Dynasty Line Ltd v Sukamto Sia: Breach of Fiduciary Duty & Director Liability

In Dynasty Line Ltd (in liquidation) v Sukamto Sia and Lee Howe Yong, the High Court of Singapore addressed the assessment of damages following a Court of Appeal decision that Sia and Lee, directors of Dynasty Line Ltd, breached their fiduciary duties. The liquidators of Dynasty sued Sia and Lee for losses incurred from pledging shares without due consideration. The court found Sia and Lee jointly and severally liable for losses arising from the Commerzbank Pledge, and Sia solely liable for losses from other pledges. The court determined the valuation date for the shares and awarded pre-liquidation interest. The court also addressed the issue of causation and the applicability of the rule in Re VGM Holdings.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment against Sia and Lee for breach of fiduciary duty, assessing damages for the Commerzbank Pledge and other pledges.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Liquidators of Dynasty Line Ltd sued Sia & Lee for breach of fiduciary duties. The court assessed damages for pledging shares, addressing causation and liability.

1.7 Decision Date

5 November 2015

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Sukamto Sia	Defendant	Individual	Judgment against Defendant	Lost
Lee Howe Yong	Defendant	Individual	Judgment against Defendant	Lost	Alvin Yeo of WongPartnership LLP Joy Tan of WongPartnership LLP Adeline Ong of WongPartnership LLP Yin Juon Qiang of WongPartnership LLP
Dynasty Line Ltd (in liquidation)	Plaintiff	Corporation	Partial Judgment	Partial	Siraj Omar of Premier Law LLC Andrea Gan of Rodyk & Davidson LLP Philip Jeyaretnam of Rodyk & Davidson LLP Alexander Lee of Premier Law LLC

3. Judges

Judge Name	Title	Delivered Judgment
Lai Siu Chiu	Senior Judge	Yes

4. Counsels

Counsel Name	Organization
Alvin Yeo	WongPartnership LLP
Joy Tan	WongPartnership LLP
Adeline Ong	WongPartnership LLP
Yin Juon Qiang	WongPartnership LLP
Siraj Omar	Premier Law LLC
Andrea Gan	Rodyk & Davidson LLP
Philip Jeyaretnam	Rodyk & Davidson LLP
Alexander Lee	Premier Law LLC

4. Facts

Dynasty Line Ltd was the personal investment vehicle of Sukamto Sia.
Sia and Lee Howe Yong were the only two directors of Dynasty.
Dynasty purchased shares in China Development Corporation Limited (CDC) from several vendors.
Dynasty only paid a fraction of the total purchase price for the CDC shares.
Dynasty pledged the CDC shares to various banks as security for loans to Sia and his associates.
Sia and his associates defaulted on the loans, and the banks sold the CDC shares.
The Vendors sued Dynasty in Hong Kong for the unpaid balance of the purchase price and succeeded.

5. Formal Citations

Dynasty Line Ltd (in liquidation) v Sukamto Sia and another, Suit No 256 of 2010, [2015] SGHC 286

6. Timeline

Date	Event
1996-02-05	Sale and purchase agreements for CDC shares signed
1996-04-23	Commerzbank Pledge entered into
1996-05-02	Intended completion date for share transfer
1996-11-06	Société Générale pledge entered into
1997-08-29	KG Investments Asia Limited pledge entered into
1997-11-03	Creditanstalt Bankverein pledge entered into
1999-06-10	Vendors commenced proceedings in Hong Kong against Dynasty
2001-04-06	Hong Kong High Court allowed the Vendors’ claim and dismissed Dynasty’s counterclaim
2007-06-27	Low commenced liquidation proceedings against Dynasty in Hong Kong
2009-10-29	Low applied to the BVI courts for Dynasty to be wound up
2009-12-22	BVI courts ordered Dynasty to be wound up
2010-01-01	William Tacon and Lauren were appointed as joint liquidators of Dynasty
2010-04-14	Liquidators commenced Suit No 256 of 2010 against Sia and Lee
2015-11-06	Decision date of the current judgment

7. Legal Issues

Breach of Fiduciary Duty
- Outcome: The court found Sia and Lee liable for breaching their fiduciary duties by pledging away the Shares without due consideration for the interests of Dynasty.
- Category: Substantive
- Sub-Issues:
  - Disregarding the interests of creditors
  - Failure to make necessary inquiries as a director
- Related Cases:
  - [2014] 3 SLR 277
Causation
- Outcome: The court found a sufficient causal link between Lee’s breach and Dynasty’s loss, rejecting the argument that Sia would have signed the Commerzbank Pledge anyway.
- Category: Substantive
- Sub-Issues:
  - Application of the 'but for' test
  - Intervening causes
- Related Cases:
  - [1996] AC 421
Joint and Several Liability
- Outcome: The court held Sia and Lee jointly and severally liable for losses arising from the Commerzbank Pledge, rejecting Lee’s argument for apportionment of liability.
- Category: Substantive
- Sub-Issues:
  - Participation in breach
  - Apportionment of liability
- Related Cases:
  - (1884) 27 ChD 322
  - [1993] B.C.C. 120
Valuation of Shares
- Outcome: The court determined that the shares should be valued as of April 2001, the date of the HK Judgment, and used the VWAP of HK$0.1092 to calculate the value of the Shares.
- Category: Substantive
- Sub-Issues:
  - Date of valuation
  - Market price
Pre-liquidation Interest
- Outcome: The court held that pre-liquidation interest was admissible, applied the BVI court rate of 5% per annum, and discounted the period for which interest was claimable to four years due to the delay in enforcing the HK Judgment.
- Category: Substantive
- Sub-Issues:
  - Admissibility of claim
  - Applicable interest rate
  - Delay in enforcement
Post-liquidation Interest
- Outcome: The court held that post-liquidation interest would only be claimable if Dynasty had a surplus of assets after paying all claims in its liquidation.
- Category: Substantive
- Sub-Issues:
  - Surplus of assets
  - Contingent claim
Equitable Allowance
- Outcome: The court declined to apply the rule in Re VGM Holdings in favor of Lee, citing uncertainties regarding Sia’s payment towards the purchase price and issues of practicality.
- Category: Substantive
- Sub-Issues:
  - Rule in Re VGM Holdings
  - Practicality and uncertainties
- Related Cases:
  - [1942] Ch 235

8. Remedies Sought

Equitable Compensation
Damages

9. Cause of Actions

Breach of Fiduciary Duty

10. Practice Areas

Commercial Litigation
Insolvency Litigation

11. Industries

Finance
Investment

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Dynasty Line Ltd (in liquidation) v Sia Sukamto	High Court	Yes	[2013] 4 SLR 253	Singapore	Cited as the High Court judgment that was appealed.
Dynasty Line Ltd (in liquidation) v Sukamto Sia and another	Court of Appeal	Yes	[2014] 3 SLR 277	Singapore	Cited as the CA Judgment that established the liability of Sia and Lee for breaching their fiduciary duties.
Focus Energy Ltd v Aye Aye Soe	High Court	Yes	[2009] 1 SLR(R) 1086	Singapore	Cited for the principle that the relevant law to be applied in determining whether directors are liable for breaches of fiduciary duties is the law of the place of incorporation.
Pacific Recreation Pte Ltd v S Y Technology Inc	High Court	Yes	[2008] 2 SLR(R) 491	Singapore	Cited for the principle that a party who wishes to prove foreign law can do so either by adducing the opinion of an expert in foreign law or by adducing raw sources of foreign law as evidence.
EFT Holdings, Inc v Marinteknik Shipbuilders (S) Pte Ltd	High Court	Yes	[2014] 1 SLR 860	Singapore	Cited for the principle that where foreign law is not proved, the content of the foreign law will be presumed to be the same as the law of the forum.
Townley v Sherborne	N/A	Yes	(1634) J Bridg 35	N/A	Cited for the principle that fiduciaries are liable only for their own breaches of trust.
Re Carriage Co-operative Supply Association	N/A	Yes	(1884) 27 ChD 322	N/A	Cited for the proposition that liability will be joint and several where the breach took place in concert or where they jointly participated in the act leading to the breach of fiduciary duty.
Bishopsgate Investment Management Ltd v Maxwell (No 2)	English Court of Appeal	Yes	[1993] B.C.C. 120	England and Wales	Cited as an analogous case where directors who both signed transfers misappropriating assets held on trust were jointly and severally liable for their breaches.
Goh Nellie v Goh Lian Teck and others	High Court	Yes	[2007] 1 SLR(R) 453	Singapore	Cited as the leading authority on the doctrine of issue estoppel.
Lee Tat Development Pte Ltd v MCST Plan No 301	High Court	Yes	[2005] 3 SLR(R) 157	Singapore	Cited for the four requirements for issue estoppel.
The Royal Bank of Scotland NV and others v TT International Limited and others	Court of Appeal	Yes	[2015] SGCA 50	Singapore	Cited for endorsing the requirements for issue estoppel.
Target Holdings Ltd v Redferns	N/A	Yes	[1996] AC 421	N/A	Cited for the principle that the defendant’s wrongful act must cause the damage complained of and that the plaintiff is to be put in the same position as he would have been in if he had not sustained the wrong.
Brickenden v London Loan & Savings Company of Canada	Privy Council	Yes	[1934] 3 DLR 465	Canada	Cited as authority for the proposition that a claim for equitable compensation arising from a breach of fiduciary duty is not premised on proving a causal connection between the breach and the loss, but ultimately not applied.
Quality Assurance Management Asia Pte Ltd v Zhang Qing and others	High Court	Yes	[2013] 3 SLR 631	Singapore	Cited for the principle that a claim for equitable compensation arising from a breach of fiduciary duty is not premised on proving a causal connection between the breach and the loss.
AIB Group (UK) plc v Mark Redler & Co Solicitors	UK Supreme Court	Yes	[2014] 3 WLR 1367	United Kingdom	Cited for the principle that if a trustee makes an unauthorised disbursement of trust funds, it is no defence to a claim by the beneficiary for the trustee to say that if he had not misapplied the funds they would have been stolen by a stranger.
Agricultural Land Management Ltd v Jackson (No 2)	N/A	Yes	[2014] WASC 102	N/A	Cited in AIB Group (UK) plc v Mark Redler & Co Solicitors.
Magnus v Queensland National Bank	N/A	Yes	(1888) 37 ChD 466	N/A	Cited in AIB Group (UK) plc v Mark Redler & Co Solicitors.
D’Oz International Pte Ltd v PSB Corp Pte Ltd and another appeal	Court of Appeal	Yes	[2010] 3 SLR 267	Singapore	Cited for the principle that the presumption of similarity of laws is a rule of convenience which the courts may resort to unless it is unjust and inconvenient to do so.
Robertson Quay Investment Ltd v Steen Consultants Pte Ltd	High Court	Yes	[2008] 2 SLR(R) 623	Singapore	Cited for the principle that a creditor who delays enforcing its debt against a company should not be able to claim the full amount of interest accruing during the period of delay.
Re VGM Holdings, Ltd	N/A	Yes	[1942] Ch 235	N/A	Cited for the proposition that a trustee beneficiary held liable to pay a sum to his trust fund, and those jointly and severally liable with him, should not be ordered to pay that part of it which would come to him as a beneficiary on the distribution, but ultimately not applied.
Selangor United Rubber Estates Ltd v Cradock (a bankrupt) and Others (No 4)	N/A	Yes	[1969] 3 All ER 965	N/A	Cited for qualifying the rule in Re VGM Holdings to apply only after costs and expenses relating to the litigation which fall on the trust fund have been deducted from the trust fund.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
West Indies Associated States Supreme Court (Virgin Islands) Act (Cap 80)	British Virgin Islands
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
Civil Law Act (Cap 43, 1999 Rev Ed)	Singapore
BVI Insolvency Act	British Virgin Islands
Judgements Act 1907 (Cap 35)	British Virgin Islands

15. Key Terms and Keywords

15.1 Key Terms

Fiduciary Duty
Commerzbank Pledge
CDC Shares
Liquidation
Joint and Several Liability
Causation
Equitable Compensation
Pre-liquidation Interest
Post-liquidation Interest
VWAP
BVI Insolvency Act
HK Judgment

15.2 Keywords

fiduciary duty
directors
liquidation
causation
joint liability
shares
pledge

17. Areas of Law

Area Name	Relevance Score
Fiduciary Duties	95
Company Law	70
Winding Up	60
Damages	50
Civil Procedure	40
Contract Law	30
Bankruptcy	30

16. Subjects

Breach of Fiduciary Duty
Company Law
Insolvency
Directors' Duties