Teo Seng Hoe v IDV Concepts: Derivative Action for Breach of Director's Duties
Teo Seng Hoe, a director and shareholder of IDV Concepts Pte Ltd, applied for leave to commence a derivative action against Chew Choon Kong, Jen Cassia Lee Mei Mei, and IDV Concepts Asia Pte Ltd, alleging breaches of director's duties and related misconduct. The High Court of Singapore, presided over by Justice Belinda Ang Saw Ean, granted Teo leave to commence the action, finding that the claims were legitimate and arguable, and that Teo was acting in good faith. The court considered the allegations of diversion of business opportunity, misuse of funds, and unauthorized use of IDV's premises and confidential information.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Leave granted to the plaintiff, Teo Seng Hoe, to commence a derivative action in the name and on behalf of IDV Concepts Pte Ltd against the second to fourth defendants.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Derivative action by Teo Seng Hoe against IDV Concepts and its directors for breach of duties. The court granted Teo leave to commence the action.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Teo Seng Hoe (alias Tew Seng Hoe) | Plaintiff | Individual | Leave to commence derivative action granted | Won | Lim Ker Sheon, Cai Enhuai Amos |
| IDV Concepts Pte Ltd | Defendant | Corporation | Derivative action allowed to proceed on behalf of IDV Concepts Pte Ltd | Neutral | |
| Chew Choon Kong | Defendant | Individual | Derivative action allowed to proceed against Chew Choon Kong | Lost | Ang Chee Kwang Andrew, Tan JinJia, Andrea |
| Jen Cassia Lee Mei Mei | Defendant | Individual | Derivative action allowed to proceed against Jen Cassia Lee Mei Mei | Lost | Ang Chee Kwang Andrew, Tan JinJia, Andrea |
| IDV Concepts Asia Pte Ltd | Defendant | Corporation | Derivative action allowed to proceed against IDV Concepts Asia Pte Ltd | Lost | Ang Chee Kwang Andrew, Tan JinJia, Andrea |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lim Ker Sheon | Characterist LLC |
| Cai Enhuai Amos | Characterist LLC |
| Ang Chee Kwang Andrew | PK Wong & Associates LLC |
| Tan JinJia, Andrea | PK Wong & Associates LLC |
4. Facts
- Teo and Chew are directors and equal shareholders of IDV Concepts Pte Ltd.
- IDV Concepts Asia Pte Ltd was incorporated on 1 April 2013 with Jen as its sole shareholder and director.
- Teo alleged that Chew and Jen plotted to take over the identity, business, assets and goodwill of IDV to IDV Asia.
- Chew and Jen allegedly instructed IDV’s office staff to change the signature block of their e-mails from that of IDV to that of IDV Asia.
- Contracts and business opportunities initially negotiated by IDV were allegedly passed to IDV Asia as the contracting party.
- Chew and Jen allegedly copied IDV’s website in its entirety for IDV Asia’s website.
- IDV Asia allegedly took over IDV’s office premises for the exclusive use of IDV Asia.
5. Formal Citations
- Teo Seng Hoe (alias Tew Seng Hoe) v IDV Concepts Pte Ltd and others, Originating Summons No 471 of 2013, [2013] SGHC 269
6. Timeline
| Date | Event |
|---|---|
| Teo and Chew decided to go into a business partnership as IDV Concepts. | |
| IDV Concepts Pte Ltd was incorporated. | |
| Relationship between Teo and Chew became strained. | |
| Teo and Chew met with Don Ho & Associates regarding liquidation. | |
| Teo and Chew met with Baker Tilly TFW LLP regarding liquidation. | |
| Chew prepared a directors’ resolution proposing the winding up of IDV. | |
| Characterist LLC wrote to Chew seeking clarification of the terms of engagement of Baker Tilly. | |
| Teo allegedly signed and returned the Directors’ Resolution to Chew. | |
| Alleged date of letter appointing Baker Tilly as IDV’s liquidators. | |
| Teo allegedly went to IDV’s offices to sign a letter appointing Baker Tilly as IDV’s liquidators. | |
| Teo received an e-mail from one of IDV’s employees with the signature block of IDV Concepts Asia Pte Ltd. | |
| IDV Asia’s bank accounts became active. | |
| Chew sent an e-mail explaining to potential clients of IDV Asia that IDV Asia would be in charge of all new projects. | |
| Teo’s solicitors sent a letter to Chew and Jen to cease and desist in their wrongful acts. | |
| Teo sent IDV and Chew the 14-day notice required under s 216A(3) of the Act. | |
| Chew filed an application to wind up IDV on just and equitable grounds. | |
| Teo filed the application for leave to commence a derivative action. | |
| Judgment issued. |
7. Legal Issues
- Breach of Director's Duties
- Outcome: The court found that there was a prima facie case of breach of duty by a director and a senior employee.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Diversion of business opportunities
- Misuse of company assets
- Breach of fiduciary duty
- Passing Off
- Outcome: The court found that a legitimate or arguable case of passing off was made out.
- Category: Substantive
- Sub-Issues:
- Goodwill
- Misrepresentation
- Damage
- Copyright Infringement
- Outcome: The court found that there was at least an arguable case of copyright infringement against IDV Asia.
- Category: Substantive
- Sub-Issues:
- Use of slogans without permission
- Good Faith in Derivative Action
- Outcome: The court found that Teo had shown that he brought the present proceedings in good faith.
- Category: Procedural
- Statutory Notice for Derivative Action
- Outcome: The court concluded that the May Notice was not invalidated by reason of the Omitted Allegations.
- Category: Procedural
8. Remedies Sought
- Leave to commence a derivative action
- Monetary damages
- Compensation for breach of duty
9. Cause of Actions
- Breach of Director's Duties
- Passing Off
- Copyright Infringement
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Interior Design
- Renovation
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Fong Wai Lyn Carolyn v Airtrust (Singapore) Pte Ltd | High Court | Yes | [2011] 3 SLR 980 | Singapore | Cited to explain the purpose of the notice requirement under s 216A(3)(a) of the Companies Act. |
| Re Bellman et al and Western Approaches Ltd | British Columbia Court of Appeal | Yes | (1981) 130 DLR (3d) 193 | Canada | Cited for the principle that failure to specify each and every cause of action in a notice does not invalidate the notice as a whole in the context of derivative actions. |
| Urs Meisterhans v GIP Pte Ltd | High Court | Yes | [2011] 1 SLR 552 | Singapore | Cited for the standard of proof required at the leave stage of a derivative action. |
| Ang Thiam Swee v Low Hian Chor | High Court | Yes | [2013] 2 SLR 340 | Singapore | Cited for the standard of proof required at the leave stage of a derivative action and the onus on the applicant to prove good faith. |
| ABB Holdings Pte Ltd and others v Sher Hock Guan Charles | High Court | Yes | [2009] 4 SLR(R) 111 | Singapore | Cited for the principle that a senior employee owes obligations of fidelity, loyalty and good faith to the employer. |
| State of Victoria v Pacific Technologies (Australia) Pty Ltd | Federal Court of Australia | Yes | [2009] FCA 737 | Australia | Cited for the argument that copyright was denied in advertising slogans. |
| Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd | Federal Court of Australia | Yes | [2010] FCA 984 | Australia | Cited as a subsequent case from the same jurisdiction cited academic opinion apparently in favour of a softer approach regarding copyright in slogans. |
| Pang Yong Hock v PKS Contracts Services Pte Ltd | Court of Appeal | Yes | [2004] 3 SLR(R) 1 | Singapore | Cited for the principle that the court must weigh all the circumstances and decide whether the claim ought to be pursued and that the existence of an alternative and adequate remedy had to be considered when deciding whether the proposed action was in the interests of the company. |
| Ting Sing Ning (alias Malcolm Ding) v Ting Chek Swee (alias Ting Chik Sui) and others | Court of Appeal | Yes | [2008] 1 SLR(R) 197 | Singapore | Cited to clarify that Pang Yong Hock did not establish the principle that when the remedy of a winding up was available, the court should not entertain any application to pursue a s 216A action. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Derivative action
- Director's duties
- Good faith
- Companies Act
- Passing off
- Copyright infringement
- Liquidation
- Goodwill
- Business opportunity
- Fiduciary duty
15.2 Keywords
- derivative action
- director's duties
- companies act
- singapore
- IDV Concepts
- breach of duty
16. Subjects
- Company Law
- Corporate Governance
- Intellectual Property
17. Areas of Law
- Company Law
- Civil Procedure
- Director's Duties
- Derivative Action