Yeo Hung Khiang v Dickson Investment (Singapore) Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 19 March 1999
• Neutral Citation: [1999] SGCA 20
• Docket Number: Civil Appeals Nos 127 and 128 of 1998
• Date: 19 March 1999
• Year: 1999
• Published date: 19 September 2003
• Plaintiff Counsel: Engelin The SC and Sean Tan (Engelin Teh & Young)
• Citation: [1999] SGCA 20
• Defendant Counsel: Joseph Ang and Chan Kia Pheng (Lee & Lee)
• Court: Court of Appeal (Singapore)
• Subject Matter: Purchase shares of minority shareholder,Whether court has discretion to enhance share value,Whether discretion is granted by statute,Valuation of shares,Whether interest can be awarded,s 9 Civil Law Act (Cap 43, 1994 Ed),Court's discretion to remedy matters complained of,Determination of share value requires fairness on facts of particular case,Pre-judgment interest on share value,Companies,Whether element of compensation could be included in relief granted by court,s 216(2) Companies Act (Cap 50, 1994 Ed),Oppression,First Sch para 6 Supreme Court of Judicature Act (Cap 322)

Judgment:

KARTHIGESU JA

(delivering the grounds of judgment of the court): These two appeals are against the order of Chao Hick Tin J made on 11 April 1998 determining, pursuant to a previous order made by the learned judge on 7 July 1995, that the petitioner`s shares in Dickson Trading (S) Ltd be purchased by Dickson Investment (Singapore) Pte Ltd and Dickson Poon at a price of $4.67 per share. We dismissed both appeals and now give our reasons.

2.By Originating Petition No 137 of 1992 presented on 14 December 1992 under s 216 of the Companies Act (`the Act`) the petitioner (`Yeo`) prayed, inter alia, that either or both the respondents, Dickson Investment (Singapore) Pte Ltd (`Dickson Investment`) and Dickson Poon (`Poon`) (collectively called `the respondents`) purchase the whole of his shares in Dickson Trading (S) Pte Ltd (`the company`). The petition was fixed for a contested hearing scheduled for 15 days commencing 31 July 1995.

4.Meanwhile, on 10 April 1995, after the trial dates were fixed, Poon wrote to Yeo`s solicitors suggesting that `in line with art 31 of the company`s articles of association` the company`s auditors, KPMG Peat Marwick, be appointed to value the shares of the company as of 1 October 1990 and the respondents would purchase all Yeo`s shares in the company as if the shares were purchased on that date. This was turned down by Yeo.

4.By a Summons for Further Directions No 2312 of 1995 dated 18 April 1995, the respondents applied, inter alia, for an order that Dickson Investment purchase the whole of Yeo`s shares in the company at a fair value based upon a valuation to be carried out by the company`s auditors, KPMG Peat Marwick, and for a stay of the petition.

5.The application was heard by Chao Hick Tin J on 4 and 7 July 1995. Counsel for the respondents submitted at the hearing of the application that the application was made without any admission of liability. This was objected to by Yeo. Yeo submitted that the application for the purchase of his shares could and should be dealt with at the hearing of and as part of the petition for minority oppression and, if ordered pursuant to the petition, Yeo would be able to claim both interest and costs. On the other hand, if the application was granted without hearing the petition and without any admission of liability, Yeo would be denied interest and costs. As such, Yeo indicated that he was only prepared to have the application heard if the respondents agreed to bear interest and costs.

6.The learned judge noted that, if he did allow the respondents` application on the basis that there was no admission of liability, this would lead to an untenable situation. Such a qualification would necessarily lead to difficulties in deciding the issue of interest and costs. The respondents then agreed to pay the costs of the petition subject to submission on quantum but wanted to reserve their right to submit on the issue of Yeo`s entitlement to interest. As such, the learned judge told the parties that he would proceed to hear the application on the basis that oppression had been established.

7.The learned judge then made the following orders:

(i) Dickson Investment purchase the whole of Yeo`s shares at a fair value to be determined by the court after taking into consideration an independent valuation of Yeo`s shares in the company to be undertaken by Mr Nicky Tan of the firm of Price Waterhouse (the auditor).

(ii) The auditor to value Yeo`s shares at a fair value as at 1 October 1990 and the valuation to be undertaken on the following basis:

(a) That the shares be valued on the basis that the company is a going concern.

(b) That no regard to be had or notice to be taken of any events in the company occurring after 1 October 1990 or the state of accounts or financial condition of the company after 1 October 1990.

(c) That regard be given to any and all financial information and records of the company from the time of its inception in 1983 to 30 September 1990 as the auditors may deem necessary.

(d) That no discount be given for minority shareholdings.

(iii) The valuation report of the auditor to include the grounds and basis for such valuation, and the court will determine the fair value of Yeo`s shares after taking into consideration that report.

8.The valuation report was submitted on 28 October 1997. Pursuant to the respondents` request, the valuer was cross-examined by their counsel on certain specific areas. Submissions were made to the learned judge by both counsel and on 11 April 1998 the learned judge delivered an oral judgment as follows:

8.1 The respondents to purchase Yeo`s shares at $4.67 per share.

8.2 Completion to take place within three weeks from 11 April 1998, thereafter the purchase price to bear interest at the rate of 6% per annum.

8.3 The costs of the petition and the summons for further directions No 2312 of 1995 awarded to Yeo.

8.4 The respondents to bear the costs of the valuer.

8.5 Originating Petition No 137 of 1992 be adjourned sine die with liberty to Yeo to restore or discontinue.

9. The trial judge`s decision

The learned judge had accepted the valuer`s assessment that the fair value of the shares as at 1 October 1990 was between $3.35 and $3.57. He adopted the mean figure of $3.46 as the mean value as at 1 October 1990. This ruling was accepted by both Yeo and the respondents. However, Yeo appealed against the learned judge`s decision not to grant interest and the respondents appealed against his decision to enhance the value of each share to $4.67.

10.The learned judge`s decision against awarding interest was the subject of CA 127 of 1998. It was submitted by counsel for Yeo that whatever was the fair price which the court might determine based on the valuation of Mr Nicky Tan, that sum should bear interest from 1 October 1990, or from a date prior to the date of judgment. However, it was argued by the respondents that until the court determined the price which they would have to pay for buying over Yeo`s shares, no interest could accrue on the price prior to such a determination.

11.The learned judge found that under s 216(2) of the Act, the court could make any order with a view to bringing an end or remedying the matters complained of. Amongst one of the possible orders laid down by the subsection was that the court may make an order for the purchase of the shares of the company by other members. However, he found that the subsection did not empower the court to impose interest payment for any period prior to the order for purchase. He was also inclined to agree with Nourse J`s remark in Re Bird Precision Bellows Ltd [1984] Ch 419[1984] 3 All ER 444 when Nourse J said, `I have never heard of interest being payable before there is an obligation to pay principal` which remark was endorsed by Purchas LJ in the Court of Appeal (reported at [1986] Ch 658; [1985] BCLC 493). The learned judge further cited the case of Irish Press plc v Ingersoll Irish Publications Ltd [1995] 2 ILRM 270 as authority that s 216(2) of the Act does not empower the court to grant damages as that would not be a relief `with a view to bringing an end or remedying the matters complained of`. As such, he found that he could not impose interest payment on the period before the order to purchase was made and consequently made no order that the respondents pay interest on the purchase price of the shares from 1 October 1990 up to the date of judgment.

12.As for the fair value of the shares, the learned judge felt that if he were just to adopt the valuer`s value of each share at $3.46 and make no adjustment in the price, that would be unjust to the petitioner, Yeo. He felt that an adjustment had to made because ` for some seven years the petitioner was denied the benefit of his shareholding while the respondents seemingly plundered the company or siphoned off its profits to the respondent`s other entities. To take no account of that would be tantamount to sanctioning wrongdoings and rewarding the oppressor. That would be to turn justice on its head .` As such, the learned judge enhanced the value of each share by fixing it at $4.67 per share which represented a 35% increase over a period of seven years, that is, a 5% increase per year. In enhancing the value, the learned judge was taking into account the benefits and growth which would have accrued to the company but for the oppressive acts. This enhancement of the value of the shares was the subject of CA 128 of 1998.

13. Civil Appeal No 127 of 1998

This was an appeal by Yeo against the decision of the learned judge with respect to the issue of interest. Yeo contended that the learned judge erred in not awarding interest on the purchase price of his shares in the company. Yeo`s counsel submitted that there were three issues arising in the appeal. The first issue was whether s 216(2) of the Act empowers the court to award or impose interest on the purchase price of Yeo`s shares in the company, by way of damages or otherwise, and whether such interest could be given for the period prior to the order for the purchase of the shares. The second issue was whether, if the first issue was decided in the affirmative, the court should, in the circumstances of the present case, exercise its discretion to order that such interest should commence from a date prior to the determination of the purchase price of Yeo`s shares. The third issue related to the date interest should commence from and the rate of interest applicable.

14. The background facts

The appellant`s case set out in lengthy detail allegations of oppression which were similar to that set out in Yeo`s affidavits. Yeo`s counsel submitted that there had been systematic oppression perpetrated against Yeo, there was deliberate delay in purchasing Yeo`s shares, there was loss and detriment suffered by Yeo and there were huge profits enjoyed by Poon and his companies. It was further submitted that the court should look at all...