General Division of the High Court · Decided 4 July 2023

Deniyal bin Kamis v Mapo Engineering Pte Ltd and others

[2023] SGHC 183Case no. Suit No 331 of 2021

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Limitation Act 1959

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Introduction
[1] Few long-term relationships, such as that between two shareholders working together in a private company, start without a degree of trust or confidence between them. The existence of such a bond does not of itself make the company a quasi-partnership, nor add anything to the principle that the majority in a company must treat the minority with commercial fairness in the light of the commercial agreement between the parties or face potential redress under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) (the “Companies Act”).
[2] The relationship between parties is nonetheless relevant to determining both the ambit of the commercial agreement and whether there has been commercial unfairness. This is because the word “commercial” not only signals reference to the standards of fair-minded businessmen, but also extends the field of inquiry beyond formal agreements and constitutional documents to informal agreements and even shared understandings. A close personal relationship is more likely to entail or generate shared informal or even unspoken understandings that constrain the exercise of majority rights.
[3] In this action, the plaintiff, Mr Deniyal bin Kamis (“Mr Deniyal”), seeks relief under s 216 of the Companies Act against the third defendant, Mr Niew Bock Leng (“Mr Niew”). Both men are shareholders and directors of the first and second defendants, which are nominal defendants that did not participate in the trial.
[4] Mr Niew made Mr Deniyal a director and shareholder because Mr Niew was confident that Mr Deniyal would run operations effectively. Mr Deniyal, for his part, trusted Mr Niew to such a degree that Mr Deniyal did little or nothing to fulfil his own directors’ duty of oversight over the administration of the companies. In a sense, Mr Deniyal chose to be in the dark. It was only much later that he became suspicious and concerned about what Mr Niew was doing. To some extent, Mr Deniyal’s allegations in this action have been stabs in the dark and remain unproven. However, I find that two critical allegations have been made out. One is that Mr Niew on occasion used the machinery of the companies to take the benefit of dividends and directors’ fees that should have been paid to Mr Deniyal. I do not accept Mr Niew’s defence that this was lawfully done by way of set-off against personal loans made by Mr Niew to Mr Deniyal. Secondly, after the men fell out, Mr Niew caused the companies to pay him salary that had previously been borne by companies in which Mr Deniyal had no interest, making this change precisely to prejudice Mr Deniyal.
[5] Accordingly, I grant Mr Deniyal the relief of a share buy-out on terms that I will elaborate later, after I have explained how I come to my conclusions.
Facts
The parties
[6] The precise nature of the relationship between Mr Deniyal and Mr Niew is the subject of much contention. I therefore start by describing the two corporate defendants.
The first and second defendants
[7] The first defendant, Mapo Engineering Pte Ltd (“MEPL”), was incorporated on 13 August 2003. MEPL is in the business of ship repair and servicing. Mr Deniyal is a director and 10% shareholder of MEPL. Mr Niew is a director and the majority shareholder of MEPL, currently holding 80% of its shares. Mr Niew and Mr Deniyal were originally the only two shareholders of MEPL, with Mr Niew holding the remaining 90% of MEPL’s shares. However, Mr Niew transferred a 10% shareholding to his daughter, Ms Celesty Neo Wei Ling (“Ms Celesty”), on 2 April 2021.
[8] The second defendant, Mapo Marine Pte Ltd (“MMPL”), was incorporated on 18 October 2006. MMPL is also in the business of ship repair and servicing. At the time of incorporation, Mr Niew was the sole shareholder and director of MMPL. On 10 August 2007, Mr Deniyal was issued 10% of MMPL’s shares and appointed a director. MMPL’s general manager, Mr Ong Chee Koon (“Mr Ong”), was also appointed a director and issued 20% of the shares. On 18 October 2011, Mr Ong’s 20% shareholding was transferred to Mr Deniyal. Mr Deniyal was thereafter a director and 30% shareholder of MMPL. Mr Niew currently holds 60% of the shares, having transferred a 10% shareholding to Ms Celesty on 2 April 2021.
[10] I provide some context for the Mapo Group’s business as described by the parties. Shipyard contractors can register as a “Resident Contractor” of a specific shipyard. The workmen of a “Resident Contractor” will only be permitted to work in their specified shipyard. Multiple companies must therefore be incorporated to bid for work in different shipyards. In the Mapo Group:
MMPL, on the other hand, was a “common contractor” that is not tied to any shipyard.
[11] Another person with a recurring role is Ms Cindy Yu Chwee Hua (“Ms Cindy”), who was for a period the accounts manager of at least MEPL and MMPL. Neither party provides clear evidence of when Ms Cindy assumed this role, or who else served as the accounts manager for the companies.
The plaintiff
[12] The scope of Mr Deniyal’s role in the Mapo Group is controversial. Parties agree that Mr Deniyal was employed by at least MEPL and Matopo, that his role was supervisory in nature, and that he was primarily situated at Keppel Yard rather than the main office. Mr Deniyal did not contribute to the capital of MEPL or MMPL and did not furnish consideration for his shares.
[13] Mr Deniyal describes himself as a “quasi-partner” in the business, who had “full autonomy to make operational decisions” without needing to consult Mr Niew. Mr Deniyal was appointed as the Senior Operations Manager of MEPL, MMPL, Matopo, and MMSPL, a position he maintained since MEPL’s incorporation in 2003 until his dismissal on 13 February 2020. As the Senior Operations Manager, Mr Deniyal was second only to Mr Niew in the business hierarchy. Mr Deniyal was not an ordinary subordinate who had to report to Mr Niew and instead made independent decisions on operational matters. On such matters, Mr Deniyal would take Mr Niew’s views into account but was not beholden to them and Mr Deniyal would disregard instructions he disagreed with. In relation to Keppel Yard, Mr Deniyal was authorised to advertise the business, attend client meetings, and approve high-level contracts. When Mr Niew travelled overseas, Mr Deniyal would stand in for Mr Niew and make decisions on pressing matters. Mr Deniyal had full operational control over business conducted at Keppel Yard, which Mr Niew rarely visited personally, and was in charge of hiring and supervising employees who were stationed there. However, in accordance with their differentiated responsibilities, Mr Deniyal would defer to Mr Niew on non-operational matters.
[14] Mr Niew downplays Mr Deniyal’s role in the business, referring to him only as an “employee” and then a “supervisor”. Mr Deniyal did not participate in management and was only appointed a director for convenience. He was not a business partner, but at best a “favoured and valuable employee”. Mr Niew accepts that Mr Deniyal’s duties included supervising employees stationed at Keppel Yard and that he was in charge of operations at Keppel Yard. According to Mr Niew, although Mr Deniyal was employed by MEPL, the Resident Contractor at Sembcorp Yard (see above at [10]), his work was primarily for Matopo, the Resident Contractor at Keppel Yard. Mr Niew accepts that Mr Deniyal was in charge of Matopo’s operations. In contrast, Mr Deniyal did not have the authority to make autonomous decisions in MEPL, and did not play any role in its operations beyond signing cheques and financial statements as well as occasionally conducting internal safety meetings for workers. Instead, Mr Niew was the sole person running MEPL. MEPL also operated a dormitory which Mr Deniyal admitted he had no involvement in. Mr Deniyal also did not hold any responsibilities in MMPL and was not involved in its operations. Mr Niew submits that Mr Deniyal could not have been a “quasi-partner” given his lack of involvement in MEPL and MMPL.
[15] It suffices to say at this juncture that I largely accept Mr Deniyal’s description of his role. Mr Deniyal’s appointment as Senior Operations Manager is supported by documentary evidence and was eventually conceded by Mr Niew. Mr Niew testified that Mr Deniyal had been appointed a director because, until 2015, Mr Niew was often overseas and needed Mr Deniyal to oversee operations in his stead. However, I also accept that Mr Deniyal’s responsibilities were largely confined to matters relating to Keppel Yard. Mr Deniyal oversaw day-to-day operations at Keppel Yard and was entitled to a degree of autonomy in carrying out this function. Although Mr Deniyal was not Mr Niew’s equal, the evidence shows that in addition to his aforementioned duties, Mr Deniyal was also held out to third parties as a representative of the Mapo Group and was involved in ensuring that clients paid for work carried out at Keppel Yard. Mr Niew also conceded that, as MMPL was a common contractor, Mr Deniyal would have oversight over MMPL workmen in Keppel Yard. Mr Niew’s own testimony was that MMPL had at least two projects in Keppel Yard which involved Mr Deniyal.
The third defendant
[16] It is undisputed that Mr Niew effectively exercised control over MEPL and MMPL and was the driving force behind the Mapo Group. Mr Niew had full control over finance and business development. Mr Niew decided what salaries and bonuses to give and the companies’ accounts department reported to Mr Niew. However, Mr Niew conceded that Mr Deniyal’s approval was required before the companies made large purchases or applied for bank loans. To oversee the companies, Mr Niew would periodically check in on the Mapo Group’s operations at the different shipyards, but mainly worked from the main office. According to Mr Niew, he was responsible for contributing the start-up capital of MEPL and MMPL. Both companies remain substantially indebted to him.
Background to the dispute
[17] Both parties provide completely different accounts of the events leading up to the deterioration in their relationship. Mr Deniyal’s version starts with a long period of blind faith in Mr Niew during which he was largely oblivious to the administration of the Mapo Group, followed by a series of confrontations that culminated in the termination of his employment. Mr Niew’s version portrays a long and tranquil relationship unexpectedly disrupted by the receipt of demand letters from Mr Deniyal’s lawyers in late 2019.
[18] Both accounts are by and large supported only by the parties’ respective testimonies. Mr Ong initially refused to give evidence and had to be subpoenaed by Mr Deniyal. I found Mr Ong to be a credible witness and will highlight relevant portions of his testimony.
Mapo Marine Services
[19] Mr Deniyal and Mr Niew are well acquainted, having met in the early 1980s when both men were involved in other businesses in the maritime industry. In 1986, Mr Niew started a sole proprietorship in the ship repair business, Mapo Marine Services (“MMS”). MMS was eventually incorporated in 2010 as MMSPL, one of the companies in the Mapo Group (see above at [9]).
[20] In 1989, Mr Deniyal joined MMS. In 1999, Mr Deniyal resigned from MMS, but re-joined in 2001.
[21] Parties differ on the reason for Mr Deniyal’s departure and the circumstances of his subsequent return. According to Mr Deniyal, he resigned due to a remuneration dispute with Mr Niew. Mr Deniyal was convinced to return only after persistent persuasion and promises by Mr Niew that Mr Deniyal would be “fairly compensated for [his] efforts and hard work”. Mr Niew had been unable to find a suitable replacement for Mr Deniyal. According to Mr Niew, there was no remuneration dispute and Mr Deniyal left on good terms. The pair kept in touch despite Mr Deniyal’s departure, and Mr Niew invited Mr Deniyal to return in 2001 because Mr Deniyal’s employer had encountered financial troubles.
Incorporation of MEPL
[22] In 2003, MEPL was incorporated to comply with changes to the requirements imposed by the Ministry of Manpower on shipyard contractors and on the employment of foreign manpower. Upon incorporation, Mr Deniyal was allotted 10% of the shares in MEPL, appointed a director, and was named as a signatory to MEPL’s bank account. When Mr Niew was overseas, Mr Deniyal was authorised to sign cheques and withdraw cash to meet any urgent needs of MEPL or their staff. Mr Deniyal did not and was not expected to pay for the shares, which were gifted to him by Mr Niew.
[23] According to Mr Deniyal, the incorporation of MEPL was an idea conceived by both Mr Deniyal and Mr Niew after joint discussions. Mr Niew gave Mr Deniyal a stake in MEPL because Mr Niew wanted to provide a long-term incentive for Mr Deniyal to continue to work with him. Prior to MEPL’s incorporation, Mr Deniyal had not expected that he would be made a director or gifted shares and was grateful. This was not inconsistent with the fact that MEPL’s incorporation resulted from joint discussions.
[24] Mr Niew denies having discussions with Mr Deniyal prior to incorporating MEPL. Mr Niew explains that he had been advised that two directors were required to incorporate a company. On account of their long association and because Mr Deniyal was one of the only staff able to speak and read English, Mr Niew asked if Mr Deniyal agreed to be appointed a director. Mr Niew also gifted Mr Deniyal the 10% shareholding out of goodwill.
[25] I observe that Mr Deniyal’s pleaded case is that he was issued shares in MEPL and was appointed a director because he had suggested this course of action to Mr Niew, on the basis that it would improve Mr Deniyal’s professional standing. However, Mr Deniyal did not confirm this allegation in his affidavit and subsequently testified that he did not in fact expressly make this suggestion to Mr Niew.
Incorporation of MMPL
[26] In 2006, MMPL was incorporated. Mr Niew was initially the sole shareholder and director of MMPL (see above at [8]). Unlike in MEPL, Mr Deniyal was not made a cheque signatory of MMPL.
[27] According to Mr Deniyal, although Mr Niew was the person who originally suggested the incorporation of MMPL, the process leading up to MMPL’s incorporation was one of active consultation between Mr Niew, Mr Deniyal, and Mr Ong. The three men engaged in long discussions to ensure that MMPL would be commercially viable. In these discussions, Mr Niew expressed his gratitude towards Mr Deniyal and Mr Ong and thanked them for their contributions. Mr Niew stated his intention that the three would become the directors and shareholders of MMPL and work together for its success. Mr Niew granted Mr Deniyal his stake in MMPL as a reward for his hard work and to provide a further incentive (by way of profit sharing) for him to remain loyal to MMPL.
[28] Mr Niew denies having engaged in any discussions about the incorporation of MMPL, which was his sole initiative. Mr Niew had identified Mr Ong as a capable candidate for the role of general manager and had only sought him out after MMPL was already incorporated. When Mr Ong was made a director and shareholder, Mr Deniyal was also gifted 10% of the shares and appointed a director. According to Mr Niew, this was “a matter of convenience” and because Mr Niew regarded Mr Deniyal as a valuable employee who Mr Niew wanted to reward and retain in the long term. Mr Deniyal was appointed a nominal director on the “understanding” that Mr Deniyal would “continue in his usual role and would not be involved in the management of MMPL”.
[29] Mr Ong testified that he was already employed as MEPL’s general manager prior to MMPL’s incorporation. Mr Ong also confirmed that Mr Niew had gifted him shares in MMPL as a reward for his contributions to the business.
Mr Ong’s departure
[30] On 18 October 2011, Mr Ong resigned from MMPL. Thereafter, Mr Ong’s 20% shareholding was transferred to Mr Deniyal.
[31] According to Mr Deniyal, Mr Ong left after a serious disagreement with Mr Niew regarding the latter’s handling of MMPL’s accounts. Mr Deniyal had noticed a growing rift between Mr Niew and Mr Ong, and when prompted, Mr Ong shared his concerns regarding Mr Niew’s handling of the accounts prior to leaving MMPL.
[32] Mr Niew denies having had any disagreement with Mr Ong. Instead, Mr Ong had resigned because he received a job offer and was relocating to the People’s Republic of China. It was Mr Ong’s choice to transfer his 20% shareholding in MMPL to Mr Deniyal. Mr Niew’s version of events is corroborated by Mr Ong, who made no mention of any disagreements regarding the handling of accounts.
[33] Nevertheless, any possible revelation evidently did not shake Mr Deniyal’s confidence in Mr Niew at this time, as he continued to “place full trust” in Mr Niew and focused only on the operational side of the Mapo Group.
Falling out
[34] Mr Deniyal’s interest in the accounts of MEPL and MMPL was only piqued in early 2018 when he noticed that invoices for two Malaysian companies, YR Engineering & Trading and YR Marine Engineering Sdn Bhd (the “Malaysian Companies”), were not reflected in the list of unpaid invoices. When Mr Deniyal asked Ms Cindy, she told him that the money owed under the invoices had been paid to Mr Niew in cash. It was then that Mr Deniyal formed the view that he ought to have been provided with monthly accounts as a director. However, despite repeated oral requests for the documents being rejected by Mr Niew, Mr Deniyal eventually accepted that obtaining the documents was unnecessary as he was persuaded that Mr Niew could be trusted to maintain proper accounts and manage the companies fairly. According to Mr Niew, Mr Deniyal did not request any documents and Mr Niew did not make any representations or assurances in relation thereto.
[35] Mr Deniyal was apparently removed as a cheque signatory for MEPL in 2018.
[36] According to Mr Deniyal, the parties fell out in mid-2019 after he confronted Mr Niew about the perceived irregularities in the management of MEPL and MMPL and demanded an explanation for why he was not given his directors’ remuneration. Being dissatisfied with Mr Niew’s response, Mr Deniyal sought legal counsel. Mr Niew denies that any such confrontation took place.
Demands for disclosure
[37] In December 2019, on behalf of Mr Deniyal, Rajah & Tann formally demanded that MEPL and MMPL disclose certain financial documents and information (the “R&T Demand Letter”). In January 2020, on behalf of MEPL and MMPL, Tang & Partners requested time to locate the documents. By a letter dated 5 February 2020, Rajah & Tann stipulated a deadline of 12 February 2020, failing which Mr Deniyal would commence legal proceedings. Documents were eventually disclosed by correspondence from Eldan Law, who currently represent Mr Niew, dated 2 March 2020, 12 June 2020, 26 June 2020, and 30 October 2020. Mr Deniyal maintains that these disclosures were piecemeal and selective. According to Mr Niew, this was the very first time Mr Deniyal expressed any interest whatsoever in the finances of MEPL and MMPL. Mr Niew asserts that all documents required to be disclosed under the Companies Act were provided to Mr Deniyal.
Termination of Mr Deniyal
[38] After the R&T Demand Letter was issued, Mr Deniyal received notices of termination from MEPL and Matopo dated 13 February 2020. Mr Deniyal claims that this was a calculated move by Mr Niew to deny Mr Deniyal access to the financial documents of the companies. Mr Deniyal also testified that his phone lines and access cards were all terminated the day after the R&T Demand Letter was sent, denying him access to Keppel Yard. This claim is supported by a contemporaneous letter from Rajah & Tann dated 20 January 2020.
[39] Mr Niew explains that Mr Deniyal had been dismissed for good reasons. The notices of termination state that Mr Deniyal had failed to report to work and failed to collect his salary despite repeated reminders. Mr Niew elaborates that business at Keppel Yard declined in 2019. Mr Deniyal was therefore requested to report to the main office on a more regular basis. However, Mr Deniyal did not do so. According to Mr Niew, Mr Deniyal came down sporadically to hand over necessary documents or only when expressly instructed to do so. Mr Deniyal was formally dismissed after he started to entirely neglect reporting to work in November 2019 and became uncontactable. Mr Deniyal initially denied being absent from work or being uncontactable, explaining that although he did not report to the main office as requested, he remained stationed at Keppel Yard. However, Mr Deniyal later admitted that he had refused to report to work sometime in end December 2019 or early January 2020 after an argument with Mr Niew regarding the R&T Demand Letter.
[40] On 2 April 2021, following an extraordinary general meeting, Ms Celesty was appointed a director and made a shareholder of both MEPL and MMPL. Although Mr Deniyal had been given notice of the meetings, he did not attend them as he considered Ms Celesty’s appointment a foregone conclusion due to Mr Niew’s controlling stake. Instead, Mr Deniyal voiced his objections by way of a letter dated 15 March 2021.
[41] Mr Deniyal commenced this action on 9 April 2021.
Buy-out offers
[42] After proceedings commenced, Mr Niew extended two offers to settle the suit and buy-out Mr Deniyal’s shares on 22 August 2022 and 14 December 2022. I will say more about the details and significance of these buy-out offers in due course.
The parties’ cases
Plaintiff’s case
[43] Mr Deniyal submits that Mr Niew had been conducting the affairs of MEPL and MMPL in an oppressive manner and in disregard of Mr Deniyal’s interests as a minority shareholder since 2011. Mr Niew abused his controlling position to prevent Mr Deniyal from sharing in the profits of MEPL and MMPL.
[44] Mr Deniyal characterises his relationship with Mr Niew as one of mutual trust and friendship. Mr Deniyal highlights that they were personal friends over and above their professional relationship. To support this claim, Mr Deniyal refers to various occasions over the course of their long relationship where Mr Deniyal and Mr Niew interacted socially. But for their friendship, Mr Deniyal would have more closely scrutinised Mr Niew’s conduct.
[45] Mr Deniyal’s case is that the parties reached a “quasi-partnership understanding” where Mr Deniyal would focus on the operational aspects of the business, while Mr Niew would handle finance, marketing, and business development. This division of responsibilities was not reduced to writing due to the informal nature of their association.
[46] Mr Deniyal relies upon a host of different allegations to support his claim. In brief, the alleged acts amounting to commercial unfairness are that:
Defendant’s case
[48] Mr Niew’s case is that this entire action is baseless and motivated by Mr Deniyal’s desire to obtain an unjustified windfall by forcing the purchase of shares that were originally gifted to him by Mr Niew.
[49] Mr Niew denies the existence of any quasi-partnership on the basis that he alone was responsible for the management of the companies and had the final say in all decisions. Mr Deniyal was his subordinate and not a partner in the business. Mr Deniyal has no evidence to prove he made management decisions or to show that he was second-in-command. In any event, Mr Deniyal fails to discharge the burden of proving the alleged “quasi-partnership understanding”. There is no evidence that the two men engaged in discussions leading up to the incorporation of MEPL, and Mr Deniyal agrees that there was no finalised agreement that Mr Niew would gift the shares prior to MEPL’s incorporation.
[51] According to Mr Niew, the money owed by Mr Deniyal under these personal loans could be repaid from three different sources. First, the companies would typically declare bonuses of two to three months, which would then be used to repay the loans. Mr Deniyal had “no issues” with this arrangement. After MEPL and MMPL were incorporated, dividends and directors’ fees which were declared could also be set-off against the loans and Mr Deniyal approved of all such transfers. Mr Deniyal would remain constantly indebted to Mr Niew, as Mr Deniyal would take further loans after prior debts were satisfied.
[52] The main thrust of Mr Niew’s submissions is that Mr Deniyal fails to discharge the burden of proving his various allegations on a balance of probabilities. Key allegations were not put to Mr Niew during the course of the trial and Mr Deniyal is therefore precluded from submitting on them under the rule in Browne v Dunn (1893) 6 R 67 (“Browne v Dunn”). In contrast, Mr Niew’s submits that his claims are supported by his explanation of the available financial records of the companies.
[53] As for Mr Deniyal’s claim for an account of moneys withdrawn from the companies and an account of unpaid directors’ fees and dividends, Mr Niew submits that this remedy is time-barred under s 6(2) of the Limitation Act 1959 (2020 Rev Ed) (the “Limitation Act”).
[54] Finally, Mr Niew submits that this action should be dismissed as an abuse of process for two reasons. First, Mr Niew had extended two reasonable buy-out offers. In proceeding with this action, Mr Deniyal is seeking an unjustified windfall in abuse of process. Second, the real injury that Mr Deniyal seeks to vindicate is a contractual claim against MEPL and MMPL for unpaid directors’ fees and dividends, which should not be brought under s 216 of the Companies Act.
The evidence
[55] The parties essentially rest their respective cases on the testimonies of Mr Deniyal and Mr Niew. In their closing submissions, each party accused the other of being an unreliable witness.
[56] I did not find the testimony of either witness entirely satisfactory. However, many of the matters raised took place several years ago and I accept that both witnesses are at an age where lapses in memory may occur. Both Mr Niew and Mr Deniyal are unskilled in accountancy and I do not place much weight on apparent contradictions in their testimony resulting from a lack of understanding of technical terms. Both men also required the assistance of translators.
[57] Further, the available documentary evidence provides only limited assistance. Both parties referred extensively to the general ledgers of MEPL and MMPL, which record debit and credit transactions over the course of a given financial year. However, these ledgers provide only a truncated description of the listed transactions and do not provide a complete picture of what the entries represent. Neither party called Ms Cindy or any other member of MEPL or MMPL’s accounts department to give evidence. Relevant supporting documents were not adduced as Mr Niew asserts that MEPL and MMPL follow a policy of not retaining documents for more than the five years required under s 199(2) of the Companies Act. Given Mr Niew’s control over the companies, most of the adduced documents were disclosed by him and I note that he was able to adduce some documents dating as far back as 2006 in support of his contentions. Mr Niew’s explanation for why this was the case was that these documents had been misplaced into “the wrong box” and therefore avoided destruction.
Mr Niew’s evidence
[58] Mr Deniyal submits that Mr Niew provided only selective disclosure of documents or intentionally concealed evidence. Mr Deniyal casts doubt on Mr Niew’s claim that MEPL and MMPL had a policy of only retaining documents for five years before destroying them.
[59] First, after receiving the R&T Demand Letter in December 2019 (see above at [37]), the initial replies from Tang & Partners dated 23 January 2020 and 20 February 2020 failed to state that the companies had any policy of destroying documents. Instead, Tang & Partners expressly assured Mr Deniyal that accounting records would be properly maintained and that the companies simply needed more time as the matters raised dated back to 2006. The statutory obligation to maintain records for a period of five years was first mentioned in a letter from Eldan Law dated 26 March 2020. I note that this letter does not expressly state that the companies did in fact have the policy of destroying documents after five years. Instead, the statutory obligation was mentioned in the context of emphasising that prior disclosure was above and beyond the legal obligations of the companies. This prior disclosure had been by way of letter from Eldan Law dated 2 March 2020, which indeed disclosed documents dating as far back as 2006 and makes no mention of any destruction policy. A letter from Eldan Law dated 30 June 2020 was the first time it was clearly set out that documents dating before 2015 were no longer in the possession of MEPL and MMPL. Mr Deniyal submits that the alleged destruction policy is an afterthought to provide Mr Niew with an excuse not to disclose incriminating documents, as there is no reason why this policy was not stated in the initial replies from Tang & Partners.
[60] Second, Mr Niew admitted during cross-examination that the companies maintained electronic records of documents dating before 2015 and made belated disclosure of further documents dating back to 2010 in support of his case at trial. For example, minutes of the annual general meetings of the companies dating back to 2010 were adduced on the sixth day of the trial to support Mr Niew’s case that Mr Deniyal had ratified declarations of directors’ fees. After being pressed on his lack of evidence for the personal loans allegedly extended to Mr Deniyal, Mr Niew offered to look for further documents and indeed adduced additional material on the last day of trial. Mr Deniyal submits that this shows that Mr Niew selectively disclosed documents as and when it suited his case.
[61] Third, Mr Niew testified that he continued to destroy documents in February 2020. As this was after the R&T Demand Letter had already been issued in December 2019, Mr Niew would have been put on notice of the need to preserve documents. In fact, Tang & Partners had assured Mr Deniyal that records would be preserved.
[62] Mr Niew rejects the allegation of selective disclosure, highlighting that he has disclosed approximately 650 documents in these proceedings. Mr Niew was cooperative in providing records to Mr Deniyal. Even after the close of the trial, Mr Niew wrote to Standard Chartered Bank to seek further records at Mr Deniyal’s behest.
[63] Furthermore, Mr Deniyal submits that Mr Niew was evasive during cross-examination and often took unnecessarily technical positions. Mr Niew denies being evasive, explaining that the relevant matters took place over a decade before the trial.
[64] I am troubled by the way Mr Niew carried out his disclosure obligations. Mr Niew did not provide any explanation for why the policy of destroying documents after five years was only belatedly raised half a year after the R&T Demand Letter. No reason is provided for the tardy disclosure of documents. Mr Niew’s explanation for why he continued to destroy documents in February 2020 despite being put on notice was that he had simply listened when his accounts department informed him that the documents could be destroyed. This was clearly contrary to his earlier undertaking that documents would be preserved (see above at [61]) and should not have been done. The timing of this destruction is made more troubling by the fact that this was the same month that Mr Deniyal intimated his willingness to commence legal proceedings to secure access to the documents and the same month his employment was terminated (see above at [37] and [38]). Although I accept that some of the documents were of considerable vintage by the time of this action and Mr Niew might have expended significant effort to search for them, this is simply part of Mr Niew’s obligation to provide discovery of documents. The fact that the documents belatedly disclosed by Mr Niew were only adduced in support of his own case gives me further pause. As the party in control of the companies, Mr Niew enjoys the advantage of an acute informational asymmetry. While this is to be expected in most claims under s 216 of the Companies Act, the one-sided and belated disclosure is a factor I take into consideration in assessing the evidence.
[65] As for credibility, I accept Mr Niew’s submission that given the passage of time, he cannot be expected to have perfect recollection. However, I found that Mr Niew was sometimes coy in his testimony. When cross-examined, Mr Niew would often respond with “you can say that” rather than providing a direct answer, and would occasionally outright refuse to answer questions. I also found Mr Niew sometimes made pedantic responses in a manner that was evasive. For example, Mr Niew initially refused to admit that he had terminated Mr Deniyal’s employment, stating that it was his Human Resources department. Mr Niew resiled from his admission that he had in substance increased his own salary, insisting that he had merely started to draw a salary from MEPL and MMPL. Mr Niew denied inviting Mr Deniyal to visit his home, because he claimed that he only had a place of residence and did not own a house at that time. At times, it appeared to me that Mr Niew was trying to pre-empt counsel’s line of questioning. For example, upon realising that counsel was about to focus on the technical distinction between a “loan” and an “advance” during cross-examination, Mr Niew abruptly denied ever extending any loans to Mr Deniyal, explaining that he gave advances instead. Mr Niew subsequently testified that he did not actually know the difference between a loan and an advance. These factors made me treat Mr Niew’s evidence with a degree of circumspection.
Mr Deniyal’s evidence
[66] Mr Niew submits that Mr Deniyal lacks credibility due to his many speculative assertions and contradictory narrative. More importantly, Mr Deniyal had initially informed the court that he would call Ms Cindy and an expert witness on accountancy, Mr Farooq Mann, to give evidence. However, Mr Deniyal failed to do so.
[67] When cross-examined on this, Mr Deniyal testified that he declined to call Mr Farooq Mann as he believed that Mr Farooq Mann’s valuation of the shares was too low and would not be favourable. As for Ms Cindy, Mr Deniyal explained that he did not call Ms Cindy or subpoena her (as he had done with Mr Ong) because she supposedly pleaded with him not to do so. Mr Deniyal also admitted under cross-examination that he was afraid that Ms Cindy would give unfavourable testimony if forced to give evidence, ostensibly because she was “very close” to Mr Niew.
[68] Mr Deniyal submits that an accountancy expert is not necessary because the legal issue of whether the transactions were oppressive is a matter for the court’s determination. Any valuation would have failed to account for the effects of oppressive conduct and would consequently be misleading. Furthermore, Mr Farooq Mann cannot determine the factual issue of whether Mr Niew did in fact extend substantial personal loans to Mr Deniyal. Mr Deniyal further submits that the onus was on Mr Niew to call Ms Cindy. Citing Wee Yue Chew v Su Sh-Hsyu [2008] 3 SLR(R) 212 at [3]–[6], Mr Deniyal submits that because Mr Niew did not dispute that Mr Deniyal was entitled to the directors’ fees and dividends declared and instead made the positive assertion that Mr Deniyal did in fact receive his entitlement, the burden fell on Mr Niew to prove this assertion.
[69] I agree that Mr Deniyal contradicted his pleaded case on some matters (for example, see above at [25] and [31]–[32]). I found that Mr Deniyal did not hold up well under cross-examination, and his testimony was sometimes confused and incoherent. I accept that Mr Deniyal did not provide an adequate explanation for his failure to call Ms Cindy. While I do not draw an adverse inference as there were aspects of both parties’ cases for which that party ought properly to have called Ms Cindy as their witness, Mr Deniyal’s failure to call Ms Cindy certainly impacts his ability to prove his case on the balance of probabilities. Indeed, this failure is fatal to Mr Deniyal’s reliance on statements allegedly made to him by Ms Cindy as, in the absence of her testimony, such statements are hearsay. As for the failure to call Mr Farooq Mann, I will discuss this in relation to the issue of whether this action was an abuse of process.
Accounting evidence
[70] As mentioned, both parties referred extensively to the general ledgers of MEPL and MMPL. Mr Niew in particular makes reference to the ledgers in support of his written submissions and explanations. However, the ledgers relied upon in Mr Niew’s submissions were prepared by the Mapo Group’s accounts department, who were not called to give evidence. When cross-examined on the transactions recorded in the ledgers, Mr Niew would repeatedly refuse to explain and insisted that his accounts department would be better placed to answer such questions. This was despite having given detailed evidence on the purpose of the transactions in his affidavit of evidence-in-chief.
[71] Mr Deniyal’s counsel in turn criticises Mr Niew for not calling Ms Cindy as his witness. I consider Mr Niew’s failure to call Ms Cindy or anyone else from his accounts department as damaging to his case in two ways. First, Mr Niew’s consistent deflection to questions asked – that he simply relied on his accounts department – fundamentally undermines the explanations for the transactions set out in his affidavit of evidence-in-chief. Evidently, these explanations were not factual statements by Mr Niew, but were at best based on information from someone in his accounts department. Second, Mr Niew bears the burden of proving his assertion that he extended substantial personal loans to Mr Deniyal. These were the debts against which Mr Deniyal’s directors’ fees and dividends were said to be subsequently set-off (see above at [50]–[51]). Based on Mr Niew’s evidence, the accounts department could have provided corroboration by giving evidence as to their knowledge that such loans occurred and thus the validity of the set-offs. As with Mr Deniyal, Mr Niew’s failure to call any evidence from the accounts department therefore similarly impacts his ability to discharge his own evidential burden. Mr Niew explained that he discovered that Mr Deniyal was not going to call Ms Cindy to testify only after parties exchanged their affidavits of evidence-in-chief. However, there is no indication that Mr Niew ever took any steps to call evidence from Ms Cindy or any other member of his accounts department.
Issues to be determined
[72] Having considered the general state of the evidence, I now address the substantive issues. The relevant issues before me are:
Issue 1: Whether the remedy of an account is barred by limitation
[73] Although Mr Niew’s defence of limitation is raised only in respect of the claim for an account of moneys withdrawn from MEPL and/or MMPL without Mr Deniyal’s knowledge or consent and for an account of any unpaid dividends and directors’ fees, it is convenient to first deal with this threshold issue.
Parties’ submissions
[74] Mr Niew submits that Mr Deniyal’s claim for an account is time-barred under s 6(2) of the Limitation Act as the directors’ fees and dividends were declared over six years before this action was commenced. Citing Lim Ah Leh v Heng Fock Lin [2018] SGHC 156 (“Lim Ah Leh”) at [171], Mr Niew submits that s 6(2) of the Limitation Act depends not on the cause of action brought, but upon the remedy sought. Thus, the fact that the present action is brought under s 216 of the Companies Act does not prevent Mr Deniyal’s claim for an account from being time-barred. Mr Niew does not submit that the other reliefs sought by Mr Deniyal are time-barred.
How I will deal with the relief sought
[78] For completeness, I agree that the fact that a shareholder does not immediately initiate litigation for unfair treatment does not preclude them from subsequently asserting a claim on that basis: Over & Over Ltd v Bonvests Holdings Ltd and another [2010] 2 SLR 776 (“Over & Over”) at [103].
Issue 2: Whether there was commercial unfairness
Applicable law
[79] Section 216 of the Companies Act provides shareholders with a personal remedy in cases where 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”: Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters [2018] 2 SLR 333 (“Sakae Holdings”) at [81]. The touchstone is therefore commercial unfairness: Over & Over ([78] supra) at [81]. This is a fact-specific inquiry that focuses on the relationship between the specific parties: Thio Syn Kym Wendy and others v Thio Syn Pyn and others and other appeals [2018] 2 SLR 788 at [29].
[80] The key starting point for most claims under s 216 of the Companies Act is the commercial agreement between the parties: Ascend Field Pte Ltd and others v Tee Wee Sien and another appeal [2020] 1 SLR 771 (“Ascend Field”) at [29]. This commercial agreement need not be enforceable as a matter of contract law to be worthy of protection under s 216 of the Companies Act. It is an agreement in the broadest sense as it may be found in informal understandings and assumptions attendant to the parties’ personal relationship (Over & Over at [84] and [87]). In assessing commercial fairness, the court is therefore entitled to consider not only the parties’ legal rights, but also their legitimate expectations (Sakae Holdings at [82]). In this context, the term “legitimate expectation” describes the correlative “right” that the claimant shareholder is entitled to protect, a right that arises from the personal relationship between the parties (Re Saul D Harrison & Sons plc [1995] 1 BCLC 14 at 19–20 and O’Neill v Phillips [1999] 1 WLR 1092 (“O’Neill”) at 1100–1102).
Parties’ relationship
[81] Mr Deniyal submits that the parties shared a relationship of mutual trust and confidence, such that there was a quasi-partnership. Both men were close friends who interacted on an informal basis. In his pleaded case, Mr Niew initially denied being friends with Mr Deniyal. However, Mr Niew admitted under cross-examination that Mr Deniyal was indeed an old friend, and that Mr Niew was “heartbroken” by Mr Deniyal’s actions in 2019. Mr Niew further testified that even though Mr Deniyal had for “many years” contributed “nothing” to the business and was often absent from work, Mr Niew was willing to continue paying Mr Deniyal a salary on account of their long friendship.
[82] Mr Niew therefore fell back in his submissions to the point that trusting and having confidence in another as friends does not equate to a quasi-partnership. Moreover, Mr Niew submits that his dominant position in the Mapo Group’s hierarchy meant there could not have been a quasi-partnership, citing Leong Chee Kin (on behalf of himself and as a minority shareholder of Ideal Design Studio Pte Ltd) v Ideal Design Studio Pte Ltd and others [2018] 4 SLR 331 and Lim Kok Wah and others v Lim Boh Yong and others and other matters [2015] 5 SLR 307 (“Lim Kok Wah”) in support. The evidence shows that there was no reciprocal trust and confidence between Mr Niew and Mr Deniyal, and Mr Niew had ultimate control over the companies. Any expectations that Mr Deniyal may have had were entirely subjective. The mere fact that Mr Niew and Mr Deniyal were personal friends does not prove the existence of a quasi-partnership.
[83] Furthermore, Mr Niew also portrays Mr Deniyal’s involvement in the business as being limited to Matopo (see above at [14]). Mr Niew submits that Mr Deniyal therefore could not have been his quasi-partner in MEPL and MMPL.
Quasi-partnerships
[84] Both parties appear to agree that a preliminary issue is whether MEPL and MMPL were quasi-partnerships, and if so, whether Mr Niew departed from legitimate expectations derived from such a status. Mr Niew submits that MEPL and MMPL were not quasi-partnerships, and no equitable considerations bound him. Mr Deniyal may therefore only rely on legitimate expectations contained in the corporate constitutions of MEPL and MMPL. Mr Deniyal on the other hand submits that there was a quasi-partnership and that Mr Niew’s conduct therefore ought to be held to a higher standard. Alternatively, Mr Deniyal submits that legitimate expectations arising from implied or informal understandings may be taken into consideration even absent a finding of quasi-partnership.
[85] I do not consider that determining whether a company is in fact a quasi-partnership is always a necessary or necessarily useful step in the analysis. In particular, I do not accept Mr Niew’s contention that Mr Deniyal is limited to only those legitimate expectations contained in the corporate constitutions of MEPL and MMPL absent a finding of quasi-partnership. In my view, the focus should be on discerning the substance, parameters, and objectives of the parties’ commercial agreement (Over & Over at [87]).
[86] It is useful to start with the House of Lords decision of Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (“Ebrahimi”). Although Ebrahimi concerns the court’s power to grant a “just and equitable” winding-up (see s 125(1)(i) of the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed)), the principles stated therein remain authoritative in the context of claims under s 216 of the Companies Act (Over & Over at [79]–[80]). In Ebrahimi, Lord Wilberforce first rejected the “tendency to create categories or headings under which cases must be brought” before intervention is justified (Ebrahimi at 374). Lord Wilberforce went on to hold (at 379-380):
I have set this out at length to properly contextualise the concept of “quasi-partnerships”.
[87] First, it is clear that the equitable considerations that can restrain the exercise of strict legal rights are generated by the personal relationship between individuals. In other words, the legitimate expectations to which the court gives effect are those of a personal character and are not derived from the status of the corporate entity. What is required is “a personal relationship or personal dealings of some kind between the party seeking to exercise the legal right and the party seeking to restrain such exercise, such as will affect the conscience of the former” (O’Neill at 1101, affirming In re Astec (B.S.R.) Plc. [1998] 2 BCLC 556 at 588). As Valerie Thean J held in Anita Hatta v Lee Siow Kiang Georgia and others [2020] 5 SLR 304 (“Anita Hatta”), the absence or presence of a “quasi-partnership” does not determine whether legitimate expectations arising from implied or informal understandings may be taken into consideration. Instead, the focus remains on whether the circumstances of the parties’ personal relationship are such as to call for intervention (Anita Hatta at [69], citing Fisher v Cadman and others [2006] BCLC 499 (“Fisher”) at [84]). I therefore disagree that there are necessarily any pre-defined set of legitimate expectations that can be “derived” from the status of a company.
[88] Second, flowing from this first observation, the label “quasi-partnership” is no more than that: a convenient label (see also Fisher at [84]). It is apt in the case of a pre-existing partnership that is subsequently incorporated. However, this label cannot be allowed to confuse or obscure the fact that the basis of intervention is s 216 of the Companies Act and not the law of partnership. It is incorrect to insist on the category or heading of “quasi-partnership” as a necessary pre-requisite before legitimate expectations may be taken into account: Lian Hwee Choo Phebe and another v Maxz Universal Development Group Pte Ltd and others and another suit [2010] SGHC 268 (“Phebe”) at [61] and The Wellness Group Pte Ltd and another v OSIM International Ltd and others and another suit [2016] 3 SLR 729 at [181]. In my view, this label is particularly unhelpful given the great variety of commercial arrangements under which companies may be run.
[89] To make finding a “quasi-partnership” a pre-requisite before the court may look into legitimate expectations arising from the parties’ personal relationship is to turn the proper analysis on its head. In Over & Over, the Court of Appeal first found as a matter of fact that the parties had associated on an informal basis and had agreed to consult one another on important financial and operational matters (Over & Over at [87]–[92]). The finding of “quasi-partnership” was a conclusion reached precisely because the Court of Appeal found that the informal agreement to consult had been proven on the facts (Over & Over at [97]).
[90] Third, Lord Wilberforce was at pains to clarify that the three elements are non-exhaustive illustrations that are not intended to constrain the analysis or delimit the circumstances in which equitable considerations may arise (also observed by the Court of Appeal in Sim Yong Kim v Evenstar Investments Pte Ltd [2006] 3 SLR(R) 827 at [30]). A relationship of mutual trust and confidence is therefore neither necessary nor sufficient, but remains relevant to determining what the parties’ commercial agreement was. As Andrew Ang J held in Phebe, the courts should always consider the circumstances of the parties’ relationships and any understanding or expectations between them, regardless of whether or not a quasi-partnership is found (at [61]). For this reason, the personal relationship between parties is important to the court’s task to determine the true extent and content of the commercial agreement between the parties (see above at [80]).
[91] I therefore focus on determining the substance of the commercial agreement between Mr Niew and Mr Deniyal as demonstrated by the evidence, keeping in mind the essential context of their personal relationship (see Anita Hatta at [72]).
My findings
[92] I accept that the parties operated with a considerable degree of informality. Mr Deniyal’s employment was not governed by any written employment contract and the men mostly communicated orally. The men did not negotiate and draft a written shareholders’ agreement. I accept Mr Deniyal’s testimony that there were no formal annual general meetings or board meetings. Mr Deniyal’s shares were not acquired as part of an arms-length commercial transaction and Mr Niew had gifted Mr Deniyal his shares at least in part because of their long friendship. Mr Niew even described his system of recording the personal loans allegedly extended to Mr Deniyal as being “very casual”. I therefore accept that the parties may have shared informal understandings or assumptions that were not reduced to writing or put into formal agreement.
[93] Crucially, Mr Niew and Mr Deniyal agree that the reason why Mr Deniyal was gifted shares in MEPL and MMPL was because Mr Niew wanted to reward Mr Deniyal and provide him with an incentive to stay with the Mapo Group in the long term (see above at [23]–[28]). Mr Niew repeatedly and consistently testified that this was precisely the reason why he gifted Mr Deniyal shares in both MEPL and MMPL. In fact, Mr Niew clarified that the intention behind the shares was to ensure that Mr Deniyal would stay within the Mapo Group, not just any one specific company.
[94] In my view, these reasons explaining why Mr Deniyal became a shareholder reveal the basis for the parties’ association as members of MEPL and MMPL. Flowing from these reasons, Mr Deniyal had a legitimate expectation to be treated fairly by Mr Niew in relation to the success of MEPL and MMPL, to which he contributed. Mr Niew was thus bound by equitable considerations of fairness in relation to how, as the majority shareholder, he dealt with profit sharing, whether declared by way of dividends or paid out as directors’ fees. This was not a mere subjective expectation.
[95] Mr Niew’s reliance on Lim Kok Wah for the proposition that the presence of an autocratic controller in a company precludes a finding of quasi-partnership is misplaced. Lim Kok Wah concerned two companies run by members of a family: a father and his sons. In that case, the court held that there was no quasi-partnership and found that the father ran the companies in question as an “autocratic patriarch” who had an “overriding say”. Accordingly, the patriarch’s sons accepted his authority and followed his decisions unquestioningly until his passing. There was therefore no relationship of mutual trust and confidence between the sons. Nevertheless, the court found that it was “undoubtedly true that there existed in each company a bilateral relationship of mutual trust and confidence between [the father] and each son” [emphasis added] (at [112]). Contrary to Mr Niew’s submission, Lim Kok Wah therefore stands for the converse proposition that a relationship of mutual trust and confidence may subsist notwithstanding the dominant power of one shareholder. Furthermore, a quasi-partnership may subsist notwithstanding the fact that the members undertake differentiated responsibilities (Ascend Field at [41]), or the fact that one party is treated as a subordinate to the other (Lim Ah Sia v Tiong Tuang Yeong and others [2014] 4 SLR 140 at [64]). In my view, the fact-specific nature of the inquiry requires focus on the specific context of Mr Niew and Mr Deniyal’s relationship. For example, given the evidence of the nature of their association, I would not have accepted a claim that Mr Deniyal had a legitimate expectation to have a say in the overall business development of the Mapo Group, or a claim that Mr Deniyal had a legitimate expectation to control matters in Sembcorp Yard. It is the actual facets of the relationship between the parties in question that delineates the scope of the commercial agreement, rather than an abstract categorisation of “quasi-partnership”.
[96] I found Mr Niew particularly prone to equivocation on the issue of whether he trusted Mr Deniyal. Mr Niew initially denied that Mr Deniyal had been made a shareholder and director of MEPL and MMPL because he trusted Mr Deniyal. However, the various explanations provided by Mr Niew point inexorably to the contrary conclusion. As already stated, Mr Niew explained that he had wanted to incentivise Mr Deniyal to stay with the Mapo Group in the long term. Mr Niew also testified that he trusted Mr Deniyal professionally and believed that Mr Deniyal would do a good job. I was unimpressed by Mr Niew’s repeated refrain that there are “many types of friends” and “many types of trust”. This was another example of Mr Niew pre-empting cross-examination (see above at [65]).
[97] As for Mr Niew’s submission that Mr Deniyal’s involvement was limited to Matopo (see above at [14]), I do not accept Mr Niew’s reliance on the technical distinction between the entities in the Mapo Group. In the first place, Mr Niew’s pleadings did not take issue with which entity employed Mr Deniyal. Instead, Mr Niew’s pleaded defence states that Mr Deniyal was employed by MMS, MEPL, and MMPL. When explaining how business declined in Keppel Yard in 2019 (see above at [39]), Mr Niew stated that it was because fewer projects were awarded to MEPL. Under cross-examination, Mr Niew could not give a straight answer when questioned on which entity employed Mr Deniyal. Mr Niew’s attempt to place emphasis on which entity paid Mr Deniyal’s salary was also undermined when Mr Niew testified that he was not particularly concerned about which company in the Mapo Group paid Mr Deniyal’s salary and disagreed that the source of salary payments was indicative of which entity was the employer. After all, Mr Niew’s evidence is that Mr Deniyal was only placed on Matopo’s payroll in November 2018. The objective evidence is also equivocal. As stated, no formal employment agreement was adduced. The available records show that different entities in the Mapo Group made Central Provident Fund contributions to Mr Deniyal over different years. Mr Deniyal tendered a business card bearing the title of “Senior Operation Manager”, which was embossed with the names of all four companies in the Mapo Group, not just Matopo or MEPL. Mr Niew created this business card. Mr Deniyal’s access pass to Keppel Yard also identified him as a director of Matopo, although this was never the case. Mr Ong’s evidence was that Mr Deniyal was involved in the management of operations for both MEPL and MMPL, and that the three men had been the “senior management team” who cooperated on operational matters. I find that as far as the parties were concerned, Mr Deniyal carried out his duties and contributed his efforts to the Mapo Group as a business.
[98] Having set out my findings on the nature of the parties’ relationship, I now turn to address Mr Deniyal’s various allegations.
Obstruction and lack of access to documents
[99] Mr Deniyal complains that, from the outset, he was not given unfettered access to financial accounts and documents of MEPL and MMPL, such as monthly management accounts, balance sheets, and profit and loss accounts. Mr Deniyal’s position is that he was entitled to these documents as a director, but Mr Niew refused to grant him access. Mr Deniyal had initially acquiesced to this state of affairs because Mr Niew had assured him that the financial aspects of the business would be well handled, which Mr Deniyal accepted on the basis of trust and confidence. Even after suspicions were raised in 2018, Mr Deniyal did not insist upon being given the documents as he trusted Mr Niew and was persuaded by him. When it was put to Mr Deniyal that he could simply have asked Ms Cindy to provide him with documents, Mr Deniyal’s explanation was that Ms Cindy would have first sought Mr Niew’s approval, and Mr Deniyal did not want to risk losing Mr Niew’s trust. After their falling out, Mr Niew’s dismissal of Mr Deniyal on 13 February 2020 was intended to prevent Mr Deniyal from accessing MEPL and MMPL’s documents and uncovering conclusive evidence of Mr Niew’s wrongdoing. Mr Niew has therefore obstructed Mr Deniyal’s right to receive monthly management accounts since 2019.
[100] Mr Niew submits that Mr Deniyal was entirely uninterested in the administration of MEPL and MMPL and had never requested access to any documents prior to the formal demands in December 2019. Accordingly, Mr Deniyal was not and could not have been prevented from accessing any documents by Mr Niew. The allegation that Mr Deniyal’s employment had been terminated to obstruct him from uncovering conclusive evidence of wrongdoing is entirely spurious as Mr Deniyal remains to date a director of MEPL and MMPL and has never been denied the right to receive the documents. In fact, even after Mr Deniyal’s dismissal, Mr Niew continued to offer Mr Deniyal the opportunity to inspect the documents at the office premises, an offer that Mr Deniyal himself declined to take up.
[101] In my view, the truth is that Mr Deniyal was for the most part uninterested in the financial accounts of the companies. Mr Deniyal admitted under cross-examination that he did not ask for access to the documents as he did not want to lose Mr Niew’s trust. Mr Deniyal’s own case is that he only realised that he ought to have been provided with monthly accounts sometime in 2018, and he testified that he only became interested in the documents in recent years. As Mr Deniyal declined to inspect the documents when invited to do so, it cannot be said that he was denied access.
[102] Mr Deniyal’s main gripe appears to be centred around the manner in which he was asked to sign financial documents throughout the years. In essence, Mr Deniyal says that he was made to sign incomplete financial documents on short notice and without adequate time to process their contents. Mr Niew or Ms Cindy would typically request that Mr Deniyal attend at the main office. Upon his arrival, Mr Deniyal would then be handed documents and would be told that they needed to be urgently signed and submitted by the end of the same day. The pages requiring his signature would already be flagged out. He would not be provided documents to review in advance and he was not provided with the complete documents before being asked to sign them. Although Mr Deniyal had difficulties understanding financial documents as he only received formal schooling until the lower secondary level, he nevertheless signed off on them “unquestioningly” because of express assurances by Mr Niew that the accounts were prepared properly. Mr Deniyal testified that he was given only a few pages of documents rather than a full set of documents and only looked at those pages earmarked for his signature. The fact that Mr Deniyal signed the documents therefore does not mean that he was fully aware of or understood their contents.
[103] Mr Niew does not know whether Mr Deniyal attempted to review the documents and was not informed that Mr Deniyal had any difficulties doing so. Nevertheless, Mr Niew’s position is that Mr Deniyal was in fact always provided the full financial documents and was given enough time to review them before signing. Mr Niew was able to review the documents despite only being qualified at the primary school level and possessing a lower level of English proficiency. Mr Niew never took any positive steps to physically prevent Mr Deniyal from reviewing the documents. Therefore, it was entirely Mr Deniyal’s own choice not to read the statements. It was his duty to do so, and Mr Niew cannot be blamed for Mr Deniyal’s own failings.
[104] The starting point is that the denial of access to information may in some circumstances amount to commercial unfairness: Lim Chee Twang v Chan Shuk Kuen Helina and others [2010] 2 SLR 209 (“Lim Chee Twang”) at [132(b)]. This should apply equally to cases where access is so circumscribed as to be unreasonable. However, Mr Deniyal’s evidence is that Ms Cindy was the person who would hand him the documents and instruct him to sign them before the end of the day. Given the two competing accounts, Mr Deniyal should have but failed to call Ms Cindy to buttress his case (see above at [69]). On the other hand, despite Mr Niew’s pleaded position, Mr Niew’s own testimony suggests some truth in Mr Deniyal’s story. It stood out to me that Mr Niew testified that both men only signed two documents a year, and that they had “only signed because accounts asked us to sign”. Mr Niew did not profess to know the nature of these documents. On the evidence, Mr Deniyal appears for a long time to have been content to take an easy-going and indeed oblivious approach to signing documents. Certainly, Mr Deniyal has failed to discharge his burden of proving this allegation of denial of access and information: Tan Chin Hock v Teo Cher Koon and another and another appeal [2022] 2 SLR 314 (“Tan Chin Hock”) at [31].
Diversion of funds to Matopo
[105] According to Mr Deniyal, Mr Niew caused funds to be diverted from MEPL and/or MMPL to Matopo without Mr Deniyal’s knowledge or approval by way of purported loans that were not repaid to MEPL and/or MMPL. In truth, Mr Niew extracted the funds for his sole benefit by causing Matopo to declare substantial dividends and directors’ fees as its sole shareholder and director.
[106] In particular, Mr Deniyal questions two particular transactions.
[107] First, MEPL’s general ledger for 2014 records a transaction dated 28 May 2014 in Mr Niew’s directors’ account for a “LOAN TO COMPANY (FOR MATOPO PUR.NO.129)” of $540,000, recorded under the header “CREDIT”. The effect of this transaction was that MEPL thereafter owed a further sum of $540,000 to Mr Niew. Mr Deniyal surmises that this meant that MEPL had purchased something on behalf of Matopo, and Mr Niew loaned money to MEPL to finance that purchase. Mr Deniyal questions why MEPL would make a purchase for Matopo’s benefit, whether incurring such expenses would benefit MEPL, whether the $540,000 even originated from Mr Niew, and why it was necessary for MEPL to be involved in what was essentially a loan from Mr Niew to Matopo. Mr Deniyal submits that there is no good explanation for the transaction, and Mr Niew’s failure to provide any explanation at all is highly suspect.

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Deniyal bin Kamis v Mapo Engineering Pte Ltd and others

Laws this judgment relies on

Grounds of decision

Introduction

Facts

The parties

The first and second defendants

The plaintiff

The third defendant

Background to the dispute

Mapo Marine Services

Incorporation of MEPL

Incorporation of MMPL

Mr Ong’s departure

Falling out

Demands for disclosure

Termination of Mr Deniyal

Buy-out offers

The parties’ cases

Plaintiff’s case

Defendant’s case

The evidence

Mr Niew’s evidence

Mr Deniyal’s evidence

Accounting evidence

Issues to be determined

Issue 1: Whether the remedy of an account is barred by limitation

Parties’ submissions

How I will deal with the relief sought

Issue 2: Whether there was commercial unfairness

Applicable law

Parties’ relationship

Quasi-partnerships

My findings

Obstruction and lack of access to documents

Diversion of funds to Matopo