Reflective loss and dishonest assistance

• Main Authors: Tang, Samantha S., Koh, Alan K.
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2023
• Subjects: Business::Law::In South Asia::Singapore; Business::Law::Commercial; Company Law; Shareholders
• Online Access: https://hdl.handle.net/10356/164412
• Institution: Nanyang Technological University

The reflective loss principle is a fraught common law doctrine of recent origin. Where a company suffers loss from a wrongful act, the shareholders may suffer “reflective” loss where the value of their shares or dividends suffers a corresponding diminution in value. Quite separately from the question whether the company may recover its loss from the wrongdoer, the reflective loss principle ordinarily bars the shareholder from bringing an otherwise valid personal claim against the same wrongdoer in respect of their reflective loss. The UK Supreme Court’s landmark Marex judgment rewrote the law on reflective loss. In Marex ’s wake, many issues remain to be decided. Take just two. Does the reflective loss principle bar a company’s claim against a third party for dishonest assistance in its director’s breach of fiduciary duty? And should it matter that the company had a wholly-owned subsidiary that was involved in, and had suffered loss from, the defendant’s breach of duty? In Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd, a five-judge panel of the Singapore Court of Appeal answered both questions in the negative. Singapore’s greater reliance on equity as opposed to company law and its retention (following the Marex majority) of a reflective loss principle cut properly down to size worked well for Tendcare and led to a welcome result on the facts.