FAYYAZ AHMAD & Anor v MUSTAQ AHMAD @ MUSHTAQ AHMAD S/O MUSTAFA & 3 Ors
[2024] SGHC(A) 17 High Court (Appellate Division) 15 May 2024 • AD/CA 91/2021|AD/CA 93/2021|AD/CA 92/2021|AD/CA 94/2021|AD/CA 96/2021|AD/CA 95/2021|AD/CA 132/2021|AD/CA 133/2021|AD/CA 136/2021|AD/CA 135/2021|AD/CA 134/2021|AD/CA 5/2022 • 210 min read
50 cases cited
(47 SG, 3 foreign)
Cited by 4 cases
Catchwords
Practice Areas
Counsel (27)
Darshan & Teo LLP Firm Davinder Singh Chambers LLC Firm Rajah & Tann Singapore LLP Firm Selvam LLC Firm WongPartnership LLP Firm Avtar Ranee Kaur Purain Counsel Respondent Axl Rizqy Counsel Appellant Bryan Wong Counsel Respondent Chia Ming Yee Doreen (Xie Minyi) Counsel Appellant Claire Lim Counsel Appellant Davinder Singh Counsel Respondent Hannah Lee Ming Shan Counsel Appellant Irina Golovkovskaya Counsel Respondent Jaikanth Shankar Counsel Respondent Koh Swee Yen Counsel Appellant Loh Weijie Leonard Counsel Appellant Quek Yi Zhi Joel (Guo Yizhi) Counsel Appellant Roshan Singh Chopra Counsel Appellant Sarbjit Singh Chopra Counsel Appellant Shawn Ang De Xian Counsel Appellant Singh Purain Darshan Counsel Respondent Sngeeta Rai Counsel Respondent Tan Ruo Yu Counsel Respondent Tiong Teck Wee Counsel Appellant Vanisha Ishwar Chandiramani Counsel Respondent Wong Yan Yee Counsel Appellant Yuen Zi Gui Counsel Appellant
Parties (12)
Mohamed Mustafa & Samsuddin Co. Pte Ltd Respondent Ansar Ahmad Appellant Asia Respondent Ayaz Ahmed Respondent Fayyaz Ahmad Appellant Iqbal Ahmad Appellant Ishret Jahan Appellant Ishtiaq Ahmad Respondent Khalida Bano Respondent Maaz Ahmad Khan Respondent Mustaq Ahmad @ Mushtaq Ahmad s/o Mustafa Appellant Wasela Tasneem Respondent
Case Significance
FAYYAZ AHMAD & Anor v MUSTAQ AHMAD @ MUSHTAQ AHMAD S/O MUSTAFA & 3 Ors [2024] SGHC(A) 17 was decided by the Appellate Division of the High Court of Singapore on 15 May 2024. The matter concerned company law and the oppression of minority shareholders, and arose from a large group of consolidated Appellate Division civil appeals — including Civil Appeals Nos 91, 92, 93, 94, 132, 133, 134, 135 and 136 of 2021 — among members of the Ahmad family and Mohamed Mustafa & Samsuddin Co. Pte Ltd. The judgment head names a coram of Debbie Ong Siew Ling, Kannan Ramesh and Woo Bih Li. The parties were represented by firms including Rajah & Tann Singapore LLP, Selvam LLC, WongPartnership LLP, Davinder Singh Chambers LLC and Darshan & Teo LLP, with counsel including Davinder Singh, Jaikanth Shankar and Koh Swee Yen.
[2024] SGHC(A) 17 explained
FAYYAZ AHMAD & Anor v MUSTAQ AHMAD @ MUSHTAQ AHMAD S/O MUSTAFA & 3 Ors ([2024] SGHC(A) 17) is a Singapore judgment decided by the High Court (Appellate Division) on 15 May 2024. It is categorised under Companies. Within this corpus it has since been cited by 4 other reported Singapore judgments, a measure of how often later decisions have referred to it. This page summarises what the reported decision covers and links the primary sources — the full judgment, the statutes it cites, and the other cases it engages with — so the decision can be read in context. It is reference information, not legal advice, and it does not state the outcome or any holding beyond what the official judgment records.
What is [2024] SGHC(A) 17 about?
FAYYAZ AHMAD & Anor v MUSTAQ AHMAD @ MUSHTAQ AHMAD S/O MUSTAFA & 3 Ors ([2024] SGHC(A) 17) is a High Court (Appellate Division) decision from 2024. Its published catchwords are “Companies — Oppression — Minority shareholders”, which indicate the subject matter the judgment addresses. The full reasoning and orders are in the judgment itself, linked below.
Which legislation does [2024] SGHC(A) 17 consider?
The judgment refers to Companies Act (Cap 50), Conveyancing and Law of Property Act (Cap 61), Evidence Act (Cap 97), and Limitation Act (Cap 163), among other provisions. The statutes cited are listed in full on this page, each linking to its primary text.
How influential is [2024] SGHC(A) 17?
Within this corpus, [2024] SGHC(A) 17 has been cited by 4 later reported Singapore judgments. That count reflects references from other decisions held in this corpus only and is a conservative lower bound on how often the case has actually been cited.
Summary
SUPREME COURT OF SINGAPORE
15 May 2024
Case summary
Mustaq Ahmad (alias Mushtaq Ahmad s/o Mustafa) and another v Ayaz Ahmed and others and other appeals [2024] SGHC(A) 17
Civil Appeal Nos. 132 to 136 of 2021 and 91 to 96 of 2021 and 5 of 2022
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Decision of the Appellate Division of the High Court (delivered by Justice Woo Bih Li):
Outcome: The Appellate Division dismisses the appeal of Mustaq Ahmad @ Mushtaq Ahmad s/o Mustafa (“Mustaq”), Ishret Jahan (“Ishret”) and Iqbal Ahmad (“Iqbal”) against the decision of the General Division of the High Court relating to claims for minority oppression in respect of Mohamed Mustafa & Samsuddin Co Pte Ltd (“MMSCPL”) and for breaches of duties by Mustaq in administering two estates, save that the Appellate Division agreed that the Judge erred in finding that certain share allotments were oppressive. The Appellate Division also partially allows the appeal by the beneficiaries of the estate of Mr Samsuddin s/o Mokhtar Ahmad (“Samsuddin”) against the Judge’s findings in respect of certain instances of oppression.
Pertinent and significant points of the judgment
• An appellate court should only exercise its powers under s 41(7)(b) of the Supreme Court of Judicature Act 1969 (2020 Rev Ed) in favour of a respondent who has not appealed where (a) the exercise of this power does not unduly prejudice other parties to the appeal; and (b) it would be clearly unjust not to do so: at [411].
Background to the appeal
1 The present cross-appeals arose from three suits against Mustaq, either individually or together with his wife, Ishret, his brother-in-law, Iqbal (collectively, the “Mustaq Group”) and the children of Mustaq and Ishret. Members of the Mustaq Group were directors of MMSCPL, and Iqbal was additionally the company secretary. Collectively, Mustaq and Ishret also held a majority of the shares in MMSCPL. The remaining shareholders in MMSCPL were the estates of Samsuddin and of Mr Mustafa s/o Majid Khan (“Mustafa”), who was Mustaq’s father.
2 Mustafa and Samsuddin had commenced a wholesale business through a partnership known as Mohamed Mustafa & Samsuddin Co (“MMSC”) on 11 July 1973. This business was taken over by MMSCPL, which was incorporated in Singapore on 21 February 1989. Mustaq, Samsuddin and Mustafa were directors in MMSCPL. A total of eight share allotments were carried out in MMSCPL after its incorporation.
3 Mustafa died intestate in July 2001. Mustaq was subsequently appointed as the administrator of the estate. Samsuddin died in April 2011. Pursuant to his will, Mustaq and Samsuddin’s son, Fayyaz Ahmad (“Fayyaz”), were appointed joint and several executors and trustees of his estate.
4 HC/S 1158/2017 (“Suit 1158”) and HCF/S 9/2017 (“Suit 9”) were commenced by the beneficiaries of the Mustafa Estate (the “Mustafa Estate Beneficiaries”) for claims against the Mustaq Group for minority oppression and against Mustaq for breaches of duty in his capacity as administrator and trustee of the Mustafa Estate.
5 HC/S 780/2018 (“Suit 780”) was commenced by the beneficiaries of the Samsuddin Estate (the “Samsuddin Estate Beneficiaries”) for claims of minority oppression by the Mustaq Group, as well as claims that Mustaq held one-third of various assets on trust for the Samsuddin Estate, and that Mustaq had breached his fiduciary duties as executor and trustee of the Samsuddin Estate. The Mustafa Estate Beneficiaries and Samsuddin Estate Beneficiaries are collectively referred to as the “Claimant Beneficiaries”.
6 The three suits were heard together in the General Division of the High Court. The Mustaq Group elected to call no evidence and made a submission of no case to answer in the suits. The Judge made the following findings which were the subject of the present appeals:
a. The Mustafa Estate Beneficiaries had locus standi to bring Suit 1158 notwithstanding that they were not registered shareholders of MMSCPL.
b. Mustaq was not MMSCPL’s sole beneficial owner. The Mustaq Group did not prove the alleged common understandings (the “Common Understandings”) with Mustafa and Samsuddin in 1973 and with the Mustafa Estate Beneficiaries in 2001 that the shares registered in the names of Mustafa and Samsuddin were held on trust for Mustaq.
c. A prima facie case had been established that:
i. Share allotments carried out on 5 January 1995 and 11 December 2001 (the “1995 and 2001 Allotments”) were oppressive.
ii. Share allotments carried out on 27 June 1991, 16 January 1993 and 19 May 1993 (the “1991 and 1993 Allotments”) were oppressive.
iii. Oppression was established on account of various incidents of misappropriation of MMSCPL’s funds by the Mustaq Group, namely, the taking of unsecured and interest-free loans from MMSCPL (the “Directors’ Loans”), the false overstatement of employees’ salaries in work pass applications to the Ministry of Manpower (“MOM”) coupled with collection back of the difference between the declared and actual salaries for Mustaq’s personal benefit (the “Cashback Scheme”) and the non-declaration of dividends to shareholders while substantial directors’ fees were paid to the Mustaq Group.
d. The Samsuddin Estate Beneficiaries could not establish a prima facie case that:
i. Mustaq had wrongfully caused MMSCPL to pay substantial consultancy fees to Zero and One (“Z&O”), a sole proprietorship set up by Mustaq.
ii. The Mustaq Group had caused MMSCPL to provide goods to related companies on credit terms without receiving payment.
iii. Mustaq had caused loss to MMSCPL through issuing three-year bearer bonds (the “Bonds”) paying interest at 4.75% per annum and placing the bond monies into fixed deposit accounts at a lower interest rate of 1.3% per annum.
e. Mustaq was in breach of his duties as executor and trustee of the Samsuddin Estate and administrator and trustee of the Mustafa Estate.
f. The Mustaq Group could not establish the defences of laches or acquiescence.
7 The Judge set aside the 1995 and 2001 Allotments, but declined to set aside the 1991 and 1993 Allotments notwithstanding that they were prima facie oppressive as that would adversely affect the interest of the Mustafa Estate Beneficiaries. The Judge also ordered Mustaq and Ishret to buy out the shares of the Mustafa and Samsuddin Estates at a price to be determined by an independent valuer (the “Valuer”).
8 The Judge also granted declarations that Mustaq had breached his duties as executor and trustee of the Samsuddin Estate, and as administrator and trustee of the Mustafa Estate. The Judge ordered that Mustaq give an account of his administration of the Mustafa Estate and granted a declaration that he was liable to account for losses caused to the estate by his breaches of duty on a wilful default basis.
9 Dissatisfied with various aspects of the Judge’s decision, the Mustaq Group and the Samsuddin Estate Beneficiaries filed the present cross-appeals. The Mustafa Estate Beneficiaries did not file any appeal.
Decision on appeal
The Locus Standi Issue
10 The Mustafa Estate Beneficiaries had locus standi to bring Suit 1158 under the exception in Wong Moy (administratrix of the estate of Theng Chee Khim, deceased) v Soo Ah Choy [1996] 3 SLR(R) 27 (“Wong Moy”). Their claims fell within the classic example where the personal representative of the estate, Mustaq, was the person against whom the claims were made: at [106] to [108].
The Ownership and Legitimate Expectations Issue
11 The evidence did not support the Mustaq Group’s allegation that Mustaq was the beneficial owner of all the shares in MMSCPL. Mustafa and Samsuddin were allotted shares and received partnership income from MMSC and dividends from MMSCPL. The alleged Common Understandings were also undermined by the available evidence, and by the Mustaq Group’s belated attempt to rely on the inconsistent narrative that Mustaq gave shares in MMSCPL to the Mustafa and Samsuddin Estates: at [112].
The 1995 and 2001 Allotments
12 The 1995 and 2001 Allotments were oppressive. There was inadequate evidence to suggest that Mustafa or Samsuddin knew of and consented to these allotments. There was also no commercial justification for these allotments and the resulting dilution of Mustafa’s and Samsuddin’s shareholdings: at [183].
The 1991 and 1993 Allotments
13 The Judge erred in finding that the 1991 and 1993 Allotments were oppressive. The allotments only benefitted Mustafa, rather than Mustaq and/or Ishret: at [188] and [195].
The Directors’ Loans Issue
14 The Directors’ Loans were oppressive. The Mustaq Group could not prove that there was an agreed and longstanding practice of such loans being taken by MMSCPL’s directors, and there was no commercial purpose to the loans: at [205] to [209].
The Dividend-Fees Issue
15 The non-payment of dividends, coupled with the excessive payment to the Mustaq Group of directors’ fees which could not be justified, was commercially unfair and oppressive: at [229].
The Cashback Scheme Issue
16 The Cashback Scheme existed and Mustaq had initiated it. This was oppressive as Mustaq had perpetuated it despite it being against the interests of the shareholders of MMSCPL: at [253] to [255].
The Consultancy Fees Issue
17 There was a prima facie case of oppression with respect to the payment of high consultancy fees to Z&O. These were essentially payments to Mustaq since there was no real distinction between Z&O and Mustaq, and were not made in consideration for genuine consultancy services performed: at [260] to [266].
The Related-Parties Transaction Issue
18 There was a prima facie case of oppression with respect to MMSCPL’s transactions on credit with parties related to the Mustaq Group. There was sufficient prima facie evidence of moneys that were unaccounted for and which called for an explanation: at [279] to [286].
The Bonds Issue
19 The Samsuddin Estate Beneficiaries had not established a prima facie case that the issuance of the Bonds and the placement of the proceeds into fixed deposit accounts amounted to oppressive conduct: at [314] to [316].
Whether the alleged acts of misappropriation constitute a personal wrongdoing
20 The Claimant Beneficiaries had brought the present proceedings in respect of injury suffered to their interests as minority shareholders. They were not seeking for the misappropriated moneys to be returned to MMSCPL. Therefore, the Mustaq Group’s contention that a derivative action was more appropriate was rejected: at [317] to [324].
The Defences Issue
21 The Mustaq Group was not entitled to rely on the defence of laches, which did not apply to the claim for statutory relief under s 216 of the Companies Act. In any event, the Mustaq Group had not been prejudiced: at [327] to [338].
22 The Mustaq Group’s defence of acquiescence also failed. Mustafa, Samsuddin and/or the Claimant Beneficiaries had not conducted themselves in a manner supporting a reasonable inference that they had acquiesced to the oppressive acts: at [341].
The Estate Duties Issue
23 Mustaq had acted in breach of his duties as administrator and trustee of the Mustafa Estate and as executor and trustee of the Samsuddin Estate. He was party to the wrongful acts constituting oppressive conduct and took no steps to rectify or to inform the Claimant Beneficiaries of them: at [344].
The Counterclaims Issue
24 The Mustaq Group’s claims that Mustaq was the legal and beneficial owner of all the shares in MMSCPL and that Fayyaz had breached duties owed to the Samsuddin Estate and its beneficiaries by bringing Suit 780 in bad faith were rejected: at [351] to [352].
The Reliefs Issues
25 The Appellate Division’s decision in respect of reliefs was as follows:
a. The Judge’s decision to set aside the 1995 and 2001 Allotments was affirmed. The share allotments on 9 April 1996 and 24 February 1997 were also set aside since they were based on the 1995 Allotment which had been invalidated: at [359] to [366]
b. It would not be appropriate to order the Valuer to fully investigate the Mustaq Group’s misconduct and make appropriate adjustments to the purchase price to be paid under the buyout order: at [371] to [375].
c. The Valuer was directed, in determining the quantum of sums misappropriated by the Mustaq Group as a result of excessive directors’ fees, to take into account a reasonable amount (whether as directors’ fees or otherwise) to be accorded to Mustaq which was commensurate with the efforts he had expended in building up MMSCPL: at [376] to [385].
d. In determining the sums misappropriated under the Cashback Scheme, the Valuer should not be restricted to the evidence of the six former employees who testified at trial: at [386] to [389].
e. The Mustafa Estate Beneficiaries were entitled to a higher valuation of that estate’s shares to take into account the Samsuddin Estate Beneficiaries’ success on the Consultancy Fees Issue and the Related-Parties Transaction Issue, notwithstanding that they had not raised these claims: at [414] to [415].
f. The Judge’s decisions in relation to costs of Suit 780 and post-judgment interest were to stand: at [421] and [428].
This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.
What was FAYYAZ AHMAD v MUSTAQ AHMAD [2024] SGHC(A) 17 about?
Decided by the Appellate Division of the High Court of Singapore on 15 May 2024, the case concerned company law and oppression of minority shareholders. It arose from consolidated Civil Appeals among members of the Ahmad family and Mohamed Mustafa & Samsuddin Co. Pte Ltd.
Which judges heard [2024] SGHC(A) 17?
The judgment head of [2024] SGHC(A) 17 names a coram of Debbie Ong Siew Ling, Kannan Ramesh and Woo Bih Li. The matter consolidated multiple Appellate Division civil appeals from 2021 involving the Ahmad family and Mohamed Mustafa & Samsuddin Co. Pte Ltd.
Statutes Cited
Cases Cited (50)
SG (11)
[2001] SGHC 19 [2005] SGCA 4 [2015] SGHC 173 [2018] SGHC 192 [2020] SGHC 117 [2020] SGHC 161 [2020] SGHC 50 [2021] SGHC 276 [2022] SGHC 161 [2022] SGHC(A) 28 [2023] SGHC(A) 40
SLR (36)
[1991] 2 SLR(R) 114 [1994] 2 SLR(R) 501 [1995] 2 SLR(R) 304 [1996] 3 SLR(R) 27 [1999] 1 SLR(R) 773 [2000] 3 SLR(R) 530 [2005] 4 SLR(R) 417 [2006] 4 SLR(R) 745 [2006] 4 SLR(R) 95 [2009] 2 SLR(R) 1004 [2010] 2 SLR 209 [2010] 2 SLR 776 [2011] 1 SLR 582 [2012] 1 SLR 847 [2014] 4 SLR 723 [2015] 1 SLR 581 [2015] 5 SLR 1422 [2015] 5 SLR 307 [2016] 2 SLR 464 [2016] 5 SLR 103 [2017] 1 SLR 141 [2017] 4 SLR 1018 [2018] 2 SLR 333 [2018] 4 SLR 425 [2018] 5 SLR 1 [2019] 3 SLR 1168 [2019] 3 SLR 161 [2019] 5 SLR 366 [2020] 1 SLR 771 [2020] 2 SLR 221 [2020] 3 SLR 1329 [2021] 1 SLR 1217 [2021] 1 SLR 304 [2022] 1 SLR 136 [2022] 2 SLR 1250 [2023] 1 SLR 450
UK (1)
[1990] Ch 682
MY (2)
[1983] 2 MLJ 320 [2020] 5 MLJ 587
Referenced in
Statutes interpreted in this judgment
Legal concepts & references
Judgment
Read the full judgment on the official Singapore Courts portal.
Read on eLitigationSource: eLitigation ([2024] SGHC(A) 17)