Siva Kumar s/o Avadiar v Quek Leng Chuang

CourtCourt of Three Judges (Singapore)
JudgeSteven Chong JA,Chao Hick Tin SJ,Woo Bih Li J
Judgment Date05 Nov 2020
Docket NumberCivil Appeal No 59 of 2020

[2020] SGCA 110

Court of Appeal

Steven Chong JA, Chao Hick Tin SJ and Woo Bih Li J

Civil Appeal No 59 of 2020

Siva Kumar s/o Avadiar
Quek Leng Chuang and others

Christopher Anand s/o Daniel, Ganga d/o Avadiar and Yeo Yi Ling Eileen (Advocatus Law LLP) for the appellant;

Srinivasan s/o V Namasivayam and Janna Wong Qian Ern (Heng, Leong & Srinivasan LLC) for the respondents.

Case(s) referred to

Bakery Mart Pte Ltd v Ng Wei Teck Michael [2005] 1 SLR(R) 28; [2005] 1 SLR 28 (refd)

Brennan v Bolt Burdon [2005] QB 303; [2004] EWCA Civ 1017 (folld)

Chiang Shirley v Chiang Dong Pheng [2017] 1 SLR 283 (folld)

Connelly v DPP [1964] AC 1254 (folld)

Essex County Council v Essex Incorporated Congregational Church Union [1963] AC 808 (distd)

Hinde v Hinde [1953] 1 WLR 175 (distd)

Liew Kit Fah v Koh Keng Chew [2020] 1 SLR 275 (folld)

Muhd Munir v Noor Hidah [1990] 2 SLR(R) 348; [1990] SLR 999 (folld)

Nalpon Zero Geraldo Mario, Re [2013] 3 SLR 258 (folld)

Ng Kiam Bee v Ng Bee Eng [2013] 2 SLR 442 (folld)

Poh Huat Heng Corp Pte Ltd v Hafizul Islam Kofil Uddin [2012] 3 SLR 1003 (folld)

Salijah bte Ab Latef v Mohd Irwan bin Abdullah Teo [1996] 2 SLR(R) 80; [1996] 2 SLR 201 (folld)

Tan Poh Weng Andy v Lee Jee [2013] SGHC 234 (refd)

Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2017] 2 SLR 12 (folld)

Wee Soon Kim Anthony v Law Society of Singapore [2001] 2 SLR(R) 821; [2001] 4 SLR 25 (folld)

Wellmix Organics (International) Pte Ltd v Lau Yu Man [2006] 2 SLR(R) 117; [2006] 2 SLR 117 (refd)

Wilding v Sanderson [1897] 2 Ch 534 (folld)

Wiltopps (Asia) Ltd v Drew & Napier [1999] 1 SLR(R) 252; [2000] 3 SLR 244 (folld)

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed) ss 216, 216(1), 216(1)(a), 216(1)(b), 216(2), 216(2)(d)

Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 92 r 4

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 42 r 1A(3), O 92 r 4

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) ss 16(1), 18(2), First Schedule

Supreme Court of Judicature (Consolidation) Act 1925 (c 49) (UK) ss 190(1), 190(2)

Town and Country Planning Act 1959 (c 53) (UK) Pt IV

Civil Procedure — Inherent powers — Consent orders — Parties entering into consent order providing for first and second respondents to purchase appellant's shares — Appellant seeking to set aside consent order — Whether court had inherent power to grant consent order providing for one party to purchase the other party's shares without prior finding of minority oppression — Whether consent order should be set aside

Civil Procedure — Jurisdiction — Appellant arguing High Court had no jurisdiction to grant consent order — Distinction between “jurisdiction” and “power”


The third respondent (“3rd respondent”), Environmental Solutions (Asia) Pte Ltd (“the Company”) was founded by the appellant, Mr Siva Kumar, the first respondent, Mr Quek Leng Chuang (“1st respondent”) and Mr James Traazil. The Company was incorporated on 8 May 1999. At the time of the appeal, the appellant held 992,500 shares (49.625%) in the Company. The appellant was a director of the Company from 22 November 1999 to 27 May 2019. At the time of the appeal, the 1st respondent held 992,500 shares (49.625%) in the Company and was presently its sole director. The second respondent, Mr Traazil Leon (“2nd respondent”), who was the son of the late Mr James Traazil, held the balance 15,000 shares (0.75%) in the Company, and became a shareholder of the Company on 18 January 2019, after the said shares were transferred to him from the estate of Mr James Traazil.

Sometime in January 2018, the relationship between the appellant and the 1st respondent began to deteriorate over various business disagreements. On 29 January 2019, the appellant was served a notice of an extraordinary general meeting (“EGM”) to be held on 18 February 2019 to remove him as director of the Company and to appoint the 2nd respondent as director in the appellant's stead. As a result, the appellant commenced HC/S 168/2019 (“Suit 168”) on 7 February 2019 against the respondents for minority oppression seeking various reliefs, inter alia, an order for the appellant or the Company to buy out the shares of the 1st and 2nd respondents at fair value; or alternatively for the 1st and 2nd respondents or the Company to buy his shares at fair value. On 9 May 2019, the appellant obtained various court orders including an interim injunction restraining any EGMs of the Company to appoint a new director of the Company until 24 May 2019.

On 24 May 2019, the parties reached a settlement in Suit 168 and by consent, applied to the High Court to record the consent order (“Consent Order”) which was duly granted. The Consent Order provided for the 1st and 2nd respondents to purchase the appellant's shares in the Company at a price to be determined by an independent valuer (“Valuer”). The Consent Order also provided for the resignation of the appellant as a director of the Company and withdrawal of all allegations stated in the appellant's and the 1st and 2nd respondents' pleadings against each other.

The appellant resigned as a director of the Company on 27 May 2019. Thereafter, the parties took steps to perform their obligations pursuant to the Consent Order, including: (a) jointly appointing Nexia TS Pte Ltd (“Nexia”) as the Valuer on 15 August 2019; (b) providing the documents requested by Nexia; and (c) making three sets of submissions to Nexia on 6 September 2019, 29 October 2019 and 25 November 2019 respectively in respect of the valuation. Upon Nexia's review of each set of submissions, Nexia provided the parties with two draft reports before issuing the “Final Report”.

On 10 October 2019, Nexia issued its first draft valuation report, valuing the appellant's shares at US$703,000. On 11 November 2019, Nexia issued the second draft report, valuing the appellant's share at US$487,000. On 4 December 2019, Nexia issued the Final Report valuing the appellant's shares at US$395,000. In all three valuation reports, Nexia was consistently of the view that a lack of marketability discount of 25% from the gross valuation of the appellant's shares would apply.

On 20 January 2020, the appellant filed HC/OS 83/2020 (“OS 83”) to set aside the Consent Order and for Suit 168 to proceed to trial. On 6 March 2020, the High Court judge (“the Judge”) dismissed OS 83 and observed that the appellant was in truth trying to get out of what had turned out to be a bad bargain for his shares, after having had sight of the report of Nexia.

The appellant appealed against the decision of the Judge to dismiss OS 83, submitting that the Judge erred in her decision not to set aside the Consent Order because: (a) the High Court did not have the jurisdiction to grant the Consent Order; (b) the Consent Order ought to have been set aside by virtue of mistake; and (c) it would be inequitable to enforce the Consent Order. The appellant also submitted that based on his interpretation of both the majority and minority decisions in Liew Kit Fah v Koh Keng Chew[2020] 1 SLR 275 (“Liew Kit Fah”), the court could not order a buy-out of shares by a majority shareholder from the minority shareholder, or vice versa, without a finding of minority oppression under s 216 of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”).

Held, dismissing the appeal:

Relevance of Liew Kit Fah

(1) The Court of Appeal (“the Court”) held that this was an entirely opportunistic attempt by the appellant to rely on a misreading of the Court's decision in Liew Kit Fah to get out of a bad bargain as the independent valuation of his shares was unsatisfactory to him. The present facts were far removed and entirely distinguishable from the facts in Liew Kit Fah. In the present case, the ambit of the Consent Order was quite different as parties came to a settlement and appeared before the High Court to record the agreed terms of a settlement in a consent order. The High Court did not make any substantive determination of any issue in Suit 168. Further, when the parties entered into the Consent Order, it was clear that the parties intended to abandon all claims and counterclaims, including that of minority oppression, against each other. The Court observed that the present case simply involved a settlement agreement between the parties that was recorded as a consent order by the High Court: at [4] and [30] to [34].

(2) The Court held that the appellant's submission that Liew Kit Fah established that if the parties opted to enter into a consent order without having the issue of minority oppression determined, they would be deemed to be willing buyers and willing sellers, and thus the discounts for lack of control and lack of marketability discount could apply was premised on an erroneous interpretation of Liew Kit Fah. In Liew Kit Fah, it was held to the contrary that unlike the minority discount for lack of control, the discount for lack of marketability was “industry specific” and should be left to “the expertise of the independent valuer to decide whether to apply the lack of marketability discount for the respondents' shares”: at [35] and [36].

(3) The Court observed that the real unhappiness of the appellant was with Nexia's final valuation of the appellant's shares itself, and not with the application of the lack of marketability discount per se. When parties agreed to the joint appointment of an independent valuer, it would be within the parties' contemplation that the valuer might arrive at a valuation which was different from the way each of them might subjectively value their respective shares. However, in agreeing to a valuation by a jointly appointed independent valuer, the parties had to be bound by the resultant valuation. Further, it was clear to the Court that Liew Kit Fah could not possibly have had any impact or influence on the Valuer's decision. The Court reiterated that the majority and minority decisions in Liew Kit Fah did not assist the appellant's submission...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT