Mona Computer Systems v Chandran Meenakumari: Breach of Fiduciary Duty and Diversion of Business Opportunities

In Mona Computer Systems (S) Pte Ltd v Chandran Meenakumari and Singaravelu Murugan, the High Court of Singapore heard a claim by Mona Computer Systems against Chandran Meenakumari (D1) for breach of fiduciary duty as a director and against Singaravelu Murugan (D2) for breaches of duty as a shadow director and/or officer by diverting business opportunities. The court, presided over by Justice Belinda Ang Saw Ean, found D2 liable for breaching his fiduciary duty by diverting business opportunities to a rival company, MN Computer Systems (S) Pte Ltd, and ordered an account of profits. The claim against D1 was dismissed. D2's counterclaim for unpaid commissions was partially allowed up to March 2006. The judgment was delivered on 2010-09-16.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff in part and Defendant in part

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Mona Computer Systems sued Chandran Meenakumari and Singaravelu Murugan for breach of fiduciary duty and diverting business opportunities. The court found Murugan liable for diverting business but dismissed the claim against Meenakumari.

1.7 Decision Date

15 September 2010

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Singaravelu Murugan	Defendant	Individual	Judgment Against	Lost	Cheong Aik Chye of A C Cheong & Co. Cheong Yuen Hee of Y H Cheong
Mona Computer Systems (S) Pte Ltd	Plaintiff	Corporation	Claim Allowed in Part	Partial	R Kalamohan of Kalamohan & Co
Chandran Meenakumari	Defendant	Individual	Claim Dismissed	Dismissed	Cheong Aik Chye of A C Cheong & Co. Cheong Yuen Hee of Y H Cheong

3. Judges

Judge Name	Title	Delivered Judgment
Belinda Ang Saw Ean	Judge	Yes

4. Counsels

Counsel Name	Organization
Cheong Aik Chye	A C Cheong & Co.
Cheong Yuen Hee	Y H Cheong
R Kalamohan	Kalamohan & Co

4. Facts

D1 and D2 formed MN Computer Systems (S) Pte Ltd, a company competing with the plaintiff.
D1 was a director of the plaintiff at the time MN Computer was incorporated.
D2 was employed by the plaintiff as Systems Manager.
D2 secured contracts for MN Computer while still employed by the plaintiff.
D2 used the plaintiff's resources to build up the business of MN Computer.
Rathi, the managing director of the plaintiff, was informed about the incorporation of MN Computer.
D1 disclosed her intention to incorporate MN Computer to her mother, a shareholder and director of the plaintiff.

5. Formal Citations

Mona Computer Systems (S) Pte Ltd v Chandran Meenakumari and another, Suit No 265 of 2009, [2010] SGHC 275

6. Timeline

Date	Event
1997-05-13	Plaintiff incorporated in Singapore
2000-09-02	D2 employed as Systems Manager
2003-10-06	D1 appointed director of plaintiff
2005-10-11	Plaintiff became ISO 9001:2001 certified company
2006-06-01	D2's remuneration revised
2006-11-10	Dharani passed away
2006-11-21	Rathi started going to the office
2007-11-22	MN Computer Systems (S) Pte Ltd formed
2009-01-01	D2 submitted a bid to the CPF Board
2009-02-20	D2 resigned as Systems Manager
2009-01-01	Suit filed in 2009
2010-09-16	Judgment reserved

7. Legal Issues

Breach of Fiduciary Duty
- Outcome: The court found D2 liable for breaching his fiduciary duty by diverting business opportunities to a rival company.
- Category: Substantive
- Sub-Issues:
  - Conflict of interest
  - Diversion of business opportunities
  - Failure to act in the company's best interest
Unauthorised Commissions
- Outcome: The court dismissed the plaintiff's claim for the return of commissions received by D2.
- Category: Substantive
Director's Duty of Disclosure
- Outcome: The court found that D1 had disclosed the incorporation of MN Computer and dismissed the claim against her.
- Category: Substantive
- Sub-Issues:
  - Conflict of interest
  - Failure to disclose conflict

8. Remedies Sought

Monetary Damages
Injunction
Account of Profits
Return of Commissions

9. Cause of Actions

Breach of Fiduciary Duty
Breach of Contract

10. Practice Areas

Commercial Litigation

11. Industries

Information Technology

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
University of Nottingham v Fishel	N/A	Yes	[2000] IRLR 471	N/A	Cited to determine whether a fiduciary relationship arises in the context of an employment relationship.
Helmet Integrated Systems Ltd v Tunnard	N/A	Yes	[2007] FSR 16	N/A	Approved the principle in University of Nottingham v Fishel for determining fiduciary relationships in employment.
Nagase Singapore Pte Ltd v Ching Kai Huat and others	N/A	Yes	[2007] 3 SLR(R) 265	Singapore	Accepted the Nottingham University case in determining fiduciary relationships.
Heap Huat Rubber Company Sdn Bhd and Others v Kong Choot Sian and Others	High Court	No	[2003] SGHC 133	Singapore	Distinguished based on the level of authority held by the defendant in that case compared to D2.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act	Singapore
Companies Act, section 156(5)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Fiduciary Duty
Shadow Director
Diversion of Business Opportunities
Conflict of Interest
Commissions
Informed Consent
Director's Duty
Companies Act

15.2 Keywords

fiduciary duty
director
company
business opportunity
commission
conflict of interest

17. Areas of Law

Area Name	Relevance Score
Fiduciary Duties	95
Company Law	80
Director's Duties	70
Contract Law	60
Commercial Disputes	50
Wrongful Competition	40
Breach of duty of fidelity	35
Inducement of Breach of Contract	30
Misrepresentation	20

16. Subjects

Company Law
Employment Law
Fiduciary Duty
Commercial Litigation