Viking Engineering Pte Ltd v Feen, Bjornar and others and another matter
| Jurisdiction | Singapore |
| Judge | Valerie Thean J |
| Judgment Date | 27 April 2020 |
| Neutral Citation | [2020] SGHC 78 |
| Court | High Court (Singapore) |
| Hearing Date | 02 March 2020 |
| Docket Number | Suit No 294 of 2017 (Summonses Nos 4610 of 2019 and 793 of 2020) and Originating Summons No 1324 of 2019 and Summons No 751 of 2020 |
| Plaintiff Counsel | Mahesh Rai s/o Vedprakash Rai and Yong Wei Jun Jonathan (Drew & Napier LLC) |
| Defendant Counsel | Wong Soon Peng Adrian, Ang Leong Hao and Sara Sim (Rajah & Tann Singapore LLP) |
| Subject Matter | Companies,Oppression,Minority shareholders,Professions,Valuer,Judicial review of valuation |
| Published date | 30 April 2020 |
Arising out of a minority oppression action in Suit No 294 of 2017 (“S 294/2017”), I ordered, on 9 April 2018, that the first defendant, Mr Bjornar Feen, purchase the shares of the plaintiff, Viking Engineering Pte Ltd (“Viking Engineering”), in the third defendant, Viking Inert Gas Pte Ltd (“VIG”) (“the Buyout Order”). The fair value of the shares in VIG (“the Shares”) was to be ascertained by an independent valuer appointed by agreement of the parties. Pursuant to the Buyout Order, parties agreed to appoint Mr Richard Hayler of FTI Consulting (Singapore) Pte Ltd (“FTI”), with agreed terms of reference. Mr Hayler subsequently completed the valuation and produced a report (“the Report”).
The Report was the subject of the present applications. On 16 September 2019, Viking Engineering filed Summons No 4610 of 2019 (“SUM 4610/2019”) seeking an order pursuant to O 45 r 6 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) for Mr Feen to pay the sum of S$13.2 million, being the valuation of the Shares stipulated by the Report, within 7 days of the order. On 22 October 2019, Mr Feen and the remaining defendants in S 294/2017 filed Originating Summons No 1324 of 2019 (“OS 1324/2019”) challenging the Report. On 2 March 2020, I dismissed OS 1324/2019 and ordered that the purchase price of Viking Engineering’s shareholding in the third defendant, VIG, be fixed at the price set by the Report.1 The defendants have appealed against my decision and I now set out my reasons in full.
BackgroundViking Engineering and Mr Feen were joint venture partners in VIG. On 4 April 2017, Viking Engineering commenced S 294/2017, as minority shareholders of VIG, for minority oppression under s 216 of the Companies Act (Cap 50, 2006 Rev Ed). In these grounds, the term “the defendants” refers to the defendants in S 294/2017, notwithstanding that they are the plaintiffs in OS 1324/2019.
S 294/2017 arose out of a sale and purchase agreement dated 10 September 2013 between Viking Engineering and Mr Feen in relation to VIG. By this agreement, Viking Engineering, at that time a 51% shareholder in VIG, sold a 21% shareholding in VIG to Mr Feen, thereby giving Mr Feen a 70% shareholding in VIG. This resulted in Viking Engineering holding a remaining 30% shareholding in VIG. Mr Feen was obliged to abide by various undertakings in return, including an undertaking to change the corporate name of VIG to Feen Marine Pte Ltd, the same name that was later used for the second defendant (“Feen Marine”). Mr Feen is the sole director of Feen Marine, the fourth defendant, Scanjet Feen IGS Pte Ltd (“Scanjet Feen”), and the fifth defendant, Feen Marine Scrubbers Pte Ltd (“Feen Marine Scrubbers”), collectively referred to as “the Feen Companies”.
Viking Engineering’s initial claim in S 294/2017 included contentions that, in breach of the sale and purchase agreement, Mr Feen failed to change the name of VIG to Feen Marine and instead incorporated a company of the same name. This is the second defendant. Mr Feen thereafter transferred his entire shareholding in VIG to Feen Marine. The business and corporate opportunities of VIG were said to have subsequently been diverted to Feen Marine and Scanjet Feen. In particular, these corporate opportunities related to the supply of oil discharge monitors, contracts for the supply of inert gas systems (“IGS”) and exhaust gas cleaning services (“ECGS”).
Viking Engineering then followed on with Summons No 4101 of 2017 seeking summary judgment in S 294/2017. On 24 November 2017, leave was given to Viking Engineering to amend its prayers in the summons to include a buy-out of Viking Engineering’s shares in VIG by Mr Feen. After considering the augmented arguments on 14 February 2018, I granted an injunction to restrain Mr Feen and his agents from using the name “Viking” in any manner which may compete with the business of Viking Engineering or be associated with or perceived to be associated with Viking Engineering or the business of Viking Engineering. I also ordered Mr Feen to purchase Viking Engineering’s entire shareholding in VIG, with an independent valuer to be appointed by agreement within 14 days of final judgment to ascertain the fair value of the shares. Unconditional leave to defend was given on the remainder of the claims. These claims were subsequently settled by parties on 6 July 20182, and VIG’s name was changed Stokke Engineering Pte Ltd on 24 July 2018.3.
Counsel for the defendants asked for time to submit on whether a discount ought to be applied by the valuer to Viking Engineering’s minority holding in VIG.4 At the same time, in the course of proceedings, after Viking Engineering contended that there was also evidence of diversion of business opportunities from VIG to Feen Marine Scrubbers, the latter was added by consent as the fifth defendant.
On 9 April 2018, after hearing parties on the question of whether a discount for Viking Engineering’s minority shareholding should apply, I held that no discount should be applied. I also ordered that the valuer make adjustments, as part of his valuation, for Mr Feen’s conduct and the diversion of opportunities to the Feen Companies. On the same date, in the course of finalising the form of the final orders, parties agreed that the cost of the valuation exercise would be borne by Mr Feen.
Subsequently, on or around 21 May 2018, the parties agreed on the draft Terms of Reference for the valuer.5 On 8 June 2018, the parties agreed to appoint Mr Hayler of FTI to conduct the valuation. The next day, Mr Hayler wrote to the parties to confirm his appointment. Mr Hayler circulated a Letter of Engagement dated 13 June 2018 (“the LOE”) to the parties, which all parties duly signed and returned in counterparts.6 The terms of FTI’s appointment reflected that the first defendant, Mr Feen, was to bear the costs of the valuation exercise. On 12 November 2018, FTI issued an invoice for the Report to Mr Feen’s solicitors.
Notwithstanding that the 9 April Buyout Order and 13 June LOE reflected the parties’ consent for Mr Feen to pay for the Report, Mr Feen failed to do so. As a result, FTI withheld the Report pursuant to its rights under cl 33 of the LOE. On 8 March 2019, pursuant to Viking Engineering filing Summons No 5784 of 2018, I set a timeframe for Mr Feen to pay pursuant to O 45 r 6(2) of the ROC: see
On 16 September 2019, Viking Engineering took out an application in SUM 4610/2019 for Mr Feen to pay the purchase price at the valuation set by the Report for the Shares within seven days of the order.
On 22 October 2019, the defendants filed OS 1324/2019 seeking a declaration that the Report was not final and binding, or that it be set aside or otherwise disregarded. They argued that Mr Hayler had departed from his instructions and that there were manifest errors in the valuation, raising specific complaints that will be addressed in detail below. In support, they also tendered a report from Mr Mark Collard (“Mr Collard”) of KPMG. In their view, the valuer’s mandate was to be determined from the Buyout Order primarily. Further, they argued that their conduct in the valuation process could not be held against them. In response to SUM 4610/2019, the defendants argued that Viking Engineering had not proved that Mr Feen had no intention to pay and, further, that Mr Feen lacked the financial ability to pay S$13.2 million. They argued therefore that no order under O 45 r 6(2) of the ROC should be made.
At the hearing, parties had also made respective applications for leave to admit further affidavits in support of their respective cases. In Summons No 751 of 2020 (“SUM 751/2020”), the defendants filed two further affidavits from Mr Feen to put in VIG’s annual financial statements in order to illustrate their points on the financial position of the company. I granted leave to admit these affidavits and Viking Engineering decided not file an affidavit in response, preferring for the hearing to carry on as scheduled. In Summons No 793 of 2020 (“SUM 793/2020”), Viking Engineering sought leave to file a further affidavit to elaborate on Mr Feen’s conduct. The defendants had a right of response and Viking Engineering decided not to pursue the application in the interests of having SUM 4610/2019 dealt with on the same date. I thus granted leave for Viking Engineering to withdraw SUM 793/2020.
The single central issue in this case was whether the Report is binding between the parties or whether it should be set aside. It was common ground that the Report, being an expert determination, may only be set aside on one or more of the following three grounds (see
For the reasons that follow, I decided that Mr Hayler had not materially departed from his instructions, nor was there any manifest error in the Report. In the result, I dismissed OS 1324/2019 and fixed the price for the purchase of Viking Engineering’s shares in VIG at S$13.2 million, the valuation stated in the Report.
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Feen, Bjornar and others v Viking Engineering Pte Ltd and another appeal and another matter
...against the decision of the High Court judge (“the Judge”) in Viking Engineering Pte Ltd v Feen, Bjornar and others and another matter [2020] SGHC 78 (“the GD”), concerning whether the Judge had erred in refusing to set aside a court-ordered valuation made by an independent valuer that was ......