Transtech Electronics Pte Ltd v Choe Jerry and Others

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 09 April 1998
• Neutral Citation: [1998] SGHC 103
• Date: 09 April 1998
• Subject Matter: Stay of proceedings,Whether forum non conveniens established,Application by defendants to stay proceedings in Singapore,Whether multiplicity of actions determinative of outcome of application for stay,Action by minority shareholder on the ground of oppression under s 216 of the Companies Act (Cap 50),Whether any multiplicity of actions,Plaintiffs filing suit in New York,Civil Procedure
• Docket Number: Originating Summons No 1366 of (Summon in Chambers No 2106 of 1998)
• Published date: 19 September 2003
• Defendant Counsel: Zaheer Merchant (Madhavan Louis & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: Sarbjit Singh and Andrew Tan (Chua Dhillion Tan & Partners)

Judgment:

1.JUDITH PRAKASH J

Background

The plaintiffs, a company incorporated in Singapore, hold 31.58% of the issued share capital of Nas-Transtech Technology Pte Ltd (the company), which is also incorporated in Singapore. The first defendant holds 52% of the company`s issued share capital and he and the second, third and fourth defendants are four out of the nine directors of the company.

2.The company is in the business of manufacturing and supplying various consumer electronic goods including a wireless microphone used to generate background music for karaoke purposes known as Leadsinger Microphone Karaoke (the product). It was set up in August 1996 as the joint venture vehicle for a proposed joint venture which was subsequently documented in an agreement dated 3 October 1996 between the plaintiffs, the first defendant and Solidex (S) Pte Ltd, a Singapore company, which now holds 10.53% of the company`s issued share capital. According to para 4(A) of the joint venture agreement, the purpose of the company was to take over all the business of NAS Electronics Inc (Nas Inc) a company incorporated under the laws of New York, in relation to the product including exclusive manufacturing rights of the product, all patent application rights and rights to invention, research and development to improve the then current model of the product (collectively `the business rights`).

3.By cl 4(B) of the joint venture agreement, the first defendant undertook to procure and insure that the business rights referred to in sub-cl 4(A) of the joint venture agreement, were promptly assigned to the company by Nas Inc and each other relevant party. The clause also provided that the business rights were valued at US$2,600,000 and that of this amount, US$1,000,000 would be considered as being the first defendant`s equity contribution to the company, and US$200,000 would be considered as the equity contribution of Solidex (S) Pte Ltd.

4.Disputes arose among the parties to the joint venture agreement. The plaintiffs, as minority shareholders, considered that they were being oppressed by actions taken by the first defendant and directors nominated by him and in December 1997, they commenced this action for relief under s 216 of the Companies Act (Cap 50, 1994 Ed) (the Act). The reliefs asked for were as follows: (1). the plaintiffs be appointed by the court to commence civil proceedings against all or any of the defendants in the name and on behalf of the company and at the expense of the company for such reliefs as the court deemed fit;

(2). the accounts and other records of the company be open for inspection by an approved company auditor and a report of the findings be submitted to the court;

(3). the defendants be directed to account for all transactions and/or moneys/assets not or not fully and properly accounted for;

(4). the first defendant be directed to take all steps necessary to effect the transfer of the business rights of Nas Inc to the company as provided for in cl 4 of the joint venture agreement;

(5). the funds received, whether directly or indirectly, by the first defendant either from: (a) the company; and (b) from any person or corporation which has had any business dealings with the company, be explained and accounted for by the first defendant;

(6). all other accounts, inquiries and directions be taken or made as the court may consider appropriate;

(7). alternatively, the first defendant be ordered to purchase the plaintiffs` shares in the company on such terms as the court may think fit or the first defendant be compelled to sell his shares in the company to the plaintiffs on such terms as the court may think fit; and

(8). alternatively, the company be wound up.

5.Immediately after taking out this summons, the plaintiffs applied for and were granted injunctive relief restraining the defendants from proceeding with the members` and directors` meetings intended to be held on 15 December 1997 and also from acting for the company and managing any of its affairs.

6.None of the defendants is a Singapore citizen nor permanently resident in Singapore. The first and second defendants, who are brothers, are resident in and citizens of the United States of America. The third defendant is also resident in the United States of America whilst the fourth defendant resides in Korea. The defendants were served with these proceedings by courier service and AR registered post to their respective addresses in New York and Korea and entered an appearance to this action on 13 January 1998.

7.Their first step taken out by an application on 22 January 1998 was for these proceedings to be continued as if this action had been commenced by way of a writ of summons and for appropriate directions to be given. This application was not successful and instead, on 16 February 1998, Lai Siu Chiu J made an order that all deponents in the main proceedings be cross-examined on their affidavits and appear for viva voce evidence to be taken on a date to be fixed by the registrar. Consequently, the originating summons was fixed for hearing on 20 March 1998.

8.In the meantime, on 13 March 1998, the defendants applied for discovery of documents to enable them to deal with the plaintiffs` allegations in the action. This application was heard on 16 March and, at that stage, the defendants sought an adjournment because they wished to take out an application to stay the main action on the basis that the plaintiffs had filed a suit in New York against the defendants which was a duplication of the present action. This adjournment was granted and the judge hearing the application also vacated the hearing date of 20 March.

9.The defendants` application for the stay was filed on 20 March 1998 and it came up for hearing before me on 30 March together with the adjourned application for discovery. I dismissed the application for the stay and thereafter the parties agreed on the application for discovery and I made a consent order in terms acceptable to them. As the defendants have indicated that they may appeal against my dismissal of the stay application, I now give my reasons for that decision.

10. The New York action

The basis for the stay application was that by...