Poh Fu Tek v Vermont UM Bunkering: Statutory Derivative Action, Minority Shareholders & Good Faith
Poh Fu Tek and Koh Seng Lee, minority shareholders of Vermont UM Bunkering Pte. Ltd., sought leave under s 216A of the Companies Act to bring a derivative action on Vermont's behalf. The High Court of Singapore, presided over by Audrey Lim J, allowed the application, subject to conditions, finding a prima facie case that Vermont's directors breached their fiduciary duties and that the applicants were acting in good faith. The proposed actions include setting aside default judgments obtained by Goldsland Holdings Company Limited and Hong Kong Sin Hua Development Co., and pursuing claims against Vermont's directors and related entities for breaches of fiduciary duties and conspiracy.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Applicants’ proposed derivative actions allowed, subject to certain conditions.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court allows minority shareholders' derivative action against Vermont UM Bunkering, finding prima facie breaches of fiduciary duties.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Poh Fu Tek | Plaintiff | Individual | Application Allowed | Won | Seah Zhen Wei Paul, Chan Yi Zhang, Aditi Ravi, Bryan Seah |
| Koh Seng Lee | Plaintiff | Individual | Application Allowed | Won | Seah Zhen Wei Paul, Chan Yi Zhang, Aditi Ravi, Bryan Seah |
| Vermont UM Bunkering Pte. Ltd. | Defendant | Corporation | Derivative Action Allowed | Neutral | Alexander Yeo, Chew Jing Wei |
| Vermont Groups Limited | Defendant | Corporation | Application Allowed | Lost | Jennifer Sia, Goh Hui Hua |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Audrey Lim | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Seah Zhen Wei Paul | Tan Kok Quan Partnership |
| Chan Yi Zhang | Tan Kok Quan Partnership |
| Aditi Ravi | Tan Kok Quan Partnership |
| Bryan Seah | Tan Kok Quan Partnership |
| Alexander Yeo | Allen & Gledhill LLP |
| Chew Jing Wei | Allen & Gledhill LLP |
| Jennifer Sia | NLC Law Asia LLC |
| Goh Hui Hua | NLC Law Asia LLC |
4. Facts
- Poh and Koh are minority shareholders and directors of Vermont.
- Goldsland and Sin Hua obtained default judgments against Vermont for alleged loans.
- Applicants sought leave to bring derivative action on Vermont's behalf.
- Majority Directors of Vermont also held directorships in Goldsland and Sin Hua.
- Applicants alleged the Majority Directors breached their fiduciary duties.
- Applicants claimed the loans were not genuine and procured through conflicts of interest.
- Vermont applied to wind itself up after the derivative action was commenced.
5. Formal Citations
- Poh Fu Tek and another v Vermont UM Bunkering Pte Ltd and another, Originating Summons No 166 of 2019, [2020] SGHC 139
6. Timeline
| Date | Event |
|---|---|
| Vermont UM Bunkering Pte. Ltd. incorporated in Singapore. | |
| Request for Instructions on Borrowing Working Capital issued by Vermont's board to Goldsland. | |
| Poh and Koh executed counter-guarantees in favor of Goldsland and Sin Hua. | |
| Meeting held in Hong Kong regarding losses suffered by Vermont due to wrongful trading. | |
| Zhao removed as a director of Vermont. | |
| Board meeting recorded the Loan Agreement. | |
| Vermont ceased active operations. | |
| Maritime and Port Authority of Singapore revoked Vermont’s bunker supply licence. | |
| Goldsland commenced proceedings in Hong Kong against the Applicants. | |
| Goldsland commenced Suit 260 against Vermont. | |
| Sin Hua commenced Suit 261 against Vermont. | |
| Goldsland and Sin Hua obtained Default Judgments against Vermont. | |
| Goldsland obtained leave to serve writ on Applicants in Singapore. | |
| Vermont's board meeting where Applicants questioned Zou Bin on Suits 260 and 261. | |
| Goldsland served writ and statement of claim on Koh. | |
| Goldsland began efforts to enforce Default Judgments. | |
| Applicants commenced OS 166. | |
| Vermont applied to wind itself up. | |
| VGL's counsel informed the court that Tong and Zhong were no longer directors of Vermont. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: Court found a legitimate and arguable claim against Majority Directors for breaches of their duties.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Failure to disclose conflicts of interest
- Breach of no-conflict rule
- Breach of double employment rule
- Related Cases:
- [2007] 2 SLR(R) 597
- [2018] 2 SLR 333
- [2017] 3 SLR 957
- Good Faith in Derivative Action
- Outcome: Court was satisfied that the Applicants were acting in good faith.
- Category: Procedural
- Sub-Issues:
- Collateral purpose
- Abuse of process
- Honest belief in cause of action
- Related Cases:
- [2013] 2 SLR 340
- [2004] 3 SLR(R) 1
- Prima Facie Interest of Company
- Outcome: Court found it was prima facie in Vermont's interest for the proposed derivative action to be brought.
- Category: Procedural
- Sub-Issues:
- Legitimate and arguable claim
- Benefit to the company
- Practical and commercial interests
- Related Cases:
- [2013] 2 SLR 340
- Setting Aside Default Judgment
- Outcome: Court found Applicants had a legitimate and arguable claim to set aside the Default Judgments.
- Category: Procedural
- Sub-Issues:
- Prima facie defense
- Triable issues
- Explanation for default
- Delay
- Prejudice to other party
- Related Cases:
- [2008] 4 SLR(R) 907
- Dishonest Assistance
- Outcome: Court found a legitimate and arguable claim for dishonest assistance against Goldsland and Sin Hua.
- Category: Substantive
- Conspiracy
- Outcome: Court found a legitimate and arguable case for conspiracy against Goldsland, Sin Hua and/or the Majority Directors.
- Category: Substantive
8. Remedies Sought
- Leave to bring derivative action
- Setting aside default judgments
- Damages for breach of fiduciary duty
- Account of profits
9. Cause of Actions
- Breach of Fiduciary Duty
- Dishonest Assistance
- Conspiracy
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Bunker Trading
- Shipping
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ang Thiam Swee v Low Hian Chor | Singapore Court of Appeal | Yes | [2013] 2 SLR 340 | Singapore | Cited for the factors in determining good faith in statutory derivative actions. |
| Pang Yong Hock and another v PKS Contracts Services Pte Ltd | Singapore High Court | Yes | [2004] 3 SLR(R) 1 | Singapore | Cited for demonstrating good faith by showing a legitimate claim and directors' reluctance to pursue it. |
| Mercurine Pte Ltd v Canberra Development Pte Ltd | Singapore High Court | Yes | [2008] 4 SLR(R) 907 | Singapore | Cited for the factors to consider when setting aside a regular default judgment. |
| Tam Tak Chuen v Eden Aesthetics Pte Ltd and another (Khairul bin Abdul Rahman and another, non-parties) | Singapore High Court | Yes | [2010] 2 SLR 667 | Singapore | Cited for the principle that winding up is not always the more appropriate course of action than a derivative action. |
| Chong Chin Fook v Solomon Alliance Management Pte Ltd and others and another matter | Singapore Court of Appeal | Yes | [2017] 1 SLR 348 | Singapore | Cited for granting conditional leave to a minority shareholder to take over proceedings due to conflicts of interest. |
| Townsing Henry George v Jenton Overseas Investment Pte Ltd (in liquidation) | Singapore High Court | Yes | [2007] 2 SLR(R) 597 | Singapore | Cited for the director's duty to act honestly and in the best interests of the company. |
| Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters | Singapore Court of Appeal | Yes | [2018] 2 SLR 333 | Singapore | Cited for the director's duty of undivided loyalty to his company. |
| Nordic International Ltd v Morten Innhaug | Singapore High Court | Yes | [2017] 3 SLR 957 | Singapore | Cited for the director's duty of undivided loyalty to his company. |
| Ho Kang Peng v Scintronix Corp Ltd (formerly known as TTL Holdings Ltd) | Singapore High Court | Yes | [2014] 3 SLR 329 | Singapore | Cited for the requirement of informed consent of shareholders to release a director from breach of duty. |
| Sim Poh Ping v Winsta Holding Pte Ltd and another and other appeals | Singapore High Court | Yes | [2020] 1 SLR 1199 | Singapore | Cited for the remedy for a breach of fiduciary duty. |
13. Applicable Rules
| Rule Name |
|---|
| O 62 r 8 read with O 12 r 4(a) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 216A of the Companies Act | Singapore |
| s 157(1) of the Companies Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Statutory derivative action
- Minority shareholders
- Good faith
- Prima facie interest
- Fiduciary duty
- Conflict of interest
- Default judgment
- Guangxin Agreement
- Bunker Trading System
- Trading Limit
- Loan Agreement
- Credit Facility
15.2 Keywords
- derivative action
- minority shareholders
- fiduciary duty
- companies act
- vermont
- bunkering
- singapore
16. Subjects
- Companies Law
- Corporate Governance
- Civil Litigation
17. Areas of Law
- Companies Law
- Statutory Derivative Action
- Civil Procedure