DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries Ltd and Others and another suit

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeKannan Ramesh J,Roger Giles IJ,Anselmo Reyes IJ
Judgment Date03 July 2018
Docket NumberSuits Nos 3 and 4 of 2017
Date03 July 2018

[2018] SGHC(I) 6

Singapore International Commercial Court

Kannan Ramesh J, Roger Giles IJ and Anselmo Reyes IJ

Suits Nos 3 and 4 of 2017

DyStar Global Holdings (Singapore) Pte Ltd
and
Kiri Industries Ltd and others and another suit

See Chern Yang, Teng Po YewandAudie Wong Cheng Siew(Premier Law LLC) for the plaintiff in Suit No 3 of 2017 and the second defendant in Suit No 4 of 2017;

Dinesh Dhillon Singh, Lim Dao Kai, Margaret Joan Ling Wei Wei, Ivan Lim Jun RuiandNigel Yeo Kok Quan (Allen & GledhillLLP) for the defendants in Suit No 3 of 2017 and the plaintiff in Suit No 4 of 2017;

Nandakumar Ponniya Servai, Wong Tjen Wee, Liu Ze Ming, Lucas Lim, Daniel HoandNicolette Oon (Wong & LeowLLC) for the first defendant in Suit No 4 of 2017.

Case(s) referred to

Boyd v Feeney [2017] NSWSC 1595 (refd)

Carr v Cheng 2007 BCSC 1693 (refd)

CLAAS Medical Centre Pte Ltd v Ng Boon Ching [2010] 2 SLR 386 (folld)

Cost Engineers (SEA) Pte Ltd v Chan Siew Lun [2016] 1 SLR 137 (refd)

EFT Holdings, Inc v Marinteknik Shipbuilders (S) Pte Ltd [2014] 1 SLR 860 (folld)

Eng Gee Seng v Quek Choon Teck [2010] 1 SLR 241 (folld)

Eshelby v Federated European Bank, Ltd [1932] 1 KB 254 (refd)

Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 (refd)

Ho Yew Kong v Sakae Holdings Ltd [2018] 2 SLR 333 (refd)

Jarguh Sawit, The [1997] 3 SLR(R) 829; [1998] 1 SLR 648 (refd)

Kong Thai Sawmill (Miri) Sdn Bhd, Re, Kong Thai Sawmill (Miri) Sdn Bhd v Ling Beng Sung[1978] 2 MLJ 227 (refd)

Kuah Kok Kim v Chong Lee Leong Seng Co (Pte) Ltd [1991] 1 SLR(R) 795; [1991] SLR 122 (folld)

Kumagai Gumi Co Ltd v Zenecon Pte Ltd [1995] 2 SLR(R) 304; [1995] 2 SLR 297 (folld)

Lim Kok Wah v Lim Boh Yong [2015] 5 SLR 307 (folld)

Lim Swee Khiang v Borden Co (Pte) Ltd [2006] 4 SLR(R) 745; [2006] 4 SLR 745 (folld)

Low v Ascot Jockey Club Ltd (1986) 1 BCLR (2d) 123 (refd)

Man Financial (S) Pte Ltd v Wong Bark Chuan David [2008] 1 SLR(R) 663; [2008] 1 SLR 663 (folld)

Mukherjee Amitava v DyStar Global Holdings (Singapore) Pte Ltd [2017] SGHC 314 (refd)

Munstermann v Rayward [2017] NSWSC 133 (refd)

Nagase Singapore Pte Ltd v Ching Kai Huat [2008] 1 SLR(R) 80; [2008] 1 SLR 80 (folld)

Ng Kek Wee v Sim City Technology Ltd [2014] 4 SLR 723 (folld)

Ng Sing King v PSA International Pte Ltd [2005] 2 SLR(R) 56; [2005] 2 SLR 56 (refd)

Over & Over Ltd v Bonvests Holdings Ltd [2010] 2 SLR 776 (folld)

Perennial (Capitol) Pte Ltd v Capitol Investment Holdings Pte Ltd [2018] 1 SLR 763 (refd)

Profinance Trust SA v Gladstone [2002] 1 WLR 1024 (folld)

Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 (refd)

Sudha Natrajan v The Bank of East Asia Ltd [2017] 1 SLR 141 (refd)

Thio Keng Poon v Thio Syn Pyn [2010] 3 SLR 143 (refd)

Ting Shwu Ping v Scanone Pte Ltd [2017] 1 SLR 95 (refd)

Tullio Planeta v Maoro Andrea G [1994] 2 SLR(R) 501; [1994] 2 SLR 489 (folld)

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed) ss 199(3), 216, 216(1), 216(2), 216(2)(d) (consd); s 254(1)(i)

Evidence Act (Cap 97, 1997 Rev Ed) s 116 illus (g)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 18 r 9(1)

Civil Procedure — Pleadings — Post-writ events being added by amendment — Whether post-writ events could be relied upon as evidence of continuing oppression — Order 18 r 9(1) Rules of Court (Cap 322, R 5, 2014 Rev Ed)

Companies — Oppression — Minority shareholders — Shareholders' agreement providing for right to appoint directors — Shareholders' agreement providing for management of company to be vested in board — Whether legitimate expectations were created

Contract — Illegality and public policy — Restraint of trade — Clauses applying asymmetrically — Clause restraining competition and solicitation in entire country — Non-solicitation clause applying to “identified prospective customers” — Whether asymmetrical restraint of trade clauses unreasonable in interest of parties — Whether country-wide geographical restraint unreasonable in interest of parties — Whether “identified prospective customers” too wide and unreasonable in interests of parties — Whether doctrine of severance could apply

Tort — Conspiracy — Lawful means conspiracy — Unlawful means conspiracy — Relying on breach of contract as conspiratorial act — Whether any combination or agreement — Whether predominant purpose to injure

Facts

Kiri Industries Limited (“Kiri”) and Senda International Capital Limited (“Senda”) were jointly invested in a company incorporated in Singapore, DyStar Global Holdings (Singapore) Pte Ltd (“DyStar”). Kiri was incorporated and listed in India. At the commencement of proceedings, Senda held 62.43% of the shareholding in DyStar, Kiri held 37.57% and Well Prospering Limited (“WPL”) held one share. Senda and WPL were subsidiaries of a company incorporated and listed in China, Zhejiang Longsheng Group Co, Ltd (“Longsheng”). DyStar's board of directors (“the DyStar Board”) comprised Ruan Weixiang (“Ruan”), Xu Yalin (“Xu”), Yao Jianfang (“Yao”), Mukherjee Amitava (“Amit”) and Manishkumar Pravinchandra Kiri (“Manish”). Ruan, Xu and Yao (collectively, “the Longsheng Directors”) were nominated by Longsheng, while Amit and Manish (collectively, “the Kiri Directors”) were nominated by Kiri.

The joint investment in DyStar arose out of two documents which Kiri and WPL executed on 31 January 2010. These were a share subscription and shareholders agreement (“the SSSA”) and a convertible bond subscription agreement (“the CBSA”). Kiri's chairman, ie, Pravinchandra Amrutlal Kiri (“Pravin”), Manish and a Kiri subsidiary, ie, Kiri International (Mauritius) Private Limited (“KIPL”) were also parties to the SSSA. Under the CBSA, WPL subscribed to a convertible bond issued by DyStar. The SSSA provided that Kiri and WPL (later Senda) had the right to appoint and remove nominee directors, two in the case of Kiri and three in the case of WPL, and that a WPL director should be chairman. Moreover, the SSSA expressly provided that overall control and management of DyStar would be vested in the DyStar Board. In 2012, the convertible bond was transferred to Senda which exercised the right of conversion under the bond. As a result of the conversion, Kiri's shareholding was diluted from close to 100% to 37.57%.

Soon after that, the relationship between Kiri and Longsheng began to deteriorate. Kiri discovered various transactions that DyStar had entered into with Longsheng-related parties, including Ruan, which it considered were commercially unfair and oppressive to Kiri's interest as a minority shareholder. Kiri was also dissatisfied with certain decisions made by Senda such as a refusal to declare dividends. Kiri commenced proceedings against Senda for oppression under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) (“the Act”) in Suit No 4 of 2017 (“Suit 4”). Kiri later added by amendment three post-writ events as constituting further instances of oppressive conduct.

The SSSA included, among other things, non-competition and non-solicitation clauses in cll 15.1(a) and 15.1(b) respectively. Clause 15.1(a) precluded Kiri from carrying on business in any country where DyStar carried on business, save for existing businesses carried on by Kiri prior to SSSA. Clause 15.1(b) precluded Kiri from soliciting or attempting to solicit away the custom of any person who was a customer, identified prospective customer or client of DyStar. Clauses 15.1(a) and 15.1(b) also required Pravin, Manish and KIPL to procure that Kiri shall not carry out the acts prohibited by cll 15.1(a) and 15.1(b). It was alleged by DyStar and Senda that Kiri, Pravin, Manish and KIPL had breached these obligations by approaching common customers in various countries in which DyStar had business. Senda counterclaimed against Kiri, Pravin, Manish, KIPL and Amit in Suit 4, raising breaches of the SSSA and claims of conspiracy. DyStar also commenced proceedings against Kiri and the same Kiri-related parties in Suit No 3 of 2017, raising claims which mirrored Senda's counterclaims in Suit 4. DyStar additionally claimed for breaches of fiduciary duty and payment for sums owed, namely, the “PTD Fees” and the “Audit Costs”.

Held, allowing the claim in Suit 3 in part, the claim in Suit 4 and the counterclaim in Suit 4 in part:

(1) While the SSSA conferred on the majority shareholder ultimate control over the DyStar Board, that did not mean that Longsheng (through WPL or Senda) could run DyStar as though it was a Longsheng subsidiary. The entrenchment of the Kiri Directors on the DyStar Board was a means of ensuring that Kiri and its directors had their say on key decisions that DyStar made. The SSSA created legitimate expectations that DyStar would be run in accordance with the standards of corporate governance and transparency applicable to any ordinary company and that the Longsheng Directors would act in the best interests of DyStar as a whole pursuant to their fiduciary obligations under general law: at [119] and [120].

(2) As Kiri was able to establish oppressive conduct as at the date of the writ, the post-writ conduct could be relied on as evidence of oppressive conduct continuing beyond the date of the writ. Such conduct would also be relevant for the purpose of determining the appropriate relief under s 216: at [134] and [138].

(3) On the facts, most of the instances of commercial unfairness raised by Kiri amounted...

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