Koh Keng Chew and Others Liew Kit Fah and Others

• Jurisdiction: Singapore
• Judge: Chua Lee Ming JC
• Judgment Date: 29 July 2016
• Neutral Citation: [2016] SGHC 140
• Published date: 13 August 2016
• Date: 29 July 2016
• Year: 2016
• Hearing Date: 18 April 2016,26 February 2016,25 February 2016,23 February 2016,18 February 2016,16 February 2016,01 March 2016,19 February 2016,17 February 2016,24 February 2016,02 March 2016
• Plaintiff Counsel: Alvin Yeo SC, Lim Wei Lee, Daniel Tan Shi Min and Catherine Chan (WongPartnership LLP)
• Citation: [2016] SGHC 140
• Defendant Counsel: Thio Shen Yi SC, Gordon Lim and Matthias Goh (TSMP Law Corporation),Francis Xavier SC, Patrick Ang, Chong Kah Kheng, Amy Seow, Chai Wei Han and Priscilla Soh (Rajah & Tan LLP)
• Court: High Court (Singapore)
• Docket Number: Suit No 125 of 2014

Chua Lee Ming JC: Introduction

The plaintiffs hold 28.125% of the shares in the 7th to 16th defendants. They have brought this action under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) against the 1st to 6th defendants, who hold the remaining 71.875% of the shares.

Although the 1st to 6th defendants did not admit the plaintiffs’ allegations of oppressive conduct, they agreed with the plaintiffs that the relationship of mutual trust and confidence between the parties had broken down and that a parting of ways had become inevitable. The parties agreed that the appropriate order was a buyout order. However, whilst the 1st to 6th defendants were prepared to buy out the plaintiffs, the plaintiffs themselves wanted to buy out the 1st to 6th defendants. In the circumstances, the parties asked this court to decide a single issue: whether the order should be for the 1st to 6th defendants to purchase the plaintiffs’ shares in the 7th to 16th defendants, or for the plaintiffs to purchase the 1st to 6th defendants’ shares in the 7th to 16th defendants. It was also agreed that the buyout order would be at a price to be determined by an independent valuer to be appointed. The appointment of the valuer, the reference date and the costs of the valuation will be decided by this court if the parties cannot agree on the same within 30 days of the buyout order being made. A consent order was entered to reflect the parties’ agreement. I would add that the parties do not want the companies to be wound up and, indeed, there is no reason to wind up the companies.

Background

In 1975, a partnership called Samwoh Transport and Trading (“Samwoh Trading”) was formed by three friends, Mr Koh Keng Chew, Mr Soh Kim Seng and the late Mr Pang Chok. It was in the transport and logistics business. Subsequently, three additional partners came on board: Mr Wang Nee Chon and Mr Liew Chiew Woon in 1978, and Mr Poh Choon Huat in 1980. The six of them (“the first-generation directors”) managed Samwoh Trading.

In 1985, the first-generation directors incorporated the 7th defendant (“Samwoh Corp”) to move into the business of manufacturing asphalt premix concrete (“the asphalt business”).ⁱ Since then, Samwoh Corp has expanded into other businesses such as construction, recycling of construction waste, and maintenance of road, aircraft and seaport pavements. The 8th to 16th defendants were incorporated for the purposes of these other businesses.ⁱⁱ Together, Samwoh Corp and these companies make up the Samwoh Group although the mainstay of the Samwoh Group’s business remains Samwoh Corp.ⁱⁱⁱ Business decisions for the entire Samwoh Group are made by the Samwoh Corp board of directors (“the Samwoh Board”).^iv

The plaintiffs in this suit are as follows: The 1st plaintiff, Mr Koh Keng Chew, was a director of Samwoh Corp from its incorporation until he stepped down in 1995.^v Since then, he has held an informal position as an advisor to the Samwoh Group. He is the father of the 2nd and 3rd plaintiffs. The 2nd plaintiff, Mr Koh Oon Bin (“Elvin Koh”), joined Samwoh Corp as its general manager in 1996 and was on the Samwoh Board as managing director (“MD”) from January 2000 to May 2013. The 3rd plaintiff, Mr Koh Hoon Lye (“Koh HL”), is Elvin Koh’s younger brother. He was appointed as a director of Samwoh Corp in 1995, taking over his father’s position,^vi and remains on the Samwoh Board.

The 1st to 6th defendants are as follows: The 1st defendant, Mdm Liew Kit Fah, is the widow of Mr Pang Chok. She inherited his shares when he passed away in 1992. She is the 3rd defendant’s mother and a relative of the 2nd defendant.^vii The 2nd defendant, Mr Liew Chiew Woon, joined Samwoh Trading in 1978 with a 10% share in the partnership. He was a director of Samwoh Corp from its incorporation to January 2000, and has held an informal position as advisor to the Samwoh Group since then.^viii The 3rd defendant, Mdm Pang Kok Lian (“Pang KL”), joined Samwoh Corp after her father, Mr Pang Chok, passed away in 1992. She was appointed as a director of Samwoh Corp in 1994.^ix The 4th defendant, Mr Soh Kim Seng, was a director of Samwoh Corp from its incorporation until 2000,^x and has held an informal position as an advisor to the Samwoh Group since then. He is the father of the 5th defendant. The 5th defendant, Mr Soh Soon Jooh (“Eric Soh”) was appointed as a director of Samwoh Corp in 2000. He was appointed Chief Executive Officer (“CEO”) of Samwoh Corp in May 2013. The 6th defendant, Mr Poh Teck Chuan (“Poh TC”), is the son of Mr Poh Choon Huat. When Samwoh Corp was incorporated, the elder Mr Poh held 20% of the shares in Samwoh Corp. He sold 10% of his shares back to Samwoh Corp in 2005 and passed away in 2010. By a trust deed in March 2012, the beneficiaries of the elder Mr Poh’s estate nominated Poh TC to hold the remaining 10% shareholding in Samwoh Group on their (and his) behalf.^xi Poh TC was appointed to the Samwoh Board in May 2013.

Of the plaintiffs and the 1st to 6th defendants, only Elvin Koh, Koh HL, Eric Soh, Pang KL and Poh TC gave evidence in this suit.

The shareholding structure of Samwoh Corp has changed over the years. The following table shows the present shareholding structure in Samwoh Corp. The shareholding structure in all the companies in the Samwoh Group is identical, save that the shares in the 14th defendant are registered in the names of Pang KL and one Mr Huang Hong Hee and those in the 15th and 16th defendants are registered in the name of Pang KL. As for the shares in the 14th to 16th defendants, it was not disputed that the legal owners of those shares hold them on trust for their beneficial owners in the same proportions set out below.^xii

Shareholder	Proportion of issued share capital of Samwoh Corp (%)
Plaintiffs
Koh Keng Chew	22.5
Elvin Koh	3.375
Koh HL	2.25
Defendants
Liew Kit Fah	22.5
Liew Chiew Woon	11.25
Pang KL	3.375
Soh Kim Seng	22.5
Eric Soh	2.25
Poh TC	10.0

Initially, the Samwoh Board comprised the first-generation directors.^xiii Sometime around 2000, there were plans to list Samwoh Corp. Subsequently, the first-generation directors retired from the Samwoh Board and became advisors to the Samwoh Group. By agreement, the Samwoh Board was reconstituted to comprise Elvin Koh, Koh HL, Pang KL and Eric Soh, with Elvin Koh serving as MD.^xiv The listing did not take place but the composition of the Samwoh Board remained unchanged until May 2013. It was undisputed that from 2000 to May 2013, commercial decisions the Samwoh Group were undertaken with the consensus of all directors on the Samwoh Board and that the directors would consult the shareholders where necessary or update them after the Board had made important decisions.^xv These meetings between the Board and the advisors, who were still shareholders, were known as Advisors’ meetings.

The Samwoh Group has achieved considerable success over the years. However, events from around 2012 gave rise to friction within the Samwoh Board and, consequently, among the shareholders. The disputes led to the plaintiffs’ commencing this suit on 29 January 2014.

The plaintiffs’ case for a minority buyout

The plaintiffs submitted that they should be allowed to buy out the 1st to 6th defendants (“a minority buyout”) for the following reasons:^xvi There has been an undisputed and irretrievable breakdown of mutual trust and confidence among the parties. The plaintiffs have played a pivotal role in the growth and development of the Samwoh Group’s business. The majority shareholders – the 1st to 6th defendants – are unfit to exercise control over the Samwoh Group given their oppressive and egregious misconduct in the management of the Samwoh Group as well as the present litigation. The plaintiffs are willing and able to finance the minority buyout and take over management of the Samwoh Group.

Breakdown of mutual trust and confidence

As stated earlier, it is common ground that there has been an irretrievable breakdown of mutual trust and confidence between the plaintiffs and the 1st to 6th defendants.

Plaintiffs’ role in the growth and development of Samwoh Group

The plaintiffs attributed the Samwoh Group’s growth to Elvin Koh’s leadership.^xvii The 1st to 6th defendants’ position was that the growth of the Group was largely due to the contributions of the Samwoh Board and senior management.^xviii

The Samwoh Group grew under the leadership of Elvin Koh. It was not disputed that Elvin Koh initiated the move into the asphalt business which became the Group’s main business.^xix The plaintiffs pointed out that during Elvin Koh’s tenure as MD, Samwoh Corp’s annual revenue had increased from approximately $49m in 2001 to in excess of $100m in 2011 and 2012.^xx It was during Elvin Koh’s tenure that Samwoh Corp won first place at the prestigious Singapore Enterprise 50 Awards in 2009 and 2010.^xxi In Eric Soh’s draft speech for a management retreat, circulated to the Samwoh Board on 26 September 2013, he acknowledged that “without [Elvin Koh] at the helm and without his leadership”, Samwoh Group would not be what it was.^xxii

The 1st to 6th defendants downplayed the significance of Elvin Koh’s contributions. They pointed out that the Samwoh Group continued to perform well even after Elvin Koh was no longer MD.^xxiii The Group’s aggregate profit after tax was $24.928m for Financial Year (“FY”) 2014, following a loss of $20.251m in FY 2013 and a comparatively modest profit of $538,000 in FY 2012.

It would be unfair not to give Elvin Koh credit for having led the Samwoh Group in his 13 years as MD, but it would be equally unfair not to acknowledge the contributions of the other directors and shareholders. Eric Soh and the present Samwoh Board have also demonstrated their ability to manage the company without Elvin...