Teo Choon Mong Frank v Wilh Schulz Gmbh and Another

• Jurisdiction: Singapore
• Judgment Date: 09 May 1998
• Date: 09 May 1998
• Docket Number: Civil Appeal No 78 of 1997
• Court: Court of Appeal (Singapore)

Teo Choon Mong Frank

Plaintiff

and

Wilh Schulz GmbH and another

Defendant

[1998] SGCA 28

Yong Pung How CJ

,

M Karthigesu JA

and

L P Thean JA

Civil Appeal No 78 of 1997

Court of Appeal

Companies–Directors–Removal–Shareholder agreement giving each party right to nominate one director and to remove or replace him–Shareholder agreement incorporated in articles of association–Whether director nominated by one shareholder could be removed by other shareholders–Conflict of Laws–Choice of jurisdiction–Shareholder agreement–Agreement to submit to jurisdiction of Singapore courts–German shareholders taking steps in Singapore proceedings–Whether injunction enforceable against German shareholders

Teo entered into a joint venture with two German companies. The vehicle for the joint venture was a Malaysian company, Forgetech. The parties entered into a shareholder agreement which provided, inter alia, that each party had the right to nominate a director to the board and to remove him and nominate another in his stead. The articles of association of Forgetech were amended to incorporate the shareholder agreement. Pursuant to the shareholder agreement, Teo nominated himself to the board of Forgetech. Teo was also appointed chief executive officer/managing director. Subsequently, the German parties terminated Teo as chief executive officer/managing director and took over Forgetech's offices and plant. Teo obtained an injunction in the High Court of Sabah and Sarawak (in Kuching) restraining the German parties from interfering with his duties and functions as chief executive officer/managing director. However, the German parties obtained an ex parte order to suspend the Kuching injunction. While the suspension was in force, the German parties called an extraordinary general meeting for the purpose of passing a resolution to remove Teo as director of Forgetech. Teo applied to the High Court of Singapore for an interim injunction to restrain the German parties from passing the resolution. The judge in chambers dismissed Teo's application and the German parties proceeded to remove Teo as director. Teo appealed against the decision of the High Court. By the time of this appeal, the Court of Appeal of Malaysia had heard the inter partes motion for suspension and reinstated the Kuching injunction.

Held, allowing the appeal:

(1) Under the articles of association and the shareholder agreement, the right to remove Teo from the office of director was vested in Teo alone. In removing Teo as director, the German parties had repudiated the relationship established by the shareholder agreement and the articles of association and should have been restrained from doing so. A mandatory order should therefore be made to cause Teo to be reappointed as director of Forgetech: at [16] to [19].

(2) The German parties had by taking steps in these proceedings submitted to the jurisdiction of the Singapore courts. More importantly, they had agreed under the shareholder agreement to submit to the jurisdiction of the courts in Singapore. Thus any injunction granted was effective against their representatives in personam: at [20].

(3) The Singapore injunction was to prevent Teo from being removed as director of Forgetech, whereas the Kuching injunction concerned Teo's position as managing director in charge of the day-to-day running of the Kuching plant. There was therefore no inconsistency or conflict between the two injunctions: at [21].

A & BC Chewing Gum Ltd, Re [1975] 1 WLR 579; [1975] 1 ALL ER 1017 (folld)

Bank of America National Trust and Savings Association v Djoni Widjaja [1994] 2 SLR (R) 898; [1994] 2 SLR 816 (refd)

Muthu Kumaran (W T Woon & Co) for the appellant

Melvin Khoo (Harry Elias & Partners) for the respondents.

L P Thean JA

(delivering the grounds of decision of the court):

1 This was an appeal against the decision of a judge in chambers in which she dismissed an application by the appellant for, inter alia, an injunction to restrain the respondents, until the trial of the action, from passing a resolution at the extraordinary general meeting of the company, Forgetech Sdn Bhd, to remove the appellant from the office as a director of that company. We allowed the appeal and now give our reasons.

The facts

2 The appellant is a Singaporean and the two respondents are German companies. Sometime in 1993, they agreed to enter into a joint venture and set up a manufacturing plant in Kuching, Malaysia. The vehicle for the joint venture was a Malaysian company called IFF Manufacturing Sdn Bhd, a private limited company...