Scotts Investments (Singapore) Pte Ltd (in compulsory liquidation) v Jumabhoy Ameerali R and Others

• Judge: Choo Han Teck J
• Judgment Date: 05 February 2004
• Neutral Citation: [2004] SGHC 20
• Citation: [2004] SGHC 20
• Court: High Court (Singapore)
• Published date: 05 May 2004
• Plaintiff Counsel: Harish Kumar and Linda Ong (Engelin Teh Practice LLC)
• Defendant Counsel: Tan Bar Tien and Winston Quek (BT Tan and Co)
• Subject Matter: Companies,Directors,Remuneration,Where a board resolution stated that director was to be paid all costs and expenses incurred, whether that included payment of his fees on time costs or on a quantum meruit basis,Whether director had discharged his burden of proving meaning of the words in board resolution entitling him to costs and expenses.,Words and Phrases,'Costs and expenses',Whether the ordinary dictionary meaning of words was helpful,Whether words had to be construed in their context.

1 This action before me concerned the counterclaim of Rafiq Jumabhoy, who was the third defendant in the action brought by the liquidators of Scotts Investments (Singapore) Pte Ltd (“SIS”) against Ameerali R Jumabhoy, Iqbal Jumabhoy, and Rafiq Jumabhoy. The liquidators’ claim had been discontinued. Rafiq Jumabhoy’s claim here was for payment of his fees based on his time costs, or alternatively, payment on a quantum meruit basis; and secondly, for costs and expenses incurred by him on behalf of SIS, including the legal fees of various law firms.

2 Rafiq Jumabhoy’s claim was based solely on the ground that the board of directors of SIS had passed resolutions and issued letters of indemnities to that effect. The facts were not complicated but some necessary references had to be made to the history of the Jumabhoy family dispute that began publicly in 1995 in Suit No 1801 of 1995. In that action, Rajabali Jumabhoy together with two of his sons, Yusuf and Mustafa, sued his other son, Ameerali (the father of Rafiq Jumabhoy), Iqbal Jumabhoy (Rafiq’s brother) and Rafiq Jumabhoy himself. A side issue concerning an alleged share option in favour of Rafiq Jumabhoy turned him against his brother, Iqbal. Rafiq Jumabhoy subsequently switched allegiance in the family dispute to the Rajabali-Mustafa-Yusuf camp and, Ameerali and Iqbal brought an application to put SIS under receivership. That application was filed on 12 April 1996. That might have consequently worsened the financial problems of SIS, when its creditor-banks became, understandably, even more nervous. SIS was only a holding company which held shares in Scotts Holdings Ltd and various subsidiary companies such as Lion City Holdings Pte Ltd. Thus, with no trading or any substantial or active business, it had long not required a manager or managing director. However, because of the family dispute in court and with creditors making demands, action was needed.

3 Yusuf Jumabhoy and Rafiq Jumabhoy were authorised by board resolutions of 27 July 1996 and 6 August 1996 to take appropriate action to preserve the company. The two resolutions were identical in wording except that they concerned two different companies. One referred to Lion City Holdings Pte Ltd (“LCH”) and the other to Scotts Holdings Ltd. The relevant portions of the wording of the resolution is important and I set it out in full:

IT WAS RESOLVED THAT

without prejudice to their respective rights and the rights of the other plaintiffs and/or defendants under the various suits which have been filed and further reserving the rights of some of the Company [SIS] 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 and that they be entitled to take instructions from Mr Yusuf Jumabhoy and/or Mr Rafiq Jumabhoy in relation to all such matters.

4 Rafiq...