Lakshmi Anil Salgaocar v Vivek Sudarshan Khabya

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: George Wei J
• Judgment Date: 26 May 2017
• Docket Number: Suit No 949 of 2016 (Registrar's Appeals Nos 13 and 31 of 2017)
• Date: 26 May 2017

[2017] SGHC 120

High Court

George Wei J

Suit No 949 of 2016 (Registrar's Appeals Nos 13 and 31 of 2017)

Lakshmi Anil Salgaocar

and

Vivek Sudarshan Khabya

Liew Teck Huat and Dafril Phua (Niru & Co LLC) for the plaintiff;

S Magintharan and Vineetha Gunasekaran (Essex LLC) for the defendant.

Afro-Asia Shipping Co (Pte) Ltd v Haridass Ho & Partners [2003] 2 SLR(R) 491; [2003] 2 SLR 491 (refd)

Antariksa Logistics Pte Ltd v McTrans Cargo (S) Pte Ltd [2012] 4 SLR 250 (folld)

Atkinson, Re [1971] VR 612 (refd)

Black Swan Investments ISA v Harvest View Ltd BVIHCV 2009/399 (refd)

Caudle v LD Law Ltd [2008] 1 WLR 1540 (distd)

Chee Siok Chin v Minister for Home Affairs [2006] 1 SLR(R) 582; [2006] 1 SLR 582 (folld)

Ching Chew Weng Paul v Ching Pui Sim [2010] 2 SLR 76 (distd)

Foss v Harbottle (1843) 2 Hare 461 (folld)

Gabriel Peter & Partners v Wee Chong Jin [1997] 3 SLR(R) 649; [1998] 1 SLR 374 (folld)

Hengwell Development Pte Ltd v Thing Chiang Ching [2002] 2 SLR(R) 454; [2002] 4 SLR 902 (refd)

Ingall v Morgan [1944] KB 160 (refd)

Lee v Lee's Air Farming Ltd [1961] AC 12 (folld)

Madan Mohan Singh v AG [2015] 2 SLR 1085 (folld)

Melati, The [2004] 4 SLR(R) 7; [2004] 4 SLR 7 (refd)

Metroinvest Ansalt v Commercial Union Assurance [1985] 1 WLR 513 (folld)

Ng Chee Weng v Lim Jit Ming Bryan [2012] 1 SLR 457 (folld)

Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Alhadad [1995] 2 SLR(R) 407; [1995] 3 SLR 388 (distd)

Riduan bin Yusof v Khng Thian Huat [2005] 2 SLR(R) 188; [2005] 2 SLR 188 (folld)

Teo Gim Tiong v Krishnasamy Pushpavathi [2014] 4 SLR 15 (folld)

Wellness Group Pte Ltd, The v OSIM International Ltd [2016] 3 SLR 729 (refd)

Wong Moy v Soo Ah Choy [1996] 3 SLR(R) 27; [1996] 3 SLR 398 (distd)

Civil Law Act (Cap 43, 1999 Rev Ed) s 10(1)

Interpretation Act (Cap 1, 2002 Rev Ed) s 2(5)

Intestate Succession Act (Cap 146, 2013 Rev Ed) s 7

Probate and Administration Act (Cap 251, 2000 Rev Ed) s 37(1)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 2 r 1(1), O 2 r 1(2), O 18 r 19(1)(b), O 18 r 19(1)(d), O 42 r 8(1), O 42 r 8(3), O 42 r 8(4), O 62 r 6(3)

Business Companies Act 2004 (No 16 of 2004) (British Virgin Islands) ss 109(1), 109(6), 113(7)

Civil Procedure — Striking out — Defendant applying to strike out plaintiff's claim on ground that plaintiff lacks locus standi — Whether proceedings should be struck out for being scandalous, frivolous or vexatious — Whether proceedings should be struck out for being abuse of process of court — Order 18 rule 19(1) Rules of Court (Cap 322, R 5, 2014 Rev Ed)

Companies — Derivative action — Common law derivative action — Plaintiff relying on exceptions to proper plaintiff rule — Whether exceptions to proper plaintiff rule applicable to beneficiaries of deceased former shareholder's unadministered estate

Probate and Administration — Administrator — Locus standi — Action brought by beneficiary of estate — Beneficiary seeking to sue before grant of letters of administration in respect of property belonging to company wholly-owned by deceased

The plaintiff was the widow of the late Anil Vassudeva Salgaocar (“AVS”), who died intestate. The plaintiff and her four children were the beneficiaries of the estate (“the Estate”). At the time of these proceedings, the plaintiff had applied for, but had not obtained, the grant of letters of administration.

In his lifetime, AVS was the sole director and shareholder of Million Dragon Wealth Ltd (“MDWL”), a BVI-incorporated company which, in turn, was sole shareholder in 22 BVI-incorporated subsidiaries. Each subsidiary owned a condominium unit (“the 22 units”). The 22 units were leased to tenants. The defendant was appointed by AVS as the chief executive officer (“CEO”) of MDWL. After AVS' passing, the defendant continued to act as the CEO of MDWL in various ways including, inter alia, instructing the tenants of the 22 units to pay their rent into a new escrow account, and entering into a new agreement to lease one of the 22 units to a tenant. After AVS' daughter seized MDWL's documents and records from MDWL's offices, the defendant also commenced proceedings seeking delivery up of those documents and records.

The plaintiff took the view that the defendant had no authority to deal in the assets and income of MDWL and its subsidiaries, or to manage their affairs. She brought claims against the defendant for conspiracy, conversion, and breach of fiduciary duty. She also brought a claim in breach of trust for several allegedly unauthorised withdrawals which the defendant made using AVS' ATM card while AVS was alive. The statement of claim stated that the plaintiff had commenced the action as a beneficiary of the Estate, for her own benefit and for the benefit of her children.

The defendant applied to strike out the plaintiff's statement of claim under O 18 r 19(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules”), alleging that the plaintiff lacked capacity to act for the Estate because she had not been duly appointed as administrator. The defendant also argued that the assets and income in question belonged to MDWL and its subsidiaries, and not the Estate. The assistant registrar (“AR”) allowed the defendant's application and struck out the statement of claim. The plaintiff appealed against this decision in Registrar's Appeal No 13 of 2017.

After the AR struck out the plaintiff's statement of claim, the defendant's solicitors drew up a draft order of court and sent it to the plaintiff's solicitors. The defendant's solicitors then extracted the order of court, allegedly without giving the plaintiff's solicitors two days to respond as required by O 42 r 8(1) of the Rules. The plaintiff's solicitors wrote to court requesting that the order be set aside, and explained that the plaintiff took issue with the preamble to the order. The AR declined to set aside the order, but stated that the plaintiff was at liberty to apply to have the preamble to the order amended. The plaintiff appealed against the AR's decision declining to set aside the order in Registrar's Appeal No 31 of 2017.

Held, dismissing both appeals:

(1) As the plaintiff had framed her claim as an action to recover, preserve or protect the assets of the Estate, the issue of locus standi would be decided on that basis: at [37].

(2) The line of authorities comprising Wong Moy v Soo Ah Choy [1996] 3 SLR(R) 27, Omar Ali bin Mohd v Syed Jafaralsadeg bin Abdulkadir Allhadad [1995] 2 SLR(R) 407 and Ching Chew Weng Paul v Ching Pui Sum [2010] 2 SLR(R) 407 (“the Wong MoyENR line of authorities”) had established that in certain special circumstances, a beneficiary could institute an action to recover the assets of an unadministered estate. Such a beneficiary was not confined to declaratory reliefs and was entitled to claim any type of relief on behalf of the estate: at [45] and [47].

(3) The Wong Moy line of authorities was inapplicable to the present case. The plaintiffs in those cases had commenced actions to recover or protect property which belonged to the deceased, or which was held on trust for the beneficiaries and/or the deceased's estate. Unlike the plaintiffs in those cases, the plaintiff was seeking to assert an interest in income and assets which belonged not to AVS himself, but to a company which had been wholly owned by AVS: at [53] to [55].

(4) The 22 units and the rental income they generated belonged to the 22 subsidiaries and MDWL respectively. They had not vested in the Estate simply by virtue of AVS' passing. Only the shares in MDWL were the assets of the Estate. Thus, an application of the Wong MoyENR line of authorities could only entitle the plaintiff to sue to recover, protect, or preserve the shares in MDWL, but not MDWL's or the subsidiaries' income or assets: at [56] and [57].

(5) In order to have locus standi to sue in conversion, the plaintiff would need to have actual possession or a right to immediate possession of the 22 units and the rental income. The plaintiff had relied on Caudle v LD Law Ltd [2008] 1 WLR 1540 (“Caudle”) for the proposition that a person who was entitled to the grant of letters of administration had an immediate right to possession of personal property formerly owned by a deceased if it was necessary that he took possession to safeguard the deceased's estate. However, the principle in CaudleENR was limited to personal property formerly owned by the deceased. It did not enable the plaintiff to bring an action for conversion in respect of property belonging to MDWL and/or the 22 subsidiaries: at [48], [51], [52] and [61].

(6) The plaintiff was effectively seeking to combine the principles from the Wong Moy line of authorities with the exceptions to the proper plaintiff rule, such that it was not only a shareholder who could sue in respect of a loss suffered by a company, but also the beneficiaries of a deceased shareholder's unadministered estate. However, the plaintiff could not hope to establish locus standi simply by grafting these two principles onto each other: at [63].

(7) The claim for breach of trust was brought in respect of a cause of action which had accrued during AVS' lifetime and which survived his death. Under s 10(1) of the Civil Law Act (Cap 43, 1999 Rev Ed) read with s 37(1) of the Probate and Administration Act (Cap 251, 2000 Rev Ed), any such cause of action had vested in the Public Trustee. No other person was entitled to pursue this claim until the grant of letters of administration: at [69] and [70].

(8) The defendant had failed to comply with O 42 r 8(1) of the Rules. However, the only prejudice suffered by the plaintiff was that the plaintiff's solicitors would otherwise have had an opportunity to object to the draft order, and to propose amendments. However, if parties had not been able to agree, the terms of the order would have to be settled by the Registrar. That had already taken place in some sense through the plaintiff's correspondence with the court. Further, the AR had...