20 July 2018
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Mustafa founder fails to strike out step-family's lawsuit

Straits Times
10 Jul 2018
K.C. Vijayan

Mr Mustaq Ahmad, founder of the iconic Mustafa Centre, has failed in his High Court bid to strike out his step-family's high-stakes lawsuit against him and five others.

High Court Assistant Registrar Scott Tan ruled that there was a novel and "knotty" issue to be settled, and it was not " plain and obvious" - a criterion for striking out a lawsuit. This means the case will proceed to a full trial, unless the assistant registrar's decision is reversed on appeal.

Mr Mustaq and five others are being sued for alleged oppressive conduct under the Companies Act by his step-siblings and their mother. The other defendants are his wife, two children and his brother-in-law, all directors in Mohamed Mustafa and Samsuddin Co Pte Ltd (MMSCPL), which is also named as a defendant.

In judgment grounds last week, Assistant Registrar Tan pointed to a 2012 Court of Appeal decision which cautioned that "knotty points of law requiring serious argument... should not be decided by a court exercising summary jurisdiction."

Mr Mustaq, 67, is the son of Mr Mustafa Majid Khan and Madam Momina. After his mother died, his father married Madam Asia Abid Khan and had five children.

After the patriarch died intestate on July 17, 2001, his six children and Madam Asia became beneficiaries of the Mustafa estate in varying portions under a Syariah Court Inheritance Certificate. Mr Mustaq is the sole administrator and trustee of the estate.

At issue is the Mustafa estate's 14.89 per cent stake in MMSCPL, which Mr Mustaq's half-siblings and their mother claim was the result of two company share allotments in 1995 and 2001 which diluted their interests as beneficiaries of the Mustafa estate.

They are seeking to void the share allotments and obtain a court-ordered independent expert to assess losses allegedly suffered by MMSCPL as a result of the defendants' conduct, among other things.

Denying their claims of oppressive conduct, Mr Mustaq, defended by Rajah & Tann lawyers, argued that the suit should be struck off because the plaintiffs lacked the standing as they are beneficiaries - not personal representatives - of the Mustafa estate.

While conceding that beneficiaries can sue in special circumstances, the defendants' lawyer Jonathan Yuen said the exception would not apply to the case. He added that the complaint of alleged misappropriation is a corporate wrong, not oppression, and argued that the plaintiff's claim of "wrongful share allotment" is plainly unsustainable.

The plaintiffs, through Drew & Napier lawyer Sngeeta Rai, countered that their legal standing is within the scope of the exception cited, and the issues formed the subject of an action in oppression.

Assistant Registrar Tan declined to strike out the lawsuit in whole or in part, and instead ordered amendments to the plaintiffs' statement of claim, as well as their reply and defence to the counter-claim.

He noted the plaintiffs' claim that the defendants had used their positions in MMSCPL to divert the company's assets for personal benefit is a "singularly censurable" form of oppressive conduct.

But he made clear it might well be the case that at the end of the trial, the court will find that the allegations do not make for a case in oppression, and the case could be litigated in some other way.

"The question before me, at this interlocutory stage, is whether it is so 'plain and obvious' that the complaint is one which cannot be mounted by way of an action in oppression, and for the reasons which I have outlined, I answer this question in the negative," wrote Assistant Registrar Tan.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Ayaz Ahmed and others v Mustaq Ahmad (alias Mushtaq Ahmad s/o Mustafa) and others [2018] SGHCR 10