Peh Yeng Yok v Tembusu Systems Pte Ltd (formerly known as Tembusu Terminals Pte Ltd) and others

• Jurisdiction: Singapore
• Judge: Chua Lee Ming JC
• Judgment Date: 15 March 2016
• Neutral Citation: [2016] SGHC 36
• Plaintiff Counsel: Kevin Lim Meng Ern, Philip Fong Yeng Fatt, Tan Yong Seng Nicklaus and Wong Hui Juan Lynn (Harry Elias Partnership LLP)
• Docket Number: Suit No 504 of 2015 (Summons Nos 2958 and 2962 of 2015)
• Date: 15 March 2016
• Hearing Date: 19 November 2015,11 November 2015
• Subject Matter: Anton Piller orders,Civil Procedure
• Year: 2016
• Citation: [2016] SGHC 36
• Defendant Counsel: Adrian Tan (August Law Corporation),Joseph Tay Weiwen, Tan Aik Thong and Claire Yeo (Shook Lin & Bok LLP)
• Court: High Court (Singapore)
• Published date: 19 March 2016

Chua Lee Ming JC: Introduction

The plaintiff, Mr Peh Yeng Yok, applied for a search order against the defendants. On 17 June 2015, I granted the order. The defendants are Tembusu Systems Pte Ltd (formerly known as Tembusu Terminals Pte Ltd) (“the Company”), Mr Andras Kristof (“Andras”) and Mr Jarrod Luo (“Jarrod”). Andras and Jarrod are directors of the Company.

All three defendants applied to set aside the search order. On 19 November 2015, I set aside the search order against all three defendants and ordered the plaintiff to pay costs to the Company (which was separately represented) fixed at $20,000 excluding disbursements, and to Andras and Jarrod fixed at $25,000 excluding disbursements.

The plaintiff has appealed against “part of [my] decision” setting aside the search order against the Company. The Notice of Appeal filed on 15 December 2015 does not state which part of my order is being appealed against. There is no appeal against my decision setting aside the search order against Andras and Jarrod.

The plaintiff’s claim

The plaintiff holds 0.74% of the shares in the Company. The Company was incorporated in Singapore on 3 March 2014. Its founding directors were the plaintiff’s son, Peh Sik Wee (“PSW”), Andras and Jarrod. Its business is developing crypto-currencies, crypto-currency platforms and associated software and hardware.

The majority shareholder of the Company is Estates General Pte Ltd (“Estates General”), a holding company with shares held by PSW, Andras and Jarrod in equal proportions. The following table shows the shareholding structure of the Company:

Name	Shares	Percentage
Estates General Pte Ltd	4,288,000	61.88%
OUE Investments Pte Ltd	1,823,709	26.32%
Red Steed Studios Pte Ltd	432,000	6.23%
Likok Paper Trading Pte Ltd	255,321	3.68%
Peh Yeng Yok	51,064	0.74%
Yap Su-Chin Nadine	50,000	0.72%
Attila Kis	30,000	0.43%

When these proceedings started in May 2015, the Board of Directors of the Company (“the Board”) comprised PSW, Andras, Jarrod and 2 nominee directors from OUE Investments Pte Ltd (“OUE”). Andras is also the Chief Executive Officer and Jarrod the Chief Operating Officer of the Company. PSW was the Chief Strategy Officer until 4 May 2015 when his employment was terminated. The two OUE nominee directors resigned from the Board sometime in November 2015.

The plaintiff claims that Andras and Jarrod have conducted the affairs of the Company in a manner oppressive to him as a minority shareholder. Specifically, the plaintiff alleges that Andras and Jarrod had breached their duties as directors of the Company. He alleges that they have disregarded the corporate governance structure of the Company in a manner unfairly prejudicial to him as a shareholder. The plaintiff’s claim is based principally on three grounds: First, the plaintiff alleges that Andras and Jarrod authorized payments (totalling S$358,419.12) on 32 dates from the Company’s bank accounts with Malayan Banking Berhad (“MayBank”) and CIMB Bank Berhad (“CIMB”) and intended to make six payments (totalling US$30,816) from the Company’s CIMB account (“the Suspicious Transactions”). The plaintiff claims that Andras and Jarrod refused to furnish information and supporting documents despite repeated requests made by PSW between March and May 2015. He claims that these payments have not been authorized by the Board and/or are in fact misappropriations by Andras and Jarrod. Second, the plaintiff claims that Andras and Jarrod offered to pay PSW $200,000 and give him complete intellectual property rights to the Company’s products if he would discontinue his investigations into the Suspicious Transactions and leave the Company (“the Offer”). PSW’s employment as Chief Strategy Officer was terminated after PSW rejected the offer. The plaintiff says that the termination was meant to punish PSW for refusing to accept the Offer. Third, the plaintiff claims that Andras and Jarrod had caused the Company to develop business in Ukraine (“the Ukraine Deal”). The plaintiff claims that Andras and Jarrod once again refused to provide any information on this deal or on various transactions and expenditures related to it. The plaintiff claims that these transactions and expenditures may be in breach of various sanctions imposed by the United States of America, the European Union and other states in relation to the Ukrainian conflict.

The plaintiff contends that Andras and Jarrod have breached their duties to the Company as directors by (a) refusing to provide information on the Suspicious Transactions and the Ukraine Deal to PSW, and (b) making the Offer to PSW in order to stop his inquiries and terminating his appointment as Chief Strategy Officer when he refused to accept the Offer. The plaintiff says that these breaches have unfairly prejudiced him as a minority shareholder.

The search order

The plaintiff applied ex parte for the search order on 25 May 2015. I heard the plaintiff’s application over a few hearings. On 17 June 2015, I granted a search order which allowed the plaintiff’s solicitors, the supervising solicitor and computer forensic experts to enter the Company’s office premises and search the premises, and any vehicles on the premises belonging to and/or habitually used by Andras and Jarrod, for: electronic and computer stored data contained in the hard disks of personal computers and mobile phones of Andras and Jarrod and/or personal computers on the Company’s premises which are used by Andras and Jarrod; electronic and computer stored data contained in the shared drives of the Company’s server accessible by Andras and Jarrod; electronic and computer stored data of all email accounts used and accessible by Andras and Jarrod on the Company’s server; and hard copy documents and correspondence relating to bank transaction payments from 1 June 2014 to date from three specific bank accounts that the Company had in MayBank, CIMB and DBS Bank Ltd (“DBS”).

I also ordered that all copies of electronic data and hard copy documents and correspondence relating to bank transaction payments be delivered to the supervising solicitor for safekeeping. My intention was to hold a subsequent inter partes hearing to work out the details for the supervising solicitor to retrieve the relevant information so that the plaintiff will not have access to information that is not necessary for purposes of these proceedings.

The order was served on the defendants on 19 June 2015 at 9.17 a.m. at the Company’s registered office at 6 Eu Tong Sen Street #19-88 The Central, Singapore 059817. The defendants promptly applied to set aside the search order. The Company was separately represented from Andras and Jarrod.

On 19 June 2015, before Senior Judge Kan Ting Chiu, the parties agreed to certain temporary orders pending the hearing of the substantive applications to set aside the search order. Pursuant to the consent order, the laptops of Andras and Jarrod were to be surrendered to the supervising solicitor, while their mobile phones were to be cloned and returned. Andras and Jarrod were ordered to allow the plaintiff’s solicitors to take screen shots of the inboxes and sent boxes of their email accounts, without having to disclose their passwords. Parties were to find a technical solution to allow copying of data of the Company’s servers in a way which would not compromise its performance. Such copied data was also to be handed over to the supervising solicitor.

I heard the defendants’ applications to set aside the search order on 11 November 2015. On 19 November 2015, I gave my decision to set aside the search order dated 17 June 2015. I also ordered all information, data, evidence and/or materials previously seized pursuant to the search order, whether in the custody of the supervising solicitor or not, to be returned to the defendants.

The law

A search order is a draconian measure and will only be granted if necessary in the interests of justice. In line with this overriding principle of necessity, a plaintiff applying for a search order must show that: there is an extremely strong prima facie case; the damage that would be suffered if a search order was not granted is very serious; there is a real possibility that the defendant(s) would destroy relevant documents; and the effect of the search order would not be out of proportion to the legitimate object of the order.

See Asian Corporate Services (SEA) Pte Ltd v Eastwest Management Ltd (Singapore Branch) [2006] 1 SLR(R) 901 (“Asian Corporate Services”) at [14].

A search order can be set aside if the defendant subsequently shows that one or more of these elements had not been...