Farzin Ratan Karma v Helen Campos: Minority Shareholder Oppression & Director's Duties
In the case of Farzin Ratan Karma versus Helen Campos and others, heard in the General Division of the High Court of Singapore on 13 February 2024, Mr. Karma, a minority shareholder, brought a claim against Ms. Campos alleging commercially unfair and oppressive acts. Ms. Campos and the defendant companies counterclaimed against Mr. Karma for breaches of fiduciary duties as a director. The court dismissed Mr. Karma's claim and partially allowed the defendants' counterclaim, finding that Ms. Campos' actions did not constitute oppression, but Mr. Karma did breach his fiduciary duties. The claim involved a minority oppression claim and a breach of fiduciary duty counterclaim.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Mr Karma’s claim is dismissed and the defendants’ counterclaim is partially allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Minority shareholder Farzin Ratan Karma sues Helen Campos for oppression. Campos counterclaims for breach of fiduciary duties. Claim dismissed, counterclaim partially allowed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Farzin Ratan Karma | Plaintiff | Individual | Claim Dismissed | Lost | |
| Helen Campos | Defendant | Individual | Counterclaim Partially Allowed | Partial | |
| MC Corporate Services Pte Ltd | Defendant | Corporation | Counterclaim Partially Allowed | Partial | |
| MC Accounting Services Pte Ltd | Defendant | Corporation | Counterclaim Partially Allowed | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Hoo Sheau Peng | Judge | Yes |
4. Counsels
4. Facts
- Mr. Karma and Ms. Campos were shareholders and directors in MCCS and MCAS.
- Ms. Campos was disqualified from acting as a director from 2017 to 2021.
- Mr. Karma caused MCCS to enter into Rose's Salary Agreement with FEL.
- Mr. Karma used MCCS' funds for personal expenses.
- MCCS and MCAS conducted rights issues that diluted Mr. Karma's shareholding.
- A Waiver Agreement was signed to waive a debt of S$546,015.76 owed by Mr. Karma.
5. Formal Citations
- Farzin Ratan Karma v Helen Campos and others, Suit No 545 of 2021, [2024] SGHC 41
6. Timeline
| Date | Event |
|---|---|
| MC Corporate Services Pte Ltd incorporated | |
| Mr. Karma appointed as director of MCCS | |
| Mr. Karma appointed signatory for MCCS' bank account | |
| MC Accounting Services Pte Ltd incorporated | |
| Mr. Karma acquired 35% shareholding in MCCS | |
| HC Consultancy Pte Ltd incorporated | |
| Mr. Karma appointed director of MCAS | |
| Mr. Karma lost shareholding and directorship in MCAS | |
| Mr. Karma regained 35% shareholding in MCAS | |
| Farohar Enterprizes incorporated | |
| Mr. Karma regained directorship in MCAS | |
| Directors’ Agreement signed | |
| Ms. Campos disqualified from acting as a director | |
| Waiver Agreement signed | |
| Ms. Campos transferred one share each in MCCS and MCAS to her son | |
| Ms. Campos resigned from MCCS and MCAS | |
| Mr Karma renewed Rose's employment pass | |
| MCCS entered into Rose’s Salary Agreement with FEL | |
| Ms. Campos requisitioned another EGM | |
| EGM held | |
| Mr. Lukshumayeh appointed director of MCCS and MCAS | |
| Ms. Campos granted leave to act as a director of MCCS and MCAS | |
| Mr. Karma commenced action | |
| Mr. Karma notified of MCCS rights issue | |
| Resolution authorising a rights issue for MCCS was passed at an EGM | |
| Mr. Karma obtained an injunction blocking the rights issue in MCCS | |
| Injunction set aside | |
| Rights issue for MCAS approved | |
| Shares in both MCCS and MCAS allotted | |
| Trial began | |
| Judgment reserved | |
| Judgment |
7. Legal Issues
- Minority Shareholder Oppression
- Outcome: The court found that Ms. Campos' actions did not constitute oppression under s 216 of the Companies Act.
- Category: Substantive
- Related Cases:
- [2010] 2 SLR 776
- [1972] 2 All ER 492
- Breach of Fiduciary Duty
- Outcome: The court found that Mr. Karma breached his fiduciary duties by causing MCCS to enter into Rose's Salary Agreement and by using company funds for personal expenses.
- Category: Substantive
- Sub-Issues:
- Self-dealing
- Conflict of interest
- Related Cases:
- [2019] 4 SLR 433
- [2017] 3 SLR 957
- [2010] 3 SLR 1069
- Implication of Contractual Terms
- Outcome: The court declined to imply a term into the Waiver Agreement that Mr. Karma would cease misappropriating money from MCCS and MCAS.
- Category: Substantive
- Related Cases:
- [2013] 4 SLR 193
8. Remedies Sought
- Buyout Order
- Equitable Compensation
9. Cause of Actions
- Minority Oppression
- Breach of Fiduciary Duty
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Corporate Services
- Accounting
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Over & Over Ltd v Bonvests Holdings Ltd and another | Court of Appeal | Yes | [2010] 2 SLR 776 | Singapore | Cited for the principle of commercial unfairness in minority oppression claims and the consideration of legitimate expectations. |
| Ebrahimi v Westbourne Galleries Ltd and others | House of Lords | Yes | [1972] 2 All ER 492 | England and Wales | Cited for the principle that in quasi-partnerships, it may be unjust to insist on legal rights. |
| Leong Chee Kin (on behalf of himself and as a minority shareholder of Ideal Design Studio Pte Ltd) v Ideal Design Studio Pte Ltd and others | High Court | Yes | [2018] 4 SLR 331 | Singapore | Cited for the yardstick for determining unfairness of a party’s conduct would generally be the legitimate expectations arising from members’ legal rights and the company’s constitution or articles of association. |
| Lim Chee Twang v Chan Shuk Kuen Helina and others | High Court | No | [2010] 2 SLR 209 | Singapore | Cited to show that even where one party is brought into a company because of a close personal relationship, this will not suffice to demonstrate that theirs was an association based on a personal relationship involving mutual confidence. |
| Lim Kok Wah and others v Lim Boh Yong and others and other matters | High Court | Yes | [2015] 5 SLR 307 | Singapore | Cited for the principle that when the power to determine who would be a shareholder and who would be a director of the companies resides in a single person, it is a factor which strongly suggests that a company is not a quasi-partnership. |
| Lim Swee Khiang and another v Borden Co (Pte) Ltd and others | High Court | Yes | [2006] 4 SLR(R) 745 | Singapore | Cited as an example of a case where the company was set up by six families to carry on their business. |
| Lim Tong Zhen Kevryn v Cheo Jean Sheng and others | High Court | Yes | [2022] SGHC 315 | Singapore | Cited for the measure of commercial unfairness can only be determined by the parties’ legal rights and legitimate expectations derived from and enshrined in agreements entered into directly between shareholders. |
| Lian Hwee Choo Phebe and another v Maxz Universal Development Group Pte Ltd and others and another suit | High Court | Yes | [2010] SGHC 268 | Singapore | Cited for the measure of commercial unfairness can only be determined by the parties’ legal rights and legitimate expectations derived from and enshrined in agreements entered into directly between shareholders. |
| 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 principle that assessing the commercial unfairness of a course of conduct entails an objective consideration of the parties’ relationship, bearing in mind that it is a commercial relationship. |
| Marten, Joseph Matthew and another v AIQ Pte Ltd (in liquidation) and others | High Court | Yes | [2023] SGHC 361 | Singapore | Cited for the principle that even infringements of the company’s constitution or articles of association, or even the Companies Act, may not necessarily be commercially unfair, unless something more can be shown. |
| Quek Kwee Kee Victoria (in her personal capacity and as executor of Quek Kiat Siong, deceased) and another v Quek Khuay Cheah | Court of Appeal | Yes | [2014] 4 SLR 1 | Singapore | Cited for the principle that a settlement agreement for the “full and final settlement” settlement of claims that a party has or may have connotes an intention to settle all existing disputes and to be free from having to go to court to resolve their issues. |
| Ashlock William Grover v SetClear Pte Ltd and others | High Court | Yes | [2012] 2 SLR 625 | Singapore | Cited for the principle that a settlement agreement discharges all claims that have been advanced and any future claims that may be advanced in connection with whatever state of affairs brought parties into dispute. |
| Ter Yin Wei v Lim Leet Fang | High Court | Yes | [2012] 3 SLR 172 | Singapore | Cited for the principle that a settlement agreement discharges all claims that have been advanced and any future claims that may be advanced in connection with whatever state of affairs brought parties into dispute. |
| Re a Company (No 007623 of 1984) | High Court | Yes | [1986] BCLC 362 | England and Wales | Cited for the principle that if a shareholder is unable or unwilling to take up a rights issue conducted in order to raise funds for the company, then it is “only fair that he should offer to sell out”. |
| The Wellness Group Pte Ltd and another v OSIM International Ltd and others and another suit | Court of Appeal | Yes | [2016] 3 SLR 729 | Singapore | Cited for the default position that there is no general expectation that the shareholding of a company will remain constant. |
| Traxiar Drilling Partners II Pte Ltd (in liquidation) v Dvergsten, Dag Oivind | Court of Appeal | Yes | [2019] 4 SLR 433 | Singapore | Cited for the principle that the rule against self-dealing prohibits a director from entering, on behalf of the company, into an arrangement or transaction with himself or with a company or firm in which he is interested, and is closely related to a director’s duty not to place himself in a position of conflict. |
| Nordic International Ltd v Morten Innhaug | Court of Appeal | Yes | [2017] 3 SLR 957 | Singapore | Cited for the principle that the rule against self-dealing prohibits a director from entering, on behalf of the company, into an arrangement or transaction with himself or with a company or firm in which he is interested, and is closely related to a director’s duty not to place himself in a position of conflict. |
| Tan Hup Thye v Refco (Singapore) Pte Ltd | High Court | Yes | [2010] 3 SLR 1069 | Singapore | Cited for the principle that the rule against self-dealing prohibits a director from entering, on behalf of the company, into an arrangement or transaction with himself or with a company or firm in which he is interested, and is closely related to a director’s duty not to place himself in a position of conflict. |
| Sim Poh Ping v Winsta Holding Pte Ltd and another and other appeals | Court of Appeal | Yes | [2020] 1 SLR 1199 | Singapore | Cited for the principle that it is incumbent on the fiduciary who wishes to place himself in a position of conflict to obtain the informed consent of his principal, not on the principal to object to his doing so. |
| Bristol and West Building Society v Mothew | Court of Appeal | Yes | [1998] Ch 1 | England and Wales | Cited for the principle that it is incumbent on the fiduciary who wishes to place himself in a position of conflict to obtain the informed consent of his principal, not on the principal to object to his doing so. |
| Creanovate Pte Ltd and another v Firstlink Energy Pte Ltd and another appeal | Court of Appeal | Yes | [2007] 4 SLR(R) 780 | Singapore | Cited for the principle that a director’s use of company funds constitutes a breach of fiduciary duty. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the three step process for the implication of terms. |
| Gay Choon Ing v Loh Sze Ti Terence Peter and another appeal | Court of Appeal | Yes | [2009] 2 SLR(R) 332 | Singapore | Cited for the principle that the question is simply whether legally recognised consideration has in fact moved from a promisee to a promisor. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act 1967 | Singapore |
| s 155A of the Companies Act | Singapore |
| s 216 of the Companies Act 1967 (2020 Rev Ed) | Singapore |
| s 157A of the Companies Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Minority Oppression
- Fiduciary Duty
- Quasi-Partnership
- Rights Issue
- Waiver Agreement
- Directors' Agreement
- Commercial Unfairness
- Self-Dealing
15.2 Keywords
- minority oppression
- fiduciary duty
- directors duties
- company law
- shareholder rights
- singapore
- rights issue
- waiver agreement
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Minority Oppression | 90 |
| Company Law | 85 |
| Fiduciary Duties | 80 |
| Director's Duties | 75 |
| Contract Law | 30 |
16. Subjects
- Company Law
- Corporate Governance
- Shareholder Rights