Prime Cars Leasing v Zenith Automobile: Breach of Director's Duties & Conspiracy
Prime Cars Leasing Pte Ltd (PCL) sued Zenith Automobile Pte Ltd (Zenith) and Lim Siew Ling in the General Division of the High Court of Singapore, alleging breach of fiduciary duties and conspiracy. PCL claimed Ms. Lim, as director, sold cars at undervalued prices and directed proceeds to her account. The court, presided over by Tan Siong Thye J, dismissed PCL's claims, finding no breach of duty or conspiracy. However, Ms. Lim was ordered to return $158,678.70 to PCL, representing funds she couldn't justify retaining. Ms. Lim's counterclaim was also dismissed.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Plaintiff's claim dismissed; partial claim of $158,678.70 allowed from the 13 Cars’ Balance Sale Proceeds.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Prime Cars Leasing sued Zenith Automobile and Lim Siew Ling for breach of fiduciary duties and conspiracy related to undervalued car sales. The court dismissed the claims.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Prime Cars Leasing Pte Ltd | Plaintiff | Corporation | Claim dismissed in part | Partial | Beh Eng Siew, Low Yu Xuan, Shaun Sim Yong Zhao |
| Zenith Automobile Pte Ltd | Defendant | Corporation | Claim Dismissed | Won | Joseph Ignatius, Suja Susan Thomas d/o B Thomas |
| Lim Siew Ling | Defendant | Individual | Claim dismissed in part; counterclaim dismissed | Partial | Joseph Ignatius, Suja Susan Thomas d/o B Thomas |
| Supreme Leasing & Limousine Pte Ltd | Third Party | Corporation | No order as to costs | Neutral | Beh Eng Siew, Low Yu Xuan, Shaun Sim Yong Zhao |
| Heng Hong Hing | Third Party | Individual | No order as to costs | Neutral | Beh Eng Siew, Low Yu Xuan, Shaun Sim Yong Zhao |
| Neo Choon Sian | Third Party | Individual | No order as to costs | Neutral | Beh Eng Siew, Low Yu Xuan, Shaun Sim Yong Zhao |
| Neo Yan | Third Party | Individual | No order as to costs | Neutral | Beh Eng Siew, Low Yu Xuan, Shaun Sim Yong Zhao |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Siong Thye | Judge of the High Court | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Beh Eng Siew | Lee Bon Leong & Co |
| Low Yu Xuan | Lee Bon Leong & Co |
| Shaun Sim Yong Zhao | Lee Bon Leong & Co |
| Joseph Ignatius | Ignatius J & Associates |
| Suja Susan Thomas d/o B Thomas | Ignatius J & Associates |
4. Facts
- Ms. Lim was the sole director and shareholder of Prime Cars Leasing Pte Ltd (PCL).
- Ms. Lim sold 14 cars belonging to PCL to Zenith Automobile Pte Ltd (Zenith).
- The Neo Sisters became PCL's directors and removed Ms. Lim as a director.
- Supreme Leasing & Limousine Pte Ltd stopped paying monthly rentals to PCL.
- Ms. Lim directed Zenith to transfer the balance sale proceeds to her personal account.
- The Neo Sisters alleged that Ms. Lim breached her fiduciary duties.
- Ms. Lim claimed the sale was in PCL's best interests due to financial difficulties.
5. Formal Citations
- Prime Cars Leasing Pte Ltd v Zenith Automobile Pte Ltd and another, Suit No 912 of 2019, [2021] SGHC 262
6. Timeline
| Date | Event |
|---|---|
| Mr. Neo Nam Kah died. | |
| Prime Cars Leasing Pte Ltd incorporated. | |
| Supreme Leasing & Limousine Pte Ltd leased 23 cars from Prime Cars Leasing Pte Ltd. | |
| Supreme Leasing & Limousine Pte Ltd ceased paying monthly rentals to Prime Cars Leasing Pte Ltd. | |
| Prime Cars Leasing Pte Ltd sold 14 cars to Zenith Automobile Pte Ltd. | |
| Prime Cars Leasing Pte Ltd sold 14 cars to Zenith Automobile Pte Ltd. | |
| Ms. Lim transferred her shares in PCC and PCL to the Neo Sisters. | |
| Neo Sisters became directors of Prime Cars Leasing Pte Ltd. | |
| Ms. Lim removed as director of Prime Cars Leasing Pte Ltd. | |
| Ms. Neo Choon Sian discovered that the 13 Cars’ Balance Sale Proceeds were not transferred to PCL. | |
| Prime Cars Leasing Pte Ltd commenced proceedings against Zenith Automobile Pte Ltd and Ms. Lim. | |
| Trial began. | |
| Trial concluded. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that Ms. Lim did not breach her fiduciary duties.
- Category: Substantive
- Sub-Issues:
- Acting honestly
- Using reasonable diligence
- Conflict of interest
- Related Cases:
- [2014] 3 SLR 329
- [1994] 1 SLR(R) 513
- [2017] 2 SLR 592
- Conspiracy by Unlawful Means
- Outcome: The court found no evidence of conspiracy.
- Category: Substantive
- Sub-Issues:
- Agreement to perform unlawful acts
- Intent to cause damage
- Related Cases:
- [2014] 1 SLR 860
- [2021] 1 SLR 1337
- Dishonest Assistance
- Outcome: The court found no dishonest assistance by Zenith.
- Category: Substantive
- Sub-Issues:
- Knowledge of breach of fiduciary duty
- Assistance in the breach
- Related Cases:
- [2010] 2 SLR 589
8. Remedies Sought
- Monetary Damages
- Account of Profits
9. Cause of Actions
- Breach of Fiduciary Duty
- Conspiracy
- Dishonest Assistance
10. Practice Areas
- Commercial Litigation
- Director's Duties
- Conspiracy
11. Industries
- Automobile
- Leasing
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| 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 a director has to act bona fide to promote the interests of the company. |
| Multi-Pak Singapore Pte Ltd (in receivership) v Intraco Ltd and others | N/A | Yes | [1994] 1 SLR(R) 513 | Singapore | Cited for the principle that a director has to act bona fide to promote the interests of the company. |
| Goh Chan Peng and others v Beyonics Technology Ltd and another and another appeal | Court of Appeal | Yes | [2017] 2 SLR 592 | Singapore | Cited for clarifying that the test for a director's duties is partly objective and partly subjective. |
| Re Smith & Fawcett Ltd | N/A | Yes | [1942] Ch 304 | England and Wales | Cited for the subjective element of a director's discretion. |
| Cheong Kim Hock v Lin Securities (Pte) | N/A | Yes | [1992] 1 SLR(R) 497 | Singapore | Cited for the subjective element of a director's discretion. |
| Charterbridge Corporation Ltd v Lloyds Bank Ltd | N/A | Yes | [1970] Ch 62 | England and Wales | Cited for the objective element in the test for a director's duties. |
| Intraco Ltd v Multi-Pak Singapore Pte Ltd | N/A | Yes | [1994] 3 SLR(R) 1064 | Singapore | Cited for the objective element in the test for a director's duties. |
| Lim Weng Kee v Public Prosecutor | N/A | Yes | [2002] 2 SLR(R) 848 | Singapore | Cited for the standard of care and diligence expected of a director. |
| Cheam Tat Pang and another v Public Prosecutor | N/A | Yes | [1996] 1 SLR(R) 161 | Singapore | Cited for the director's fiduciary duties at common law. |
| Wyno Marine Pte Ltd (In Liquidation) v Lim Teck Cheng and Others (Koh Chye Heng and Others, Third Parties) | High Court | Yes | [1998] SGHC 332 | Singapore | Cited for the principle that a director must account for any unauthorised benefit obtained through their fiduciary position. |
| Regal (Hastings) Ltd v Gulliver | N/A | Yes | [1967] 2 AC 134 | England and Wales | Cited for the principle that a director must account for any unauthorised benefit obtained through their fiduciary position. |
| Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd | N/A | Yes | [2020] SLR 200 | Papua New Guinea | Cited for the principle that the management of a company rests with its board of directors. |
| TYC Investment Pte Ltd and others v Tay Yun Chwan Henry and another | High Court | Yes | [2014] 4 SLR 1149 | Singapore | Cited for the principle that the management of a company rests with its board of directors. |
| Chan Siew Lee v TYC Investment Pte Ltd and others and another appeal | N/A | Yes | [2015] 5 SLR 409 | Singapore | Cited for the principle that the division of powers between the board of directors and the shareholders in a general meeting is governed by 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 elements of a claim in dishonest assistance. |
| Banque Nationale de Paris v Hew Keong Chan Gary and others | N/A | Yes | [2000] 3 SLR(R) 686 | Singapore | Cited for encompassing the existence and breach of a fiduciary obligation. |
| Swiss Butchery Pte Ltd v Huber Ernst and others and another suit | N/A | Yes | [2010] 3 SLR 813 | Singapore | Cited for encompassing the existence and breach of a fiduciary obligation. |
| Clearlab SG Pte Ltd v Ting Chong Chai and others | N/A | Yes | [2015] 1 SLR 163 | Singapore | Cited for the requirement of some causative significance in the acts by the defendant. |
| Yong Kheng Leong and another v Panweld Trading Pte Ltd and another | N/A | Yes | [2013] 1 SLR 173 | Singapore | Cited for the knowledge required of the assistor in dishonest assistance. |
| EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another | N/A | Yes | [2014] 1 SLR 860 | Singapore | Cited for the elements of a claim for conspiracy by unlawful means. |
| Crest Capital Asia Pte and others v OUE Lippo Healthcare (formerly known as International Healthway Corp Ltd) and another and other appeals | Court of Appeal | Yes | [2021] 1 SLR 1337 | Singapore | Cited for the raison d’être for unlawful means conspiracy. |
| New Ping Ping Pauline v Eng’s Noodles House Pte Ltd and others | High Court | Yes | [2020] SGHC 271 | Singapore | Cited for the awareness required of the alleged conspirators. |
| Beckkett Pte Ltd v Deutsche Bank AG and another and another appeal | N/A | Yes | [2009] 3 SLR(R) 452 | Singapore | Cited for the element of unlawful means. |
| Chew Kong Huat and others v Ricwil (Singapore) Pte Ltd | N/A | Yes | [1999] 3 SLR(R) 1167 | Singapore | Cited for a conspiracy arising in relation to a breach of a director’s fiduciary duties. |
| Belmont Finance Corporation v Williams Furniture Ltd (No 2) | N/A | Yes | [1980] 1 All ER 393 | England and Wales | Cited for the principle that a director is a trustee of the company's funds. |
| Grains and Industrial Products Trading Pte Ltd v Bank of India and another | N/A | Yes | [2016] 3 SLR 1308 | Singapore | Cited for the court's discretion to determine the period for which pre-judgment interest should be awarded. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Companies Act | Singapore |
| Civil Law Act (Cap 43, 1999 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Fiduciary Duty
- Director's Duties
- Conspiracy
- Unlawful Means
- Balance Sale Proceeds
- Undervalued Prices
- Shareholder
- Director
- Repossession
- Loan Facilities
- ACRA Search
- Security Deposits
- Transport Allowance
15.2 Keywords
- Breach of Fiduciary Duty
- Director's Duties
- Conspiracy
- Car Leasing
- Singapore High Court
- Zenith Automobile
- Prime Cars Leasing
16. Subjects
- Company Law
- Contract Law
- Tort
- Fiduciary Duty
17. Areas of Law
- Contract Law
- Company Law
- Tort Law
- Fiduciary Duty