Case Details
- Citation: [2020] SGCA 112
- Title: Feen, Bjornar and others v Viking Engineering Pte Ltd and another appeal and another matter
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 17 November 2020
- Case Numbers: Civil Appeals Nos 45 and 46 of 2020 and Summons No 81 of 2020
- Coram: Andrew Phang Boon Leong JA; Tay Yong Kwang JA; Belinda Ang Saw Ean J
- Judgment Type: Grounds of decision (appeals from the High Court)
- Plaintiff/Applicant: Feen, Bjornar and others
- Defendant/Respondent: Viking Engineering Pte Ltd and another appeal and another matter
- Appellants (CA 45): Feen, Bjornar and others (including Mr Bjornar Feen)
- Appellant (CA 46): Mr Bjornar Feen
- Respondent’s Position: Viking Engineering Pte Ltd
- Legal Areas: Companies — oppression; Professions — valuer (judicial review of valuation)
- Key Statute Referenced: Companies Act (Cap 50, 2006 Rev Ed)
- Other Procedural References: Rules of Court (Cap 322, R 5, 2014 Rev Ed) including O 45 r 6(2), O 57 rr 13(3) and 13(4)
- High Court Decision Appealed From: Viking Engineering Pte Ltd v Feen, Bjornar and others and another matter [2020] SGHC 78
- Counsel for Appellants: Ramesh Bharani s/o K Nagaratnam and Ong Ying Ting Eunice (RBN Chambers LLC)
- Counsel for Respondent: Mahesh Rai s/o Vedprakash Rai and Yong Wei Jun Jonathan (Drew & Napier LLC)
- Judgment Length: 10 pages, 5,783 words (as reported in metadata)
Summary
This Court of Appeal decision concerns the limited circumstances in which a court-ordered valuation by an independent valuer may be set aside. The valuation was made pursuant to a buyout order following a finding of minority oppression under s 216 of the Companies Act. The appellants sought to challenge the valuation on the basis that the valuer materially departed from his instructions and that the valuation contained manifest error.
The Court of Appeal dismissed both appeals. It held that the independent valuer acted within the scope of his instructions, which were framed broadly and afforded the valuer a wide discretion. The Court further emphasised that “manifest error” requires more than a disagreement between experts; it must be an error that justly requires judicial intervention. Finally, the Court refused to allow the appellants to adduce a competing valuation report, reinforcing the principle that expert determinations appointed by consent are not lightly disturbed.
What Were the Facts of This Case?
The dispute arose from a joint venture relationship between Mr Bjornar Feen (“Mr Feen”) and Viking Engineering Pte Ltd (“Viking Engineering”). They were joint venture partners in Viking Inert Gas Pte Ltd (“VIG”). Viking Engineering later commenced proceedings alleging minority oppression in the High Court (HC/S 294/2017, “S 294”). Among other allegations, Viking Engineering claimed that Mr Feen had diverted business opportunities belonging to VIG to companies he controlled, including Feen Marine Pte Ltd, Scanjet Feen IGS Pte Ltd, and Feen Marine Scrubbers Pte Ltd (collectively, “the Defendants”).
In S 294, Viking Engineering sought relief under s 216 of the Companies Act, either by way of a buyout order or, alternatively, a winding-up order. The High Court found oppression had been made out. As a remedy, the Judge ordered Mr Feen to purchase Viking Engineering’s 30% shareholding in VIG at a price to be determined by an independent valuer (the “Buyout Order”). The Buyout Order was detailed: it required the valuer to ascertain the fair value of the shares as at 9 April 2018 on a going concern basis, without applying a minority discount, and to have regard to financial information and records that the valuer deemed necessary.
Crucially, the Buyout Order also required adjustments to the purchase price on the assumption that VIG had undertaken business diverted away from it to the Defendants. The adjustments were not open-ended; they were constrained to specific business areas (inert gas systems and exhaust gas cleaners) and required attribution of goodwill and revenue earned by the other Defendants to VIG, subject to a narrow exception where such goodwill or revenue arose from contracts that would have been physically impossible for VIG to have earned. The valuer was also directed to give regard to the Defendants’ financial records as necessary for carrying out the order.
By agreement, the parties appointed Mr Richard Hayler of FTI Consulting (Singapore) Pte Ltd (“FTI”) on 8 June 2018. Mr Hayler circulated a letter of engagement dated 13 June 2018 (“LOE”), which the parties signed and returned. He produced a valuation report (the “FTI Report”) after delays in document provision by the Defendants. The FTI Report valued VIG at $44m as at 9 April 2018, using an average of (i) a discounted cash flow (DCF) analysis based on VIG’s revenue and (ii) a comparative analysis using share valuations of two listed companies. The shares were valued at $13.2m.
After the FTI Report, Viking Engineering applied for an order that Mr Feen pay $13.2m within seven days (HC/SUM 4610/2019, “SUM 4610”). In parallel, the Defendants sought to declare the FTI Report not final and binding, or to set it aside or disregard it (HC/OS 1324/2019, “OS 1324”). The High Court dismissed OS 1324 and ordered payment in accordance with the FTI Report. The present appeals were brought against that decision.
What Were the Key Legal Issues?
The Court of Appeal identified three principal issues. First, it considered whether the Defendants should be granted leave in CA 45 to raise a new argument challenging the validity of the Buyout Order. The new argument was that Viking Engineering ought to have availed itself of buyout provisions in VIG’s articles of association (“VIG’s Articles”) before commencing S 294, and that failure to do so amounted to an abuse of process.
Second, assuming the Buyout Order was valid, the Court had to determine the grounds on which a valuation made pursuant to it may be challenged. This required the Court to apply the established approach to expert determinations appointed by consent, including the threshold for “material departure from instructions” and “manifest error”.
Third, the Court addressed whether the FTI Report should be set aside. This involved assessing whether Mr Hayler materially departed from the Buyout Order and LOE, and whether any alleged errors rose to the level of manifest error. A related procedural issue also arose in CA 45: whether the appellants should be allowed to adduce a competing valuation report (CA/SUM 81/2020, “SUM 81”).
How Did the Court Analyse the Issues?
Issue 1: Leave to raise a new argument and abuse of process
On the first issue, the Court of Appeal refused to accept the Defendants’ attempt to raise a new legal argument. It held that the “extended” doctrine of res judicata barred the issue. The doctrine applies not only to matters actually decided, but also to points that were not previously decided because they were not raised earlier, even though they could and should have been raised in earlier proceedings. The Court framed the inquiry as whether, having regard to the substance and reality of the earlier action, the issue reasonably ought to have been raised.
Applying that approach, the Court reasoned that Viking Engineering’s application in SUM 4101 was for summary judgment in S 294 under O 14 r 1 of the Rules of Court. Any submission that the commencement of S 294 was an abuse of process should have been ventilated at that stage. The Defendants did not do so, and the Court therefore treated the new argument as barred.
In any event, the Court also found the argument unpersuasive on the merits. The Defendants relied on the Court of Appeal’s observations in Ting Shwu Ping (administrator of the estate of Chng Koon Seng, deceased) v Scanone Pte Ltd and another appeal [2017] 1 SLR 95 (“Ting Shwu Ping”), which addressed how the existence of a shareholder exit mechanism in a company’s articles may affect the court’s assessment under s 216. The Court reiterated that such mechanisms can negate unfairness (because unfairness is assessed in light of the shareholder’s ability to exit), may render an application an abuse of process where a viable alternative exists and the winding-up petition is brought for a collateral purpose, and the court retains a residual discretion to assess whether the article procedure itself is unfair.
However, the Court concluded that the buyout provisions relied upon by the Defendants were part of a common set of articles in privately held companies providing a right of first refusal when another shareholder wishes to sell. The Court did not accept that these provisions displaced the court’s remedial jurisdiction under s 216 in the manner suggested by the Defendants. Accordingly, leave was not granted and the new challenge failed.
Issue 2 and 3: Challenging the valuation—scope of instructions and manifest error
The Court then turned to the valuation challenge. The parties agreed that the FTI Report was an expert determination. The Court applied the principles in Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd [2009] 2 SLR(R) 385 (“Oriental Insurance”) at [47], under which an expert determination may be set aside only on limited grounds: (a) where the expert materially departed from instructions; (b) where there is manifest error that justly requires judicial intervention; or (c) where there is fraud, corruption, collusion, dishonesty, bad faith, bias, or the like.
In OS 1324, the Defendants relied on the first two grounds. The High Court had found that Mr Hayler acted within the scope of his instructions under both the Buyout Order and the LOE, which afforded him a wide discretion. The Court of Appeal endorsed this approach. It emphasised that the Buyout Order required the valuer to ascertain fair value and to have regard to financial information and records as the valuer deemed necessary. The instructions did not prescribe every modelling choice or analytical step. Instead, they set the valuation framework and required specific adjustments to reflect diverted business opportunities, while leaving room for professional judgement in implementing the framework.
On the alleged “material departure”, the Court considered whether the valuer had stepped outside the boundaries of what he was instructed to do. The Court agreed with the Judge that the Defendants’ complaints amounted to disagreements about methodology and emphasis rather than a departure from the instructions. Where the instructions were broad and the valuer was appointed to determine fair value, the Court was reluctant to treat every contested modelling assumption as a breach of instructions.
On “manifest error”, the Court similarly rejected the Defendants’ case. The Defendants relied on an expert report by KPMG Services Pte Ltd (“KPMG”) to argue that the FTI Report was wrong. The Court of Appeal held that the submissions, at their highest, raised differences in expert opinion. That is not enough. Manifest error requires an error that is obvious and compelling—an error that justly requires the court to intervene. The Court’s reasoning reflects a policy of finality: expert determinations appointed by consent should not become the subject of a de novo review merely because another expert would have valued differently.
Procedural reinforcement: refusal to adduce a competing valuation report
In CA 45, the appellants also sought leave to adduce a competing valuation report (SUM 81). The Court dismissed this application. While the extract provided does not detail the full reasoning, the outcome is consistent with the Court’s broader approach: the court’s role is not to replace the expert’s determination with another valuation, but to police the limited grounds for setting aside an expert determination. Allowing a competing report would risk turning the challenge into a merits contest, contrary to the narrow judicial review framework under Oriental Insurance.
What Was the Outcome?
The Court of Appeal dismissed both appeals (CA 45 and CA 46). It upheld the High Court’s refusal to set aside the FTI Report and affirmed that Mr Feen was required to purchase Viking Engineering’s shares at the valuation of $13.2m determined by the independent valuer.
Additionally, the Court dismissed CA/SUM 81/2020, the appellants’ application to adduce a competing valuation report. Practically, this meant that the valuation remained binding and the buyout remedy proceeded on the basis of the FTI Report rather than any alternative valuation methodology proposed by the appellants.
Why Does This Case Matter?
This decision is significant for corporate disputes involving minority oppression remedies under s 216 of the Companies Act. When courts order a buyout with valuation by an independent expert, the valuation is not treated as a mere preliminary step. Instead, it is given strong procedural and substantive finality, subject only to narrow grounds for judicial intervention.
For practitioners, the case clarifies two recurring points. First, challenges to the validity of a buyout order or the remedial route under s 216 must be raised promptly. The Court’s application of the extended doctrine of res judicata underscores that parties cannot hold back arguments and later seek leave to relitigate issues that could and should have been raised earlier.
Second, the case reinforces the high threshold for setting aside expert determinations. “Manifest error” is not synonymous with “error” in the sense of being wrong or less persuasive than another expert’s view. It requires an error that justly compels the court to intervene. Similarly, “material departure from instructions” is assessed against the scope and breadth of the expert’s mandate. Where the court’s order and the LOE confer discretion, courts will generally not treat contested modelling choices as material departures.
Legislation Referenced
- Companies Act (Cap 50, 2006 Rev Ed), s 216
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), O 14 r 1; O 45 r 6(2); O 57 rr 13(3) and 13(4)
Cases Cited
- [2020] SGCA 112 (the present case)
- Viking Engineering Pte Ltd v Feen, Bjornar and others and another matter [2020] SGHC 78
- The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd [2009] 2 SLR(R) 385
- The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd (nTan Corporate Advisory Pte Ltd and others, other parties) and another appeal [2015] 5 SLR 1104
- Goh Nellie v Goh Lian Teck and others [2007] 1 SLR(R) 453
- Ting Shwu Ping (administrator of the estate of Chng Koon Seng, deceased) v Scanone Pte Ltd and another appeal [2017] 1 SLR 95
- [2020] SGHC 78 (as referenced in metadata)
Source Documents
This article analyses [2020] SGCA 112 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.