Tullio v Maoro

• Judge: Karthigesu JA
• Judgment Date: 23 May 1994
• Neutral Citation: [1994] SGCA 76
• Citation: [1994] SGCA 76
• Defendant Counsel: Tan Jee Ming and N Sreenivasan (Derrick Ravi & Pnrs)
• Published date: 19 September 2003
• Plaintiff Counsel: Michael Kor (Michael Kor & Co)
• Date: 23 May 1994
• Docket Number: Civil Appeals Nos 35 and 104 of 1993
• Court: Court of Appeal (Singapore)
• Subject Matter: Principles,Relief sought that defendant repurchase the shares,Depriving successful party of part of his costs,Companies,Relief,Costs,s 216 Companies Act (Cap 50, 1990 Ed),Keeping shareholder out of company management,Civil Procedure,Successful party not acting improperly or unreasonably,Principles governing award of costs,Requirement of fairness on the facts of the particular case,Shares bought by oppressed member from defendant,Whether shares to be sold at their original price or at their net value at the date of judgment,Oppression

The appellant, an Italian national engaged in the business of dealing in building materials in Bolzano, Northern Italy, had come to Singapore in or about July 1991 with a view to expanding his business in South-East Asia and to that end to registering a business in Singapore. However he encountered certain obstacles in setting up a business in Singapore due to the legal requirement of having a locally resident manager or director, as the case may be, for his business. He then met the respondent, also an Italian national but a resident of Singapore, who hailed, co-incidentally, from Bolzano. They became friends as was to be expected in these circumstances. When the appellant made known to the respondent his intentions in coming to Singapore, the respondent, who was also engaged in the business of dealing in building materials and who had established businesses in Singapore for the past 20 years, invited the appellant to invest in a company called La Mar Diamant (Overseas) Pte Ltd (`the company`) in which he held 41,300 shares and his wife held 200 shares representing a paid up capital of $415,000 at $10 per share out of the authorized capital of $600,000. The company was at that time inactive. The respondent conducted his business in building materials through another company called La Mar Diamant (SEA) Pte Ltd which had a paid up capital of $2.4m.

Following discussions between the appellant and the respondent, the latter was persuaded by the appellant to re-activate the company, in which the appellant would have an equal say, by buying over half the issued and fully paid shares at $7 per share which the respondent represented to the appellant was based on the net worth of the company as at 1 March 1992. Accordingly the appellant agreed to buy 20,750 fully paid up shares in the company from the respondent for $145,250.

No formal agreement was entered into between the appellant and the respondent. It was contended by the appellant at the hearing of the petition, which the learned trial judge accepted, that the agreement was partly oral and partly in writing. She found the oral content of the agreement to be, that the appellant would be responsible for the operations of the company in Italy whilst the respondent would be mainly responsible for the operations in Singapore; that joint signatures of both the appellant and the respondent were required for all cheques drawn on the company`s foreign account with Banca Commerciale Italiana (BCI) at Carrara, Italy; and that the appellant would be the `manager` or director of the company and have an equal role in the running of the company and in decision making. It was also agreed that the respondent would sponsor the appellant`s application for an employment pass.

The written content of the agreement was contained in a letter in Italian from the respondent to the appellant dated 15 February 1992 and countersigned by the appellant on 16 February 1992. The material terms of this letter may be thus summarized from an English translation which was provided: that the appellant will be given 50% of the paid up capital in the company (20,750 shares) upon payment of $145,250 (about 109m lire at the rate of exchange of 750 lire to $1) calculated at $7 per share which was based on the accounts of the company for the year ended 1 March 1992; that the appellant will deposit in the company`s account at Banca Commerciale Italiana (BCI) Carrara, Italy $10,000 by 15 March 1992 as a guarantee for the payment of the purchase price of the 20,750 shares, which will be returned once BCI confirmed the receipt of the purchase price; that the company`s trade and business in marble and granite and other products `would take place outside Singapore`, and any business effected by the company in Singapore would have to be approved by the respondent; that joint signatures would be necessary for `certain kinds of operations to be defined`; that the company would rent office space and equipment from La Mar Diamant (SEA) Pte Ltd, the respondent`s other company, at $2,500 per month and rent storage space as and when necessary at $2.50 per unit ton; that the respondent was `prepared to devote the necessary time to the management of the company as he lived in Singapore`; that the appellant `would have to work full time and exclusively in the interest of the business` of the company; that if the appellant wanted to apply for an employment pass in Singapore, he would have to apply to the relevant authorities and state his position as `Sales Manager of the company` and declare a monthly salary of not less than $2,500; that if the appellant received a salary the respondent would be entitled to the same salary; that apart from this the annual profits would be shared equally between the respondent and the appellant; that the terms of this letter could be varied only by written agreements signed by both parties; that in the event either party wished to sell his shares, the other would be given the first offer but neither could sell their shares during the first year of operation; and that in the event of disagreements or disputes, they shall be resolved by arbitration of three lawyers or accountants, one of whom shall be independently appointed.

Upon the signing of the letter dated 15 February 1992 the appellant paid the deposit of $10,000, the receipt of which the respondent duly acknowledged by endorsing his signature on the letter.

The appellant paid the full purchase price for the 20,750 shares in the company, that is to say, $145,250 converted to lire at 750 lire to $1 (about 109m lire) into the company`s account with BCI on 27 March 1992 and thereupon 20,750 shares in the company were duly transferred to the appellant on 1 April 1992. However the appellant by his petition alleged that thereafter the respondent became rude and intolerant of the appellant`s presence on the company`s premises. The respondent refused to pass the necessary resolutions to make the appellant a director of the company or a signatory of the company`s banking accounts. He further refused to sponsor the appellant`s application for an employment pass. He refused to provide any statement of the company`s accounts and any financial information about the company. Finally, he refused to refund the deposit of $10,000 as agreed and it was only after the appellant had instructed solicitors that the appellant agreed to and did make partial refund of $8,617.

The appellant...