Yeo Boong Hua and Others v Turf City Pte Ltd and Others and Another Suit

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 23 June 2008
• Neutral Citation: [2008] SGHC 93
• Docket Number: Originating Summons No 1634 of 2002 (Summons No 4117 of 2007) and Suit No 703 of
• Date: 23 June 2008
• Year: 2008
• Published date: 24 June 2008
• Plaintiff Counsel: Timothy Tan Thye Hoe and Wendy Leong Marnyi (AsiaLegal LLC)
• Citation: [2008] SGHC 93
• Defendant Counsel: Kelvin Poon and Farrah Salam (Rajah & Tann LLP)
• Court: High Court (Singapore)
• Subject Matter: Inherent powers of the court to interfere with consent orders,Circumstances where court can interfere with consent orders,Whether court ought to interfere with consent order upon a proper construction of the order,Civil Procedure,Amendments,Orders

23 June 2008 Judgment reserved.

Choo Han Teck J:

Introduction

1 By way of Summons No 4117 of 2007, the plaintiffs filed an application for further orders and/or clarification and/or variation of a consent order this court had granted on 22 February 2006 (“the Consent Order”). The case alleged by the plaintiffs against the defendants in Originating Summons 1634 of 2002 (“the OS”) consolidated with Suit No 703 of 2004 (“the Suit”) which eventually culminated into the Consent Order was essentially one of minority oppression under s 216 of the Companies Act (Cap 50, 2006 Ed). The plaintiffs are minority shareholders of Turf City Pte Ltd (“TCPL”) and Turf Club Auto Emporium Pte Ltd (“TCAE”) (collectively called “the Companies”). The defendants in these proceedings, Singapore Agro Agricultural Pte Ltd (“SAA”) and Koh Khong Meng (“Koh”), are the majority shareholders of the Companies.

2 The relationship between the parties had its genesis in a Memorandum of Understanding signed in 2001 (“the MOU”) whereby the parties agreed to jointly lease, develop and operate the site of the former turf club at Bukit Timah. It was further agreed that the Companies would be the joint venture vehicles operating the project and that the plaintiffs would be the minority shareholders. SAA had obtained a three-year lease from the Singapore Land Office (“the SLO”) of the Bukit Timah site (“the 2001 Head Lease”) and it sub-leased the land to the Companies pursuant to the joint venture agreement. The Companies in turn gave out licenses to the ultimate operators at the site and the license fees formed the Companies’ main revenue stream.

3 Shortly after the joint venture began, disputes arose between the parties which resulted in the OS and the Suit being filed against the defendants. In the course of those proceedings, the 2001 Head Lease expired. Under the 2001 Head Lease, the SLO may at its absolute discretion grant SAA a lease for a further period of three years under terms and conditions at the SLO’s absolute discretion. Instead of renewing the 2001 Head Lease under that option, it appeared that SAA entered into a fresh three-year lease with the SLO (“the 2004 Head Lease”) which contained a similar option to renew.

4 At the same time, SAA renewed its sub-leases with the Companies but did not grant the Companies any option to renew even though it enjoyed such an option in its 2004 Head Lease with the SLO. That was different from the sub-lease the Companies previously enjoyed, which had contained a clause where SAA was bound to offer an option to renew to the Companies on terms and conditions at SAA’s discretion should the Companies make a request in writing.

5 At the time the Consent Order was negotiated, the plaintiffs were unaware that the Companies no longer enjoyed any option to renew under the sub-lease. The plaintiffs were also unaware that SAA had actually entered into a fresh lease (the 2004 Head Lease) with the SLO. They had assumed that SAA simply renewed the 2001 Head Lease and that no further option to renew was granted by the SLO.

6 Before the matter proceeded to trial, parties reached a settlement the terms of which were encapsulated in a Consent Order recorded on 22 February 2006. The Consent Order was a product of negotiations undertaken at arm’s length by counsel. Under the Consent Order, valuation reports would be prepared by KPMG as independent valuer for the share price of each of the Companies. The valuation reports were envisaged to have been released sixty days from the date of the consent order (ie, May 2006) and both parties would treat the reports as final and conclusive for the purposes of engaging in a closed bidding exercise for each other’s shares in the Companies. If the plaintiffs were the sole or higher bidder, SAA would use its best endeavours to procure the assignment of SAA’s “head lease with the Singapore Land Office” to the plaintiffs. Unfortunately, the valuation reports which were due to be issued in May 2006 were only released on 10 August 2007. On 23 August 2007, the plaintiffs discovered that SAA had renewed its lease with the SLO from 1 September 2007 to 31 August 2010 (“the 2007 Head Lease”) but did not sub-lease the same to the Companies. The valuation reports did not take into account the 2007 Head Lease.

7 This move by the defendants effectively denuded TCPL and TCAE and made any bidding exercise meaningless. The plaintiffs therefore made the present application to vary the Consent Order and sought, inter alia, the following amendments:

(i) that a re-valuation exercise be carried out after valuation reports are re-issued at the defendants’ expense to take into account SAA’s current lease with the SLO;

(ii) if the plaintiffs win the bid for the Companies, the defendants shall use their best endeavours to facilitate the transfer of SAA’s current lease with the SLO or to sub-lease the site to the Companies, together with a transfer of the licenses with the ultimate tenants to the Companies; and

(iii) that if the plaintiffs win the bid for the Companies, the defendants shall make a full account of all profits the Companies made from 1 June 2006.

Alternatively, the plaintiffs sought to clarify the Consent Order in a manner necessary to give effect to it.

Jurisdiction

8 A preliminary issue this court raised when parties first appeared for the present application was whether this court had jurisdiction to hear the application. The defendants’ contentions in this regard are essentially threefold. First, they raised a procedural argument that when a main action is spent, no further applications of a fresh and substantial nature may be made by way of a summons save those specifically permitted or directed by the original orders of the court. However, an incorrect mode of commencement of proceedings is not necessarily fatal unless the defendants can show that this court has no jurisdiction or ought not exercise its jurisdiction in this matter. Hence, the defendants argue that even if the court has inherent jurisdiction to vary consent orders, it is limited to making further orders of an incidental nature. Thirdly, the defendants argue that the “liberty to apply” clause in the Consent Order is inapplicable in the present case because the plaintiffs are not seeking any clarification but are, in effect, seeking to vary the order substantially.

9 The plaintiffs cited O 92 rr 4 and 5 of the Rules of Court (Cap 322, R5, 2006 Rev Ed)(“Rules of Court”) as well as the authorities of Fivecourts Limited v JR Leisure Development Co Ltd [2000] WL 141246 (QBD) (“Fivecourts”) and Ropac Ltd v Inntrepreneur Pub Co (CPC) Ltd [2001] CP Rep 31 (“Ropac”) in support of their argument that this court has jurisdiction to make further substantive orders in this case. They also characterise the further orders sought as consequential for which the “liberty to apply” clause is operable.

10 In so far as this court’s jurisdiction to make further substantive orders is concerned, Fivecourts and Ropac are of limited assistance to the plaintiffs. In both cases, the party who was stipulated to perform a task within a certain time under a consent order applied for an extension of time from the court. Gray J and Neuberger J respectively held that in exceptional cases, a court has jurisdiction to interfere with a consent order by granting a time extension but refused to grant the application. Neuberger J opined that one of the circumstances where a court would grant a time extension was when one party suffered an accident that rendered him unable to doing anything for the relevant period. This is a fortiori in light of our O 3 r 4 of the Rules of Court which allows the court to extend the time within which a person is required or authorised by a judgment, order or direction, to do any act. The present application however is not an application for an extension of time.

11 Both Fivecourts and Ropac recognise that whilst there may be exceptional circumstances where a court may interfere with a consent order (eg, granting an extension of time), in general, a consent order represented a contract with which the court has no jurisdiction to interfere, save in circumstances in which the court has to interfere with a contract. This contractual underpinning of a consent order has been adopted locally by MPH Rubin J in CSR South East Asia Pte Ltd v Sunrise Insulation Pte Ltd [2002] 3 SLR 281. The plaintiffs argued that the amendments are necessary to remedy the following breaches of the Consent Order by the defendants:

(a) the defendants entered into the 2007 Head Lease with the SLO but allowed the sub-lease with the Companies to expire; and

(b) the defendants failed to disclose that: (i) SAA had entered into the 2007 Head Lease; and (ii) that the 2004 Head Lease contained an option to renew but the sub-lease to the Companies did not.

Any allegation of breach of the Consent Order ought to be brought in a separate action. Nonetheless, it will become apparent upon a proper...