Mona Computer Systems v Singaravelu: Account of Profits for Breach of Fiduciary Duty

The Court of Appeal heard an appeal by Mona Computer Systems (S) Pte Ltd against the High Court's decision regarding the account of profits owed by Singaravelu Murugan for breach of fiduciary duty. Murugan, while employed by Mona Computer Systems, incorporated MN Computer Systems (S) Pte Ltd, a competing company, and diverted contracts to it. The Court of Appeal allowed the appeal, ordering Murugan to account for the commissions he received from MN Computer Systems but permitted him to retain the director’s fees from MN. The court awarded costs of $20,000 to Mona Computer Systems.

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

Appeal regarding an account of profits for breach of fiduciary duty. The court allowed the appeal, ordering the Respondent to account for commissions.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Singaravelu MuruganRespondentIndividualPartial LossPartial
Mona Computer Systems (S) Pte LtdAppellantCorporationAppeal Allowed in PartPartial

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Chao Hick TinJustice of the Court of AppealYes
Quentin LohJudgeNo

4. Counsels

Counsel NameOrganization
Cheong Aik ChyeA C Cheong & Co.
Cheong Yuen HeeA C Cheong & Co.
R KalamohanKalamohan & Co
Shanthi Elavarasi d/o R KalamohanKalamohan & Co

4. Facts

  1. Respondent was employed by Appellant as Computer Systems Manager.
  2. Respondent incorporated MN Computer Systems (S) Pte Ltd while still employed by Appellant.
  3. MN Computer Systems (S) Pte Ltd conducted the same business as Appellant.
  4. Respondent secured contracts for MN while still under Appellant’s employment.
  5. Appellant sued Respondent for breach of fiduciary duties.
  6. Respondent admitted to incorporating MN and diverting contracts.
  7. Respondent claimed Rathi had consented to his actions.

5. Formal Citations

  1. Mona Computer Systems (S) Pte Ltd v Singaravelu Murugan, Civil Appeal No 142 of 2012, [2013] SGCA 63
  2. Mona Computer Systems (S) Pte Ltd v Singaravelu Murugan, , [2012] SGHC 230

6. Timeline

DateEvent
Respondent employed by Appellant as Computer Systems Manager
Dharani's death
Respondent incorporated MN Computer Systems (S) Pte Ltd
Respondent resigned from Appellant
Appellant commenced Suit No 265 of 2009 against the Respondent and CM
Damages assessed by the Assistant Registrar
High Court judge heard Registrar’s appeals
Court of Appeal delivered grounds of decision

7. Legal Issues

  1. Breach of Fiduciary Duty
    • Outcome: The court found the Respondent liable for breach of fiduciary duty in diverting business opportunities from the Appellant to MN.
    • Category: Substantive
    • Sub-Issues:
      • Diversion of business opportunities
      • Conflict of interest
    • Related Cases:
      • [1896] AC 44
      • [1967] 2 AC 134
      • [1972] 1 WLR 443
  2. Account of Profits
    • Outcome: The court ordered the Respondent to account for the commissions he received from MN, but allowed him to retain the director's fees.
    • Category: Remedial
    • Sub-Issues:
      • Calculation of profits
      • Deductions from profits
      • Equitable allowance
    • Related Cases:
      • (1995) 182 CLR 544
      • [2005] EWCA Civ 959

8. Remedies Sought

  1. Account of Profits

9. Cause of Actions

  • Breach of Fiduciary Duty

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Information Technology

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Bray v FordHouse of LordsYes[1896] AC 44England and WalesCited for the principle that a fiduciary is not entitled to make a profit and cannot put himself in a position where his interest and duty conflict.
Regal (Hastings) Ltd v GulliverHouse of LordsYes[1967] 2 AC 134England and WalesCited for the rule that a fiduciary who makes a profit by use of a fiduciary position is liable to account for that profit, regardless of fraud or bona fides.
Industrial Development Consultants Ltd v CooleyHigh Court of JusticeYes[1972] 1 WLR 443England and WalesCited to support the principle that a director is liable to account for profits derived from a contract obtained for himself while still a director of the company.
Boardman v PhippsHigh Court of JusticeNo[1964] 1 WLR 993England and WalesCited by the respondent to argue that a liberal allowance should be granted to him for his expenditure as well as work and skill invested by him in generating MN’s profits. The court distinguished this case.
Boardman v PhippsCourt of AppealNo[1965] Ch 992England and WalesCited in relation to the argument that a liberal allowance should be granted to him for his expenditure as well as work and skill invested by him in generating MN’s profits. The court distinguished this case.
Boardman v PhippsHouse of LordsNo[1967] 2 AC 46England and WalesCited in relation to the argument that a liberal allowance should be granted to him for his expenditure as well as work and skill invested by him in generating MN’s profits. The court distinguished this case.
Paul A Davies (Aust) Pty Ltd (in liq) v Davies & Anor (No 2)Court of Appeal of New South WalesNo[1983] 8 ACLR 1AustraliaCited by the respondent to argue that a liberal allowance should be granted to him for his expenditure as well as work and skill invested by him in generating MN’s profits. The court distinguished this case.
Grimaldi v Chameleon Mining NL and Another (No 2)Federal Court of AustraliaNo[2012] FCAFC 6AustraliaCited for the principle that allowances are not granted as of right and a court will exercise its powers to do what is “practically just”.
Warman International Ltd v DwyerHigh Court of AustraliaYes(1995) 182 CLR 544AustraliaCited for the principle that the concern was to “ascertain precisely what it was that was acquired in consequence of the fiduciary's breach of duty”.
Murad v Al-SarajEngland and Wales Court of Appeal (Civil Division)No[2005] EWCA Civ 959England and WalesCited for Lady Justice Arden’s interpretation of Warman.
Bristol & West Building Society v MothewCourt of AppealYes[1998] Ch 1England and WalesCited for the duties of a fiduciary.
Guinness v SaundersHouse of LordsYes[1990] 2 AC 663England and WalesCited for the principle that the allowance for skill and work is granted in limited circumstances because such an award is an exception to the overriding no-conflict and no-profit rules.
Jumabhoy Rafiq v Scotts Investments (Singapore) Pte LtdCourt of Appeal of SingaporeYes[2005] 1 SLR(R) 45SingaporeCited for taking a restrictive approach to granting an equitable allowance to fiduciaries as recognition for work done.
O’Sullivan v Management Agency & Music Co LtdQueen's Bench DivisionNo[1985] 1 QB 428England and WalesCited as an example of a decision which has taken a more liberal view than Guinness, granting an allowance in less-than-exceptional circumstances and even where the fiduciary has acted dishonestly.
Estate Realties Ltd v WignallHigh Court of New ZealandNo[1992] 2 NZLR 615New ZealandCited as an example of a decision which has taken a more liberal view than Guinness, granting an allowance in less-than-exceptional circumstances and even where the fiduciary has acted dishonestly.
Mona Computer Systems (S) Pte Ltd v Chandran Meenakumari and anotherHigh Court of SingaporeYes[2010] SGHC 275SingaporeCited for the finding that Rathi did not give her informed consent to the Respondent submitting tenders for the diverted contracts under the name of MN, and that the Respondent went ahead to place himself in a position of conflict.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Fiduciary duty
  • Account of profits
  • Commissions
  • Director's fees
  • Diverted contracts
  • Conflict of interest

15.2 Keywords

  • Fiduciary duty
  • account of profits
  • commissions
  • Singapore
  • commercial litigation

17. Areas of Law

Area NameRelevance Score
Fiduciary Duties95
Account of Profits80
Business Litigation60
Contract Law30

16. Subjects

  • Fiduciary Duty
  • Account of Profits
  • Commercial Litigation