Thio Syn Pyn v Thio Syn Kym Wendy and others and another appeal
Judge | Andrew Phang Boon Leong JA |
Judgment Date | 27 March 2019 |
Neutral Citation | [2019] SGCA 19 |
Citation | [2019] SGCA 19 |
Defendant Counsel | Alvin Yeo SC, Joy Tan, Ho Wei Jie, Jeremy Tan and Wang Chen Yan (WongPartnership LLP) |
Published date | 30 March 2019 |
Hearing Date | 18 February 2019 |
Plaintiff Counsel | Cavinder Bull SC, Kong Man Er and Fiona Chew (Drew & Napier LLC),Jason Chan, Paul Ong, Melissa Mak and Afzal Ali (Allen & Gledhill LLP) |
Docket Number | Civil Appeals Nos 56 and 59 of 2018 |
Court | Court of Appeal (Singapore) |
Date | 27 March 2019 |
Subject Matter | Discount on minority shares,Companies,Shares,Minority shareholders,Oppression,Valuation |
Both appeals are the latest instalment in a series of suits between the members of the Thio family. These suits concern the management of three companies incorporated in the 1960s (“the Group”) by Mr Thio Keng Poon (“Mr Thio”), the family patriarch. One of those companies, Malaysia Dairy Industries Pte Ltd (“MDI”), is the subject of these appeals.
Three of the Thio siblings, namely, Thio Syn Kym Wendy (“Wendy”), Thio Syn San Serene (“Serene”) and Thio Syn Ghee (“Michael”), are the respondents in these appeals (“the Respondents”). They are minority shareholders of the Group, including MDI. They acquired their shares by way of bonus issues in 2002, because their parents, Mr Thio and Mdm Kwik Poh Leng (“Mdm Kwik”), wished to provide for them financially. Their brothers, Thio Syn Pyn (“Ernest”) and Thio Syn Wee (“Patrick”), are the appellants (“the Appellants”). They are controlling shareholders of the Group, including MDI.
In earlier proceedings, the Respondents sought relief from minority oppression for acts committed by the Appellants and Mdm Kwik, and asked for a buyout order in respect of their shares in the Group. The trial judge (“the Judge”) found for the Respondents in part (see
In the CA Judgment, we affirmed the Judge’s finding that while the Group were “family companies” in the sense that most of the directors were members of the Thio family, the Thios did not operate on the basis of a relationship of mutual trust and confidence in relation to how the companies were run. Neither was there a common understanding among the parties that the Respondents were entitled to participate in the management of the Group as directors. Thus, the companies were neither quasi-partnerships nor akin to quasi-partnerships (CA Judgment at [6]–[7]).
We also affirmed the Judge’s decision to allow the claim of minority oppression in two respects. First, the Appellants’ use of MDI to further their personal pursuit of Mr Thio for his alleged multiple expense claims in the Group went well beyond the rational corporate action required to recover the amounts due to the companies. The matter could have been settled by accepting Serene’s offer to make compensation for the sums claimed from Mr Thio. Indeed, in engaging lawyers to issue the letters of demand despite Serene’s offer, the Appellants essentially incurred more costs for the Group that approximated to a large percentage of what was ultimately recovered. In the circumstances, their use of MDI for the purposes of their vendetta was commercially unfair vis-à-vis the other shareholders including the Respondents (Liability Judgment at [75]–[79]; CA Judgment at [14]).
Second, the Appellants’ conduct in selectively using the results of an independent report prepared by Aon Hewitt, a consultancy firm (“the AH report”) to justify increasing their remuneration, drastically reducing Michael’s remuneration and taking away long established benefits for non-executive directors (including the other Respondents), while simultaneously refusing to implement comments that would have taken away their own benefits, was oppressive and unfair. Pertinently, Michael’s employment resulted from familial, not corporate, considerations. Mdm Kwik wanted his livelihood to be provided for, and Ernest and Patrick accordingly found a position for him and paid him a salary that would achieve that aim. In other words, Michael was not recruited on the usual basis of a company with a vacancy giving a qualified applicant a market rate salary for the job. His position was special and, therefore, using the AH report to justify a return to market rates for Michael’s remuneration and to deprive him of an allowance from MDI would not have been anticipated. Seen in this context, the reduction of Michael’s remuneration was a spiteful act and not one motivated by rational corporate considerations (Liability Judgment at [81]–[90]; CA Judgment at [15]).
In the circumstances, we affirmed the Judge’s order that the Appellants purchase the Respondents’ shares in MDI on the basis of a share price to be determined by an independent valuer who shall value the company as a going concern. The Judge also granted the parties liberty to apply (CA Judgment at [26]; Liability Judgment at [114]).
As it turned out, parties could not agree whether a discount should be applied to the valuation of the Respondents’ shares in MDI. They therefore sought a court determination of the issue. The Judge’s decision can be found at
The Judge held that the shares should
On the facts of this case, the Judge concluded that the Respondents’ shares should
While the parties had also relied on other factual aspects of the case to support their respective positions as to whether a discount should be applied, the Judge did not think that much weight should be placed on most of them (Valuation Judgment at [35]–[38]). We will address these factual aspects below.
The issueThe sole issue in these appeals was whether the Judge was correct to order that no minority discount on the basis of lack of control be applied to the Respondents’ shares in MDI. This encompassed the legal issue as to whether there is or should be a presumption that minority shares in non-quasi-partnerships should be valued at a discount.
The parties’ arguments The Appellants’ arguments The Appellants urged this court to recognise a presumption that shares in non-quasi-partnerships should be valued on a discounted basis. They relied on a line of English cases, including
The Appellants further submitted that the facts of this case did not justify a pro-rata valuation. In particular, they pointed out that the Respondents acquired the shares by way of a gift and did not contribute to the financial success of the company. They also emphasised that the Respondents were interested in selling their shares in 2011 – in other words, they were not unwilling sellers and should not be treated as such.
The Respondents’ arguments The Respondents agreed with the Judge that the court must look at all the facts and circumstances when determining whether a discount should be applied when valuing minority shares in quasi-partnerships. They pointed out that the Appellants’ reliance on
To continue reading
Request your trial-
Kiri Industries Ltd v Senda International Capital Ltd and another and other appeals and other matters
...went on appeal and the appeal was dismissed by the Court of Appeal in Thio Syn Pyn v Thio Syn Kym Wendy and others and another appeal [2019] 1 SLR 1065. The focus of the Court of Appeal in that case was whether a distinction could be made between quasi-partnerships and other companies in de......
-
Anita Hatta v Lee Siow Kiang Georgia and others
...I hold that no discount should be made for the minority interest. In Thio Syn Pyn v Thio Syn Kym Wendy and others and another appeal [2019] 1 SLR 1065 (“Thio Syn Pyn”), the Court of Appeal clarified that in the context of non-quasi-partnerships, whether a discount should be applied would de......
-
The Central Provident Fund Board v Libra Group Limited
...to prevent the Attorney-General from prosecuting an offender by staying the prosecution … [Emphasis in bold added] In Lim Chit Foo v PP [2019] SGCA 19 (“Lim Chit Foo”), the Court of Appeal affirmed this position at [20]: [20] … It is clear on the one hand that under Art 35(8) of the Constit......
-
Liew Kit Fah and others v Koh Keng Chew and others
...[2018] SGHC 54 (“Thio Syn Kym (HC)”)28 at [29], affirmed on appeal in Thio Syn Pyn v Thio Syn Kym Wendy and others and another appeal [2019] 1 SLR 1065 (“Thio Syn Kym (CA)”)29 at [17]. Where, eventually, a court orders the shares of the oppressed minority shareholder to be bought out, he is......
-
Company Law
...21 See para 9.3 above. 22 [2019] 2 SLR 524. 23 Public Prosecutor v Lew Syn Pau [2006] 4 SLR(R) 210 appeared to suggest otherwise. 24 [2019] 1 SLR 1065. 25 [2019] 4 SLR 1. 26 [2019] 1 SLR 873. 27 [2020] 1 SLR 275. 28 For the avoidance of doubt, no party involved in the litigation is related ......