loans benefited MMSCPL in any way. Indeed, Chee concluded that on the contrary, the loans made to the directors were not in MMSCPL’s interests. As he pointed out, while the directors were able to get large, unsecured and interest-free loans from the company for their personal use, this was “at MMSCPL’s expense” because in the same period, the company had “significant bank loans and other interest-bearing borrowings”:

(5) Summary of findings on unsecured and interest-free directors’ loans taken by Mustaq, Ishret and Iqbal

Given the circumstances of the directors’ loans, I agreed with the plaintiffs that in respect of their conduct vis-à-vis the taking of the unsecured and interest-free loans, Mustaq, Ishret and Iqbal were in breach of their duty as directors to act honestly and bona fide in the best interests of MMSCPL and to avoid putting their interests ahead of MMSCPL’s. In Kong Thai Sawmills (Miri) Sdn Bhd, Re: Kong Thai Sawmills (Miri) Sdn Bhd v Ling Beng Sung [1978] 2 MLJ 227, Lord Wilberforce held (at 232) that improper drawings by way of loans were material as evidence of oppression and disregard of a minority shareholder’s interests. I agreed with the plaintiffs that the wrongdoing by Mustaq, Ishret and Iqbal constituted evidence of these defendants conducting the affairs of MMSCPL in a manner that was oppressive and in disregard of the interests of the minority shareholders.

(6) Claims not made out against the third and fourth defendant

As I noted earlier, Shama and Osama did not take unsecured and interest-free directors’ loans. In fact, Osama was not even a director of the company in the decade between 10 February 2004 and 24 December 2014. Insofar as the two sets of plaintiffs appeared to be claiming that Shama and Osama failed to take action to prevent the loans being taken by the other defendants, I reiterate the observations I made earlier (at [330]–[333]) regarding the absence of evidence on Shama’s and Osama’s knowledge and their actions. There was no evidence, for example, that Shama and Osama had the means for discovering the extent and nature of the loans taken by the other three defendants.

In the circumstances, I did not accept that the plaintiffs were able to establish a prima facie case of wrongdoing by Shama and Osama which could amount to evidence of their acting in oppression and/or disregard of the minority shareholders.

The falsification of MOM applications

I next address the plaintiffs’ claims concerning the falsification of work pass applications made by MMSCPL to MOM in relation to MMSCPL employees working for Kebabs N Curries, Mustafa’s Café, Handi Restaurant and Catering, and/or MMSCPL itself. The first three entities were restaurants which were wholly owned by MMSCPL. In gist, the plaintiffs alleged that since April 2009, Mustaq had procured or caused MMSCPL to overstate the salaries of its employees in the work pass applications: the differences between the salaries declared to MOM and the actual salaries paid to the workers would then be collected from the workers every month by an MMSCPL Human Resources (“HR”) manager named Ghouse (“Ghouse”), and later on, by one Raj Patro (“Patro”) who operated an employment agency named Pat & Hoff Consultants (“Pat & Hoff”). According to the plaintiffs, the monies collected back in this manner would then be passed, directly or indirectly, to Mustaq and/or applied as directed by him and/or used by him for his own benefit. The plaintiffs referred to this as the “Cashback Scheme”.

The defendants’ pleaded case in respect of the falsified MOM applications and the Cashback Scheme was that they knew nothing about these matters. According to the defendants, Ghouse was the person who handled applications to MOM for work passes in relation to employees working for MMSCPL, while Patro handled the work pass applications in relation to employees working for Kebabs N Curries, Mustafa’s Café and Handi Restaurant. The defendants claimed that Ghouse and Patro did not report to them: according to the defendants, they had no contact with either man and no reason to suspect that falsified applications had been made to MOM. . In fact, the defendants claimed that the allegations about the falsified MOM applications and the Cashback Scheme were really a concerted effort by Rajesh (the consultant engaged by the two sets of plaintiffs) and one Arvind Sharma (“Arvind”, the former general manager of Kebabs N Curries) to manufacture and collect false evidence in support of the plaintiffs’ litigation against Mustaq.

The evidence led by the plaintiffs

The plaintiffs called a number of witnesses to give evidence on the falsified MOM applications and the Cashback Scheme. As seen from the list below, apart from Rajesh, the other witnesses were all former MMSCPL employees:

(a) Ashish Singh (“Ashish”) worked at Kebabs N Curries from around 9 May 2014 to 12 July 2018.

(b) Abdul Raziq (“Raziq”) worked as a restaurant captain at Kebabs N Curries from around October 2011 to 8 June 2018.

(c) Tarun Sharma (“Tarun”) worked as a restaurant supervisor at MMSCPL from 21 December 2011 to 14 July 2018.

(d) Anees Ahmad (“Anees”) worked as a sales executive at the watch department and then the electronics department of MMSCPL from 20 April 2009 to 8 June 2018.

(e) Arvind Sharma (“Arvind”) was the general manager of Kebabs and Curries from August 2013 until he was fired on 31 May 2018.

(f) Mohit worked at Kebabs N Curries from around 26 November 2011 to 18 September 2018.

(g) Abdul Haq Siddique (“Siddique”) was a Senior Sales Executive in MPL from around 1 October 2011 to 25 June 2018, and the brother-in-law of Ayaz.

(h) Rajesh was the consultant first hired by Ayaz in 2016 to investigate the affairs of the Mustafa Estate (see [37] above). Around early 2018, Rajesh was also asked by Fayyaz to investigate the affairs of MMSCPL.

I examine in some detail below the evidence of Ashish Singh, as his account of events reflected broadly the accounts given by the other former MMSCPL employees.

(1) Ashish Singh’s evidence

(A) Ashish joined MMSCPL in May 2014

Ashish’s evidence was that he joined MMSCPL in May 2014, after coming into contact with Patro in April 2014 and paying the latter an agent’s fee of $6,500 cash (in instalments) to help him obtain employment in Singapore.

When Ashish first joined MMSCPL, he attended a staff briefing on 9 May 2014 for about 15 to 20 new staff. This briefing was given by Patro, who told the new staff that if any government agencies asked them whether they “give any cash-back”, they had to “deny it completely”. At trial, Ashish clarified the actual words used by Patro at the 9 May 2014 briefing:

According to Ashish, his monthly salary – as declared in his employment contract – was $2,500. In or around August 2014, he started receiving monthly allowances as well, which amounted to $210. In 2016 his monthly salary was increased to $2,520. He initially received his salary in cash vouchers which he had to encash for his salary, but started receiving his salary in his bank account from January 2015.

In Ashish’s third month of employment, ie, around August 2014, he attended a meeting at the HR office with Ghouse, the HR manager of MMSCPL, where Ashish was informed he would have to “pay a sum to HR”, being the “total outstanding, inclusive of the sums owed for the first two months”. Ashish then calculated that despite his official salary of $2,500, his actual salary was $1,600 to $1,800. The amount of “cashback” he was required to pay (and therefore his actual monthly salary) would fluctuate as it depended on factors such as annual leave and allowances or incentives that he was entitled to, and whether he had worked on public holidays or any off-days. When he checked with his colleagues in Kebabs N Curries, he was told that this “cashback” payment was “the requirement for all foreign workers, other than the immediate family members of the boss”. He therefore complied and paid the "cashbacks" as required.

(B) Procedure for collection of cashbacks

The procedure for the collection of cashbacks occurred every month. Ashish explained in his AEIC that usually the foreign workers would get phone calls from the HR department for them to attend at the HR office one by one. On each occasion, Ghouse and one Ms Nafisah (“Nafisah”) would inform them of the “outstanding” amount they had to “return”.

In his AEIC, Ashish exhibited a photograph of a document which Ghouse would refer to during those meetings. Ashish explained that he had taken this photograph sometime in 2015 while he was in the HR office to pay the “cashback” and while Nafisah was pre-occupied with some other papers. Ashish explained that the left-hand column recorded the employees’ badge number. In cross-examination, he agreed that his badge number was not reflected on that handwritten document, but explained that this was “because there were around 80 to 100 S Pass holders who were coming pay [sic] the cash back”. There were also some entries indicating negative amounts, which Ashish explained meant that the staff in question had paid their “cashback” in advance of receiving their salary. As for why some of the “new balance” amounts (the amounts the employees had to return to HR for the current month) were negative, Ashish explained that sometimes, his annual leave pay was reflected as $775, which increased his net salary, and “that’s why when they calculate they do not have to pay them back”.

(C) Amount of cashback collected each month

Ashish testified that the amount he had to pay back to MMSCPL would differ from month to month. Although he had stated in his Suit 780 AEIC that the “cashback” was around $700 to $900 per month, at trial he explained that he did not always have to give $700 every month: the amount could be around $300 to $500, or it could even go to zero in the months of December and January when he had his annual leave. He also stated that there were months where he did not pay back any cash or where he paid less than $100 (eg $84 in February 2015) . While Ashish’s payslips showed that his monthly gross salary, or his “regular pay”, remained the same, at $2,520 per month, his “net pay” differed each month.

In his AEIC for Suit 1158, Ashish stated that from July 2014 to October 2017, he paid an average monthly amount ranging between $300 and $800 as “cashback”. He accepted that in a letter sent by his solicitors on 26 June 2018 to MOM , the cashback amount had been erroneously stated as $600 per month.”

(D) Gathering evidence from August 2014

Ashish was unhappy he had to pay cashbacks every month. In August 2014, he shared his frustrations with Arvind, who told him that if Ashish intended to challenge this, he would need a lot of evidence. Around this time, Ashish started making recordings of the meetings he attended in the HR office for the payment of the “cashbacks”, and he provided these recordings to Arvind.

From around March 2016, Patro began coming to the Handi Restaurant to collect “cashbacks”, while Ghouse continued to collect cashbacks for any outstanding amounts owed. Ashish continued to record the meetings he attended with these men for the purpose of paying the “cashbacks”. On his evidence, the payment of these “cashbacks” was not something that the staff were allowed to disregard or evade. For example, in a conversation with Patro on 10 June 2016, Ashish informed Patro that he did not have enough money to pay the “cashbacks” in full at that point and that he would pay the remainder the next time. Patro’s response to him was: “Don’t get into this next time next time otherwise next time will get your salary on hold…I am not joking”.

(E) Events in 2017

(I) April to May 2017

As another example, in a meeting on 20 April 2017 with Patro and one Chef Ayub (“Ayub”), Patro told Ashish that Ashish would receive a fine of $50 if he did not pay the “cashback” that he owed. During this conversation, Ashish had also asked for a loan of $10,000 from the company, which request Patro had rejected. Patro suggested that the sum could be given as a salary advance instead.

After the above conversation with Patro, Ashish spoke to the HR directors of MMSCPL – Stephen and Lee – to ask for a loan. In that conversation, Ashish had suggested to Stephen that he (Ashish) should stop paying the “cashbacks” each month so that he could use the money for himself first, before returning the amount after four or five months. Ashish requested that Stephen speak to “the boss” – ie, Mustaq – about this suggestion. According to Ashish, Stephen’s response to his suggestion and his reference to the “cashback” payments was:

Eventually, Stephen approved a loan of $2,000, but Ashish ultimately did not accept it.

Around the time he spoke to Stephen and Lee, Ashish also made a statutory declaration on 17 May 2017. At trial, he explained that he had done so –

According to Ashish, he had decided on his own to make this statutory declaration but “had taken suggestions” from “friends who were in India”. In cross-examination, Ashish explained that at that time (ie, earlier in 2017), he had decided to make this statutory declaration and to provide the evidence he had collected to Rajesh, instead of making a police report, because he and the other staff had been “threatened” since “day one”: they had been “told that [they] will be fired from [their] job and also told that [they] will never get another job in Singapore ever” should they bring the “cashback” matter to light. As he was responsible for his family, he had “no other choice but to continue working in MMSCPL”.

(II) November 2017: Announcement of the end of the Cashback Scheme

Ashish said that on 10 November 2017, while he was working at Kebabs N Curries, he saw Mustaq and one Saleem (Iqbal’s son-in-law) come into the restaurant to speak with Ayub. The following day (11 November 2017), Ayub called for a meeting where he informed the staff that the “boss”, meaning Mustaq, had told him that the foreign employees would no longer have to pay cashbacks to the management.

At trial, Ashish testified that he believed Mustaq and the other directors of MMSCPL were aware of the “cashback” practice and that an end had been put to it in 2017 after Mustaq spoke with Chef Ayub. Ashish agreed that he had not actually heard the conversation between Mustaq and Ayub on 10 November 2017. What he could say was that he had watched Mustaq speaking to Ayub, and the following day Ayub had announced at the staff briefing that “Boss” (ie, Mustaq) had said there would be no more “cashback” payments.

(F) Events in 2018

(I) May 2018: Arvind’s termination and non-renewal of S Passes

On 28 May 2018, however, the HR office put up a notice stating that all existing S-Pass holders would not be renewed by MMSCPL, ie, their employment would terminate on the last day stated on their S-Passes (the “28 May 2018 Notice”). Ashish and some other staff approached Arvind that same day to air their frustrations, and asked Arvind to speak to the management on their behalf. Nine of the foreign staff, including Ashish, signed a handwritten letter for Arvind to convey to management; and in this letter, reference was made to their having had their work passes renewed in the past when they were “paying back part of [their] salary”, as well as to Ayub’s previous announcement about the (supposed) end to such payments. Some of Ashish’s colleagues also wrote emails to management expressing their frustration.

Unfortunately, Arvind himself had his employment terminated around 31 May 2018; and Ashish and his colleagues received no response from management to their handwritten letter and emails.

(II) June 2018: Reporting the Cashback Scheme to the authorities

On 1 June 2018 Ashish made a complaint to MOM through their “isubmit” system. That same day, however, Patro conducted a staff briefing to tell the staff “the tiger is back” (apparently referring to himself), and that those who wanted to go and complain to MOM could do so as he “knows how to handle it”.

On 4 June 2018, Ashish made a second statutory declaration to “add some more points”. He explained that he did so because Arvind had been fired on 31 May 2018 and he himself was “scared” as “Patro used to come and threaten us”. When asked by the defendants’ counsel if he knew that the statutory declaration did not prove anything, he explained:

About a week after Patro’s briefing of 1 June 2018, those of Ashish’s colleagues who had sent emails to management had their employment terminated. Ashish himself received a threatening and abusive call from Patro that same day. On 9 June 2018, Ashish – with Arvind’s assistance – lodged a police report concerning the Cashback Scheme. At that time, he knew that there was a dispute going on in Mustafa’s family. However, he explained that he had gone to the police to report the Cashback Scheme on 9 June 2018 because:

On 10 June 2018, Ashish wrote a letter to MOM explaining the Cashback Scheme. In this letter (which he said Arvind helped him with in terms of correcting the grammar ), he stated that Mustaq and Shama’s husband were benefiting from the Cashback Scheme. In cross-examination, he accepted that he did not have “strong proof” that Mustaq and Shama’s husband were the ones ultimately benefiting from the cash-back.

On 10 July 2018, Ashish attended an interview with MOM. Shortly after that, he was fired from MMSCPL on 12 July 2018. By that point, he felt he had no other choice but to “carry forward with [his] complaint”.

On 2 August 2018, Ashish sent an email to the High Commissioner of India in Singapore. In this email he attached a document titled “Modus operandi and some facts in regards to cash back” which he said he had drafted himself and in which he set out his account of the system of cashback collections at MMSCPL.

(2) Similar evidence from other former employees

The following other former MMSCPL employees (Raziq, Tarun, Anees, Mohit and Siddique) gave evidence which was broadly similar to Ashish’s, in terms of their experiences with the “Cashback Scheme”. Broadly, they too gave evidence of Ghouse and Patro collecting from them the “cashback” payments every month. These amounts would vary depending on factors such as whether the employee in question had taken off days during the month and whether the “declared salary” had increased. They also gave evidence of having tried to gather evidence of the “cashback” collections: for example, Tarun gave evidence that he had made audio recordings of the occasions when he was summoned to the HR office to make his payments, and that he had also downloaded CCTV footage from the office which he had handed over to Rajesh. When asked why they had handed over the evidence collected to Arvind and/or Rajesh instead of making police reports, these witnesses testified that they were “living in constant fear” due to the threats of losing their jobs, and “did not have the courage to approach the authorities without enough evidence and proof” (per Tarun). As Anees put it, he was “scared” of being fired – and as it turned out, he – like the others – was fired when eventually he did complain .

These other witnesses also gave evidence of having been told by Ayub on 11 November 2017 that Mustaq had told him the foreign employees would no longer need to pay “cashbacks” to management. In May 2018, however, they found out via a notice on the MMSCPL notice-board that all S-Passes would no longer be renewed. Their subsequent handwritten letter and emails to management went unanswered. Instead, one by one, they were fired.

(3) Arvind Sharma’s evidence

Arvind first joined MMSCPL in August 2013 as the general manager of MMSCPL’s Food & Beverage Department. He was in charge of the operations of Kebabs N Curries, Handi Restaurant and Mustafa Café. Around 50 staff reported to him, including Ashish, Tarun and Raziq.

(A) August 2014: Ashish told Arvind about the Cashback Scheme

Sometime in August 2014, Arvind was informed by Ashish of the Cashback Scheme. Arvind explained that he had heard about the Cashback Scheme even before August 2014 – in fact, somewhere around the start of 2014. He had not taken steps to investigate at that juncture because he had been told by Saleem that he should simply take care of the operations; and as he was new to the company, he had to perform well.

When Arvind was approached by Ashish in 2014, he told the latter that he “assumed that the instructions came from the top”. While Arvind thought the Cashback Scheme was illegal, he did not report this to the authorities at the time as “in a big company, you do need evidences, without evidences you cannot prove anything”. Moreover, Arvind himself was “not the victim” of the Cashback Scheme: it was the other employees who “were the victims, so they had to go and report to the authorities”.

Arvind also told Ashish that he needed to have concrete evidence and that it would be better to have a group of people raise this concern to the boss, Mustaq. Arvind explained that he “assumed” that Mustaq knew and that he “wanted these guys to speak to him because you should always speak to the boss if there’s something wrong in the company”. He also explained that he had asked other S-Pass holders why they did not complain to MOM, and had realised that there was an “atmosphere of fear instilled in their mind”.

(B) Events from March 2016

Around March 2016, Patro took over the collection of the cashbacks.

Around July or August 2016, Tarun approached Arvind; and as Ashish had done, he too told Arvind that he was upset with the Cashback Scheme. Arvind told Tarun that he should collect evidence, report it to MOM and speak to the boss.

Around September 2016, when reviewing CCTV footage of Handi Restaurant, Arvind saw Patro collecting cash from the foreign employees. He then asked Tarun to save the CCTV recordings in a thumb drive. He explained that he asked Tarun to do so, rather than doing it himself, because “[e]vidences were of no use to me, I was not the victim, so I told him to collect the evidence”. Arvind also explained that he did not go to the authorities himself with the CCTV evidence as he was not part of the “cashback” scheme, and it was for the victims of the “cashback” scheme to come forward to inform the authorities about this practice.

Arvind stated that he also did not say anything to Mustaq about the Cashback Scheme at this juncture because it was “common knowledge” that Mustaq was involved in the Cashback Scheme, along with the HR department, Saleem and Raj Patro. He explained that by “common knowledge”, he meant that:

(C) Arvind’s meeting with Rajesh in 2016

Sometime around late 2016, Arvind visited Rajesh at his office, as he had come to know that Rajesh was investigating the affairs of MMSCPL. He informed Rajesh about the Cashback Scheme; and in December 2016, he brought Tarun and Ashish to Rajesh’s office, where they explained the Cashback Scheme to Rajesh. Subsequently, Arvind also assisted to collate recordings from the staff and passed them to Rajesh.

(D) Events from November 2017

In November 2017, word spread among the staff that some members of Mustaq’s family “planned to file a litigation suit” against Mustaq and MMSCPL, and that one of the issues was the Cashback Scheme. On 9 November 2017, Patro called Arvind and Ayub to the office at Handi Restaurant and asked them to sign a letter stating that MMSCPL, Mustaq and Patro had not taken any monthly deductions from the staff’s salaries. Arvind signed this letter as he was “scared” for his job: he knew “that Raj Patro was very powerful there” and “was very close to Saleem”.

After signing the letter, he tried to ask Saleem and Patro to return him the letter, but his request was denied. On the evening of 9 November 2017, Arvind sent an email to Mustaq and Saleem in which he raised the subject of the Cashback Scheme for the first time. He wanted to inform Mustaq about what Saleem and Patro had done; and he wanted Mustaq to intervene to get the letter back for him. According to Arvind, he knew that Mustaq was part of the Cashback Scheme, but he felt that there was “no choice left” except to “write to the top boss”: it “had to be black and white”. That same day, Saleem replied to Arvind’s email without copying Mustaq. In the email, Saleem claimed, inter alia, that as far as he was aware, there was “no such activity taking place” (ie, no cashback activity).

On 10 November 2017, Arvind replied to Saleem’s email reiterating that the letter he had signed at Patro’s behest “shall be considered as null and void and shall be returned back to [him]”.

Arvind also gave evidence that Ayub too had previously tendered his resignation. On the night of 10 November 2017, however, Ayub called Arvind and stated that Mustaq and Saleem had spoken to him (Ayub) and asked him to take back his resignation, saying that his salary would be increased and that the Cashback Scheme would be stopped. Based on his conversation with Ayub (which he recorded), Arvind “understood that boss [ie, Mustaq] knew everything about the cash-back”. According to Ayub, when Mustaq was asked about the cash-backs, rather than denying this practice existed, Mustaq had said “Brother one thing is there that you guys are PR” and asked Ayub “did you use to return back the money?” and “When did you return back?” . Arvind testified that these responses by Mustaq were a “confirmation of Mr Mustaq’s involvement because he has not told Ayub that they’re not taking cash-back”.

On 11 November 2017, Ayub informed the staff at Kebabs N Curries that HR would no longer be collecting cashbacks. On the same day, Saleem told Arvind that the signing of the letter on 9 November 2017 was a “fake exercise” to see whose side he was on, and that the letter was with one Shadab. Arvind was concerned as he had previously been led to believe that the letter was with MMSCPL’s management. He proceeded to file a police report that day.

On 18 November 2017, still concerned about the letter, Arvind drafted a joint statutory declaration with Ayub, so that “we can state the facts that this is what happened with us”. In cross-examination, Arvind denied that he had made this statutory declaration for the purpose of having it used as evidence in Suit 1158 and/or Suit 780. According to Arvind, the statutory declaration was a record “let’s say for someone complains to Ministry of Manpower or any other authority”.

(E) Events from May 2018

Around 28 May 2018, Arvind was informed by the staff about the 28 May 2018 Notice. Some of them said they had been told that if they resumed paying “cashbacks” to HR, their work passes would be renewed. Nine of the foreign employees then signed a handwritten letter setting out their pleas and gave it to Arvind so that he could raise the issue to management. Unfortunately, Arvind himself was fired shortly thereafter, on 31 May 2018.

After 31 May 2018, Arvind continued to be involved in the complaints and various documents that other employees were sending to the authorities because he himself had suffered wrongful termination of his employment, and he wanted to help the other ex-employees with their complaints.

(4) Rajesh’s evidence

Apart from the other former MMSCPL employees, the plaintiffs also led evidence from Rajesh about the Cashback Scheme. In this connection, Rajesh gave evidence about his tele-conversations with Mustaq. There were a total of 33 calls between Mustaq and Rajesh from 31 January 2018 to 8 February 2018.

On 5 February 2018, Rajesh had eight phone calls with Mustaq. The first call started at 11.17am and lasted for 64 minutes, but the first 29 minutes of the call was not recorded, as Rajesh only started the recording from 11.46am onwards. According to Rajesh, before he started the recording, Mustaq had “admitted that there was a cashback and how he was spending these monies”: Mustaq “said there were a lot of money coming from the cashback and he has been using those money for the various expenses which are off the books”. Mustaq also stated that the money was “off hand”, which Rajesh understood to mean the money was obtained illegally.

Referring to the transcript of his conversation with Mustaq, Rajesh testified that when he confronted Mustaq with the “MOM” allegations, Mustaq knew what he (Rajesh) was talking about because there was an allegation in the Suit 1158 statement of claim concerning this MOM Cashback Scheme. The relevant portions of the transcript are reproduced below:

According to Rajesh, rather than demonstrating his ignorance of the Cashback Scheme, Mustaq’s responses showed that Mustaq had been “caught off guard” and had not expected Rajesh to continue talking about the cashback “discussion”: the moment that Mustaq realised he had “made a mistake of admission of this illegal money receiving and spending, he wanted to hold it back”.

My findings

(1) The existence of the Cashback Scheme

On the evidence adduced, I found that the two sets of plaintiffs were able to establish at least a prima facie case that MMSCPL work pass applications to MOM were falsified in order to facilitate the Cashback Scheme; that this was done with Mustaq’s knowledge and at the very least acquiescence; and that Mustaq personally benefited from Cashback Scheme. My reasons were as follows.

First, the former MMSCPL employees called by the plaintiffs (Ashish, Raziq, Tarun, Anees, Mohit and Siddique) were consistent in testifying to their personal experience of the Cashback Scheme. Each of them gave evidence of how they had paid back to the company a portion of their declared salary every month. While the defendants made much of some inconsistencies in the witnesses’ testimonies as to the exact amounts paid back each month , the existence of some inconsistencies on this point did not strike me as being either surprising or sinister, given that some years had passed since the events they were testifying about. The witnesses themselves had also explained that the monthly payments fluctuated in quantum, depending on factors such as the number of public holidays or off-days within a month on which the employee chose to work. In the main, the witnesses were consistent on the procedure for the collection of the “cashbacks” and the personnel involved in the collection. It should also be highlighted that more than one witness had made audio recordings of the meetings at which the “cashbacks” were collected from them; and Tarun had downloaded CCTV footage as well.

Having had the opportunity to observe these former employees in the witness stand where they were cross-examined at length, I concluded that these former employees were sincere and truthful witnesses. I rejected the defendants’ suggestion that the Cashback Scheme was something they had concocted pursuant to a “plan” hatched by Rajesh and Arvind. First, the numerous audio recordings and the CCTV recording of the meetings where Ghouse and Patro collected the “cashbacks” from the employees showed that the Cashback Scheme was not a fabricated tale.

Further, the recordings revealed that the witnesses had started collecting evidence of the “cashback” payments at different times from each other – and that at least a few of them had started doing so before the commencement of proceedings by the plaintiffs in the two minority oppression suits. For example, Ashish began recording the meetings in the HR office around August 2014 (see [444] above), while Tarun began doing so around early 2017. I did not find it at all believable that all these witnesses could have come together and conspired to fabricate evidence even before the commencement of the two minority oppression suits (and in Ashish’s case, presumably even before Rajesh’s appointment in 2016 as a consultant for the Mustafa and Samsuddin estates).

As to the various statutory declarations, I accepted the witnesses’ consistent testimony that these were made both for their own protection as well as to record the truth. For example, Ashish explained that he signed his statutory declaration “for my own safety to say that whatever I’m stating is all truth, nothing but the truth, that I wanted to ensure that tomorrow I do not deny what exactly happened to me”. Raziq said he made a statutory declaration in May 2017 because if there was an inquiry by MOM officials, “we can show it to them that this is what happened”. He explained: “because it’s all truth what I have said in my [statutory declaration] and I don’t need any protection from truth”. The statutory declaration was also to “protect” him from the people involved in the cashback scheme, including Iqbal, Raj Patro, Ghouse, and Saleem and the directors of MMSCPL, like Mustaq, Osama, Shama and Ishret.

On the evidence before me, therefore, I did not think there was anything nefarious about the witnesses making these statutory declarations. The defendants argued that these statutory declarations would only expose the witnesses to potential criminal liability if they were found to contain false statements. As Mohit pointed out, however, this was precisely the point of making the declaration: taking the “big step” of putting the information about the Cashback Scheme in a statutory declaration only proved the witnesses’ commitment to telling the truth, on pain of criminal liability.

As to the various emails to MMSCPL management and complaints to the authorities, I did not accept the defendants’ argument that these represented a coordinated attack against Mustaq and the other defendants, and/or a further attempt to manufacture false evidence to support the plaintiffs’ claims. I accepted that the witnesses had assisted one another in writing these emails and letters – for example, Arvind assisted Ashish in making grammatical corrections to his letter of 10 June 2018 to MOM and the High Commissioner of India, while Raziq had received assistance from (inter alia) Anees, Gopal, and Arvind, in preparing his letter dated 30 May 2018 to the MMSCPL management. The witnesses were able to explain that the assistance they received was editorial and related to issues like grammar, whereas the contents of these letters remained their own. Aside from the defendants’ accusations and speculation, there was simply no evidence of a “concerted” effort among the witnesses to manufacture false evidence against the defendants.

As to the delay by the witnesses in reporting the Cashback Scheme to the authorities, contrary to the defendants’ suggestions, I did not think there was anything strange or sinister about the witnesses trying to collect more evidence prior to reporting the matter. The witnesses had explained that they were very fearful of antagonising their employer and losing their jobs, especially when they had family members whom they were responsible for. These were very natural and understandable fears: indeed, the fact that each of these former employees lost his job after speaking up to question or protest the Cashback Scheme showed that their fears about retaliation from their employer were completely warranted.

Further, although the defendants claimed that these witnesses had concocted their evidence about the Cashback Scheme in order to aid the plaintiffs in their lawsuits against Mustaq and his family members, I did not see any reason for the witnesses to do so. At the time witnesses such as Ashish and Tarun began collecting evidence of the “cashback” payments and then handing over such evidence to Rajesh and Arvind, they still had their jobs with MMSCPL: even if they had heard about Ayaz’s interest in investigating MMSCPL’s internal affairs, there was no reason for them to side with Ayaz against “the Boss” (Mustaq) on whom they depended for their employment. I agreed with the plaintiffs that these witnesses were individuals who had nothing to gain from coming forward to speak up about the Cashback Scheme – and everything to lose by standing up against this practice.

I add that I also did not find anything suspicious about Rajesh himself continuing to investigate the Cashback Scheme instead of reporting it to the police. Rajesh testified that he had thought about whether to report the matter to the authorities, but after discussion with his staff, they had concluded that since they were “not the affected party”, they should “still hold it unless authorities [call] us”. It should also be remembered that he was not, after all, hired by the ex-employees; it was not his job to vindicate them or to assist them in finding some recourse to their grievances. As he explained, investigation was the job he had been hired by the plaintiffs to do; and he “wanted to understand the process how this [referring to the Cashback Scheme] has been routed and see if they have any evidence”.

I was also not persuaded by the defendants’ suggestion that Rajesh was trying to “use the threat of the report to authorities as a further pressure point on Mr Mustaq on behalf of the Mustafa estate”. There was no evidence that Rajesh had been instructed by the Suit 1158 plaintiffs to put “a further pressure point” on Mustaq “on behalf of the Mustafa estate”, and there was no incentive for Rajesh to do so. Indeed, his evidence – which was uncontroverted – was that it was Mustaq who had approached him by calling him first; he did not even have Mustaq’s phone number at the time.

For completeness, I also add that although the defendants tried to suggest in cross-examination that the cash payments collected from MMSCPL employees actually represented repayment of salary advances by these employees (ie, that these alleged cashback payments were actually repayments of loans by employees ), I rejected this suggestion. As the plaintiffs’ counsel pointed out, this purported defence of “salary advance repayments” was never pleaded by the defendants. In fact, as I noted in the course of the trial, it ran contrary to their pleaded defence that they knew nothing about the Cashback Scheme and had nothing to do with it.

(2) Mustaq’s involvement in the Cashback Scheme

Next, I found that the evidence adduced (which included the evidence of Rajesh’s tele-conversations with the first defendant) was enough to give rise to an inference that Mustaq knew of, was involved in, and benefited from the Cashback Scheme.

At the outset, it should be made clear that none of the former employees of MMSCPL who gave evidence laid claim to having spoken with Mustaq about the Cashback Scheme or to having actually heard him speak about it with other persons such as Ghouse and Patro. However, I agreed with the plaintiffs that the following circumstantial evidence made it possible to infer Mustaq’s knowledge of and involvement in the scheme.

First, with regard to the tele-conversations between Rajesh and Mustaq on 5 February 2018, Rajesh testified that in the earlier, unrecorded portion of his tele-conversation with Mustaq on 5 February 2018, Mustaq had admitted to collecting “cashbacks”. In fact, Rajesh said it was this admission that led him to start recording the phone call. While the defendants denied Rajesh’s evidence of what Mustaq had said, Mustaq himself – who would have been best placed to give his version of the phone call – did not take the witness stand.

As to the recorded portion of the tele-conversation, I agreed with the plaintiffs that if Mustaq was not involved in the Cashback Scheme and had no knowledge of it, he would have expressed surprise and asked Rajesh for further information about the latter’s reference to “MOM money”. Instead, he referred to the cashbacks as being “off hand”, which Rajesh testified he understood to mean the “cashbacks” were obtained illegally – and he told Rajesh that they “cannot discuss anything about this”.

Second, when Ayaz confronted Ghouse over the telephone on 17 April 2017 regarding salary monies being collected from employees and given to “boss” (ie, Mustaq), the audio-recording of their conversation showed that Ghouse merely denied he was involved in the collection of salary monies from employees at Kebabs N Curries, which collection he claimed “the consultant” (apparently referring to Patro) was responsible for – but tellingly, Ghouse did not deny that he had been passing “boss” these monies. Indeed, when Ayaz asked bluntly whether he was “giving directly boss”, Ghouse affirmed “yeah yeah” and even added “now it is became very less”.

Third, some of the ex-employees who gave evidence had emailed Mustaq personally to complain about the Cashback Scheme. The serious nature of the allegations made about the Cashback Scheme in these emails, if false, would surely have prompted some response from Mustaq – but there was none. In fact, when Saleem replied to Arvind’s email of 9 November 2017 to deny any personal knowledge of the Cashback Scheme, Saleem conspicuously left Mustaq out of the email chain even though Arvind had originally included Mustaq in it.

Fourth, multiple witnesses gave evidence that at the staff briefing on 11 November 2017, Ayub had informed the staff that the “Boss” – ie, Mustaq – had said cashbacks would no longer be collected:

(a) Ashish’s evidence was that he saw Mustaq and Saleem speaking with Ayub the day before the staff briefing by Ayub. At the briefing, Ayub stated that the “boss”, ie, Mustaq, had told him (Ayub) the foreign employees would no longer have to pay cashbacks.

(b) Arvind’s evidence was that Ayub told the staff on 11 November 2017 that the “boss” had told Ayub that the foreign employees would no longer have to pay cashbacks. By “boss”, he was referring to Mustaq. Arvind also had a recording of his conversation with Ayub on 10 November 2017 in which the latter recounted his conversation with Mustaq that same day.

(c) Raziq’s evidence was that Ayub had told the staff on 11 November 2017 that the “boss”, ie, Mustaq, had informed him they would no longer have to pay cashbacks.

(d) Tarun was not present at the briefing of 11 November 2017, but his evidence was that Ayub had told him that Mustaq said they no longer had to pay cashbacks.

The defendants did not adduce any evidence to refute these claims. Having regard to the circumstantial evidence available, I found that it was possible to infer Mustaq’s knowledge of and involvement in the Cashback Scheme. Rajesh also gave evidence that in his tele-conversation with Mustaq, Mustaq had told him about using the “cashback” money to pay for certain expenses and donations. This evidence remained unrefuted at the end of the trial, since the person probably best-placed to refute it – Mustaq – did not take the witness stand.

Further, from Rajesh’s evidence about Mustaq having admitted using “cashback” money to pay for certain expenses and donations, as well as Ghouse’s admission to Ayaz on 17 April 2017 about having passed “boss” (ie, Mustaq) the “cashback” money collected from the staff, it was possible to infer that the salary amounts collected back from staff in the illicit Cashback Scheme were taken by Mustaq for his own benefit. As the Suit 1158 plaintiffs put it, this was another instance of Mustaq procuring or causing MMSCPL “to make unauthorised and improper payments out of MMSCPL’s funds for the purpose of enriching himself”.

(3) Prima facie case not made out against Ishret, Shama, Osama and Iqbal

On the other hand, I did not find that any of the above evidence implicated Ishret, Shama, Osama and Iqbal. In particular, I did not find it possible to say that the evidence showed them to have been involved in the Cashback Scheme.

In my view, therefore, in respect of the claims of falsified MOM applications and the Cashback Scheme, the plaintiffs were able to establish a prima facie case against Mustaq, but not against Ishret, Shama, Osama and Iqbal.

Payment of excessive directors’ fees and non-payment of dividends

I next address the plaintiffs’ allegation that the defendants acted oppressively by causing or allowing MMSCPL to not pay any dividends to the shareholders between 2001 and 2013 while paying Mustaq and Ishret substantial directors’ fees during the same period.

The parties’ submissions and the applicable legal principles

The defendants conceded that no dividends were paid during the said period but argued that the plaintiffs had no grounds for complaint since the decision to declare dividends was a commercial decision of the company, and shareholders had no right per se to receive dividends. The plaintiffs needed to show, for the purposes of their oppression claims, that the non-payment of dividends was in bad faith and without justification: the defendants argued that they were unable to do so. Similarly, with regard to the payment of directors’ fees to Mustaq and Ishret over the years, the defendants argued that this was a commercial decision for the company to make: the plaintiffs had not shown that the payment of directors’ fees to Mustaq and Ishret was in bad faith and without justification. In any event, so the defendants argued, Mustafa, Samsuddin and their respective estates had never objected to the non-payment of dividends and/or the payment of directors’ fees to Mustaq and Ishret over the years from 1997 to 2013.

I should point out that the plaintiffs did not actually dispute that as a matter of general legal principle, directors have no obligation to declare dividends and shareholders correspondingly have no right to receive dividends. As the High Court noted in Lim Kok Wah and others v Lim Boh Yong and others and other matters [2015] 5 SLR 307 (“Lim Kok Wah”, at [145]), the failure to recommend or effect the declaration of dividends does not by itself amount to unfair conduct which is impeachable under s 216 of the Companies Act. The courts will generally intervene only in cases where the decision not to declare dividends is shown to be made in bad faith or for improper purposes (per the Singapore International Commercial Court (“SICC”) in DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and others [2018] 5 SLR 1 (“DyStar SICC)”, at [245]).

In DyStar SICC, the court found that the refusal by the Longsheng Directors (the directors nominated by Longsheng, the parent company of the majority shareholder) to declare a dividend was “neither made in good faith nor reached on purely commercial grounds”: on the evidence adduced, the court found that there was an improper motivation in denying Kiri (the minority shareholder) the benefits of its shareholding in the company DyStar, while simultaneously permitting Senda (the majority shareholder) unilaterally to extract benefits from DyStar (at [246]). The court rejected the directors’ explanation that dividends were not declared because the company needed a “huge working capital”, noting inter alia that the company had made large related party loans, paid substantial fees to Longsheng allegedly for services rendered, and approved a “Special Incentive Payment” of US$2 million to one of its directors in the same period. Against the backdrop of these events which took place around the same period, the court found that it was difficult to see the refusal to declare dividends as being bona fide (at [246]–[249]).

The above findings by the court in Dystar were upheld on appeal by the CA (Senda International Capital Ltd v Kiri Industries Ltd and others and another appeal [2019] 2 SLR 1).

In Lim Kok Wah, the High Court accepted (at [144]) that:

On the facts of Lim Kok Wah, the court did not find the directors’ refusal to declare dividends oppressive or commercially unfair. Inter alia, the court noted (at [146]–[148]) that the plaintiffs, who were alleging oppression, actually controlled the board of directors of the relevant companies: if they had wanted to, they could have chosen “at any time” to pass the necessary resolutions to pay out dividends. As for the payment of additional fees to the two defendants, though these were substantially more than the other directors’ fees, the court found that these additional fees were “not without reasonable justification”: the plaintiffs did not dispute that there was a policy in the relevant companies for each company’s managing director to be awarded 10% of the net profit for that year if the company earned a profit; and that this policy was to incentivise the managing director who played a vital role in running the company. Furthermore, the court pointed out that even though the plaintiffs controlled the board and could have voted down at any time the directors’ fees paid to the two defendants, they chose to remain silent for an entire decade and to accept the companies’ policies on dividends and remuneration of the two defendants. In such circumstances, the court was of the view that it should be slow to find that these policies had an oppressive effect, whether in any given year or over all the years.

In Re Gee Hoe Chan Trading Co Pte Ltd [1991] 2 SLR(R) 114 (“Gee Hoe Chan”), the court found on the evidence before it that the non-declaration of dividends amounted to oppression or disregard of the minority shareholders’ interests, as it was clearly based on the wish of the majority shareholders and directors to punish the minority shareholders for having presumed to question the manner in which they were running the company (at [20]). The court noted that in the period when no dividends were being paid to shareholders, the company was actually profitable, and the majority shareholders were getting substantial directors’ fees. Ironically, it was in the year when the company made a loss for the first time that the majority shareholders / directors decided to recommend a dividend – which led the court to remark (at [22]) that this “could not have been a coincidence that the dividend was only approved and paid by the company after the [minority] had instituted these proceedings for relief” under s 216 of the Companies Act.