STRIKING OUT OF AN ORIGINATING APPLICATION
In Sullivan, Sir Cornelius Sean v Hill Capital Pte Ltd and another [2024] SGHC 198, the second respondent succeeded in striking out the whole of the action against her in HC/OA 820/2023 (“OA 820”).
Facts. OA 820 concerned two discretionary trusts executed by the Applicant’s late father by way of deed under the law of the Isle of Man, the “Anchor Trust” and the “Anchor Two Trust”, collectively the “Anchor Trusts”) (at [3]).
The beneficiaries of the Anchor Trust are the Applicant’s late father and the Anchor Two Trust; the beneficiaries of the Anchor Two Trust are the Applicant’s late father and his issue (at [3]).
The first respondent in OA 820 (“Hill Capital”) is a company incorporated in Singapore, and was appointed as the trustee of the Anchor Trusts (at [4]).
The second respondent in OA 820 (“Ms Ban”) is the sole shareholder and director of Hill Capital and practices as a lawyer (at [5]).
OA 820. The Applicant commenced OA 820 against Hill Capital and Ms Ban together, seeking, among others, a declaration that Ms Ban had breached her fiduciary duties (at [6]).
As against Ms Ban, “the underlying premise of his claims … is that a fiduciary relationship exists between Ms Ban and the beneficiaries of the Anchor Trusts … where Ms Ban owes them a fiduciary duty to account for the Trust Assets and Trust Moneys.” (at [7])
In support of OA 820, the Applicant filed his affidavit (the “Applicant’s OA Affidavit”) stating that (at [8]):
“… [Ms Ban] was or is managing the Anchor Trusts. … [Ms Ban] is the sole shareholder and sole director of [Hill Capital]. [Ms Ban] is effectively the controller of [Hill Capital]. [emphasis added]”
(emphasis in original by High Court)
In short, the Applicant’s claim against Ms Ban for breach of fiduciary duties was by virtue of Ms Ban being the sole shareholder and director of Hill Capital.
SUM 843. Ms Ban then filed HC/SUM 843/2024 (“SUM 843”) to strike out the whole of the Applicant’s action against her in OA 820 “on the grounds that she was not and had never been a trustee of the Anchor Trusts, and did not owe the Applicant (who claimed to be a beneficiary of the Anchor Two Trust and an ultimate beneficiary of the Anchor Trust) any duties.” (at [11])
The Applicant filed an affidavit in response (the “Applicant’s SUM 843 Affidavit”) which, among others, stated that, while the legal trustee was Hill Capital, Ms Ban was “a fiduciary vis-à-vis the Anchor Trusts”, with the basis being that “Ms Ban is the sole controller and decision-maker in relation to the Anchor Trusts and owes fiduciary obligations to the beneficiaries of the Anchor Trusts” (at [12]).
The principles for striking out an OA claim. The High Court started with the striking out provisions under O 9 r 16 of the Rules of Court 2021 (“ROC 2021”), and referred to the principles espoused in Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and others [1997] 3 SLR(R) 649 (“Gabriel Peter”) in the context of a writ action, now referred to as an action commenced by an originating claim (an “OC action”) under the ROC 2021 (at [24] – [26]).
The High Court then stated how the principles would apply in the context of striking out a claim in an action commenced by an originating application (an “OA action”) where there are no pleadings (at [27] – [33]).
First principle. The affidavit filed in support of the originating application (the “OA supporting affidavit”) will be treated as the equivalent of the claimant’s pleadings in an OC action.
This is because the OA supporting affidavit is intended to disclose the cause of action.
But “affidavits filed in the striking out application itself, which adduce further evidence, should not ordinarily be considered in determining the striking out application.”
Therefore, in a striking out application, whether a reasonable cause of action is made out is assessed only on the contents of the OA supporting affidavit.
Second principle. “[A]s only the OA supporting affidavit should ordinarily be considered where a defendant files an application to strike out the claim in an OA action, it would mean that the claimant’s evidence is not contradicted by competing evidence from the defendant.”
The court’s task is therefore “to evaluate whether the claimant’s evidence bears out the requisite factual substratum that would establish the legal cause of action advanced.”
This is in line with O 15 r 7(5) of the ROC 2021 where an OA action must be decided based on affidavit evidence, without oral evidence or cross-examination.
Nonetheless, in the present case, the High Court noted that Ms Ban’s legal team was (to their credit) prepared to and did engage with and address the further evidence adduced in the Applicant’s SUM 843 Affidavit, which was why the High Court considered the Applicant’s further evidence in determining SUM 843 (at [30]).
Result. The High Court considered and dismissed all three premises of the Applicant’s contention (the ad hoc fiduciary premise, the trustee de son tort premise, and the alter ego premise) that Ms Ban personally owed fiduciary duties to the trust beneficiaries (at [34] – [74]).
For the first two premises, Ms Ban was found to have been doing no more than acting as the agent of Hill Capital (at [64], [66]).
As for the last premise, the High Court highlighted that “it must be borne in mind that for one-man companies, the sole shareholder and director would almost always be the controlling mind and will of the company; this cannot be the basis for piercing the corporate veil in the case of every one-man company as that would defeat the point of incorporation …” (at [67]).
The High Court found no factual basis for the assertion that Ms Ban was the alter ego of Hill Capital (at [74]).
The High Court found that OA 820 disclosed no reasonable cause of action against Ms Ban and struck out the same under O 9 r 16(1)(a) of the ROC 2021 “because the Applicant cannot establish that she owed him fiduciary duties, which is the fundamental premise of his claims against her.” (at [75])
Significance. This case is useful for the principles of striking out an OA action as well as a reminder on the concept of separate legal personalities in the context of a one-man company and its sole shareholder and director. A company being a trustee does not automatically impose fiduciary duties to be owed by its director to the beneficiaries of the trust. This is unless the director had personally assumed fiduciary duties or obligations to the beneficiaries of the trust.
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