Personal Automation Mart v Tan Swe Sang: Breach of Fiduciary Duty & Negligence

In Personal Automation Mart Pte Ltd v Tan Swe Sang, the High Court of Singapore addressed claims by Personal Automation Mart against its former director, Tan Swe Sang, for breach of fiduciary duty related to the GEMS project and negligence in managing the company's affairs. The court found Tan Swe Sang liable for breach of fiduciary duty for diverting the GEMS project to Newstead Technologies and for overdrawing her salary. The court also addressed the plaintiff's claim for money paid for the defendant's car. The defendant's counterclaim for unconsumed leave and arrears of salary was partially allowed. The court ordered damages to be assessed for the breach of fiduciary duty and directed the defendant to account for overpaid salary, offsetting it against unpaid salary and leave.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for the plaintiff on breach of fiduciary duty and monetary claims; defendant's counterclaim allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

High Court case involving Personal Automation Mart's claims against former director Tan Swe Sang for breach of fiduciary duty and negligence.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Personal Automation Mart Pte LtdPlaintiffCorporationJudgment for PlaintiffPartial
Tan Swe SangDefendantIndividualCounterclaim Allowed in PartPartial

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Wong Soo ChihHo, Wong & Partners
Jason TohHo, Wong & Partners
A RajandranA Rajandran Joseph & Nayar

4. Facts

  1. Defendant was a director and shareholder of the plaintiff company.
  2. Defendant resigned from the plaintiff company and joined Newstead Technologies.
  3. Plaintiff accused the defendant of breach of fiduciary duty in relation to a notebook retailing project.
  4. Plaintiff alleged the defendant was negligent in handling the affairs of the plaintiff.
  5. Plaintiff had financial claims against the defendant involving an alleged car loan and overpayment of salary.
  6. Compaq appointed the plaintiff to act as its sole fulfilment house/service agent in relation to GEMS.
  7. Compaq ceased to deal with the plaintiff and transferred GEMS to Newstead because the defendant deliberately procured this result.

5. Formal Citations

  1. Personal Automation Mart Pte Ltd v Tan Swe Sang, Suit 777/1999, [2000] SGHC 55

6. Timeline

DateEvent
Defendant first worked with Mr. Cheng in Besta.
Plaintiff incorporated; defendant became one of the promoters and initial directors.
Plaintiff passed a resolution to approve the advancement of funds to assist the defendant in the payment of a downpayment of a car.
Defendant officially appointed managing director of the plaintiff.
Compaq submitted its tender for GEMS.
Plaintiff's employees sent for special training on GEMS.
GEL organised an official launch of the GEMS project.
Compaq placed an advertisement in The Straits Times for GEMS.
Defendant tendered her resignation to the plaintiff.
Defendant wrongfully set up Newstead.
Mr. Cheng met with Mr. Wah to clarify the issue of the GEMS appointment.
Defendant signed an application form to Singapore Telecom asking for the transfer of telephone lines to Newstead.
Defendant's last working day with the plaintiff.
Mr. Wah sent an e-mail suggesting a meeting on GEMS.
Newstead officially appointed by Compaq as its new fulfilment house for GEMS.
GEL organised another launch of the GEMS project.
Decision Date

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found that the defendant breached her fiduciary duties to the plaintiff by diverting the GEMS project to Newstead.
    • Category: Substantive
    • Sub-Issues:
      • Usurping corporate opportunity
      • Diversion of business opportunity
  2. Negligence
    • Outcome: The court found that the defendant was not negligent in relation to the KNE case or Kelvin Ng’s case.
    • Category: Substantive
    • Sub-Issues:
      • Failure to supervise
      • Failure to exercise control
  3. Constructive Dismissal
    • Outcome: The court found that whether the reduction amounted to a constructive dismissal is irrelevant.
    • Category: Substantive

8. Remedies Sought

  1. Damages
  2. Accounting of Profits

9. Cause of Actions

  • Breach of Fiduciary Duty
  • Negligence

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Technology
  • Retail

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Canadian Aero Service Ltd v O’Malley et alSupreme Court of CanadaYes[1973] 40 DLR (3d) 371CanadaCited for the principle that a director may not obtain for himself any property or business advantage that properly belongs to his company or for which it has been negotiating.
Island Export Finance Ltd v UmunnaN/AYes[1986] BCLC 460N/ACited for the submission that the propositions in O’Malley had been too widely stated and did not represent English law.
Re City Equitable Fire Insurance CoN/AYes[1924] All ER Rep 485N/ACited for the standard of care expected of a director.
AWA Ltd v DanielsN/AYes[1992] 7 ACSR 759N/ACited for a useful exposition of the position of non-executive directors.
Daniels v AndersonsCourt of AppealYes[1995] 16 ACSR 607N/ACited for affirming AWA Ltd v Daniels [1992] 7 ACSR 759.
Re Duomatic LtdN/AYes[1969] 2 Ch 365N/ACited for the principle that in determining whether or not a person has acted reasonably, the court will consider whether he has acted in the affairs of the company as he would have done in relation to his own affairs.
Chng Joo Tuan Neoh v Khoo Tek KeongN/AYes[1932] SSLR 100SingaporeCited for the principle that in determining whether or not a person has acted reasonably, the court will consider whether he has acted in the affairs of the company as he would have done in relation to his own affairs.
Re National Bank of WalesN/AYes[1895-9] All ER Rep 715N/ACited for the principle that a director acting honestly is not to be held liable for negligence because he trusts the officers of the company, regarding whom he knows no reason why they should be distrusted, not to conceal from him what they ought to report.
Kie Hock Shipping (1971) Pte LtdN/AYes[1985] 1 MLJ 411MalaysiaCited as a contrasting case where a director was found to be grossly negligent in the management of the company.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • GEMS project
  • Fulfillment house
  • Banker's guarantee
  • Corporate opportunity
  • Managing director
  • Corporate Sales Department
  • Accounts receivable

15.2 Keywords

  • fiduciary duty
  • negligence
  • director
  • company
  • GEMS
  • Newstead
  • Compaq
  • salary
  • loan

17. Areas of Law

Area NameRelevance Score
Fiduciary Duties95
Company Law70
Contract Law60
Corporate Opportunity60
Breach of Contract50
Inducement of Breach of Contract40
Fraud and Deceit40
Damages30
Misrepresentation30
Estoppel20
Constructive Dismissal20

16. Subjects

  • Company Law
  • Fiduciary Duty
  • Negligence