MCH International v YG Group: Striking Out Claims for Breach of Fiduciary Duty
In MCH International Pte Ltd and others v YG Group Pte Ltd and others, the High Court of Singapore addressed an application by YG Group Pte Ltd to strike out parts of the statement of claim related to alleged breaches of fiduciary duties and conspiracy. The plaintiffs, MCH International Pte Ltd, Wong Kok Hwee, and Sing Lee Mee Yoke, claimed damages due to the defendants' actions. The court, presided over by Assistant Registrar Tan Teck Ping Karen, allowed the application to strike out, finding that the plaintiffs lacked the legal standing to bring a derivative action on behalf of YG Group Pte Ltd without prior leave from the court.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application to strike out allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court considered striking out claims for breach of fiduciary duty and conspiracy due to lack of legal standing. The application to strike out was allowed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| MCH International Pte Ltd | Plaintiff | Corporation | Claim dismissed | Lost | Chua Cheng Yew, Sun Ran |
| Wong Kok Hwee | Plaintiff | Individual | Claim dismissed | Lost | Chua Cheng Yew, Sun Ran |
| Sing Lee Mee Yoke | Plaintiff | Individual | Claim dismissed | Lost | Chua Cheng Yew, Sun Ran |
| YG Group Pte Ltd | Defendant | Corporation | Application to strike out allowed | Won | Navin Jospeh Lobo, Oon Shaun Kim San |
| YG Logistics Pte Ltd | Defendant | Corporation | Neutral | Neutral | |
| Liong Chung Yee | Defendant | Individual | Neutral | Neutral | |
| Tan Keng Beng | Defendant | Individual | Neutral | Neutral | |
| Ang Chee Siong | Defendant | Individual | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Teck Ping Karen | Assistant Registrar | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chua Cheng Yew | Wong Tan & Molly Lim LLC |
| Sun Ran | Wong Tan & Molly Lim LLC |
| Navin Jospeh Lobo | Bird & Bird ATMD LLP |
| Oon Shaun Kim San | Bird & Bird ATMD LLP |
4. Facts
- MCH and YGL formed YGG as a joint venture to acquire logistics companies in China.
- Henry, a director of MCH, was also a director of YGG.
- Simon, a director of YGL, is also a director of YGG.
- Plaintiffs claimed damages due to an alleged conspiracy and breaches of a Shareholders Agreement.
- YGL commenced actions against MCH, Henry, and YGG for breach of a Deed of Undertaking and loan repayment.
- Plaintiffs alleged Simon breached his fiduciary duties as a director of YGG.
- Plaintiffs sought declarations that Simon, Bernard, and Michael breached their fiduciary duties.
5. Formal Citations
- MCH International Pte Ltd and others v YG Group Pte Ltd and others, Suit No 107 of 2017, [2017] SGHCR 8
6. Timeline
| Date | Event |
|---|---|
| Hearing date | |
| Judgment reserved | |
| HC/S 104/2016 commenced by YGL against MCH, Henry and YGG | |
| HC/ S 337/2016 commenced by YGL against MCH, seeking immediate payment of the loan | |
| Suit No 107 of 2017 |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court considered whether the plaintiffs had the legal standing to bring an action for breach of fiduciary duty on behalf of the company.
- Category: Substantive
- Related Cases:
- (1843) 2 Hare 461
- Locus Standi
- Outcome: The court held that the plaintiffs did not have locus standi to bring a statutory derivative action without prior leave from the court.
- Category: Procedural
- Related Cases:
- [2011] 3 SLR 980
- Striking Out
- Outcome: The court allowed the application to strike out parts of the statement of claim.
- Category: Procedural
8. Remedies Sought
- Declaration that Bernard and Michael breached their fiduciary duties
- Declaration that Simon breached his fiduciary duties
- Order that the defendants account to the plaintiffs for loss and damage
- Order that MCH be granted leave to bring civil proceedings in the name and on behalf of YGG
9. Cause of Actions
- Breach of Fiduciary Duty
- Conspiracy
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 | (1843) 2 Hare 461 | N/A | Cited for the proper plaintiff rule, stating that the company is the proper party to sue for breach of fiduciary duty owed to the company. |
| Fong Wai Lyn Carolyn v Airtrust (Singapore) Pte Ltd and another | N/A | Yes | [2011] 3 SLR 980 | Singapore | Cited for the principle that the court has the power to dispense with notice requirements under s 216A(4) of the Companies Act when it is impractical for notice to be given. |
| Ng Heng Liat v Kiyue Co Ltd | N/A | Yes | [2003] 4 SLR(R) 218 | N/A | Cited for the principle that in an application under s 216A, the main questions to be considered are whether the complainant is acting in good faith and whether the proposed action is in the interest of the company. |
| Petroships Investment Pte Ltd v Wealthplus Pte Ltd | Court of Appeal | Yes | [2016] 2 SLR 1023 | Singapore | Cited to show that a complainant may commence both a statutory derivative action as well as a common law derivative action as the issue of whether the common law derivative action co-exist with, or has been abrogated by, s 216A of the Companies Act has not been conclusive determined by the Singapore Courts. |
| Ng Kek Wee v Sim City Technology Ltd | N/A | Yes | [2014] 4 SLR 723 | N/A | Cited for the principle that the general rule with regard to pleadings is met and neither party is taken by surprise in relation to the case that he must meet at trial. |
| Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd | N/A | Yes | [1995] 3 MLJ 417 | N/A | Cited for the procedural requirements for a minority shareholder to bring an action on behalf of himself and all the other shareholders of the company, excluding the majority wrongdoers. |
| Venkatraman Kalyanaraman v Nithya Kalyani | N/A | Yes | [2016] 4 SLR 1365 | N/A | Cited for the principle that an action that does not meet these procedural requirements is liable to be struck out as being frivolous and vexatious. |
| Sinwa SS (HK) Co Ltd v Morten Innhaug | N/A | Yes | [2010] 4 SLR 1 | N/A | Cited for the substantive requirements before the court will grant leave for the commencement of a common law derivative action. |
| Ng Kek Wee v Sim City Technology Ltd | Court of Appeal | Yes | [2014] 4 SLR 723 | N/A | Cited for the principle that the material facts relied on in support of a claim for relief under s 216 of the Companies Act have to be pleaded to put the company on notice that the complainant’s claim was one for relief under s 216 of the Companies Act |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court O 18 r 19 |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act s 216A | Singapore |
| Companies Act s 216 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Proper plaintiff rule
- Statutory derivative action
- Common law derivative action
- Fraud on the minority
- Locus standi
- Minority oppression
- Breach of fiduciary duty
- Striking out
15.2 Keywords
- breach of fiduciary duty
- derivative action
- striking out
- company law
- civil procedure
16. Subjects
- Civil Procedure
- Company Law
- Derivative Actions
17. Areas of Law
- Civil Procedure
- Company Law
- Breach of Fiduciary Duty
- Derivative Actions