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Grounds publishedDecided 13 Feb 2024
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General Division of the High Court

Farzin Ratan Karma v Helen Campos and others

[2024] SGHC 41Case no. Suit No 545 of 2021

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Grounds of decision

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  1. Introduction

  2. Facts

  3. The parties

  4. [2] The second defendant, MC Corporate Services Pte Ltd (“MCCS”), was incorporated on 28 November 2006, and is in the business of providing corporate secretarial and general management consultancy services. The third defendant, MC Accounting Services Pte Ltd (“MCAS”), was incorporated on 29 January 2008, and is in the business of providing accounting services.

  5. [3] Both MCCS and MCAS were initially incorporated with Ms Campos as their sole shareholder. By 2010, Mr Karma had acquired 35,000 out of 100,000 shares in MCCS, and 805 out of 2,300 shares in MCAS, amounting to a 35% share in each company. Ms Campos retained the remaining 65% shareholding of each company until October 2019, when she transferred one share in each to her son, Andrew Cherian Thomas (“Mr Thomas”). By the time this action was commenced on 18 June 2021, the single share held by Mr Thomas had been transferred to Mr Chris Allix (“Mr Allix”), a director in MCCS and MCAS.

  6. [4] After the commencement of the present action, in October 2021 and in January 2022, MCCS and MCAS each offered a rights issue respectively. As Mr Karma did not take up either rights issue, the percentage of his shareholding in MCCS fell to 5%, and his shareholding in MCAS fell to 0.013%. Mr Allix continued to hold a single share in each company, and Ms Campos owned the remaining 94.999% of the shareholding in MCCS, and 99.865% of the shareholding in MCAS. This represents the parties’ current shareholding.

  7. Background to the dispute

  8. Parties’ history

  9. [5] Mr Karma and Ms Campos first met in 2003. At the time, Mr Karma was employed as the Regional Technical Director of a computer software and management company named Ulysess System (Singapore) Pte Ltd (“Ulysess”), which was being advised by a law firm at which Ms Campos was working. Ms Campos’ practice related to the provision of corporate secretarial services.

  10. [6] By 2005, Ms Campos had left the law firm and taken up a position as shareholder and managing director of ELTICI Corporate Services Pte Ltd’s (“ELTICI”) corporate secretarial practice. However, in or around October 2006, ELTICI’s management decided to sell its corporate secretarial practice. As Ms Campos was not keen on taking up employment with the buyer, she decided to leave ELTICI. Parties disagree over how acrimonious her departure was. Mr Karma argues that it was extremely so, while Ms Campos claims that it was quite amicable.

  11. Incorporation of MCCS and MCAS

  12. [7] After leaving ELTICI in late 2006, Ms Campos decided to set up MCCS – a corporate services company. At the outset, she was its sole director and shareholder. While parties disagree on the importance of the role Mr Karma played in setting up MCCS and how significant his contributions were, it is common ground that he was at least supportive of Ms Campos’ efforts to start MCCS. Further, parties are in agreement that Mr Karma made at least “minimal” contributions to the starting-up and running of MCCS and MCAS. In particular, Ms Campos concedes that he assisted in some “secondary matters”, including logistics, dealing with the movers and contractors, and setting up the IT network system for MCCS.

  13. [8] As noted above at [3], MCCS was incorporated on 28 November 2006. Mr Karma was appointed a director of MCCS on 12 December 2006. He was then appointed a signatory for MCCS’ bank account with United Overseas Bank Limited (“UOB”) on 9 June 2007, and thereafter acquired a 35% shareholding in MCCS (ie, 35,000 shares) from Ms Campos on 19 February 2008.

  14. [9] MCAS was incorporated on 29 January 2008. On 21 April 2009, Mr Karma was appointed a director, and acquired a 35% shareholding in MCAS (ie, 805 shares). He lost both his shareholding and directorship in MCAS on 23 April 2009, with some dispute between the parties as to whether he knew of this at that time. However, he thereafter regained his 35% shareholding in MCAS on 17 September 2010, and his directorship on 25 February 2013. Mr Karma does not appear to contest Ms Campos’ allegation that he did not pay for the shares in either MCCS or MCAS, or contribute any capital to either of the companies.

  15. HCCS and FEL

  16. [10] In addition to MCCS and MCAS, Ms Campos incorporated a full-service corporate secretarial firm named HC Consultancy Pte Ltd (“HCCS”) on 23 December 2008. Her intention in doing so was to use HCCS to collect revenue generated from her provision of nominee-director services to companies, and for other services which she provided outside the purview of MCCS or MCAS’ business.

  17. [11] In the meantime, Mr Karma was still employed at Ulysess. He remained so employed until leaving in 2013, with Ulysess subsequently being struck off in 2015. Mr Karma subsequently incorporated Farohar Enterprizes on 18 January 2013 (“FEL”), a management consultancy company, of which he was the sole director and shareholder.

  18. The Directors’ Agreement

  19. [12] Over the years, various points of dispute had arisen between Ms Campos and Mr Karma over issues pertaining to remuneration. On 23 April 2014, they entered into an agreement (the “Directors’ Agreement”) which was dated 1 January 2014. This was meant to resolve their existing disagreements, and formalise their legal and commercial relationship with each other, as well as their financial entitlements vis-à-vis MCCS and MCAS. The Directors’ Agreement provided for inter alia the remuneration of Ms Campos and Mr Karma, payment of a lump sum of $350,000 by Ms Campos to Mr Karma in settlement of any possible claims or liabilities between themselves, MCCS, MCAS, HCCS, or FEL, and for apportionment of billings between Ms Campos and Mr Karma, via HCCS and FEL respectively, going forward. As the parties rely on different terms of the Directors’ Agreement in making their arguments on the various issues raised, I will consider the terms upon which they rely in greater detail at the appropriate juncture.

  20. Ms Campos’ disqualification from directorship

  21. [13] On 9 March 2017, Ms Campos was disqualified from acting as a director in or taking part in the management of a company pursuant to s 155A of the Companies Act (Cap 50, 2006 Rev Ed), as she had been a director in three companies that were struck off by the Registrar within a five-year period. Ms Campos officially resigned from MCCS and MCAS in October 2019, having been granted several extensions of time to resign her directorships by ACRA. Ms Campos eventually resumed her directorships of MCCS, MCAS, and HCCS after being granted leave by the court to do so on 1 February 2021.

  22. The Waiver Agreement

  23. [14] As of 2 November 2017, the accounts of MCCS and MCAS showed Mr Karma owing the companies a total debt of $546,015.76. It should be noted at this juncture that Mr Karma claims that a large portion of this debt was supposed to have been written off pursuant to the Directors’ Agreement. However, it is undisputed that Ms Campos and Mr Karma entered into an agreement (“the Waiver Agreement”) on 2 November 2017, to waive the $546,015.76 which Mr Karma was shown to owe MCCS and MCAS.

  24. Rose’s Salary Agreement

  25. [15] On 10 January 2020, MCCS entered into an agreement with FEL concerning the salary of one Asis Rose Dela Rosa (“Rose” and “Rose’s Salary Agreement”). Rose was an accountant who had been employed by MCCS since around 2017. This agreement was entered into in connection with the renewal of her employment pass by MCCS, brought about by Mr Karma. Under Rose’s Salary Agreement, Rose would spend some of her working hours providing services to FEL, and FEL would in exchange pay MCCS a sum of $1,700 on a monthly basis. It was also provided that this arrangement would terminate upon one month’s written notice, or when Rose was no longer on assignment with FEL. FEL paid the $1,700 to MCCS for Rose’s services up until December 2020, and did not pay this sum from January 2021 until July 2021. Parties dispute whether Rose continued to render any services to FEL after January 2021. Rose’s employment with MCCS was subsequently terminated in July 2021.

  26. Appointment of additional directors

  27. [16] On 8 October 2019, while still disqualified from holding directorships, Ms Campos transferred one share each in MCCS and MCAS to her son, Mr Thomas. She then convened an extraordinary general meeting (“EGM”), held on 8 November 2019, to appoint Dr Theyvendran s/o Ramanathan (“Dr Theyvendran”) as a director of MCCS and MCAS.

  28. [17] On 29 June 2020, Ms Campos requisitioned another EGM, for the purposes of appointing Mr Allix as a director of the MCCS and MCAS, and for Mr Madadevan Lukshumayeh (“Mr Lukshumayeh”) to be appointed as an alternate director for Dr Theyvendran.

  29. The rights issues

  30. [19] Mr Karma commenced the present action on 18 June 2021. By this time, Ms Campos had been reinstated as a director of MCCS and MCAS.

  31. [20] On 20 October 2021, a resolution authorising a rights issue for MCCS was passed at an EGM. A separate EGM was to be held on 2 November 2021 to authorise a rights issue in MCAS, but Mr Karma obtained an injunction on 29 October 2021 blocking the carrying out of the rights issue in MCCS and proceeding with the EGM to authorise the rights issue in MCAS. The injunction was subsequently set aside on 14 January 2022. The rights issue for MCAS was approved in January 2022, and shares in both MCCS and MCAS were subsequently allotted in February 2022. As mentioned above at [4], Mr Karma did not take up the rights issue, and as a result, the percentage of his shareholding in MCCS fell from 35% to 5%, and his shareholding in MCAS fell from 35% to 0.013%.

  32. The parties’ cases

  33. Mr Karma’s claim

  34. [21] Mr Karma argues that MCCS and MCAS were in substance quasi-partnerships formed on the basis of mutual trust and confidence between himself and Ms Campos. As I will elaborate on below (at [44]), the legal implication of finding a quasi-partnership, is that the court will be more generous in looking beyond the parties’ strict legal rights when determining whether there was oppressive conduct. In any event, Mr Karma argues that he had a legitimate expectation that Ms Campos would conduct herself in accordance with both companies’ Articles of Association. In this connection, he identifies three major patterns of conduct which he claims were commercially unfair and oppressive within the meaning of s 216 of the Companies Act 1967 (2020 Rev Ed) (“Companies Act”).

  35. [22] First, Mr Karma alleges that Ms Campos unlawfully drew and continues to draw a director’s salary for herself in a manner which was inconsistent with the Articles of Association of both MCCS and MCAS. Specifically, Article 87 of both companies’ Articles of Association provides that:

  36. [23] Mr Karma highlights the fact that, while both he and Ms Campos were authorised signatories of MCCS’ bank account (as noted above at [8]), only Ms Campos could operate the bank account of MCAS. This meant that she could “freely draw on these bank accounts to pay herself a director’s salary without [Mr Karma’s] knowledge or concurrence”. Mr Karma’s case is that Ms Campos took advantage of this to bypass the need to obtain either a board decision or shareholder resolution to authorise payment of her salaries, and to thus “[help] herself to millions of dollars of director’s salary” while avoiding the need to share any remuneration with him. He claims that the high salaries which she drew for herself placed MCCS and MCAS in a “state of perpetual loss” and left “nothing for the shareholders”, and also impacted the value of his own shares in both the companies.

  37. [24] Second, Mr Karma claims that Ms Campos diverted business and revenues from MCCS and MCAS, in which he and Ms Campos are shareholders, to HCCS, in which Mr Karma is not a shareholder.

  38. [25] Third, Mr Karma claims that the rights issues in both MCCS and MCAS were not bona fide attempts to raise cash, as he claims that both companies were not actually in a cash crunch but for Ms Campos’ drawing of inordinately high salaries. The low price per share in the rights issue was based on budgets wrongly premised on the assumption that Ms Campos was entitled to continue drawing the full amount of her salary, which Mr Karma claims she was not legally entitled to do. He argues that this meant that the rights issues had to be a deliberate attempt to “inflict maximum damage” on his interest as a minority shareholder.

  39. (b) That MCCS and MCAS had undertaken all the business which Ms Campos is alleged to have diverted to HCCS from the date of HCCS’ incorporation up till the date of valuation.

  40. (c) The unauthorised salaries and other sums drawn by Ms Campos are to be treated as a debt owing from her to MCCS and MCAS.

  41. (d) All goodwill and revenue of HCCS from the date of its incorporation up till the date of valuation should be attributed to MCCS and MCAS unless it arose from a contract which would have been “physically impossible” for MCCS and MCAS to fulfil.

  42. [27] In short, he asks that the valuation of his shareholding be determined in such a way that Ms Campos “will not gain any advantage or benefit” from the alleged acts of oppression discussed at [22]–[25].

  43. Ms Campos’ defence

  44. [28] In response to Mr Karma’s allegations as outlined above, Ms Campos makes the following arguments.

  45. [29] First, she takes the position that MCCS and MCAS are not quasi-partnerships. MCCS and MCAS were always meant to be vehicles for her personal professional practice. This is evident from the fact that both were incorporated with her as their sole shareholder and director, and that she ultimately determined the extent of Mr Karma’s involvement in MCAS. Mr Karma only became a shareholder in MCCS a year after it was incorporated, and in MCAS two years after its incorporation. He also remained employed at Ulysess until 2013. Ms Campos’ acts of making Mr Karma a director and shareholder in MCCS and MCAS, and a signatory of MCCS’ bank account with UOB, were only done at his insistence and do not reflect any relationship of mutual trust and confidence. Mr Karma did not even pay for the shares in MCCS and MCAS which she transferred to him. Finally, Mr Karma did not have any legitimate expectation that his shareholding in MCCS or MCAS would remain constant over time, and any expectations which he did have would be superseded by the Directors’ Agreement signed in 2014.

  46. [30] Second, on the issue of her salaries, Ms Campos argues that they were appropriate and not excessive, given that MCCS and MCAS were essentially her own professional practice, and she was the one making the major decisions, running daily operations of the businesses, and actually rendering services to clients. In any event, Mr Karma is precluded from making any claim in respect of her salaries drawn before 1 January 2014, by virtue of having signed the Directors’ Agreement, pursuant to which he received $350,000 from Ms Campos, and thereafter signing the financial statements of MCCS and MCAS reflecting the salary which Ms Campos had drawn. Ms Campos also argues that all the salaries she drew after 1 January 2014 were authorised by clause 2(A)(ii) of the Directors Agreement. Finally, the salaries she drew during her disqualification period were drawn pursuant to an employment contract appointing her as general manager of MCCS and MCAS, which was validly approved by Mr Allix and Mr Lukshumayeh.

  47. [31] Third, in respect of the alleged diversion of business from MCCS and MCAS to HCCS, Ms Campos argues that any billings of clients by HCCS prior to 1 Jan 2014 could be justified on the basis that the services it rendered were not rendered by MCCS and MCAS at the material time. Additionally, it was the accounting practice between MCCS, MCAS, and HCCS that where each rendered different services to a client, the client would be invoiced by the company with the largest billing, and the fee would be distributed internally. In any event, Mr Karma is again precluded from taking issue with this by virtue of the Directors’ Agreement. As for HCCS’ invoicing of MCCS’ clients for services rendered after 1 January 2014, Ms Campos’ case is that she had been permitted to do so by clause 2(D) of the Directors’ Agreement, and that her doing so therefore could not be considered oppressive towards Mr Karma.

  48. [32] Finally, Ms Campos argues that the rights issues were bona fide attempts to raise funds which MCCS and MCAS needed. This need had arisen partly because of the billing-sharing arrangement under clause 2(D) of the Directors’ Agreement, which had allowed 50% of both Ms Campos’ and Mr Karma’s billings to be taken out of MCCS. COVID-19 also had a negative impact on their revenue. She argues that she was rightfully entitled to the salaries reflected in the budgets upon which the prices of issued shares were based. She also claims that she had not been drawing her full salary entitlement owing to the companies’ precarious financial positions, and did not want to continue lending money to the companies. In light of these circumstances, Ms Campos, Mr Allix, and Mr Lukshumayeh all believed that raising funds via a rights issue was necessary. Mr Karma had a chance to participate in the rights issue. As he had no legitimate expectation that his shareholding would remain constant, and given that the price of shares was appropriate in light of the companies’ negative equity value, it could not be said to be unfair, prejudicial, or oppressive to him.

  49. The Defendants’ counterclaim

  50. [33] Ms Campos, MCCS, and MCAS (collectively “the Defendants”) also make several counterclaims against Mr Karma. First, the Defendants argue that Mr Karma caused MCCS to enter into Rose’s Salary Agreement with FEL, and caused FEL to fail to pay the agreed $1,700 from the months of January to July 2021, as noted above at [15]. In this connection, they claim that FEL was obliged to do so as it had not validly terminated Rose’s services, and there is evidence that Rose continued working for FEL after February 2021. These were breaches of his fiduciary obligations to act bona fide in the best interest of MCCS, specifically the duty to act in good faith and to avoid putting himself in a position of conflict.

  51. [34] Second, the Defendants argue that Mr Karma took advantage of his position as a signatory of MCCS’ bank account to incur substantial personal expenses between 2017 and 2020 which they claim also constituted a breach of his fiduciary duties.

  52. [35] Finally, the Defendants argue that the Waiver Agreement contained an implied term that, in exchange for waiving the outstanding $546,015.76 which Mr Karma was reflected as owing to MCCS and MCAS, he would stop misappropriating funds from MCCS. As noted above at [34], they allege that as Mr Karma continued to misappropriate funds between 2017 and 2020, he was in fundamental and repudiatory breach of the Waiver Agreement, and MCCS was entitled to enforce the debt of $546,015.76 which had been waived thereunder.

  53. Mr Karma’s defence to the counterclaim

  54. [36] In response to the Defendants’ counterclaim, Mr Karma’s defence is as follows.

  55. [37] In relation to the allegation as to his claiming personal expenses in breach of his fiduciary duties, Mr Karma argues that it was an accepted practice between both Ms Campos and himself to use the companies’ funds for their personal expenses, and their doing so would be captured in the financial records.

  56. [38] In relation to the Waiver Agreement, Mr Karma first argues that the legal test for the implication of a term has not been met. Second, as noted above, he argues that his drawing of personal expenses was not improper as this was a standing practice for both him and Ms Campos at the time. The legal significance of this assertion is presumably that his drawings therefore could not be said to be improper, and hence cannot be considered “misappropriations”. Third, he disputes the fact that he ever owed the debt of $546,015.76 to the companies in the first place, and in this connection argues that his signing of the Waiver Agreement cannot be taken as an acknowledgement that he owed that sum.

  57. [39] Finally, regarding Rose’s Salary Agreement, Mr Karma argues that he was not personally party to it and therefore cannot be held liable for any alleged failure of FEL to perform its payment obligations for the period of January to July 2017; the test to pierce the corporate veil of FEL is not met. In any event, he argues that Rose had ceased working for FEL by January 2021, and that FEL therefore was under no contractual obligation to pay MCCS the monthly sum of $1,700 under Rose’s Salary Agreement to begin with.

  58. Issues to be determined

  59. [40] From the foregoing, the following issues arise for my consideration in relation to Mr Karma’s claim:

  60. (a) Are MCCS and MCAS quasi-partnerships?

  61. (b) Did Ms Campos draw salaries in a manner which ought to be considered oppressive to Mr Karma?

  62. (c) Did Ms Campos divert business from MCCS and MCAS to HCCS in a manner which ought to be considered oppressive to Mr Karma?

  63. (d) Were the rights issues in MCCS and MCAS oppressive to Mr Karma?

  64. [41] In relation to the Defendants’ counterclaim, these are the issues raised:

  65. (a) Did Mr Karma cause MCCS to enter into Rose’s Salary Agreement in a manner which constituted a breach of his fiduciary duties to MCCS?

  66. (b) Did Mr Karma’s use of the funds of MCCS and MCAS for his personal expenses constitute a breach of his fiduciary duties?

  67. (c) Are MCCS and MCAS entitled to claim the sum of $546,015.76 which Mr Karma allegedly owed to them?

  68. [42] I examine each of these issues in turn.

  69. Mr Karma’s claim in minority oppression

  70. Were MCCS and MCAS quasi-partnerships?

  71. [43] The concept of commercial unfairness is the touchstone by which the court determines whether to grant relief under s 216 of the CA, and will arise where there is 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 (Over & Over Ltd v Bonvests Holdings Ltd and another [2010] 2 SLR 776 (“Over & Over”) at [70], [77], [81]). This is a multifaceted inquiry, which must take into account not only members’ legal rights, but also their legitimate expectations, informal understandings and assumptions (Over & Over at [78], [81], [84]).

  72. [44] This distinction between legal rights and legitimate expectations is particularly salient in the context of quasi-partnerships, which are set up on the basis of mutual trust and confidence and operate with a degree of informality, and in which members’ rights and obligations are not always spelt out in their entirety (Over & Over at [83]). In such situations, considerations of a personal character arising between one individual and another may make it unjust or inequitable to insist on legal rights, or to exercise them in a particular way (Ebrahimi v Westbourne Galleries Ltd and others [1972] 2 All ER 492 at 500; Over & Over at [79]–[80]). The courts have thus consistently applied a stricter yardstick of scrutiny because of the peculiar vulnerability of minority shareholders in such companies (Over & Over at [83]). The law will hence be more willing to scrutinise the parties’ past conduct and communications to determine if there are any informal agreements or understandings between them, which might form the context for considering whether specific conduct is or is not commercially unfair (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 (“Leong Chee Kin”) at [50]). However, outside the quasi-partnership context and in the absence of equitable considerations, the relevant yardstick for determining the unfairness of a party’s conduct would generally be the legitimate expectations arising from members’ legal rights and the company’s constitution or articles of association (Leong Chee Kin at [51]).

  73. [45] In the present case, Mr Karma argues that MCCS and MCAS are quasi-partnerships. In support of this, he relies primarily on the circumstances in which Ms Campos left ELTICI to demonstrate the existence of a relationship of trust and confidence between them, which served as the basis for MCCS and MCAS. As noted above at [6], Mr Karma submits that Ms Campos’ departure from ELTICI was highly acrimonious. He claims that he helped her manage the conflicts arising from that departure, set up various aspects of MCCS’ infrastructure, and transfer her clients and their data from ELTICI. He also claims that Ms Campos had in fact wanted to join the buyer of ELTICI, but that he dissuaded her from doing so, claiming that the understanding was that they “will work together … will continue to do that, and we’ll start a business”. In exchange for this support, Mr Karma claims that “it was always a consideration that … [he] would be a shareholder”. According to him, it is “unbelievable” that Ms Campos would have given him shares just to placate or appease him, given that she would have known the legal implications of doing so.

  74. [46] On the other hand, Ms Campos’s relies heavily on the uncontested fact that MCCS was incorporated with her as its sole shareholder and director, and that it therefore could not have been a quasi-partnership. She argues that she made Mr Karma a director only because he had “pleaded with [her] endlessly to make him a director as he promised he could bring in business and help to grow the two companies”. Similarly, she claims to have made him a bank signatory of MCCS’ UOB account only because he “insisted on being appointed and she wished to keep the peace”, and to have given him shares in MCCS only after he “insisted and begged”. In sum, her case appears to be that MCCS and MCAS were effectively set up as vehicles for her own professional business, and that she reluctantly included Mr Karma only at his insistence.

  75. [47] As noted above at [7], I accept that Mr Karma provided some support and assistance in Ms Campos’ departure from ELTICI and in setting up MCCS. Indeed, in arguing that she “did not necessarily need Mr Karma’s help” as things like logistics, IT, and dealing with the movers and contractors “could have been” outsourced, Ms Campos must necessarily be taken as implicitly accepting that he rendered some help. I also accept that it is very difficult to believe that Ms Campos gave Mr Karma a 35% shareholding in her new company simply to placate him or because of the mere fact of his insistence, especially since she would have known of the legal implications of doing so in light of her legal training.

  76. [48] At the same time, I do not think that there was any implied or informal understanding that Mr Karma would be a shareholder or director in MCCS or MCAS, let alone as to what his rights would be vis-à-vis Ms Campos. Here, the chief difficulty confronting Mr Karma is the task of explaining why, if it was true that MCCS and MCAS were both started and thereafter run on the basis of mutual trust and confidence, they were not incorporated with him as a shareholder at the very outset. Mr Karma’s case was “always understood that [he] would be joining [Ms Campos] as a shareholder as and when … [he] had more … comfort in becoming a shareholder”, but that he did not do so immediately upon MCCS’s incorporation because it “was not convenient for him to formally join [Ms Campos] as a shareholder and business partner of MCCS because he was still in the employment of Ulysses”. However, I find this difficult to believe. As noted above at [8], MCCS was incorporated on 28 November 2006, and Mr Karma was appointed a director of MCCS on 12 December 2006. However, he remained employed with Ulysses until 2013. This being the case, it is difficult to understand why it might have been “inconvenient” for him to have been appointed a director at the very outset, when he accepted the directorship barely a few weeks later even though nothing appears to have changed in respect of his employment at Ulysses.

  77. [49] Moreover, even if his acceptance of an operational position with MCCS might plausibly been an issue given his continued employment at Ulysses, it is difficult to see what similar difficulty might have made it inconvenient to have accepted a shareholding in MCCS, or what might have made him “not ready to take up a shareholding position”. Yet, as noted above at [8], contrary to what one would have expected if it was really his employment with Ulysses that was the source of any alleged inconvenience, Mr Karma first accepted a directorship weeks after MCCS was incorporated in November 2006, was then made a signatory of MCCS’ bank account in 2007, and only in 2008 became a shareholder, by which time MCCS had already been running for a full year and turning a profit. Indeed, he also accepted that “the shareholding percentage in the beginning was not … determined and agreed”, which in my view points away from any implicit understanding underpinning the parties’ relative shareholdings in MCCS at the point of its incorporation.

  78. [50] In a similar vein, it is also difficult to believe Mr Karma’s claim that “[Ms Campos] had known all along that [Mr Karma] would be leaving his then well-paying job with good perks to become her business partner and co-shareholder”, when he only in fact left that well-paying job with good perks in 2013, seven years after MCCS was incorporated and five years after MCAS was incorporated. On the contrary, I note that Mr Karma’s salary with Ulysses was originally around $300,000, up till around 2009. However, while he denied that his income from Ulysses “started either diminishing or disappearing” from around 2011, he accepted that his income around 2011 would have been closer to $200,000, which appears to constitute a diminution. Perhaps not coincidentally, Ms Campos alleges that it was also around 2011 that Mr Karma “informed [her] that he wanted to do work for [MCCS and MCAS] as their business development director”, and “demanded that he should have received at least half of what [she] was earning”. When this was brought to Mr Karma’s attention during cross-examination, he denied asking to be made a business development director, but he did not deny Ms Campos’ claim that it was at this point that he began asking for money from MCCS and MCAS.

  79. [51] In sum, I do not believe Mr Karma’s claim that MCCS and MCAS were from the outset “started by two intimate friends based on mutual trust and confidence”. I accept that Mr Karma and Ms Campos might have been close friends, and that Mr Karma did render some support and assistance to Ms Campos following her departure from ELTICI. However, the piecemeal nature of his being made a director, signatory of MCCS’ bank account, and shareholder, and the subsequent negotiation of his salary which only came many years later and coincided with his declining fortunes at Ulysses, suggest to me that none of these things were done pursuant to any genuine understanding. Rather, they were requests made spontaneously and granted by Ms Campos, not simply to appease or placate Mr Karma, but more likely out of a genuine sense of gratitude for the support and assistance which he had rendered to her during and following her departure from ELTICI.

  80. [52] In this light, I agree with Ms Campos that the present case appears similar to that of Lim Chee Twang v Chan Shuk Kuen Helina and others [2010] 2 SLR 209 (“Lim Chee Twang”), in which the court found that (at [70]):

  81. This finding was in turn a factor which led the court to find that there was no quasi-partnership between the parties (Lim Chee Twang at [79]). Indeed, Lim Chee Twang demonstrates that even where one party is brought into a company because of a close personal relationship, this will not suffice to demonstrate that theirs was an association based on a personal relationship involving mutual confidence, whereby two persons come together to embark on a business in common with a view to profit (see Lim Chee Twang at [70]). A similar conclusion ought to follow in the present case.

  82. [53] This conclusion is reinforced by the fact that Ms Campos seems to have had the power to determine unilaterally who would be a shareholder and who would be a director of the companies. When this power resides in a single person, it is a factor which strongly suggests that a company is not a quasi-partnership (Lim Kok Wah and others v Lim Boh Yong and others and other matters [2015] 5 SLR 307 (“Lim Kok Wah”) at [114]; Lim Chee Twang at [70]). Here, Mr Karma’s shareholding derived not from his jointly incorporating MCCS with Ms Campos, but via a transfer of shares from her. And this is even clearer in respect of MCAS. Mr Karma only discovered MCAS’ existence “much later on” after its incorporation. Moreover, on 21 April 2009, Ms Campos had appointed Mr Karma as a director in MCAS and transferred him a 35% shareholding, but unilaterally revoked the appointment and transfer only two days later. As Ms Campos observes, Mr Karma does not claim that this was oppressive. More importantly, this strongly suggests that both MCCS and MCAS were incorporated as vehicles for Ms Campos’ personal professional practice, and that she had final say in whether Mr Karma came onboard and to what extent. The fact that she might have done so out of gratitude for his support and assistance, does not suffice to render this a quasi-partnership. The present case thus stands in marked contrast to Over & Over, in which the company in question was originally incorporated as a joint venture vehicle between the two disputing families from the outset (at [4]), and Lim Swee Khiang and another v Borden Co (Pte) Ltd and others [2006] 4 SLR(R) 745, in which the company was likewise set up by six families to carry on their business (at [13]). Unlike the companies in those cases, MCCS and MCAS cannot be considered quasi-partnerships.

  83. [54] In light of the above, and the fact that Mr Karma accepts that he did not contribute any capital to the starting up of MCCS and MCAS, I am of the view that neither MCCS nor MCAS are quasi-partnerships. Despite Mr Karma’s attempts to explain otherwise, the evidence does not suggest the existence of any “core understandings” between the parties (see Over & Over at [7]), and rather points in the opposite direction. Accordingly, there is no scope for the superimposition of equitable considerations. The measure of commercial unfairness can only be determined by the parties’ legal rights and legitimate expectations derived from and enshrined in the company’s constitution (Lim Kok Wah at [115]), agreements entered into directly between shareholders (see Lim Tong Zhen Kevryn v Cheo Jean Sheng and others [2022] SGHC 315 at [62]–[70]; Lian Hwee Choo Phebe and another v Maxz Universal Development Group Pte Ltd and others and another suit [2010] SGHC 268 at [60]), and from an objective consideration of the alleged wrongdoing in the context of the parties’ relationship and the fact that it is a commercial relationship (Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters [2018] 2 SLR 333 (“Ho Yew Kong”) at [81]).

  84. Ms Campos’ drawing of salaries

  85. [55] I turn to consider the first act of oppression alleged by Mr Karma, that being Ms Campos’ alleged excessive and improper drawing of salaries. Mr Karma’s case is that Ms Campos’ salaries were not drawn in accordance with Article 87 of the constitutions of MCCS and MCAS, which both provided that:

  86. [56] While Ms Campos in her defence originally sought to draw a distinction between director’s remuneration and director’s salary, she appears to have abandoned this argument as of her closing submissions. Rather, the dispute on the issue of the propriety of her salaries now turns largely on the Directors’ Agreement signed in 2014.

  87. [57] In this connection, a distinction must be made between her drawing of salaries before the signing of the Directors’ Agreement, between 2007 and 2013, and her drawings of salaries after, from 2014 onwards. This is because of Ms Campos’ position that the former salaries, and any dispute potentially arising in connection therewith, were settled by virtue of Clause 2(C) of the Directors’ Agreement, the relevant portions of which read as follows:

  88. [58] It is trite law that a settlement agreement for the “full and final settlement” settlement of claims that a party has or may have connotes an intention to settle all existing disputes and to be free from having to go to court to resolve their issues (Quek Kwee Kee Victoria (in her personal capacity and as executor of Quek Kiat Siong, deceased) and another v Quek Khuay Cheah [2014] 4 SLR 1 at [7] and [25]). A settlement agreement discharges all claims that have been advanced and any future claims that may be advanced in connection with whatever state of affairs brought parties into dispute (Ashlock William Grover v SetClear Pte Ltd and others [2012] 2 SLR 625 at [6] and [22], and Ter Yin Wei v Lim Leet Fang [2012] 3 SLR 172 at [16]–[18]).

  89. [59] As alluded to above at [12], Mr Karma did not seriously dispute that the Directors’ Agreement is legally binding on the parties. His signatures are found on the Directors’ Agreement, and he does not challenge their authenticity. The only argument he raised (somewhat belatedly in his reply submissions), is that the Directors’ Agreement was not binding upon him because Ms Campos had not signed it in her personal capacity. However, although Ms Campos did not sign the Directors’ Agreement in the space provided for her to do so in her personal capacity, she signed three times on behalf of MCCS, MCAS, and HCCS in her capacity as a director in each. More importantly, by relying on the Directors’ Agreement, both parties appear to accept it has legal effect. Ms Campos relies on it, inter alia, to argue that Mr Karma is precluded from complaining of any alleged impropriety in respect of her drawings of salaries prior to the signing of the Directors’ Agreement. Mr Karma appears to attempt to rely on it in connection with the allegedly outstanding debt which Ms Campos seeks to recover from him in her counterclaim for breach of the Waiver Agreement. As such, I find that Clause 2(C) of the Directors’ Agreement precludes parties from taking any issue with any conduct predating its signing in 2014, including the drawing of salaries by Ms Campos.

  90. [60] I then turn to consider the salaries Ms Campos drew after the signing of the Directors’ Agreement. Ms Campos’ case is that she was permitted under Clause 2(A) of that agreement to do so, and that having been agreed to by Mr Karma, her doing so cannot be considered commercially unfair, not in accordance with his legitimate expectations, or oppressive. Clause 2(A) provides as follows:

  91. [61] The difficulty arises from three handwritten mark-ups made by Mr Karma against Clause 2(A)(iii) of the Directors’ Agreement. First, he struck off the word “managing” from the phrase “managing director of MCCS/MCAS”. Second, following on from the end of Clause 2(A)(iii), he added on a line reading “& subject to the satisfaction of the terms of the employment agreement for [Ms Campos] signed separately by [Ms Campos] and [Mr Karma]”. Third, in the empty space to the left of Clause 2(A)(iii), he added in the phrase “Agreed subject to refinement and also finalization of Employment contracts of [Ms Campos] and [Mr Karma]”. In sum, Mr Karma’s case is that the effect of these handwritten amendments was to modify Clause 2(A)(iii) in such a way that Ms Campos' continued entitlement to draw her salary of S$30,000 was made contingent upon the finalisation of an employment contract which she was to execute with MCCS and MCAS.

  92. [62] The question is whether Mr Karma’s attempted modifications are of any legal effect, and if so, what that effect is. Ms Campos argues that they were not legally binding upon her, as they were made only after she signed the main contract and she did not countersign Mr Karma’s mark-ups. She also argues that, in any event, the proper interpretation of the clause read with Mr Karma’s amendments is that Ms Campos would be entitled to continue drawing a total salary of $30,000 until otherwise agreed in writing and an employment agreement for her was signed separately with herself and Mr Karma. On the other hand, Mr Karma claims that the proper interpretation of the amendments is that there was no outright agreement as to Ms Campos’ proposed salary, and that “he had to be satisfied with the terms to be set out” in the employment contract which would be signed by both parties. He also rejects Ms Campos’ argument that the handwritten amendments to Clause 2(A) were not legally binding.

  93. [63] In my view, given that it is accepted that the Directors’ Agreement was entered into, the burden falls upon Mr Karma to prove that the Directors’ Agreement was validly modified, and that properly interpreted, the modifications have the effect of suspending Ms Campos’ right to draw a salary under Clause 2(A)(iii) until separate employments for each of them were finalised. I find that he has not discharged this burden.

  94. [64] First, I note that next to the handwritten amendments to Clause 2(A)(iii), Mr Karma has appended his signature. He also signed against another set of handwritten amendments made to Clause 2D(i). However, Ms Campos has not done so. I find this to be rather peculiar. Mr Karma clearly demonstrated that he had the presence of mind to sign next to each set of amendments. If Ms Campos had genuinely agreed to them, then one would think it likely that he would also have made some attempt to procure her signature next to each set of amendments as well. On its own, this is something that makes it more likely that Ms Campos’ version of events is true, ie, that both of them first signed the original version of the Directors’ Agreement, and that Mr Karma then unilaterally made the amendments and then countersigned against them.

  95. [65] Second, it is not obvious that Mr Karma was entirely clear as to what his own handwritten amendments meant. In his closing submissions, he claims that the effect was inter alia that he “had to be satisfied with the terms to be set out in a formal Employment Contract [emphasis added]”. In his reply submissions, he again argues that his agreement to Ms Campos salary of S$30,000 was subject to … “he being satisfied with the terms of the Employment Contract for [Ms Campos] to be signed by both of them [emphasis added]”. However, to the extent that he claims that the proper interpretation of the amended Clause 2(A)(iii) entails a discrete requirement of him being “satisfied” as to the terms of the employment agreement, this is not the proper objective interpretation of the clause. The amended portion reads “… & subject to the satisfaction of the terms of the employment agreement [emphasis added]. On a plain reading of the amended term, it is not Mr Karma who must be satisfied as to the contents of the employment agreement. To my mind, the haphazard nature of the handwritten amendments and the untidy, and somewhat ambiguous end result, would further suggest that Mr Karma had been unable to obtain Ms Campos’ agreement in respect of the exact wording, and thus had to make these unilateral modifications to the Directors’ Agreement subsequently.

  96. [66] However, even if the amendments were validly incorporated, the amendment to the left of Clause 2(A)(iii) reads “[a]greed subject to refinement and also finalization of employment contracts for [Ms Campos] and [Mr Karma] [emphasis added]”. As Ms Campos argues, this would seem to suggest that there was an agreement that Ms Campos would be entitled to draw a salary of S$30,000 per month, but that this would be open to revision by separate employment contracts in the future. Mr Karma’s interpretation, as summarised above at [61], would also have been more obviously correct if Clause 2(A)(iii) had instead been modified without the word “[a]greed [emphasis added]” in relation to the amendment to the left of Clause 2A(iii). Turning to the handwritten amendment at the end of Clause 2A(iii), it would also have helped Mr Karma’s case if he had at least struck out “until otherwise agreed upon in writing” from the line “[t]his amount shall continue to be paid to [Ms Campos] until otherwise agreed upon in writing [emphasis added]”, before his adding “& subject to the satisfaction of the terms of the employment agreement for [Ms Campos] signed separately by [Ms Campos] and [Mr Karma]”. This would make it somewhat clearer that entitlement to payment of S$30,000 is suspended until further agreement. I am mindful that Mr Karma is not legally trained. However, on a plain reading of these handwritten amendments, I do not find that they support Mr Karma’s case.

  97. [67] I turn to address certain portions of an email dated 28 February 2019, which Mr Karma relies on as evidence that there had been no agreement on the matter of directors’ salaries for either one of them. These portions read as follows:

  98. [68] Mr Karma argues that if parties had truly understood the Directors’ Agreement to mean that Ms Campos would be entitled to draw a $30,000 monthly salary, she would have “[presented] the agreement to [Mr Karma] to shut him up”. On his case, the fact that she did not suggests that she herself did not believe that she was entitled to do so under the Directors’ Agreement.

  99. [69] I do not think much support for Mr Karma’s case can be gleaned from Ms Campos’ response, which comprises fourteen one-line points. Most of these pertain to the fact that she was at the material time busy and overstretched, and did not have the time to deal with his allegations. Her substantive responses to his allegations revolve around the fact that she had been responsible for the vast majority of the companies’ work, and that her salaries had nonetheless remained constant since 2007. These have consistently been her main points of contention with Mr Karma, and it is unsurprising that they comprise the bulk of a rather terse reply. In this light, it is my view that little can be inferred from what she did not say. I therefore find on balance of probabilities that the amendments were not incorporated into the agreement so as to qualify, suspend, or hold in abeyance Ms Campos’ right to draw a salary under Clause 2(A)(iii).

  100. [70] However, even if the amendments were validly incorporated and had the meaning that Mr Karma claims, I am of the view that it does not necessarily follow that Ms Campos’ continued drawing of salaries rises to the level of oppression. As noted above at [54], assessing the commercial unfairness of a course of conduct entails an objective consideration of the parties’ relationship, bearing in mind that it is a commercial relationship (Ho Yew Kong at [81]; Leong Chee Kin at [47]). Even infringements of the company’s constitution or articles of association, or even the Companies Act, may not necessarily be commercially unfair, unless something more can be shown (Leong Chee Kin at [48]; Lim Kok Wah at [100]; Marten, Joseph Matthew and another v AIQ Pte Ltd (in liquidation) and others [2023] SGHC 361 at [158]).

  101. [71] In this case, it must be remembered that the companies were effectively vehicles for Ms Campos’ personal professional practice (see above at [53]). It is worth highlighting that from 2007, after the incorporation of MCCS, Ms Campos drew a salary of S$23,000 per month. As explained by Ms Campos, this was based on the salary offered to her by the buyer of ELTICI. Her monthly salary was increased to S$30,000 for both companies, upon the incorporation of MCAS in 2008. There was no increase to her salary thereafter. I accept Ms Campos’ evidence of the history of her drawings. More importantly, despite some disagreement over the exact extent of each party’s contributions, it does not appear to be seriously disputed that Ms Campos was the one responsible for the vast majority of the companies’ billings. Against this backdrop, even if her drawing of salaries was inconsistent with the Directors’ Agreement, a monthly salary of S$30,000 would have been far from unreasonable, or commercially unfair to Mr Karma. Even if there was a breach by Ms Campos, it is not one which rises to the level of oppression, so as to justify the court’s intervention under s 216 of the Companies Act. In this regard, I also note that during her period of disqualification from 9 March 2017 to 1 February 2021, Ms Campos drew a reduced monthly salary from the companies. Thereafter, during the Covid-19 period, she drew a reduced monthly salary of $21,160. Accordingly, on the whole, I do not find that Ms Campos’ drawing of salaries constituted a form of oppression.

  102. Ms Campos’ alleged diversion of business and revenues from MCCS and MCAS

  103. [72] I next consider Ms Campos’ alleged diversion of business and revenues from MCCS and MCAS to HCCS. Mr Karma alleges that Ms Campos used HCCS to engage clients for the same services provided by MCCS and MCAS. In doing so, she effectively claimed referral fees not only from new work from the existing clients of MCCS and MCAS, but also any subsequent work from them. In this connection, he produces letters sent by HCCS to various third parties, which he claims show that HCCS billed the clients for accounting services which MCAS also provided.

  104. [73] Moreover, while Ms Campos attempts to justify this with reference to Clause 2(D) of the Directors’ Agreement, Mr Karma argues that on a plain reading of this clause, this only allowed Ms Campos or Mr Karma to claim a financial reward of referral fee from MCCS and MCAS if they “brought in New Clients” or “if they got the Existing Clients of MCCS and MCAS to give the companies New Matters”. It could not be interpreted in such a manner as to allow Ms Campos to “divert the entire business (and with it the revenues) of MCCS and MCAS to HCCS”, as this would be inconsistent with the purpose of Clause 2(D) which was to “incentivize the directors to bring in more business and revenues to MCCS and MCAS”.

  105. [74] On the other hand, Ms Campos’ case in this regard again rests on the Directors’ Agreement. As regards any alleged acts of diversion taking place before the signing of the Directors’ Agreement on 23 April 2014, she argues that Mr Karma is precluded from taking issue with them by virtue of Clause 2(C) of the Directors’ Agreement. As noted above at [58]–[59] in the context of her drawing of salaries, this provides for full and final settlement of all potential causes of action arising between January 2007 and December 2013.

  106. [75] Regarding alleged acts of diversion after the signing of the Directors’ Agreement, she makes the following points. First, she argues that Clause 2(D) of the Directors’ Agreement allowed her to put 50% of the billings of any new work carried out by MCCS, into HCCS. Specifically, she relies on Clause 2(D)(i) of the Directors’ Agreement, which provides as follows:

  107. Percentage of Billings to be apportioned to the Personal Company of the Representative Director from MCCS and/or MCAS

  108. Percentage of Billings to remain within MCCS and/or MCAS respectively

  109. Percentage of Billings to be apportioned to the other director

  110. Any New Matter of Existing Clients within MCCS and/or MCAS belonging to [Mr Karma]

  111. 50%

  112. 45%

  113. 5%

  114. Any New Matter of Existing Clients within MCCS and/or MCAS belonging to [Ms Campos]

  115. 50%

  116. 45%

  117. 5%

  118. Any New Matter for New Clients sourced by [Mr Karma]

  119. 50%

  120. 50%

  121. 0%

  122. Any New Matter for New Clients sourced by [Ms Campos]

  123. 50%

  124. 50%

  125. 0%

  126. [76] In this connection, Ms Campos claims that she would give effect to this arrangement by having HCCS directly invoice the clients of MCCS for any new work, and then subsequently credit 50% of the invoiced amount to MCCS. The phrase “new matter of existing client” meant that Clause 2(D) allowed her to put 50% of billings for any new work done for existing clients into HCCS, even if the work done for the clients was the same as had been done previously. She highlights that, on his own admission, Mr Karma appears to have done the same since 2017, and that there is no evidence that he ever took issue with this method of giving effect to Clause 2(D)(i).

  127. [77] Ms Campos further argues that Clause 2(E)(i) of the Directors’ Agreement allowed her to carry out nominee services, advisory services, and preparation of documents and agreements through HCCS, and to keep 100% of the billings earned from such work in HCCS. She also notes that HCCS does not provide accounting services, highlighting that none of the invoices disclosed show any accounting services. As such, there is no evidence that HCCS offered accounting services or invoiced clients of MCAS for accounting services that MCAS had carried out.

  128. [78] Preliminarily, I note that belatedly, Mr Karma also attempts to claim that the Directors’ Agreement was not binding upon him because Ms Campos had not signed it in her personal capacity. However, as noted above at [59], Mr Karma has himself attempted to rely on aspects of that agreement. Moreover, specifically in connection with the diversion issue, it would appear that Mr Karma received payments through FEL under Clause 2(D), albeit between 2017 to 2020.

  129. [79] I now briefly address the alleged acts of diversion taking place before the signing of the Directors’ Agreement. In short, as was the case in respect of Ms Campos’ drawing of salaries, I find that parties are precluded from taking issue with any alleged diversion of business prior to that time, for the reasons mentioned above at [58]–[59].

  130. [80] I therefore turn to consider the alleged acts of diversion taking place after the signing of the Directors’ Agreement. Here, the question is essentially whether Clause 2(D) allowed Ms Campos to give effect to the arrangement in the manner she did, rather than by using MCCS and MCAS to bill the clients first and only then giving a portion of those billings to HCCS, and whether it was commercially unfair or oppressive for her to have done so.

  131. [82] However, I do not think that the phrases “apportioned to…from” or “remain within” necessarily mean Clause 2(D) required that, as a matter of procedure, billings had to be done by either MCCS or MCAS first, before then transferring the allocated portion to HCCS or FEL. These phrases are broadly consistent with an understanding of Clause 2(D) as providing that, going forward, all future billings would be shared between MCCS, MCAS, HCCS, and FEL in the proportions set out in Clause 2(D)(i).

  132. [83] In preferring this interpretation of Clause 2(D), I observe that the essence of the dispute between the parties, both before and after the signing of the Directors’ Agreement, appears to have related simply to their respective financial entitlements and drawings from MCCS and MCAS. For example, the bulk of Mr Karma’s complaints in his email to Ms Campos dated 25 January 2013 pertain to revenue sharing, Ms Campos taking of salaries, and sharing of earnings. In the email he sent to her on 28 February 2019 set out above at [67], he complains of Ms Campos’ booking and drawing of salaries, his own salary claims, and monies owed to him by MCCS and MCAS. Ms Campos’ response to him on 28 February 2019 likewise pertains to his financial demands, directors’ fees, and salaries. In another email dated 23 March 2019, Ms Campos accused him of bringing in “miserable” billings less than 10% of the firm’s total, drawing and demanding far more than those billings, and expecting her to share earnings with him. Conversely, there appears to have been no mention or complaint of negative impact on share value. While it is true that Ms Campos’ method of billing clients with HCCS might objectively have impacted the cash flow of MCCS and MCAS, this does not appear to have been the main point of dispute between parties at the time when they entered into the Directors’ Agreement. Indeed, nowhere in their earlier correspondence does Mr Karma appear to have made complaints about MCCS and MCAS’ loss of clients and goodwill, or anything to do with the value of his shares, with his focus being predominantly on his financial entitlements whether in the form of dividends or salaries.

  133. [84] In this light, I accept Ms Campos’ evidence that the intention of the arrangement set out in Clause 2(D) was simply to “split the revenue between the parties based on the parties’ actual revenue generation”. This is not inconsistent with her admission that the intention behind this arrangement was to incentivise directors to bring in more clients, as apportioning revenue based on actual revenue generation would naturally create a stronger incentive to bring in more clients of their own. This being the case, Clause 2(D) ought not to be interpreted as containing any procedural requirement to first bill clients using MCCS or MCAS and only thereafter transferring a portion to HCCS or FEL, but as simply laying out final proportions, which could be achieved in any manner chosen by the parties.

  134. [86] Accordingly, having found that the purpose of the arrangement was primarily to resolve their disagreements over revenue allocation, and also in light of the fact that Mr Karma himself began billing for work previously done as well, Ms Campos’ billing of new and existing clients for new matters, including matters of a type previously done for existing clients, was permitted under Clause 2(D) of the Directors’ Agreement. It therefore cannot be said to be commercially unfair or oppressive towards Mr Karma.

  135. The rights issues

  136. [87] The last act on Ms Campos’ part which Mr Karma alleges to have been oppressive is her calling for the rights issues in MCCS and MCAS mentioned above at [20].

  137. [88] On this issue, Mr Karma claims that each rights issue was a “mala fide exercise to dilute his shares”, meant to force him to either foolishly subscribe to the rights shares or have his shareholdings severely diluted. He argues that the rights issue was not justified as MCCS and MCAS were not genuinely in need of cash. The only reason that they appeared to be was because the budgets upon which Ms Campos relied to justify the rights issues included her improper drawing of salaries, and also because of her diversion of business from MCCS and MCAS to HCCS. Moreover, the proposed values of the rights shares were entirely arbitrary, and Mr Karma had not been given the opportunity to participate in the decision-making. Finally, there was no real urgency for the rights issues, or any other good reason why Ms Campos, Mr Allix, and Mr Lukshumayeh refused to give Mr Karma enough time and information to properly consider them.

  138. [89] Naturally, Ms Campos’ case was that the rights issues were bona fide attempts to address a genuine and legitimate cash shortage faced by MCCS and MCAS, and which were necessary to keep the businesses operational. She acknowledges that this shortage arose in part due to the revenue sharing arrangement under Clause 2(D). However, she also attributes this to a slowdown in business and corresponding earnings due to COVID-19. She also highlights that MCCS and MCAS were only able to remain going concerns because she not only did not take her full salary entitlement, but extended loans to both companies. She claims that she did not want to “continually be put in a position where she had to lend the companies monies”, given that “there was no realistic chance the companies would be able to pay if she recalled her loans”. This being the case, she, Mr Allix, and Mr Lukshumayeh all genuinely believed that the companies needed to find another way of raising funds.

  139. [90] In response to Mr Karma’s allegations that he was given insufficient notice of the rights issues, she points out that he was notified of the MCCS rights issue on 1 October 2021, with the rights issue itself being held on 20 October 2021 as noted above at [20]. He also attended a directors’ meeting held on Zoom on 5 October 2021; he logged on for 10 minutes to make a “bare objection” to the budget before logging off. He again attended the EGM on 20 October 2021 to object to the budget and to ask for an extension of time until 10 November 2021. In fact, he had until 22 October 2021 to provide the funds needed.

  140. [93] Further, I have also found that her alleged “diversion” of business to HCCS was permitted under the Directors’ Agreement, and any effect of this on MCCS and MCAS cannot be said to be oppressive. In any event, as noted above at [85], Mr Karma himself was also billing clients for repeat matters as of 2021. Additionally, as regards the direct billing of clients by HCCS as opposed to first billing them with MCCS or MCAS and thereafter transferring the apportioned share to HCCS, while this might have made a difference to MCCS’ and MCAS’ revenues, where it comes to the companies’ overall financial positions, it is difficult to see why there should be a difference.

  141. [94] Additionally, I note that at trial, Mr Karma attempted to admit two tables which he claimed contained information extracted from the documentary evidence in the agreed bundles of documents, and which allegedly showed that but for Ms Campos’ salaries, MCCS and MCAS would not be in a cash crunch situation. Ms Campos argues that these tables should not be admitted. The tables were not simply summaries of primary evidence, but were compiled in exercise of the judgment or opinion on the part of their maker. They should therefore have been provided in affidavit evidence so that her counsel could have had the opportunity to respond on them and cross-examine Mr Karma’s witnesses, rather than a mere five minutes before the start of the eighth day of trial.

  142. [95] In my view, I am in agreement with Ms Campos that the tables are not reliable enough to be referred to and ought to be excluded. The contentious albeit brief correspondence on the tables is full of attempts to justify or dispute the inclusion or exclusion of various items, and demonstrates precisely why they ought to have been disclosed to Ms Campos’ counsel ahead of the trial, so as to allow them time to examine and prepare to cross-examine Mr Karma and his witnesses on it. I further observe that the last-minute manner in which they were adduced is consistent with Mr Karma’s unsatisfactory conduct in respect of his discovery obligations. He ought not to be allowed to benefit from such conduct.

  143. [96] However, even if they are admissible, I do not think they can show that the rights issues were so clearly without commercial justification that they must necessarily be said to have been issued in bad faith, or with an ulterior motive of diluting Mr Karma’s shareholding. As Ms Campos’ counsel points out in their letter of 14 August 2023, even if her salaries are excluded from MCCS and MCAS’ bank withdrawals, the average monthly balance cash in 2021 for MCCS would be S$2,699.90, and that of MCAS would be negative S$1,874.66. The former is not a large sum of money. I also bear in mind the outstanding loans which Ms Campos had extended to MCCS and MCAS. In view of her ongoing dispute with Mr Karma, I find it quite reasonable that she would be reluctant to keep extending such loans and essentially putting her money into MCCS and MCAS without any real prospect of getting it back.

  144. [97] Additionally, while Mr Karma has sought to portray MCCS and MCAS as not having been severely impacted by the COVID-19 pandemic, this is somewhat undercut by his admission that they had “trimmed down on staff”, that they were on “4 days’ work week”, and had to rely on grants from the government. Indeed, after Mr Karma succeeded in obtaining an injunction to block the rights issue on 29 October 2021, Ms Campos extended a further loan of $22,000 to MCCS and MCAS. In my view, this provides further support for Ms Campos’ claim that MCCS and MCAS were in need of funds, which she was reluctant to provide but nonetheless felt compelled to owing to Mr Karma’s injunction. With all of the above in mind, even if Ms Campos salary had not been included in the computation, it seems plausible that Ms Campos, Mr Allix, and Mr Lukshumayeh would have considered it wise, if not absolutely necessary to raise additional funds by way of rights issues of approximately $250,000 for MCCS and $150,000 for MCAS.

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