Bhavin Rashmi Mehta v Chetan Mehta

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD,Kannan Ramesh JAD,Quentin Loh SJ
• Judgment Date: 15 May 2023
• Docket Number: Civil Appeal No 49 of 2022
• Court: High Court Appellate Division (Singapore)

Bhavin Rashmi Mehta

and

Chetan Mehta and others

[2023] SGHC(A) 19

Woo Bih Li JAD, Kannan Ramesh JAD and Quentin Loh SJ

Civil Appeal No 49 of 2022

Appellate Division of the High Court

Companies — Directors — Resignation — Respondent giving notices of resignation from directorship of company — Respondent signing board resolutions — Whether respondent withdrew resignations with consent of board — Whether appellant estopped from denying respondent's withdrawal of resignations

Held, dismissing the appeal:

(1) The judge below had based her decision on the narrow ground of whether it was open to Mr Bhavin to seek relief for Mr Sahni's Resignations and did not make any finding on whether the Resignations were withdrawn by consent or whether estoppel by convention applied: at [19].

(2) Evidence about phone calls and meetings in 2015 and 2018 which were purportedly made to persuade Mr Sahni to stay on as director after his Resignations were sent would have to be resolved, if necessary, by trial. However, there was other evidence which did not need to be resolved by trial: at [21].

(3) First, Mr Bhavin had co-signed on financial statements of Arpee Gem for the financial years ending 31 March 2014 and 31 March 2015 with Mr Sahni as co-directors. Second, Mr Sahni invoiced for and was paid director's fees for Arpee Gem until Mr Bhavin's e-mail on 5 October 2021 alleging that Mr Sahni was not a director. Third, there was an undated Indemnity and Undertaking signed in response to a letter dated 7 March 2019 about the winding up of Arpee Gem, which had been signed by Mr Sahni as a director and Mr Bhavin as a co-signatory. The evidence established that Mr Bhavin had consented to the withdrawal of each notice of resignation: at [22] to [26].

(4) The proposition that the doctrine of estoppel by convention in Singapore, strictly understood, was an evidential doctrine applied specifically to aid in the construction of agreements, was not uncontroversial in light of English high judicial authorities suggesting that estoppel by convention was a manifestation of a unified and broader principle that where parties had proceeded on an underlying assumption, neither of them would be entitled to subsequently deny that assumption if it was unjust to do so: at [27] to [32].

(5) The requirements for estoppel by convention to operate were laid out in the Singapore landmark case of Travista Development Pte Ltd v Tan Kim Swee Augustine[2008] 2 SLR(R) 474. The question was whether these requirements should be applied exclusively to parties to a contract (the “Contractual Approach”) or whether they could be extended more broadly to parties in other dealings and transactions (the “Broad Approach”): at [33] and [34].

(6) It appeared that the applicability of estoppel by convention to non-contractual dealings had not yet been fully settled in Singapore. While there were cases that appeared to have adopted either the Contractual Approach or the Broad Approach, the courts had not yet undertaken an in-depth consideration of which approach would be more appropriate: at [35] to [38].

(7) As it had been concluded that Mr Bhavin had consented to the withdrawal of each notice of resignation, it was not necessary for this court to consider whether estoppel by convention should apply beyond the contractual context or to shareholders or co-directors of a company. However, if estoppel by convention could have been invoked by the respondents, Mr Bhavin would have been estopped from denying Mr Sahni's directorship: at [39] and [40].

(8) Although the respondents did not produce any other directors' resolutions signed by Mr Sahni after the Resignations or any other documentation to establish that Mr Sahni had continued as a director with Arpee Gem's consent, the available evidence sufficed to establish that Mr Sahni had continued to act and been permitted to continue to act as a director. The resolution passed on 24 December 2021 by the respondents to re-confirm Mr Sahni's directorship appeared to further confirm his directorship to avoid argument rather than tell any other “truth of the matter” as suggested by Mr Bhavin: at [41].

(9) The point that a resignation was effective when a notice of resignation was sent did not preclude the withdrawal of the notice by consent. Otherwise, there could never be a withdrawal in most situations where notice of resignation was given: at [43].

(10) Mr Bhavin's attempt to amend OS 1267 to rely on s 18 and the First Schedule to the SCJA to enforce ss 145(4A) and 145(4B) of the CA was misplaced. These provisions were to facilitate the resignation of a director even without the consent of the company and did not preclude the company and the director from agreeing to the withdrawal of his resignation notice: at [44].

Case(s) referred to

Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84; [1981] 3 All ER 577 (refd)

Bhavin Rashmi Mehta v Chetan Mehta [2022] SGHC 173 (refd)

Blindley Heath Investments Ltd v Bass [2017] Ch 389 (refd)

Chan Yun Cheong v Chan Chi Cheong [2021] 2 SLR 67 (refd)

Day, Ashley Francis v Yeo Chin Huat Anthony [2020] 5 SLR 514 (refd)

Glossop v Glossop [1907] 2 Ch 370 (folld)

Keen v Holland [1984] 1 WLR 251 (refd)

MAE Engineering Ltd v Fire-Stop Marketing Services Pte Ltd [2005] 1 SLR(R) 379; [2005] 1 SLR 379 (refd)

MCST Plan No 473 v De Beers Jewellery Pte Ltd [2002] 1 SLR(R) 418; [2002] 2 SLR 1 (refd)

Revenue and Customs Commissioners v Benchdollar Ltd [2010] 1 All ER 174 (refd)

Singapore Island Country Club v Hilborne [1996] 3 SLR(R) 418; [1997] 1 SLR 248 (refd)

Tinkler v Revenue and Customs Commissioners [2022] AC 886; [2021] 3 WLR 697 (refd)

Travista Development Pte Ltd v Tan Kim Swee Augustine [2008] 2 SLR(R) 474; [2008] 2 SLR 474 (folld)

Facts

The appellant (“Mr Bhavin”) and the first respondent (“Mr Chetan”) were directors and shareholders of the fourth respondent company (“Arpee Gem”). Besides Mr Bhavin and Mr Chetan, the board of Arpee Gem comprised the second respondent (“Mr Sahni”), the third respondent (“Mr Quek”) and one Mr Pradipkumar Modi. Arpee Gem was a majority shareholder and in direct control of two subsidiaries (“Kay Diamonds” and “GES”), which in turned owned another subsidiary (“MIC”).

On 14 December 2015 and 4 December 2018, Mr Sahni submitted notices of resignation from his directorship in Arpee Gem (the “Resignations”). In 2020, Mr Bhavin disagreed with Mr Chetan's proposal to sell a property belonging to MIC (the “Property”). On 16 July 2021, Mr Chetan called for board meetings of Kay Diamonds and MIC for the purpose of convening annual general meetings (“AGMs”) for the two companies. He sought to add to the agenda of Kay Diamonds' AGM the determination of who was allowed to vote on Kay Diamonds' behalf in MIC's affairs, and to add to the agenda of MIC's AGM the decision to sell the Property.

On 3 October 2021, Mr Bhavin received copies of directors' resolutions appointing Mr Chetan as Arpee Gem's proxy for MIC's and Kay Diamonds' AGMs, which had been signed by Mr Chetan, Mr Sahni and Mr Quek (the “Purported Resolutions”). On 5 October 2021, Mr Bhavin objected by e-mail to the validity of the Purported Resolutions.

In HC/OS 1267/2021 (“OS 1267”), Mr Bhavin alleged that Mr Sahni had ceased to be a director of Arpee Gem and his approval of the Purported Resolutions was hence invalid. As OS 1267 was filed in reliance on ss 399(2) and 409A of the Companies Act (Cap 50, 2006 Rev Ed) (the “CA”) which required an act that contravened the CA or related to a requirement necessitated by the CA, Mr Bhavin sought to rely on a contravention of ss 173A and 39 of the CA. Mr Bhavin also unsuccessfully applied to amend OS 1267 to rely on s 18 read with the First Schedule to the Supreme Court of Judicature Act 1969 (2020 Rev Ed) (the “SCJA”) so as to enforce ss 145(4A) and 145(4B) CA as an alternative basis for his claims. The respondents contended that the conduct of Arpee Gem, Mr Bhavin and Mr Sahni sufficed to amount to consent to the withdrawal of the Resignations, and that further/alternatively, Mr Bhavin was estopped by convention from denying that Mr Sahni continued to be a director of Arpee Gem. The Judge below dismissed OS 1267.

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed) ss 39, 145(4A), 145(4B), 173A, 399(2), 409A

Supreme Court of Judicature Act 1969 (2020 Rev Ed) s 18, First Schedule

Jerald Foo and Luis Inaki Duhart Gonzalez (Selvam LLC) for the appellant;

Koh Swee Yen SC, Ang Shunli Alanna Suegene UyandTeo Wei Kiat Samuel (WongPartnership LLP) for the first to third respondents;

Fourth respondent absent and unrepresented.

15 May 2023

Woo Bih Li JAD (delivering the grounds of decision of the court):

Introduction

1 This appeal centred around the question of whether one of the respondents had withdrawn his resignation from his directorship of a company, which would in turn affect whether he could have validly voted on resolutions passed by the company's board. We dismissed the appeal on 27 April 2023 and issue our grounds of decision as follows.

2 The appellant, Mr Bhavin Rashmi Mehta (“Mr Bhavin”), and the first respondent, Mr Chetan Mehta (“Mr Chetan”) were cousins. Mr Bhavin's father, Mr Rashmi Mehta (“Mr Rashmi”), and Mr Chetan's father, Mr Prabodh Mehta (“Mr Prabodh”) had incorporated the fourth respondent company, Arpee Gem Pte Ltd (“Arpee Gem”). Though patriarchs, the two fathers were not directors or...