Long Say Ting Daniel v Merukh Nunik Elizabeth: Director's Relief under Companies Act
In Long Say Ting Daniel v Merukh Nunik Elizabeth, the Singapore High Court addressed an application by Daniel Long Say Ting, the sole director of Merukh Singapore Properties Pte Ltd, for prospective relief under s 391(2) of the Companies Act. The defendant, Merukh Nunik Elizabeth, representing the estate of the company's sole shareholder, opposed the application. The case arose from three property sales conducted by the plaintiff. The court granted the application regarding the plaintiff's potential liability to the Company but denied relief against actions brought by the defendant. The court held that s 391 of the Act is intended to operate within the context of the company’s relationship with its directors, officers and those employed as auditors and experts, and hence does not apply where proceedings are brought by persons other than the company.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application granted in respect of the plaintiff’s potential liability to the Company.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on director's application for relief under s 391(2) of the Companies Act regarding property sales.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Long Say Ting Daniel | Plaintiff | Individual | Application granted in part | Partial | Carolyn Tan, Au Thye Chuen |
| Merukh Nunik Elizabeth (personal representative of the estate of Merukh Jusuf, deceased) | Defendant | Individual | Application denied in part | Lost | Teh Ee Von |
| Motor-Way Credit Pte Ltd | Intervener | Corporation | Neutral | Neutral | Sharma, James Selvaraj |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lee Seiu Kin | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Carolyn Tan | Tan & Au LLP |
| Au Thye Chuen | Tan & Au LLP |
| Teh Ee Von | Infinitus Law Corporation |
| Sharma | Tan Lee & Partners |
| James Selvaraj | Tan Lee & Partners |
4. Facts
- The plaintiff was the sole director of Merukh Singapore Properties Pte Ltd.
- The defendant is the daughter of the company’s sole shareholder, Dr Jusuf Merukh, deceased.
- The plaintiff conducted three property sales on behalf of the Company.
- Options to purchase the Three Properties were granted in quick succession.
- The Estate issued two legal notices directing the plaintiff to cancel the options or deposit the sale proceeds.
- The plaintiff argued he granted the options to avert potential recovery action by the mortgagee bank.
- The deceased had provided all the moneys for the purchase of the Three Properties.
- The plaintiff was a chauffeur and had known the deceased since July 2005.
- The Merukh family had decided to sell all the Three Properties and cars in Singapore.
- The plaintiff received an offer for the Bayshore property which exceeded the original purchase price.
5. Formal Citations
- Long Say Ting Daniel v Merukh Nunik Elizabeth (personal representative of the estate of Merukh Jusuf, deceased) (Motor-Way Credit Pte Ltd, intervener), Originating Summons No 895 of 2011, [2012] SGHC 250
6. Timeline
| Date | Event |
|---|---|
| Merukh Singapore Properties Pte Ltd incorporated | |
| Dr Jusuf Merukh passed away | |
| Option to purchase Bayshore property granted | |
| Option to purchase Kitchener property granted | |
| Option to purchase Raintree property granted | |
| Estate issued legal notice directing cancellation of options | |
| Estate issued legal notice directing deposit of sale proceeds | |
| Defendant's email request for meeting | |
| Plaintiff applied for prospective relief under s 391(2) of the Act | |
| Judgment issued |
7. Legal Issues
- Director's Relief
- Outcome: The court granted the application regarding the plaintiff's potential liability to the Company but denied relief against actions brought by the defendant.
- Category: Substantive
- Sub-Issues:
- Honest oversight
- Inadvertence
- Error of judgment
- Scope of Section 391 of the Companies Act
- Outcome: The court held that s 391 of the Act is intended to operate within the context of the company’s relationship with its directors, officers and those employed as auditors and experts, and hence does not apply where proceedings are brought by persons other than the company.
- Category: Jurisdictional
- Sub-Issues:
- Application to third-party claims
- Application to criminal liability
- Application to breaches of other statutory duties
- Related Cases:
- Customs and Excise Commissioners v Hedon Alpha Ltd and others [1981] 2 All ER 697
- Daniels and Others (formerly practising as Deloitte Haskins & Sells) v Anderson and Others [1995] 37 NSWLR 438
- Edwards and others v Attorney General and Another (2004) 60 NSWCA 272
- Breach of Section 160 of the Companies Act
- Outcome: The court found that the plaintiff’s breach of s 160 of the Act was not so egregious as to make a grant of relief a disservice to the administration of company law.
- Category: Substantive
- Sub-Issues:
- Failure to seek prior approval of the company in general meeting
- Disposal of substantially the whole of the company’s undertaking or property
8. Remedies Sought
- Prospective Relief under s 391(2) of the Companies Act
9. Cause of Actions
- Negligence
- Breach of Duty
- Breach of Trust
10. Practice Areas
- Commercial Litigation
11. Industries
- No industries specified
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Foss v Harbottle | N/A | Yes | [1864] 67 ER 189 | N/A | Cited regarding the rule in Foss v Harbottle, stating that a claim for breach of s 160 of the Companies Act is rightfully the Company’s to make. |
| Customs and Excise Commissioners v Hedon Alpha Ltd and others | English Court of Appeal | Yes | [1981] 2 All ER 697 | England | Cited as a leading case on the scope of the section in relation to third party claims, holding that the court’s power to grant relief does not extend to claims brought by persons other than the company. |
| Deputy Commissioner of Taxation v Dick | N/A | Yes | [2007] NSWCA 190 | New South Wales | Cited regarding whether the provision affords relief against liabilities originating from breaches of other statutory duties other than those found in the Companies Act. |
| ASIC v Vines | Supreme Court of New South Wales | Yes | [2005] NSWSC 1349 | New South Wales | Cited regarding whether the provision affords relief against liabilities originating from breaches of other statutory duties other than those found in the Companies Act. |
| Daniels and Others (formerly practising as Deloitte Haskins & Sells) v Anderson and Others | Supreme Court of New South Wales | Yes | [1995] 37 NSWLR 438 | New South Wales | Cited as an example of the Australian position, extending relief under s 1318 of the Corporations Act to relieve a director of claims in indemnity and contributory negligence, brought against him by third party auditors. |
| Edwards and others v Attorney General and Another | N/A | Yes | (2004) 60 NSWCA 272 | New South Wales | Cited as an example of the Australian position, where the Supreme Court of New South Wales granted relief under s 1318 of the Corporations Act to certain directors of an asbestos-trading company. |
| Re IDEAGLOBAL.COM Ltd | High Court | Yes | [2000] 1 SLR(R) 804 | Singapore | Cited for the proposition that the provision does not afford relief against criminal liability. |
| Re Duomatic Ltd | N/A | Yes | [1969] 2 Ch 365 | N/A | Cited for the proposition that the plaintiff bore the burden of proving three elements to be eligible for relief under s 391 of the Act: honesty, reasonableness, and fairness. |
| Re Ena Jainab, Deceased, Juliah Ammal and Anor | N/A | Yes | [1930] SSLR 26 | N/A | Cited for the proposition that the plaintiff bore the burden of proving three elements to be eligible for relief under s 391 of the Act: honesty, reasonableness, and fairness. |
| Vita Health Laboratories Pte Ltd and Others v Pang Seng Meng | N/A | Yes | [2004] 4 SLR(R) 162 | N/A | Cited as a local case concerning s 391 of the Act where the conduct of the impugned company officers had been manifestly deceitful. |
| Hytech Builders Pte Ltd v Tang Eng Leong and another | N/A | Yes | [1995] 1 SLR(R) 576 | N/A | Cited as a local case concerning s 391 of the Act where the conduct of the impugned company officers had been manifestly deceitful. |
| W&P Piling Pte Ltd (in liquidation) v Chew Yin What and others | N/A | Yes | [2007] 4 SLR(R) 218 | N/A | Cited as a local case concerning s 391 of the Act where the conduct of the impugned company officers had been manifestly deceitful. |
| Commonwealth Bank of Australia v Friedrich and ors | N/A | Yes | [1990-1991] 5 ACSR 115 | N/A | Cited for equating acting “honestly” with the absence of moral turpitude. |
| Australian Securities and Investments Commission v Macdonald and Others (No 12) | N/A | Yes | [2009] NSWSC 714 | New South Wales | Cited for equating acting “honestly” with the absence of moral turpitude. |
| Australian Securities and Investments Commission v Healey (No 2) | N/A | Yes | [2011] FCA 1003 | N/A | Cited for stating that a person acts honestly if the person’s conduct is without moral turpitude. |
| Australian Securities and Investments Commission v Edwards (No 3) | N/A | Yes | [2006] NSWSC 376 | New South Wales | Cited for stating that a person’s subjective intent constitutes evidence from which a conclusion may be drawn about whether he acted honestly. |
| Lawson v Mitchell | Supreme Court of Victoria | Yes | [1975] VR 579 | Victoria | Cited for the proposition that the words “negligence or breach of trust” were primarily directed at ameliorating the harshness of a company law regime which still drew close analogies with trust principles. |
| Re Claridge's Patent Asphalte Co Ltd | N/A | Yes | [1921] 1 Ch 543 | N/A | Cited as an example of the kind of liability where company directors were until recently exposed to liability if they caused their company to act ultra vires or contrary to restrictions in the articles of association. |
| Bell and another v Lever Brothers Limited and others | N/A | Yes | [1932] 1 AC 161 | N/A | Cited as an example of a case involving proceedings brought by a company against a director, to be tried by jury. |
| Chng Joo Tuan Neoh and Khoo Ee Lay v Khoo Tek Keong, Khoo Sian, and Cheah Inn Keong | N/A | Yes | [1932] SSLR 100 | N/A | Cited for the proposition that in determining whether or not the director has acted reasonably, one consideration is whether the director acted in the affairs of the company as he would have done in relation to his own affairs. |
| Re Stuart, Smith v Stuart | N/A | Yes | [1897] 2 Ch 583 | N/A | Cited for the proposition that in determining whether or not the director has acted reasonably, one consideration is whether the director acted in the affairs of the company as he would have done in relation to his own affairs. |
| Re Haji Ali bin Haji Mohamed Noor, Deceased | N/A | Yes | [1933] SSLR 253 | N/A | Cited for the proposition that the experience and qualifications of the person in question are relevant in determining whether or not the director has acted reasonably. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) s 391(2) | Singapore |
| Companies Act s 160 | Singapore |
| Employment Act (Cap 91, 2009 Rev Ed) | Singapore |
| Central Provident Fund Act (Cap 36, 2001Rev Ed) | Singapore |
| Central Provident Fund Act (Cap 36, 2001Rev Ed) s 7(1) | Singapore |
| Trustees Act (Cap 337, 2005 Rev Ed) s 60 | Singapore |
| Companies Act 1967 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Prospective Relief
- Section 391 Companies Act
- Director's Duties
- Beneficial Owner
- Bare Legal Owner
- Options to Purchase
- Property Sales
- Estate
- Honest and Reasonable
- Breach of Duty
- Negligence
- Breach of Trust
15.2 Keywords
- Companies Act
- Director
- Relief
- Property
- Sale
- Singapore
16. Subjects
- Company Law
- Director's Duties
- Relief from Liability
17. Areas of Law
- Company Law
- Civil Procedure