Darco Water Technologies Ltd v Thye Kim Meng: Director's Duties & Project Management
Darco Water Technologies Ltd sued Thye Kim Meng, a former director and CEO, in the General Division of the High Court of Singapore on 8 March 2022, alleging breach of director's duties in managing the Water Project and the Solar Project in Vietnam. The court, presided over by Hoo Sheau Peng J, dismissed the plaintiff's claim, finding no breach of duties by the defendant.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Plaintiff's claim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Darco Water Technologies Ltd sued Thye Kim Meng for breach of director's duties in managing two projects. The court dismissed the claim.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Darco Water Technologies Ltd | Plaintiff | Corporation | Claim Dismissed | Lost | |
| Thye Kim Meng | Defendant | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Hoo Sheau Peng | Judge of the High Court | Yes |
4. Counsels
4. Facts
- The defendant was a former director and CEO of the plaintiff, Darco Water Technologies Limited.
- The dispute concerns two projects in Vietnam: the Water Project and the Solar Project.
- The plaintiff alleges that the defendant breached duties owed to it in managing these projects.
- The Water Project involved the potential acquisition of 90% equity interest in Canwaco.
- The Solar Project involved the potential acquisition of Con Dao Green Energy (CDGE).
- The plaintiff made a US$1m deposit for the Water Project and US$600,000 in payments for the Solar Project.
- Neither the Water Project nor the Solar Project materialized, and the plaintiff was unable to fully recover the deposit and payments.
5. Formal Citations
- Darco Water Technologies Ltd v Thye Kim Meng, Suit No 844 of 2020, [2022] SGHC 49
6. Timeline
| Date | Event |
|---|---|
| Darco Water Technologies Ltd incorporated | |
| Darco Water Technologies Ltd listed on the Singapore Exchange | |
| Defendant contacted Mr. Dao regarding business opportunity in Vietnam | |
| Defendant, Ms. Tan, and Mr. Dao met to discuss the Water Project | |
| Defendant sent Ms. Tan draft terms of framework agreement | |
| Framework Agreement signed | |
| US$1m Deposit remitted to CA Trading | |
| Mazars LLP engaged to carry out financial due diligence | |
| Draft Mazars Report sent to Mr. Teh | |
| Defendant discussed solar power generation with Mr. Dao | |
| Draft letter of intent circulated to the Board | |
| Draft letter of intent circulated to the plaintiff’s board of directors | |
| Letter of intent entered into by DWS and CDGE | |
| Request for Advancement signed by DWS and CDGE | |
| First Payment of US$200,000 made | |
| Second Payment of US$300,000 made | |
| Third Payment of US$100,000 made | |
| Ms. Tan ceased being a director | |
| Defendant left the company | |
| Plaintiff announced withdrawal from the Water Project | |
| Statement of Claim dated | |
| Defence (Amendment No. 1) dated | |
| Trial began | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Breach of Director's Duties
- Outcome: The court found that the defendant did not breach his duties as a director.
- Category: Substantive
- Sub-Issues:
- Failure to act bona fide in the company’s interests
- Failure to exercise reasonable care and diligence
- Authority to Enter Agreements
- Outcome: The court held that the defendant had the authority to enter into the Framework Agreement and authorize payments.
- Category: Procedural
- Sub-Issues:
- Requirement for Board approval
- Interpretation of Group Charter
- Due Diligence Obligations
- Outcome: The court found that the defendant was not responsible for the failure to complete due diligence and that the defendant was justified in allowing the due diligence process to continue.
- Category: Substantive
- Sub-Issues:
- Responsibility for conducting due diligence
- Adequacy of due diligence performed
8. Remedies Sought
- Declaration of Breach of Fiduciary Duties
- Monetary Damages (US$1.6m)
9. Cause of Actions
- Breach of Fiduciary Duty
- Breach of Director's Duties
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Water Treatment
- Renewable Energy
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| 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 the test of whether a director had exercised his discretion bona fide in what he considered was in the interests of the company. |
| Then Khek Koon v Arjun Permanand Samtani | High Court | Yes | [2014] 1 SLR 245 | Singapore | Cited for the principle that duties of care, skill and diligence are not core fiduciary duties. |
| Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters | Court of Appeal | Yes | [2018] 2 SLR 333 | Singapore | Cited for the standard of care, skill and diligence expected of a director. |
| Tan Kia Poh v Hong Leong Finance Ltd | Court of Appeal | Yes | [1993] 3 SLR(R) 429 | Singapore | Cited for the principle that the court may not allow a party to pursue a certain line of argument if pleadings are not sufficiently specific. |
| AMG Global Investments & Holdings Pte Ltd (in Liquidation) v Ong Kee Ming Richard and another | High Court | Yes | [2021] SGHC 222 | Singapore | Cited for the proposition that a director who authorises a payment must believe that the payment is for a proper purpose of the company. |
| 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 the court is slow to interfere in commercial decisions which have been made honestly even if they turn out, on hindsight, to be financially detrimental. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act 1967 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Director's Duties
- Fiduciary Duty
- Water Project
- Solar Project
- Framework Agreement
- Deposit
- Due Diligence
- Board Approval
- Group Charter
- Advancement Letter
- Inter-company Loan
15.2 Keywords
- director duties
- breach of fiduciary duty
- water project
- solar project
- singapore
- companies act
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fiduciary Duties | 90 |
| Director's Duties | 85 |
| Company Law | 80 |
| Corporate Law | 75 |
| Corporate Governance | 65 |
| Business Litigation | 60 |
| Breach of Contract | 50 |
| Contract Law | 40 |
16. Subjects
- Corporate Law
- Company Law
- Directors' Duties