Ting Sing Ning v Ting Chek Swee: Derivative Action, Breach of Fiduciary Duty, and Fraud on Minority Exception

In Ting Sing Ning (alias Malcolm Ding) v Ting Chek Swee (alias Ting Chik Sui) and Others, the Court of Appeal of Singapore heard an appeal regarding a derivative action brought by Ting Sing Ning on behalf of Havilland Ltd against three of its directors, Ting Chek Swee, Sia Cheng Yong, and Binti. The appellant claimed breach of fiduciary duties and fraud. The Court of Appeal allowed the appeal, finding that the appellant had locus standi to pursue the derivative action under the 'fraud on the minority' exception to the rule in Foss v Harbottle.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Court of Appeal allowed a derivative action against directors for breach of fiduciary duty, finding a 'fraud on the minority' exception applied.

1.7 Decision Date

8 October 2007

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Ting Sing Ning (alias Malcolm Ding)	Appellant	Individual	Appeal Allowed	Won	See Chern Yang of Tan Kok Quan Partnership Marina Chin of Tan Kok Quan Partnership Paul Seah of Tan Kok Quan Partnership Kannan Ramesh of Tan Kok Quan Partnership
Ting Chek Swee (alias Ting Chik Sui)	Respondent	Individual	Appeal Dismissed	Lost	Francis Xavier of Rajah & Tann Melvin Lum of Rajah & Tann Dawn Wee of Rajah & Tann
Sia Cheng Yong	Respondent	Individual	Appeal Dismissed	Lost	Andy Chiok of Michael Khoo & Partners Cleophas Pfang of Michael Khoo & Partners
Havilland Ltd	Other	Corporation	Neutral	Neutral

3. Judges

Judge Name	Title	Delivered Judgment
Chan Sek Keong	Chief Justice	Yes
Andrew Phang Boon Leong	Justice of the Court of Appeal	No
Judith Prakash	Judge	No

4. Counsels

Counsel Name	Organization
See Chern Yang	Tan Kok Quan Partnership
Marina Chin	Tan Kok Quan Partnership
Paul Seah	Tan Kok Quan Partnership
Kannan Ramesh	Tan Kok Quan Partnership
Francis Xavier	Rajah & Tann
Melvin Lum	Rajah & Tann
Dawn Wee	Rajah & Tann
Andy Chiok	Michael Khoo & Partners
Cleophas Pfang	Michael Khoo & Partners

4. Facts

The appellant, a minority shareholder in Havilland, commenced a derivative action against three directors.
The directors were alleged to have committed fraud and breached their fiduciary duties to Havilland.
The directors controlled 42% of the shares in Havilland.
Ting's sister held 10% of the shares in Havilland.
The independent shareholders voted against the continuation of the action.
The appellant did not attend the extraordinary general meeting.
Payments were made by Havilland to related companies, Merit and Henley.

5. Formal Citations

Ting Sing Ning (alias Malcolm Ding) v Ting Chek Swee (alias Ting Chik Sui) and Others, CA 125/2006, [2007] SGCA 49

6. Timeline

Date	Event
2000-03-01	Action commenced by the appellant
2000-07-11	Appellant wrote to Havilland's board of directors
2000-07-31	Board wrote to shareholders regarding the action
2000-08-07	Shareholders conveyed their decision to the appellant
2001-02-10	Sia and Binti added as defendants
2005-01-01	Ting and Sia filed applications for trial of preliminary issue
2005-12-30	Court gave directions for filing affidavits
2006-01-01	Appellant filed expert affidavit
2006-02-07	Shareholders requisitioned an extraordinary general meeting
2006-03-13	Extraordinary general meeting held
2006-04-07	Ting filed affidavit detailing events at EGM
2006-04-10	Sia filed affidavit detailing events at EGM
2006-06-02	Other shareholders filed affidavits in support of Ting and Sia
2006-06-09	Other shareholders filed affidavits in support of Ting and Sia
2006-07-26	Preliminary issue heard by the Judge
2006-07-27	Preliminary issue heard by the Judge
2007-10-09	Judgment reserved

7. Legal Issues

Breach of Fiduciary Duty
- Outcome: The court found a prima facie case of breach of fiduciary duty.
- Category: Substantive
- Sub-Issues:
  - Conflict of interest
  - Misuse of company funds
  - Secret profits
Locus Standi in Derivative Action
- Outcome: The court held that the appellant had locus standi to bring the derivative action under the 'fraud on the minority' exception.
- Category: Procedural
- Sub-Issues:
  - Fraud on the minority exception
  - Control of the company by wrongdoers
- Related Cases:
  - [1843] 2 Hare 461

8. Remedies Sought

Declaration of breach of fiduciary duties
Damages
Account of secret profits
Payment of amount due
Recovery of funds utilized by related company

9. Cause of Actions

Breach of Fiduciary Duty
Fraud

10. Practice Areas

Commercial Litigation
Corporate Law

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Foss v Harbottle	N/A	Yes	[1843] 2 Hare 461	N/A	Cited for the rule that the proper plaintiff in an action for a wrong done to a corporation is the corporation itself, and the 'fraud on the minority' exception to that rule.
Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)	English Court of Appeal	Yes	[1982] Ch 204	England and Wales	Cited for the principle in Foss v Harbottle and the exceptions thereto, particularly the 'fraud on the minority' exception.
Estmanco (Kilner House) Ltd v Greater London Council	N/A	Yes	[1982] 1 WLR 2	N/A	Cited for the definition of 'fraud' in the context of 'fraud on a minority' in company law.
Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd	Malaysian Court of Appeal	Yes	[1995] 3 MLJ 417	Malaysia	Cited for the interpretation of 'fraud on the minority' and the abuse of powers by those wielding majority control.
Smith v Croft (No 2)	N/A	Yes	[1988] 1 Ch 114	N/A	Cited for the test of whether shareholders are independent in voting on a derivative action.
Pang Yong Hock v PKS Contract Services Pte Ltd	High Court	Yes	[2003] SGHC 195	Singapore	Cited by the second respondent for the proposition that winding up the company is an alternative remedy, but distinguished by the court.
Pang Yong Hock v PKS Contract Services Pte Ltd	Court of Appeal	Yes	[2004] 3 SLR 1	Singapore	Cited by the second respondent for the proposition that winding up the company is an alternative remedy, but distinguished by the court.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Hong Kong Companies Ordinance (Cap 32)	Hong Kong
Companies Act (Cap 50, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Derivative action
Foss v Harbottle
Fraud on the minority
Locus standi
Breach of fiduciary duty
Control of company
Extraordinary general meeting
Related company
Shareholder
Director

15.2 Keywords

derivative action
breach of fiduciary duty
fraud on minority
company law
Singapore
Havilland Ltd

17. Areas of Law

Area Name	Relevance Score
Fiduciary Duties	95
Derivative action	90
Company Law	85
Minority Shareholders Rights	75
Corporate Litigation	70
Dispute Resolution	60

16. Subjects

Company Law
Corporate Governance
Civil Litigation