DM Divers Technics v Tee Chin Hock: Director's Fiduciary Duty & Limitation Act

In DM Divers Technics Pte Ltd v Tee Chin Hock, the High Court of Singapore ruled in favor of the plaintiff, DM Divers Technics Pte Ltd, against the defendant, Tee Chin Hock, for breach of fiduciary duties as a director. The plaintiff alleged that the defendant misappropriated company funds. The court found the defendant liable for several instances of misappropriation and misuse of company funds, rejecting the defendant's defense of a time bar under the Limitation Act and dismissing his counterclaim. The court ordered an account of all moneys due and owing by the defendant, including profits made at the plaintiff's expense.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

DM Divers Technics sues director Tee Chin Hock for breach of fiduciary duty. Court finds Tee liable for misappropriating funds; counterclaim dismissed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
DM Divers Technics Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Tee Chin HockDefendantIndividualCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Lai Siu ChiuJudgeYes

4. Counsels

Counsel NameOrganization
Suresh DivyanathanDrew and Napier LLC
Leonard LooLeonard Loo and Co
Edwin LooLeonard Loo and Co

4. Facts

  1. Tee Chin Hock was the managing director of DM Divers Technics Pte Ltd from its incorporation until 2000.
  2. Tan Siam Weng, the other director, trusted Tee Chin Hock and left the running of the company entirely to him.
  3. Tee Chin Hock put his wife, Tan Geok Keng, on the payroll of DM Divers Technics Pte Ltd as a clerk.
  4. Tan Siam Weng discovered that Tee Chin Hock had been misappropriating the company's moneys and assets since its incorporation.
  5. Tee Chin Hock signed three letters admitting responsibility for the accounts and agreeing to return moneys owing to the company.
  6. Tee Chin Hock made a part payment of $15,000 towards the agreed sum of $45,000 stated in the fourth admission letter.
  7. Tee Chin Hock withdrew $38,000 from the plaintiff's bank account in January 2001 and could not account for it.

5. Formal Citations

  1. DM Divers Technics Pte Ltd v Tee Chin Hock, Suit 459/2003, [2004] SGHC 191

6. Timeline

DateEvent
Tan Siam Weng started Dundee Marine & Industrial Services Pte Ltd as a sole-proprietorship.
Tee Chin Hock became the sole proprietor of Technics Underwater Services.
Tan Geok Keng took over Tee Chin Hock's sole-proprietorship of Technics Underwater Services.
Tee Chin Hock approached Tan Siam Weng to set up a company.
DM Divers Technics Pte Ltd was incorporated.
Tan Geok Keng was put on the payroll of DM Divers Technics Pte Ltd as a clerk.
DM Divers Technics Pte Ltd purchased a Phosmarine Brush Kart machine.
Tan Siam Weng decided to close down DM Divers Technics Pte Ltd.
Tan Siam Weng discovered that TUS was still carrying on business.
Tee Chin Hock withdrew $38,000 from DM Divers Technics Pte Ltd's bank account.
Tan Siam Weng requested Tee Chin Hock to sign the accounts for DM Divers Technics Pte Ltd and directors’ report for the years 1999 and 2000.
Tee Chin Hock brought the books of accounts to Dundee Marine & Industrial Services Pte Ltd.
Tan Siam Weng and Agnes Lee examined the books and discovered misappropriations.
Tan Siam Weng confronted Tee Chin Hock about the misappropriations.
Tee Chin Hock signed three admission letters and a Declaration of Trust.
Tee Chin Hock signed the fourth admission letter.
Tee Chin Hock was supposed to sign the revised accounts but did not turn up and made a payment of $15,000.
Tan Siam Weng sent a letter to Tee Chin Hock giving notice of the annual general meeting.
Tan Siam Weng's attempt to hold an annual general meeting was thwarted.
Tan Siam Weng discovered Tee Chin Hock's change of residential address.
DM Divers Technics Pte Ltd received summonses from the Registry of Companies and the Inland Revenue Authority of Singapore.
Tan Siam Weng issued Originating Summons No 1588 of 2002.
DM Divers Technics Pte Ltd was fined $250 by the courts.
Tan Siam Weng was granted leave to bring an action on DM Divers Technics Pte Ltd's behalf.
Assignment of debt between Tee Chin Hock and TUS.
Tee Chin Hock gave notice of the assignment to DM Divers Technics Pte Ltd.
Tan Siam Weng commenced this action.
Tee Chin Hock made a written demand on DM Divers Technics Pte Ltd for payment of the debt.
Tan Siam Weng lodged a police report.
Judgment reserved.

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found that the defendant breached his fiduciary duties by misappropriating company funds and placing himself in a position of conflict of interest.
    • Category: Substantive
    • Sub-Issues:
      • Misappropriation of company funds
      • Conflict of interest
      • Failure to act in the company's best interests
  2. Limitation
    • Outcome: The court held that the limitation period did not begin to run until the plaintiff discovered the fraud, and that the defendant's admission letters amounted to an acknowledgment of debt, stopping the time bar from running.
    • Category: Procedural
    • Sub-Issues:
      • Discoverability of fraud
      • Reasonable diligence
      • Acknowledgment of debt

8. Remedies Sought

  1. Account of Profits
  2. Monetary Damages
  3. Indemnity for fines

9. Cause of Actions

  • Breach of Fiduciary Duty
  • Misappropriation of Funds

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Marine
  • Oil Refinery

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Halsbury’s Laws of EnglandN/AYesHalsbury’s Laws of England vol 28 (4th Ed, Reissue, 1997) para 1122EnglandCited for the standard of diligence required to discover fraud, deliberate concealment, or mistake under the UK Limitation Act 1980, which is in pari materia with Singapore's Limitation Act.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Limitation Act (Cap 163, 1999 Rev Ed)Singapore
Limitation Act (Cap 163, 1999 Rev Ed) s 29(1)Singapore
Limitation Act (Cap 163, 1999 Rev Ed) s 26(2)Singapore
Companies Act (Cap 50, 1994 Rev Ed) ss 156Singapore
Companies Act (Cap 50, 1994 Rev Ed) ss 157Singapore
Penal Code (Cap 224, 1985 Rev Ed) s 405Singapore
Penal Code (Cap 224, 1985 Rev Ed) s 408Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Fiduciary Duty
  • Misappropriation
  • Limitation Act
  • Acknowledgment of Debt
  • Directors' Duties
  • Admission Letters

15.2 Keywords

  • fiduciary duty
  • director
  • misappropriation
  • limitation act
  • companies act
  • singapore

17. Areas of Law

Area NameRelevance Score
Fiduciary Duties90
Director's Duties85
Limitation80
Civil Practice75
Company Law70
Misappropriation of Funds70
Duty to Account65
Fraud and Deceit60

16. Subjects

  • Company Law
  • Civil Procedure
  • Limitation