Anita Hatta v Lee Siow Kiang Georgia and others

• Jurisdiction: Singapore
• Judge: Valerie Thean J
• Judgment Date: 24 September 2019
• Neutral Citation: [2019] SGHC 222
• Plaintiff Counsel: Wong Hin Pkin Wendell, Chen Jie'An Jared and Ang Xin Yi, Felicia (Drew & Napier LLC)
• Docket Number: Suit No 555 of 2017
• Date: 24 September 2019
• Hearing Date: 16 April 2019,12 April 2019,17 April 2019,18 April 2019,01 July 2019,09 April 2019,11 April 2019,22 April 2019,10 April 2019,15 April 2019
• Subject Matter: Minority shareholders,Oppression,Misrepresentation,Inducement,Contract,Companies
• Published date: 27 September 2019
• Defendant Counsel: Chong Yee Leong, Tan Pang Leong, Nicholas and Sheryl Lauren Koh Quanli (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Citation: [2019] SGHC 222
• Year: 2019

Valerie Thean J: Introduction

The plaintiff, Ms Anita Hatta, is a film and television producer. The first defendant, Dr Lee Siow Kiang Georgia, is a doctor and the founder and medical director of TLC Lifestyle Practice (“TLC”), a clinic specialising in aesthetic treatments. Dr Lee is also the sole director of the second, third and fourth defendants (“the Companies”), which are engaged in the packaging, marketing and sale of DrGL® products, a line of skincare created by Dr Lee.

Ms Hatta and Dr Lee met for an evening discussion on 20 January 2012. Subsequently, on 2 February 2012, Ms Hatta invested $2m for the purposes of the second, third and fourth defendants (“the Investment”). She thereafter received, on 3 February 2012, 5% of the Companies’ shareholding. In early 2017, as part of negotiations to secure new capital investment from Adval Capital Pte Ltd (“Adval”), the second and third defendants’ assets were transferred to a new company, in return for entitlement to 20% shareholding in the new joint venture company.

On 20 June 2017, Ms Hatta brought the present proceedings. She contends Dr Lee made misrepresentations on the evening of 20 January 2012 and seeks rescission of her $2m investment or, in the alternative, damages in the sum of $2m pursuant to s 2 of the Misrepresentation Act (Cap 390, 1994 Rev Ed) (“Misrepresentation Act”). In the alternative, she contends that Dr Lee’s actions between 2012 and 2017 amount to minority oppression, and seeks a share buy-out by Dr Lee, either at $2m, or at a price to be determined by an independent valuer.

Background Ms Hatta’s investment and the parties’ understanding

In or around 2006, Ms Hatta was introduced to Dr Lee by a mutual friend, Ms Sherry Lim. Ms Lim was then a patient of Dr Lee’s. Ms Hatta also became Dr Lee’s patient. Ms Lim subsequently became Ms Hatta’s personal assistant. The three were also social acquaintances.

In or around 2011, Ms Lim heard that Dr Lee was looking for investors to further develop her range of skincare products, DrGL®.¹ On 19 January 2012, Ms Lim arranged for Dr Lee and Ms Hatta to meet the next evening at Ms Hatta’s home.

During this meeting on 20 January 2012, Ms Hatta contends, Dr Lee informed both her and Ms Lim that she required additional capital for the Companies to expand their business overseas, expand their distribution network, conduct more research and development and expand the Companies’ bottling facilities.² She spoke of her plans to have DrGL® products sold in large department stores in Singapore and to expand abroad. There were other interested investors looking to invest in the Companies. A third party investor by the name of Andy Wong, for instance, had offered to invest a sum of $24m in the Companies.³ Ms Hatta asserts that Dr Lee made three key representations to her during that meeting (“the Representations”): The sales of the DrGL® skincare products were doing very well and had exceeded $5m since its launch in or around 2008. Dr Lee had personally invested approximately $14m into the Companies. The Companies were worth $40m or Dr Lee knew that the Companies were worth $40m, and Ms Hatta’s investment of $2m would represent 5% of the shareholdings in the Companies.

Dr Lee denies making the Representations. Her recollection is that they had a short meeting, and she is unable to remember the details of their exchange, save that Ms Hatta offered her house for use for the Companies’ events.⁴ Following the meeting at Ms Hatta’s house, Ms Hatta was introduced to Mr Frank Cintamani by Dr Lee, as a close friend who assisted her with business matters. Ms Hatta was asked to continue the discussions with Mr Cintamani.

On or around 31 January 2012, Mr Cintamani and Ms Hatta incorporated Fide Productions Pte Ltd (“Fide”)⁵ in order to host fashion shows and events.⁶ Mr Cintamani had persuaded Ms Hatta to extend a shareholder’s loan of $2m to Fide to be used as Fide’s working capital (“the Fide Loan”).⁷ Ms Hatta was given the position of managing director.⁸ It is not disputed that she had no operational role in Fide.

On 3 February 2012, Fide and the Companies agreed on an Exclusive Rights Agreement (“the First ERA”). Mr Cintamani and Ms Hatta represented Fide and Dr Lee represented the Companies. Under the First ERA, dated 2 February 2012,⁹ Fide agreed to purchase exclusive rights to produce all events for the Companies for four years in exchange for a sum of $4m, which was to be paid in 2 tranches of $2m.¹⁰ Fide was to pay $4m to the Companies, specifically, $2m on execution of the First ERA, and $2m within six months thereafter.

Three share transfer forms were signed by parties, for the following:¹¹ a transfer of 500 ordinary shares in the second defendant, for a stated consideration of $1, from Dr Lee to Ms Hatta; a transfer of 5 ordinary shares in the third defendant, for a stated consideration of $1, from Mr Cintamani to Ms Hatta; and a transfer of 50 ordinary shares in the fourth defendant, for a stated consideration of $1, from Dr Lee to Ms Hatta.

On or about 2 February 2012, Ms Hatta issued two cheques of $2m each in favour of Fide, one for the purpose of the Investment, and the other for the purpose of the Fide Loan.¹² Both cheques were made to Fide because Mr Cintamani informed her that, after discussions with Dr Lee, Dr Lee had requested for the payment of the Investment to be made through Fide.¹³ Mr Cintamani and Ms Hatta went to the United Overseas Bank and deposited the said cheques into Fide’s account.¹⁴ Mr Cintamani later withdrew these monies and deposited them both into his personal bank account.¹⁵ On 3 February 2012, Mr Cintamani gave Dr Lee a cheque for $2m that was made out in his own name and addressed to her personally.¹⁶

Events from 2012 to 2015

The parties are in agreement that between 2012 and 2015, Ms Hatta and Dr Lee maintained a good shareholder relationship, which was largely an informal one.¹⁷ What is in dispute is Ms Hatta’s role in the Companies. According to Ms Hatta, both she and Dr Lee understood that in consideration of Ms Hatta’s $2m investment, apart from being given 5% of shareholding in the Companies, Ms Hatta would be consulted on material events, regularly updated and involved in decision-making on key matters (I refer to this in this judgment as “the Alleged Understanding”, and detail its specifics below). Dr Lee, in contrast, denies the existence of the Alleged Understanding. Ms Hatta, she says, was “entirely unconcerned” with the Companies’ operations, and was updated only at Dr Lee’s discretion.¹⁸

Around 1 September 2012, Fide and the Companies entered into a revised version of the First ERA titled “Amendment of Exclusive Rights Agreement Dated 2 February 2012” (“the Revised ERA”).¹⁹ Dated 1 September, the Revised ERA purported to supersede the First ERA, and stated that, given that Fide had “failed to make payments on the 2nd tranche”, it would “forego any further rights or claims for the exclusive appointment to produce all events for the Companies”.²⁰ Mr Cintamani signed the Revised ERA on behalf of Fide.²¹

Subsequently, Dr Lee approached Ms Hatta to make a further investment in the Companies. On 23 November 2012, Dr Lee asked Ms Hatta to invest a further $2m. In an email informing her that the initial $2m had been rechannelled into the Companies, Dr Lee asked: “wonder if you can assist us to fulfil the balance 2million for the other 5%”.

On 21 December 2012, Dr Lee wrote to a lawyer, Ms Kuah Boon Theng, to ask her to prepare an agreement which envisaged a $2m investment for 5% in the second defendant and 12% in the fourth defendant in phases. The same email contained an instruction to Mr Richard Chan, an accountant for the Companies, to prepare a share transfer. Ms Kuah replied on 27 December 2012 with a draft agreement. Ms Lim replied to ask Ms Kuah to amend Ms Hatta’s address. Ms Hatta then asked to see the accounts and to verify the extent of Dr Lee’s investment. On 9 January 2013, Dr Lee asked Mr Chan for records of expenditure relating to the “Total spent for skincare to date” and the accounts. On 12 January 2013, Dr Lee sent an email detailing $13,251,474.52 spent by the Companies. On 18 January 2013, Mr Chan followed on with the skincare development component for a slightly different period, March 2003 to December 2011, for a similar sum. Both related to TLC’s expenses. Ms Hatta did not place any further funds with Dr Lee.

During this time period, between 2012 to 2015, the Companies’ financial statements reflected losses for the Companies each year.²²

The joint venture with Adval

In late 2015, a personal friend of Dr Lee, Ms Patsy Ong-Hahl, became interested in the Companies, and Dr Lee requested that Adval, Ms Ong-Hahl’s company, develop a growth plan for the Companies.²³ On or around 4 December 2015, Adval commenced a due diligence exercise to understand the Companies’ businesses. In or around February 2016, Dr Lee and Adval entered into extensive discussions on Adval’s proposed investment plan.²⁴ Ms Hatta was not involved in these discussions.

On 11 February 2016, Dr Lee introduced Ms Hatta to Mr Clarence Ku, Adval’s Chief Financial Officer.²⁵ This was the first time that Ms Hatta was informed of the discussions with Adval.²⁶ On 22 February 2016, Dr Lee sent an email to Ms Hatta, summarising a proposal from the proposed investors. This was “JV Structure 1”, the first of five joint venture proposals. This proposal stated that:²⁷ The Companies were to transfer their assets to Dr Lee, who would then transfer said assets to the joint venture company. Dr Lee and Ms Hatta would receive 19% and 1% of the shares in the joint venture company respectively.

On 26 February 2016, Ms Hatta emailed Dr Lee with certain queries concerning Adval’s investment.²⁸ Later that day, Dr Lee informed Ms Hatta that she intended to hold an Extraordinary General Meeting (“EGM”) for the Companies on...