Over & Over Ltd v Bonvests Holdings Ltd and Another

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 01 December 2008
• Neutral Citation: [2008] SGHC 226
• Docket Number: Suit No 449 of 2007
• Date: 01 December 2008
• Published date: 05 December 2008
• Year: 2008
• Plaintiff Counsel: Ang Cheng Hock, Loong Tse Chuan and Paul Ong Min-Tse (Allen & Gledhill LLP),Derrick Wong (Derrick Wong & Lim BC LLP) instructing solicitor
• Citation: [2008] SGHC 226
• Defendant Counsel: Lim Shack Keong and Albert Loo (Drew & Napier LLC),Alvin Yeo SC, Tan Whei Mien Joy and Chang Man Phing (WongPartnership LLP)
• Court: High Court (Singapore)
• Subject Matter: Whether share transfer unfair to minority shareholder,Whether related party transactions unfair to minority shareholder,Whether there was prejudice to minority shareholder,Sections 156(4) and 216(1) Companies Act (Cap 50, 2006 Rev Ed),Company called for rights issue which was concluded within a month after it could not take up refinancing package to pay off loan,Waiver of pre-emption rights sought from minority shareholder,Transfer of shares to current majority shareholder,Company entered into transactions with companies in which majority shareholder had interests in,Minority shareholder negotiated and obtained removal of pre-emption rights and consented to share transfer,Companies,Oppression,Whether majority shareholder had acted unfairly in respect of rights issue,Whether non-compliance with company's articles warranted finding of unfairness,Section 216(1) Companies Act (Cap 50, 2006 Rev Ed)

1 December 2008

Woo Bih Li J:

Introduction

1 This dispute arose from Over & Over Ltd’s (“Over & Over”) claim for relief against oppressive and/or unfairly prejudicial conduct under s 216 of the Companies Act (Cap 50, 2006 Rev Ed). Over & Over is a minority shareholder of Richvein Pte Ltd (“Richvein”), which is the second defendant. At the conclusion of the trial, I dismissed Over & Over’s claim. Over & Over has filed an appeal. I now provide my written reasons.

Background

2 Over & Over, a company incorporated in Hong Kong, is an investment vehicle of the Lauw family. Lauw Siang Liong (“LSL”) and John Loh (“JL”) are the only shareholders and directors of Over & Over, JL being LSL’s son.

3 Bonvests Holdings Ltd (“Bonvests”), the first defendant, is a company listed on Singapore Exchange Limited with approximately 59.68% of its shares held by Goldvein Holdings Pte Ltd (“Goldvein”). In turn, Goldvein is a company controlled by the Sianandar family. Henry Ngo (“HN”) and Dijtu Sianandar (“DS”), who are brothers, are members of the Sianandar family.

4 Sometime in 1978, the Sianandar family was considering buying a piece of land along Scotts Road to develop a hotel. Through a mutual business associate, DS and LSL met each other and expressed interest in participating in a joint venture to develop that piece of land. There were some discussions (the extent to which is in dispute) between the two families in relation to the proposed joint venture.

5 Further to these discussions, Richvein was incorporated on 20 August 1980 as a joint venture company between Over & Over and Bonvests. At the beginning, 70% of the shares of Richvein were held by Unicurrent Finance Limited (“Unicurrent”) and 30% of the shares of Richvein were held by Over & Over. Unicurrent is an investment holding company incorporated in Hong Kong and is owned by the Sianandar family (with 99% of its shares held by HN and the remaining 1% held by DS). Unicurrent subsequently transferred one share to BHL Investments Pte Ltd (which is a company owned by the Sianandar family)[note: 1] . On 23 September 2003, the 70% shareholding (less one share) originally held by Unicurrent was transferred to Bonvests[note: 2] . This transfer to Bonvests is one of the grievances of Over & Over as I shall elaborate on later.

6 After Richvein was incorporated, it purchased the land at Scotts Road and developed a hotel on it known as Sheraton Towers Singapore. The construction of the hotel was completed in December 1985 and the hotel has operated on the premises since then. Sheraton Towers Singapore is Richvein’s sole business and main asset.

7 During the trial, Over & Over called on JL and LSL as their witnesses. Bonvests called on HN and DS as their witnesses. However, I did not give much weight to LSL’s testimony since there was evidence that he had a failing memory and could not remember much of what had happened in the past. DS gave evidence that after the incorporation of Richvein, he left it entirely to HN to manage Richvein and his evidence was, in any event, shaky and unreliable. The bulk of the evidence regarding the history between the parties came from JL and HN.

The Disputes

8 Over & Over relied on three events which took place in the past six years and argued that these three events were oppressive and/or unfairly prejudicial to it. The three events were:

(a) the transfer of Unicurrent’s 70% shareholding in Richvein to Bonvests in 2003 (“the Share Transfer”);

(b) the rights issue conducted by Richvein in October 2006, under which Richvein issued 66 million new shares to its shareholders at $0.38 per share (“the Rights Issue”); and

(c) three contracts entered into between Richvein and parties which were related to Bonvests and/or HN (“the Related Party Transactions”) comprising:

(i) a contract dated 11 May 2006 with Colex Holdings Ltd for waste disposal services;

(ii) a contract dated 28 July 2006 with Integrated Property Management Pte Ltd for cleaning services; and

(iii) a hotel management contract dated 12 December 2005 with Henrick International Hotels & Resorts Pte Ltd (subsequently renamed “The Residence Hotels & Resorts Pte Ltd”).

9 It is therefore appropriate that I first set out the circumstances in relation to the three events in some detail.

The Share Transfer

10 Article 30 of Richvein’s Articles of Association (“Richvein’s Articles”) initially restricted the transfer of shares to a non-member of the company as follows:[note: 3]

Shares may be freely transferred by a member or other person entitled to transfer to any existing member selected by the transferor, but save as aforesaid, and save as provided by Article 35 hereof, no share shall be transferred to a person who is not a member so long as any member or any person selected by the Directors as one whom it is desirable in the interest of the Company to admit to membership is willing to purchase the same at fair value.

11 The first mention of any transfer of shares in Richvein from Unicurrent to Bonvests was made on 29 May 2002 at the AGM of Richvein (the “2002 AGM”).

12 The minutes of the 2002 AGM stated:

Transfer of Shares

The Chairman informed the shareholder’s representative of Over & Over Limited, Mr Melvin Lee Tiong Choon, of Unicurrent Finance Limited’s (“Unicurrent”) intention, that at an opportune time Unicurrent will sell its entire holdings of 70,000,000 ordinary shares representing 70% of the issued capital of the Company to Bonvests Holdings Limited.

Mr Melvin Lee Tiong Choon, the representative of the other shareholder, Over & Over Limited, expressed no objections to Unicurrent’s proposed sale of shares.

RESOLVED that with no objections from Over & Over Limited’s representative, Unicurrent Finance Limited would at an opportune time, sell its entire holdings of 70,000,000 ordinary shares representing 70% of the issued capital of the Company to Bonvests Holdings Limited.

13 Over & Over objected to the accuracy of the minutes as it claimed that no vote or approval of the proposed transfer (“the proposed Share Transfer”) was called during the 2002 AGM. After receiving the minutes of the 2002 AGM, Melvin Lee (who attended the 2002 AGM on Over & Over’s behalf) wrote to Richvein’s company secretary on 27 June 2002 requesting for the resolution to be deleted[note: 4] .

14 After the 2002 AGM on 29 May 2002, discussions on the proposed Share Transfer continued between Over & Over and Bonvests. There was a series of letters between HN and LSL.

15 Thereafter, on 27 June 2002, HN called LSL to discuss the proposed Share Transfer. Then, LSL was still considering whether or not to approve the proposed Share Transfer and he suggested selling Over & Over’s shares in Richvein to Bonvests during the conversation. However, HN apparently said to LSL that it would not be justifiable for Over & Over to do so as the proposed Share Transfer was at a discounted rate.[note: 5]

16 On 8 August 2002, an Extraordinary General Meeting (“EGM”) was held to discuss the ‘proposed transfer of [Unicurrent’s] entire shareholdings in [Richvein] to [Bonvests]’[note: 6] . The minutes of the EGM showed that Over & Over was interested in selling its 30% stake in Richvein together with Unicurrent to Bonvests. The EGM was adjourned to explore such a possibility. Over & Over alleged that Bonvests had offered to buy Over & Over’s stake in Richvein on or around 15 August 2002 on certain terms which entailed a cash payment[note: 7] . However, HN denied offering to pay in cash[note: 8]

17 JL gave evidence that a meeting was held on 11 September 2002 between, inter alia, LSL and HN to discuss the proposed Share Transfer[note: 9] . On the same day, Over & Over rejected Bonvests’ offer[note: 10] . Thereafter, in a letter dated 17 September 2002 from HN to Over & Over’s solicitors, HN asked for a letter confirming that Over & Over did not intend to sell its shareholding in Richvein to Bonvests, and that Over & Over grant a waiver for Unicurrent to sell its shares to Bonvests. Over & Over’s solicitors wrote back to HN on 18 September 2002 confirming that Over & Over did not intend to sell its shareholdings in Richvein. However, Over & Over’s solicitors were, at that time, waiting for their client’s instructions on the waiver.

18 On 20 September 2002, HN wrote a letter to Over & Over’s solicitors[note: 11] :

1. I refer to your letter of 18 September 2002 in which you confirmed that your clients do not intend to sell their shareholdings in the Company.

2. You also mentioned that you are still waiting for your client’s instructions on the waiver regarding the transfer of shares from Unicurrent Finance Limited to Bonvests Holdings Limited.

3. As I had set out several times earlier the transfer of my 70% interest in the Company is an internal group restructuring. As I had mentioned before, it could be through Unicurrent transferring the 70% or through myself injecting Unicurrent into my Bonvests Group.

4. To all intents and purposes, nothing will be changing in terms of my business relationship with your clients before and after the internal group restructuring for me as 70% shareholder and your clients as 30% shareholder. The waiver of the transfer is merely a cordiality and there is no real need to await for your clients to revert on it.

19 On 23 September 2002, Over & Over’s solicitors wrote to HN[note: 12] :

Further to our letter dated 18 September 2002, our clients wish to propose that the relevant articles in the Articles of Association of the Company be amended so that the shareholders of the Company could freely transfer their shares in the Company to any party notwithstanding that the transferee is not an existing member of the Company. In other words, there will be no pre-emptive rights for the transfer of shares in the Company.

If you are agreeable to the above suggested amendment, the waiver from our client would not be needed in respect to the transfer of shares in the Company from Unicurrent Finance Limited...