Thio Keng Poon v Thio Syn Pyn and others and another appeal

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 08 April 2010
• Neutral Citation: [2010] SGCA 16
• Date: 08 April 2010
• Docket Number: Civil Appeals No. 64 and 71 of 2009
• Published date: 19 April 2010
• Plaintiff Counsel: Chelva Retnam Rajah SC and Muthu Arusu (Tan Rajah & Cheah)
• Hearing Date: 01 October 2009
• Defendant Counsel: Davinder Singh SC and Adrian Tan (Drew & Napier LLC)
• Court: Court of Appeal (Singapore)
• Subject Matter: Companies

Chao Hick Tin JA (delivering the judgment of the court): Introduction

This is an appeal (Civil Appeal No 64 of 2009) by one Thio Keng Poon (the plaintiff in both Suit No. 734 of 2008/S (“Suit 734”) and Suit No. 10 of 2008/T (“Suit 10”) below and is hereinafter referred to as “the Appellant”) against the decisions (in respect of both suits) made by the High Court judge (“the Judge”) in Thio Keng Poon v Thio Syn Pyn and Others and Another Suit [2009] SGHC 135.

In Suit 734, the Appellant alleged that he was “surreptitiously”¹ removed from his offices of Chairman, Managing Director and Director in both Malaysia Dairy Industries Pte Ltd (“Malaysia Dairy”) and Modern Dairy International Pte Ltd (“Modern Dairy”) in a manner which did not accord with the Articles of Association (“AA”) of the aforementioned companies (“the breach of AA issue”). In Suit 10, the plaintiff’s case was premised on minority oppression, breach of contract, and breach of an understanding and assurance (“the Minority Oppression issue”). The Judge dismissed the Appellant’s claims in both suits upon a “no case to answer” submission at the trial below. Separately, the Appellant has also filed an appeal (in Civil Appeal No. 71 of 2009/Q) against an Order of Court made by the Judge, disallowing the amendments proposed by the Appellant in relation to the 3rd paragraph of the draft Judgment put forward by the Respondents and relating to their counterclaim in Suit 10.

Factual background

The dramatis personae in this appeal comprise the Appellant, his wife, Kwik Poh Leng (“Madam Kwik”), and their six children. In order of birth, the children are:

Name	Seniority in Family	Year of Birth
Thio Syn Luan Vicki, (“Vicki”)	1st daughter	1957
Thio Syn Pyn (“Pyn”)	1st son	1958
Thio Syn Kym, Wendy (“Wendy”)	2nd daughter	1960
Thio Syn Ghee (“Ghee”)	2nd son	1962
Thio Syn San, Serene (“Serene”)	3rd daughter	1963
Thio Syn Wee (“Wee”)	3rd son	1965

The Appellant is the founder and was the Managing Director of Malaysia Dairy, a company incorporated in Singapore in 1963 pursuant to a joint venture between the Appellant and the Australian Dairy Produce Board (the “ADPB”). In 1968, the Appellant bought out ADPB, and became both the Chairman and the Managing Director of Malaysia Dairy.

The year 1969 saw two developments. First, Malaysia Milk Sdn Bhd (“Malaysia Milk”) was incorporated in Malaysia as a wholly owned subsidiary of Malaysia Dairy. Its operations, which began in 1977, were based in Malaysia. Secondly, Thio Holdings (Private) Limited (“Thio Holdings”) was set up as an investment holding company for the various business ventures entered into by the members of the Thio family. Currently, Thio Holdings holds 30% of the issued share capital of Malaysia Dairy. Since then, the business of the Appellant’s companies has expanded exponentially and additional companies have been set up beyond Singapore and Malaysia. Indeed, the Thio family currently owns and manages the following group of companies (“the Thio Group”)²: In Singapore Thio Holdings; Malaysia Dairy; Modern Dairy (which is wholly owned by Malaysia Diary); United Realty (Singapore) Private Limited (“United Realty”); and Cotra Enterprises Pte Ltd. In Malaysia Malaysia Milk; and Cotra Enterprises Sdn Bhd (“Cotra Sdn”). In Hong Kong Premier Enterprise Limited; and Pertama Investment Limited. In Myanmar Myanmar Dairy International Pte Ltd. In Brunei Modern Dairy Industries (B) Sdn Bhd. In so far as the above companies are concerned, we note that the ones in Hong Kong, Myanmar and Brunei do not feature in this appeal.

Over the years, the Appellant transferred his shares in the various companies in the Thio Group, as well as to cause these companies to issue bonus shares, to the other members of the family for “no consideration”. However, it will soon be seen that the Appellant himself had also benefitted from his well-calculated moves to transfer a certain portion of ownership in these companies to the rest of his family.

As is common in many family-run companies, from 1983, Pyn, being the eldest son, began assisting the Appellant in the running of the business of the Thio Group and was thereafter in 1995 appointed Deputy Managing Director. Based on the sterling financial results of the companies and the supporting evidence from Serene, it cannot be disputed that Pyn successfully took the reins of the Thio Group and steered the Group’s business to even greater heights. The Appellant, however, became dissatisfied because his previously unchecked powers of control over the business were progressively being reined in by his family members. The Appellant appeared to be labouring under the belief that, as the founder of Malaysia Dairy and the patriarch of the family, he was entitled to retain the various offices in the Thio Group on a permanent basis until such time as he chose to retire, or until he passes away, whichever first occurs.

There were various disputes³ in the Thio family, one of which arose as a result of the Appellant’s proposal in 1995 to restructure the respective shareholdings of his children so as to provide for his grandsons (Ghee’s twin sons who happen to be the Appellant’s only grandsons). These disputes involved various share restructuring exercises which were proposed by the Appellant. In an attempt to resolve these disputes once and for all, the Appellant and the rest of the Thio family eventually entered into a Deed of Settlement on 23 December 2005 (“Deed of Settlement”)⁴, which bound the Appellant and the 1st to 9th Respondents (the 1st to 6th Respondents – the children, the 7th Respondent – the wife, the 8th Respondent – Thio Holdings and the 9th Respondent – Malaysia Dairy). For ease of reference, the more pivotal clauses of the Deed of Settlement are reproduced hereunder:

Clause 10

Each of the Parties to this Deed hereby confirms and accepts that upon Completion, each of the Parties’ full legal, registered and beneficial shareholdings in the Companies shall be as set out in Columns 5 and 6 of the Schedules, and: -

(a) none of them shall have any further right or claim to any other shareholding or equity interest in the Companies, save for interests in shares arising from subscriptions or investments or rights arising after the date of this Deed; and (b) their respective shareholdings stated in Column 5 and 6 of the Schedules represent their respective full legal and beneficial interests and none of them - (i) is holding any shares in the Companies on trust or on behalf of any other person; or (ii) has any claim to or beneficial interest in any shares in the Companies that are registered in the name of any other person.

…

Clause 13

The Parties agree that the Companies will be managed and operated for profit and in accordance with best corporate practices to return to shareholders maximum returns.

Clause 15

This Deed sets forth the entire agreement and understanding of the Parties with respect to the subject matter contained herein and supersedes all prior discussions and agreement, whether written or oral, relating to the subject matter herein.

[emphasis added]

It is apparent that the Deed of Settlement conclusively settled the distribution of the shares in the Thio Group (“save for interests in shares arising from subscriptions or investments or rights arising after the date of the Deed of Settlement”⁵). Indeed, pursuant to the Deed of Settlement, the Appellant received shares (which had a total net tangible asset value in excess of $24 million as at 31 December 2005) from Pyn, Wee and Thio Holdings. Nevertheless, Pyn and Wee still jointly retained majority control over Thio Holdings and Malaysia Dairy.

As it turned out, however, the Deed of Settlement did not, contrary to expectations, precipitate harmony within the family. Indeed, disputes unfortunately continued to plague the Thio family which remained a cauldron of animosity. Among the disputes were a demand by the Appellant for a $10 million birthday gift⁶ and a proposal by the Appellant to re-assert control over the Thio Group. But he did not succeed in either⁷. Other altercations appeared to be petty ones which were invariably “resolved” after one party gave in (reluctantly or otherwise) to the other. However, a significant event occurred in 2007 which became the genesis for the removal of the Appellant from his various positions in the Thio Group.

On 22 October 2007, Malaysia Dairy decided to engage an audit and assurance firm, Ernst & Young (“E&Y”), to conduct an independent review of the travel expenses incurred by the Appellant for the period 1 January 2005 to 30 September 2007 as recorded in the accounting books and records of Malaysia Dairy, Malaysia Milk and Cotra Sdn.⁸

After E&Y reported their findings on the review, the Appellant was shortly thereafter removed from his positions as Chairman, Managing Director and Director of Malaysia Dairy and Modern Dairy on or around 20 November 2007 and 21 November 2007 respectively. The impetus for the Appellant’s removal was the discovery by E&Y that there had been 9 occasions where the Appellant had claimed for reimbursement of air ticket expenses for the same trip from both Malaysia Dairy and Cotra Sdn (“the Double Claims”). In essence, what the Appellant did was to claim the cost of the same trips twice, once from Malaysia Dairy (for the sum of S$ 45,529.64) and again from Cotra Sdn (for the sum of S$ 48,713.67). In his defence, the Appellant insisted that the monetary value of the Double Claims which he had made against Malaysia Dairy and Cotra Sdn was in fact less than what he would have been entitled to claim for the air-tickets (for one person) plus the hotel expenses which he had incurred on those trips.⁹

In the light of the...