Agrosin Pte Ltd v Martynov Igor: Breach of Director's Duties, Understated Costs, and Unpaid Salary Dispute

Agrosin Pte Ltd sued Igor Martynov, its former director and finance director, in the High Court of Singapore on 26 June 2009, claiming losses due to Martynov's breach of contractual, common law, and statutory duties by understating costs of sales for Caprolactam and NPK businesses. Martynov denied responsibility and counterclaimed for unpaid salary. The court found Martynov liable for breach of his director's duties and granted Agrosin interlocutory judgment with damages to be assessed, while also allowing Martynov's counterclaim for unpaid salary.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Interlocutory judgment granted to the plaintiff with damages to be assessed; Defendant's counterclaim for unpaid salary allowed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Agrosin sued Igor Martynov, its former director, for losses due to understated costs. The court found Martynov liable for breach of duties and allowed his counterclaim for unpaid salary.

1.7 Decision Date

25 June 2009

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Agrosin Pte Ltd	Plaintiff	Corporation	Interlocutory judgment granted	Partial	Haridass Ajaib of Haridass Ho & Partners Subashini Narayanasamy of Haridass Ho & Partners Yogarajah Sharmini of Haridass Ho & Partners
Martynov Igor	Defendant	Individual	Counterclaim Allowed	Partial	Philip Fong of Harry Elias Partnership Shanti Jaganathan of Harry Elias Partnership Navin Lobo of Harry Elias Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Andrew Ang	Judge	Yes

4. Counsels

Counsel Name	Organization
Haridass Ajaib	Haridass Ho & Partners
Subashini Narayanasamy	Haridass Ho & Partners
Yogarajah Sharmini	Haridass Ho & Partners
Philip Fong	Harry Elias Partnership
Shanti Jaganathan	Harry Elias Partnership
Navin Lobo	Harry Elias Partnership

4. Facts

The plaintiff, Agrosin Pte Ltd, claimed losses suffered as a result of the defendant’s breach of his duties.
The defendant, Igor Martynov, was the plaintiff’s former director and finance director.
The defendant allegedly understated the costs of sales of Caprolactam and NPK.
The plaintiff claimed that the defendant gave the illusion that the Caprolactam and NPK businesses were profitable when they were not.
The defendant admitted that he owed the plaintiff contractual, fiduciary and statutory duties.
The defendant counterclaimed for unpaid salary in the aggregate sum of S$323,950.71.
The plaintiff made a decision to postpone expatriate staff salaries from December 2005.

5. Formal Citations

Agrosin Pte Ltd v Martynov Igor, Suit 111 of 2007, [2009] SGHC 148

6. Timeline

Date	Event
1993-04-01	Defendant employed as plaintiff's finance director.
1998-06-02	Defendant appointed director on plaintiff's board.
2000-01-01	Relevant period for Caprolactam business begins.
2003-01-01	Relevant period for NPK business begins.
2006-04-01	Defendant's directorship ends.
2006-01-13	Plaintiff decides to postpone expatriate staff salaries.
2007-02-09	Defendant's employment ends.
2007-02-22	Interest on damages to be assessed from this date.
2007-04-24	Plaintiff files defence to counterclaim.
2007-03-29	Interest on unpaid salary from this date.
2007-01-01	Suit filed by plaintiff.
2008-07-12	Khalimov files affidavit of evidence-in-chief.
2009-06-26	Judgment reserved.

7. Legal Issues

Breach of Director's Duties
- Outcome: The court found the defendant in breach of his duty to act bona fide in the interests of the plaintiff and his duty to exercise reasonable diligence.
- Category: Substantive
- Sub-Issues:
  - Failure to act bona fide in the interests of the company
  - Failure to exercise reasonable diligence
Causation of Losses
- Outcome: The court found that the defendant's misstatement caused the plaintiff's losses by preventing the plaintiff from taking timely action to avoid or minimize the losses.
- Category: Substantive
Quantum of Damages
- Outcome: The court determined that the proper measure of damages is the loss actually suffered by the plaintiff in continuing with the Caprolactam tolling business and in embarking on the NPK tolling.
- Category: Substantive
Entitlement to Unpaid Salary
- Outcome: The court allowed the defendant's claim for his unpaid salary.
- Category: Substantive

8. Remedies Sought

Monetary Damages
Unpaid Salary

9. Cause of Actions

Breach of Contract
Breach of Fiduciary Duty
Breach of Statutory Duty

10. Practice Areas

Commercial Litigation

11. Industries

Chemicals
Fertilizer

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Kua Kok Kim v Ernst and Young	High Court	Yes	[2000] 1 SLR 707	Singapore	Cited regarding the standard of care applicable in relation to the question whether an auditor had valued certain shares accurately.
Lim Weng Kee v PP	High Court	Yes	[2002] 4 SLR 327	Singapore	Cited to distinguish between a director’s duty to exercise reasonable diligence and the duty to act honestly.
Galoo Ltd v Bright Grahame Murray	English Court of Appeal	Yes	[1994] 1 WLR 1360	England and Wales	Cited regarding whether the negligent failure of auditors caused losses to the company.
Caparo Industries plc v Dickman	House of Lords	Yes	[1990] 2 AC 605	England and Wales	Cited regarding determining the scope of duty by reference to the kind of damage from which a defendant must take care to save the plaintiff harmless.
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd	Court of Appeal	Yes	[2005] 1 SLR 661	Singapore	Cited regarding the doctrine of loss of chance.
Vita Health Laboratories Pte Ltd v Pang Seng Meng	High Court	Yes	[2004] 4 SLR 162	Singapore	Cited for quantifying losses as the difference between actual costs incurred and the defendant’s provision of costs.
Smith New Court Securities v Citibank NA	House of Lords	Yes	[1997] AC 254	England and Wales	Cited to show how, in assessing damages for fraud, a mechanical approach was to be eschewed in favour of flexibility.
Allied Maples Group Ltd v Simmons & Simmons	N/A	Yes	[1995] 1 WLR 1602	N/A	Cited regarding the distinction between what falls within the realm of loss of a chance and what requires proof on the balance of probabilities.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed) s 157	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Caprolactam
Nitrogen Phosphate Potassium
NPK
Tolling
Provision of Costs
Actual Costs
Monthly Statements of Shipment Purchase Costs and Freight
Director's Duties
Fiduciary Duty
Companies Act

15.2 Keywords

Agrosin
Martynov
Director
Finance
Caprolactam
NPK
Breach
Duty
Salary
Singapore
Companies Act

17. Areas of Law

Area Name	Relevance Score
Director's Liability	85
Fiduciary Duties	80
Company Law	75
Fraud and Deceit	60
Contract Law	50
Breach of Statutory Duty	40
Breach of Contract	40
Accounting	30
Commercial Disputes	30
Damages	30
Civil Procedure	20

16. Subjects

Company Law
Director's Duties
Breach of Contract
Fiduciary Duty