Conflict in Business Relationships – Determining Oppressive Acts and Breach of Director’s Duties

In Farzin Ratan Karma v Helen Campos & 2 Ors [2024] SGHC 41, which centred on issues of conflict in business relationships, the Singapore High Court had to determine a claim for commercially unfair and oppressive acts, as well as a counterclaim for breach of fiduciary duties owed as director.

The Plaintiff and the 1^st Defendant were shareholders in the 2^nd and 3^rd Defendant companies. The Plaintiff claimed that the 1^st Defendant had perpetrated various commercially unfair and oppressive acts against him with regard to the companies. The Court dismissed the Plaintiff’s claim, rejecting the following acts as being forms of oppression, and finding that they were not unreasonable or commercially unfair to the Plaintiff:

(a)          The 1^st Defendant’s drawing of salaries;

(b)          The alleged diversion of business by the 1^st Defendant to a third-party company; and

(c)          Rights issues that had been conducted in relation to the 2^nd and 3^rd Defendants.

The Defendants counterclaimed against the Plaintiff for breach of his fiduciary duties as director of the 2^nd and 3^rd Defendants. The Court allowed part of the counterclaim, finding as follows:

(a)          The Plaintiff had breached the no-conflict rule by causing the 2^nd Defendant to enter into an agreement with his personal company for an employee of the 2^nd Defendant to do his personal company’s work in exchange for a monthly sum, which in fact was not paid for a number of months; and

(b)          The Plaintiff had used his position as the 2^nd Defendant’s bank signatory to incur substantial personal expenses.

The Defendants were successfully represented by Vikram Nair and Ashwin Kumar Menon from the Commercial Litigation Practice.