Jumabhoy Rafiq v Scotts Investments (Singapore) Pte Ltd
| Judge | Chao Hick Tin JA |
| Judgment Date | 06 October 2004 |
| Neutral Citation | [2004] SGCA 48 |
| Defendant Counsel | Harish Kumar and Linda Ong (Engelin Teh Practice LLC) |
| Subject Matter | Remuneration,Meaning of "indemnify for ... costs and expenses",Costs,Civil Procedure,Whether such agreements amounting to undertaking to remunerate appellant on time-costs basis,Appellant director of respondent company,Implied contracts,Directors,Respondent's articles of association specifically providing for appellant's remuneration,Whether trial judge correct in awarding costs of proceedings to respondent,Contract,Respondent conceding liability for expenses properly incurred by appellant,Companies,Whether covering appellant's remuneration,Trial judge ordering Registrar to conduct inquiry as to expenses incurred by appellant,Whether appellant nevertheless entitled to remuneration on quantum meruit basis,Respondent passing resolutions and issuing indemnities purporting to indemnify appellant for costs and expenses incurred,Words and Phrases,Quantum meruit |
| Published date | 11 October 2004 |
| Plaintiff Counsel | Tan Bar Tien and Winston Quek Seng Soon (B T Tan and Co) |
| Court | Court of Three Judges (Singapore) |
6 October 2004
Chao Hick Tin JA (delivering the judgment of the court):
1 This was an appeal by a director of a company against a decision of the High Court refusing his claim for remuneration: see Scotts Investments (Singapore) Pte Ltd v Jumabhoy Ameerali
The background
2 The respondent, Scotts Investment (Singapore) Pte Ltd (“SIS”), a company then under compulsory liquidation, instituted Suit No 736 of 2002, against, inter alia, the appellant, Rafiq Jumabhoy (“RJ”), for breaches of duty as a director of SIS. The other two defendants to the action were Ameerali R Jumabhoy, the father of RJ, and Iqbal Jumabhoy, the brother of RJ. In turn, RJ counterclaimed for remuneration amounting to some $916,275 allegedly due to him from SIS, as well as for the reimbursement of expenses totalling $164,034.68, which RJ asserted that he had incurred on account of SIS. Eventually, the claim of SIS against RJ and the other two defendants was discontinued. What remained was the counterclaim of RJ.
3 The counterclaim was in respect of work done and services rendered by RJ to SIS as well as expenses incurred by him on account of SIS pursuant to three resolutions passed by the board of SIS, ie, the resolutions of 27 July 1996, 6 August 1996 and 18 June 1997, and the written indemnities dated 30 June 1997 and 9 October 1997 given by SIS to RJ.
4 SIS was incorporated in May 1991 to hold the Jumabhoy family’s stake in Scotts Holding Ltd, a public listed company. One of SIS’s main subsidiaries was Lion City Holdings Pte Ltd (“LCH”). Besides the persons already mentioned above, the other members of the Jumabhoy family which we ought to identify for this case are Yusuf Jumabhoy (“YJ”) and Mustafa Jumabhoy (“MJ”), who are the brothers of ARJ and uncles of RJ; and Assad Jumabhoy (“AJ”), a brother of RJ.
5 By the mid-1990s, the members of the Jumabhoy family, including grandfather Rajabali Jumabhoy, were involved in protracted legal proceedings brought about by a certain financial crisis in SIS. Banks which had granted facilities to SIS became alarmed. The members of the Jumabhoy family were concerned that the banks might act against SIS.
6 It was during that period that the resolutions were passed by the board of SIS empowering YJ and RJ to carry out certain acts on behalf of the company. YJ and RJ were expected to deal with the banks, which RJ did. We would observe that in undertaking the tasks, RJ would also be protecting his own interest in SIS. As the counterclaim of RJ rested entirely on the resolutions passed and the indemnities given, it is necessary that we set out the material parts of those documents in extenso:
27 July 1996 resolution
IT WAS RESOLVED THAT without prejudice to their respective rights and the right of the other plaintiffs and/or defendants [sic] under the various suits which have been filed and further reserving the rights of some of the Company directors challenging the legality of the investment in LCH and the guarantees provided to LCH by the Company pursuant to Article 112 of the Articles of Association of the Company Mr Yusuf Jumabhoy and Mr Rafiq Jumabhoy be appointed from among the directors of the Company to review the Company’s investment in LCH to determine the steps (if any) to be taken by the Company to safeguard the Company’s investment in LCH and all amounts owing to the Company or guaranteed by Company for the debts of LCH and to exercise all the powers of the Board in connection therewith and all things incidental thereto including without limitation:
(a) deciding all questions, taking all steps required and approving all matters to give effect to such steps as they may agree to take vis-à-vis LCH pursuant to their review;
(b) obtaining such reports or other data as they may deem necessary to assist them in their review and in determining the steps to be taken vis-à-vis LCH;
(c) instructing M/s Rajah & Tann as solicitors for the Company, and any other professional advisers (including auditors) or any third party on all matters relating to LCH and to settle the terms of their appointment; and
(d) exercising all discretion and doing all acts and things necessary or expedient to give effect to all matters referred to in this resolution.
and the Company shall indemnify Mr Yusuf Jumabhoy and Mr Rafiq Jumabhoy for all costs and expenses incurred by them (or each of them) personally in respect of their appointment.
That M/s Rajah & Tann be appointed as the Company’s solicitors to act for the Company in relation to all matters regarding LCH …
[emphasis added]
[The 6 August 1996 resolution was in all material respects similar to that dated 27 July 1996 except that this related to SIS’s investment in SHL.]
18 June 1997 resolution
IT WAS RESOLVED that in consideration for his taking action for the recovery of the assets of the company, Mr Rafiq Jumabhoy be fully indemnified for all costs and expenses incurred and against all legal liability as far as permitted by law with regards to LCH, its subsidiaries and associates and in the pursuit of any action to be taken on behalf of SIS/LCH as advised by the company’s solicitors. [emphasis added]
30 June 1997 indemnity
In consideration of your agreeing to reasonably assist (at the cost and expense of the relevant company and/or ourselves) (1) in the recovery of the assets of SIS, Lion City Holdings Pte Ltd (LCH) and/or its subsidiaries and associated companies, and including, without limitation, Scotts Weitnauer Retailing Pte Ltd, Cost Plus Pte Ltd, Connoisseurs (Private) Limited, Landberg Holdings Pte Ltd and Richberg Holdings Pte Ltd (“LCH Group”) (2) the prosecution of any claim which any company of the LCH Group may have and/or (3) any reasonable action in connection with the affairs of any company of the LCH Group as may be advised by the company’s solicitors, we agree to indemnify you and keep you indemnified at all times, to the extent permitted by law, out of our assets against all costs and expenses and liabilities incurred or suffered by you in connection with any of the foregoing, until such time as this indemnity is revoked in writing. [emphasis added]
9 October 1997 indemnity
In consideration of having agreed to our request to undertake such duties as Nominee Director of Rosebury Holdings Limited, a New Zealand incorporated Company, we … will indemnify you, and keep you indemnified against all claims, demands, and payments for which you may in the course of or arising out of such service render yourself liable and against all actions, suits, proceedings,...
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