Innovative Corp v Ow Chun Ming: Director's Fiduciary Duties & Corporate Opportunity

In Innovative Corporation Pte Ltd v Ow Chun Ming and Clydesbuilt (Holland Link) Pte. Ltd., the High Court of Singapore addressed a claim by Innovative Corporation against its former director, Ow Chun Ming, and his company, Clydesbuilt (Holland Link) Pte. Ltd., for breach of fiduciary duties and accessory liability. The case involved the alleged diversion of a residential housing development project from Innovative Corporation to Ow Chun Ming. The court found Ow Chun Ming liable for breaching his fiduciary duties as a director and Clydesbuilt (Holland Link) Pte. Ltd. liable for dishonest assistance. The court ordered an account of profits by the defendants.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Innovative Corp sues ex-director Ow Chun Ming for breach of fiduciary duties by diverting a project. The court found Ow liable.

1.7 Decision Date

12 May 2019

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Innovative Corporation Pte Ltd	Plaintiff	Corporation	Claim Allowed in Part	Partial	Raman Gopalan, Chew Teck Lim
Ow Chun Ming	Defendant	Individual	Claim Allowed in Part	Lost	Lim Kheng Yan Molly, Wong Si Hui Eunice, Lim Haan Hui
Clydesbuilt (Holland Link) Pte. Ltd.	Defendant	Corporation	Claim Allowed in Part	Lost	Lim Kheng Yan Molly, Wong Si Hui Eunice, Lim Haan Hui

3. Judges

Judge Name	Title	Delivered Judgment
Ang Cheng Hock	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Raman Gopalan	Withers KhattarWong LLP
Chew Teck Lim	Chew Teck Lim
Lim Kheng Yan Molly	Wong Tan & Molly Lim LLC
Wong Si Hui Eunice	Wong Tan & Molly Lim LLC
Lim Haan Hui	Wong Tan & Molly Lim LLC

4. Facts

Innovative Corporation intended to develop a residential project on land owned by Fong Yun Thai Association (FYTA).
Ow Chun Ming, a real estate developer, became a 50% shareholder and director of Innovative Corporation.
FYTA grew concerned about the progress of the project and the competency of Innovative Corporation.
FYTA invited Ow Chun Ming to bid for the project independently.
Ow Chun Ming resigned as director of Innovative Corporation and submitted a successful bid through Clydesbuilt (Holland Link) Pte. Ltd.
Innovative Corporation sued Ow Chun Ming and Clydesbuilt for breach of fiduciary duties and accessory liability.

5. Formal Citations

Innovative Corp Pte Ltd v Ow Chun Ming and another, Suit No 410 of 2016, [2019] SGHC 121

6. Timeline

Date	Event
2004-08-16	Innovative Corporation Pte Ltd incorporated
2006-01-01	Ms. Chen met Mr. Ow
2007-01-01	Ms. Chen sought Mr. Ow’s help for a contact in Tianjin, China
2007-01-01	FYTA decided to build a residential housing development
2008-03-06	URA approved ATI’s proposal and FYTA was granted Provisional Permission
2009-01-01	Ms. Chen was introduced as a representative of THC to Mr. Liu
2009-07-09	Cooperation Agreement signed
2009-07-16	ATI engaged CHC to undertake the excavation works
2009-08-17	Excavation works commenced
2009-09-01	Mr. Ow drove by the site of the Project and spoke to Ms. Chen
2009-09-23	Joint Venture Agreement drafted
2009-12-04	Mr. Ow sent an email to Ms. Chen setting out the terms of his proposal for a 50% stake in the plaintiff
2009-12-01	FYTA terminated ATI’s retainer
2009-12-01	Mr. Ow executed his consent to act as a director for the plaintiff
2010-01-01	Mr. Ow left Singapore for a five-week holiday to Paris
2010-01-11	Plaintiff’s issued share capital was increased to S$1 million
2010-02-11	Mr. Liu formally resigned as the chairman
2010-02-18	Mr. Ow was reflected as a director of the plaintiff in the records
2010-02-24	Mr. Ow was transferred 500,000 shares in the plaintiff
2010-02-24	Ms Chen introduced Mr. Ow at a lunch with FYTA’s representatives
2010-03-02	Mr. Leow and Mr. Ow attended a meeting with the URA
2010-03-27	Mr. Leow sent Ms. Chen an email attaching a draft termination agreement
2010-04-07	Mr. Ow received an official invitation to tender for the Project
2010-04-19	Mr. Ow submitted his bid
2010-05-04	The board of FYTA accepted Mr. Ow’s proposal
2010-05-17	The second defendant was incorporated
2010-07-25	Meeting held between FYTA’s representatives, Mr. Ow, Ms. Chen and another representative of the plaintiff, Ms. Laska, as well as Mr. Goh Huck Heng
2010-08-23	Mr. Ow’s resignation as director of the plaintiff was lodged with ACRA
2010-08-24	Mr. Ow instructed Ms. Ng to write a letter to the plaintiff
2010-10-07	The defendants, Clydesbuilt Investment Pte Ltd and FYTA entered into a joint venture agreement
2010-10-20	Four more directors were appointed
2010-10-20	The second defendant acquired from the trustees of FYTA the land
2014-01-01	The Project was completed
2017-01-01	Legal proceedings were commenced by FYTA against the two defendants and Clydesbuilt Investment Pte Ltd
2018-02-26	Sale and purchase agreement entered into between the second defendant and FYTA
2018-07-31	21 of the 25 units earmarked for FYTA were transferred to them
2018-10-16	Trial began
2019-02-01	Judgment reserved
2019-05-13	Judgment issued

7. Legal Issues

Breach of Fiduciary Duty
- Outcome: The court found that the first defendant breached his fiduciary duties to the plaintiff.
- Category: Substantive
- Sub-Issues:
  - Usurping corporate opportunity
  - Conflict of interest
- Related Cases:
  - [2018] 2 SLR 655
  - (1973) 40 DLR (3d) 371
  - [2003] 4 SLR(R) 414
  - [2000] SGHC 55
  - [1996] HKCA 581
  - [1986] BCLC 460
  - [1972] 1 WLR 443
  - [1967] 2 AC 134
  - [1966] SCR 673
  - [2008] 1 SLR(R) 225
Accessory Liability
- Outcome: The court found the second defendant liable for dishonest assistance but not for knowing receipt.
- Category: Substantive
- Sub-Issues:
  - Knowing receipt
  - Dishonest assistance
- Related Cases:
  - [2010] 2 SLR 589
  - [2001] 2 BCLC 704
  - [2010] 3 SLR 813
  - [2005] EWHC 1638 (Ch)
  - [1999] 3 All ER 652
  - [2002] 2 All ER 377
Inducement of Breach of Contract
- Outcome: The court found that there was no binding contract between the plaintiff and FYTA and therefore no inducement of breach of contract.
- Category: Substantive
- Related Cases:
  - [2000] 2 SLR(R) 407

8. Remedies Sought

Damages
Account of Profits

9. Cause of Actions

Breach of Fiduciary Duty
Inducement of Breach of Contract
Knowing Receipt
Dishonest Assistance

10. Practice Areas

Commercial Litigation

11. Industries

Construction
Real Estate

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and others and another appeal	Court of Appeal	Yes	[2018] 2 SLR 655	Singapore	Cited for the definition of a fiduciary and the existence of fiduciary duties of directors.
Canadian Aero Service Ltd v O’Malley	Supreme Court of Canada	Yes	(1973) 40 DLR (3d) 371	Canada	Cited for the three conditions to establish breach of fiduciary duties in respect of resigning to procure a corporate opportunity.
Tokuhon (Pte) Ltd v Seow Kang Hong and others	Court of Appeal	Yes	[2003] 4 SLR(R) 414	Singapore	Cited as a local decision that accepted the conditions laid in Canadian Aero Service.
Personal Automation Mart Pte Ltd v Tan Swe Sang	High Court	Yes	[2000] SGHC 55	Singapore	Cited as a local decision that accepted the conditions laid in Canadian Aero Service.
Akihiro Oba and others v Kishimoto Sangyo Co Ltd and another	Hong Kong Court of Appeal	Yes	[1996] HKCA 581	Hong Kong	Cited to illustrate that a proper application of the principle would show that the Project was not a maturing business opportunity.
Island Export Finance Ltd v Umunna and another	English High Court	Yes	[1986] BCLC 460	England and Wales	Cited to illustrate that a proper application of the principle would show that the Project was not a maturing business opportunity.
Industrial Development Consultants Ltd v Cooley	English High Court	Yes	[1972] 1 WLR 443	England and Wales	Cited for the principle that the likelihood of the company actually acquiring that opportunity for itself is irrelevant.
Regal (Hastings) Ltd v Gulliver and others	House of Lords	Yes	[1967] 2 AC 134	England and Wales	Cited for the principle that a director must account for any benefit which he obtains in the course of and owing to his directorship.
Peso Silver Mines Limited (NPL) v Stanley E Cropper	Supreme Court of Canada	Yes	[1966] SCR 673	Canada	Cited as an exception to the principle that a director must account for any benefit which he obtains in the course of and owing to his directorship.
Viking Airtech Pte Ltd v Foo Teow Keng and another	High Court	Yes	[2008] 1 SLR(R) 225	Singapore	Cited for the suggestion that, had the director not acted unilaterally, this would have legitimised his behaviour.
Cook v Deeks and others	Privy Council	Yes	[1916] 1 AC 554	England and Wales	Cited for the principle that a breach of fiduciary duties by a director can only be consented to or ratified by the shareholders of the company.
Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others and other appeals	Court of Appeal	Yes	[2013] 1 SLR 374	Singapore	Cited for the principle that an informal assent of all the shareholders may be sufficient to effectively ratify a director’s breach of his fiduciary duties.
Ho Kang Peng v Scintronix Corp Ltd (formerly known as TTL Holdings Ltd)	Court of Appeal	Yes	[2014] 3 SLR 329	Singapore	Cited for the principle that directors may be released from their obligations to the company by unanimous or, at the very least, majority agreement of the shareholders to “forgive and approve” their conduct, provided of course there is full disclosure of the relevant facts.
Tribune Investment Trust Inc v Soosan Trading Co Ltd	Court of Appeal	Yes	[2000] 2 SLR(R) 407	Singapore	Cited for the elements for establishing the tort of inducement of breach of contract.
George Raymond Zage III and another v Ho Chi Kwong and another	Court of Appeal	Yes	[2010] 2 SLR 589	Singapore	Cited for the requirements of knowing receipt and dishonest assistance.
CMS Dolphin Ltd v Simonet	High Court	Yes	[2001] 2 BCLC 704	England and Wales	Cited for the principle that the underlying basis of the liability of a director who exploits after his resignation a maturing business opportunity of the company is that the opportunity is to be treated as if it were property of the company in relation to which the director had fiduciary duties.
Swiss Butchery Pte Ltd v Huber Ernst and others and another suit	High Court	Yes	[2010] 3 SLR 813	Singapore	Cited for the principle that the underlying basis of the liability of a director who exploits after his resignation a maturing business opportunity of the company is that the opportunity is to be treated as if it were property of the company in relation to which the director had fiduciary duties.
Ultraframe (UK) Ltd v Fielding & others	High Court	Yes	[2005] EWHC 1638 (Ch)	England and Wales	Cited for the issue of whether maturing business opportunities would be regarded as trust assets for the purposes of knowing receipt.
Satnam Investments Ltd v Dunlop Heywood	Court of Appeal	Yes	[1999] 3 All ER 652	England and Wales	Cited for the principle that, even if one was to assume that confidential information and consequential corporate opportunities are assets for the purposes of a claim in knowing receipt, one cannot trace such information and opportunities into real property acquired by a third party using such information and opportunities.
Twinsectra Ltd v Yardley and others	House of Lords	Yes	[2002] 2 All ER 377	England and Wales	Cited for the scope of liability under dishonest assistance.
Personal Representatives of Tan Man Sit v Capacious Investments Ltd	Privy Council	Yes	[1996] A.C. 514	England and Wales	Cited for the principle that compensatory and gain-based damages are inconsistent and alternative remedies.
Dayco Products Singapore Pte Ltd (in liquidation) v Ong Cheng Aik	High Court	Yes	[2004] 4 SLR(R) 318	Singapore	Cited for the principle that the liability to account arises from the fiduciary’s breach of duty.
Consul Development Pty Limited v DPC Estates Pty Limited	High Court of Australia	Yes	(1975) 132 CLR 373	Australia	Cited for the principle that the liability of the person in a fiduciary position does not depend on the fact that the person to whom the duty is owed has suffered an injury or loss.
United Pan-Europe Communications NV v Deutsche Bank AG	England and Wales Court of Appeal (Civil Division)	Yes	[2000] 2 BCLC 461	England and Wales	Cited for the principle that the purpose of a disgorgement of profits is not to compensate the plaintiff but to ensure that the fiduciary does not profit from his breach of duty.
Mona Computer Systems (S) Pte Ltd v Singaravelu Murugan	Court of Appeal	Yes	[2014] 1 SLR 847	Singapore	Cited for the principle that the fiduciary should not be allowed to retain any of the profit derived from his breach of duty.

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

Fiduciary Duty
Corporate Opportunity
Knowing Receipt
Dishonest Assistance
Director's Duties
Joint Venture Agreement
Cooperation Agreement

15.2 Keywords

fiduciary duty
director
corporate opportunity
construction
singapore
knowing receipt
dishonest assistance

16. Subjects

Company Law
Fiduciary Duty
Trusts
Construction Dispute

17. Areas of Law

Company Law
Directors' Duties
Breach of Fiduciary Duty
Trust Law
Accessory Liability
Knowing Receipt
Dishonest Assistance