Teo Lay Gek v Hoang Trong Binh: Judicial Review of Valuation Dispute in Share Sale Agreement

In Teo Lay Gek and Lok Kexin Melissa v Hoang Trong Binh, Truong Quang Con, and IPMM (Singapore) Pte. Ltd., the Singapore High Court addressed a dispute arising from a settlement agreement regarding the valuation of the plaintiffs' shares in Agape Holdings Pte Ltd. The plaintiffs sought a declaration that the Ernst & Young (EY) Report, which valued their shares at US$4,165,675, was final and binding, and an order for the defendants to pay this sum. The defendants argued that the EY Report was flawed and exceeded its mandate. Justice Tan Siong Thye granted the plaintiffs' application, finding no basis to set aside the EY Report and ordering the defendants to pay the specified sum plus interest.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiffs' application allowed; the Ernst & Young Report was declared final and binding.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court judgment on a dispute over the valuation of shares in Agape Holdings Pte Ltd, ruling the Ernst & Young report final and binding.

1.7 Decision Date

26 March 2019

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Teo Lay Gek	Plaintiff	Individual	Application Allowed	Won	Lee Ee Yang of Covenant Chambers LLC Wong En Hui Charis of Covenant Chambers LLC
Lok Kexin Melissa	Plaintiff	Individual	Application Allowed	Won	Lee Ee Yang of Covenant Chambers LLC Wong En Hui Charis of Covenant Chambers LLC
Hoang Trong Binh	Defendant	Individual	Application Unsuccessful	Lost	Hing Shan Shan Blossom of Drew & Napier LLC Chin Tian Hui Joshua of Drew & Napier LLC Tan Yi Yin Amy of Drew & Napier LLC
Truong Quang Con	Defendant	Individual	Application Unsuccessful	Lost	Hing Shan Shan Blossom of Drew & Napier LLC Chin Tian Hui Joshua of Drew & Napier LLC Tan Yi Yin Amy of Drew & Napier LLC
IPMM (Singapore) Pte. Ltd.	Defendant	Corporation	Application Unsuccessful	Lost	Hing Shan Shan Blossom of Drew & Napier LLC Chin Tian Hui Joshua of Drew & Napier LLC Tan Yi Yin Amy of Drew & Napier LLC

3. Judges

Judge Name	Title	Delivered Judgment
Tan Siong Thye	Judge	Yes

4. Counsels

Counsel Name	Organization
Lee Ee Yang	Covenant Chambers LLC
Wong En Hui Charis	Covenant Chambers LLC
Hing Shan Shan Blossom	Drew & Napier LLC
Chin Tian Hui Joshua	Drew & Napier LLC
Tan Yi Yin Amy	Drew & Napier LLC

4. Facts

Plaintiffs and defendants entered into a Settlement Agreement regarding the valuation of plaintiffs' shares.
Ernst & Young Solutions LLP was appointed as the independent valuer.
EY assessed the fair market value of the plaintiffs’ shares to be US$4,165,675 as at 31 December 2016.
The defendants did not make any payment to the plaintiffs.
The defendants argued that the EY Report was not final and binding due to manifest errors and exceeding the contractual mandate.
The plaintiffs sought a declaration that the EY Report be final and binding and an order for the defendants to pay the sum of US$4,165,675.
The EY valuation relied on a CBRE report for the valuation of a Vietnam project.

5. Formal Citations

Teo Lay Gek and another v Hoang Trong Binh and others, Originating Summons No 935 of 2018, [2019] SGHC 84

6. Timeline

Date	Event
2016-07-14	Plaintiffs commenced an action against the defendants for minority oppression.
2017-06-16	Parties attended a mediation session and entered into the Settlement Agreement.
2017-08-14	Parties agreed to appoint Ernst & Young Solutions LLP as the independent valuer.
2017-11-14	CBRE’s report was completed.
2018-01-02	EY’s valuation report was dated.
2018-01-10	The EY Report was sent to the parties.
2018-03-29	Defendants wrote to EY requesting a reassessment of the valuation.
2018-07-09	Parties attended a mediation session.
2018-08-01	Plaintiffs commenced Originating Summons No 935 of 2018.
2018-09-26	Savills Vietnam Co., Ltd prepared a report.
2019-02-08	The court granted the plaintiffs’ application in OS 935/2018.
2019-03-06	Defendants filed a notice of appeal.
2019-03-27	Judgment Date

7. Legal Issues

Manifest Error in Valuation Report
- Outcome: The court found that there were no manifest errors in the EY Report.
- Category: Substantive
- Sub-Issues:
  - Inaccurate assumptions
  - Failure to apply statutorily prescribed formula
  - Incomplete information
- Related Cases:
  - [2014] 2 SLR 573
  - [2006] 1 SLR(R) 634
  - [1976] 1 WLR 403
  - [1978] 1 Lloyd’s Rep 175
  - [2007] 1 SLR(R) 1004
  - [2014] 4 SLR 1
  - [2009] 2 SLR 385
  - [2015] SGHC 222
  - [2002] 1 All ER 703
  - [1991] 2 EGLR 103
Departure from Contractual Mandate
- Outcome: The court found that EY had not exceeded the scope of its contractual mandate.
- Category: Substantive
- Sub-Issues:
  - Exceeding scope of valuation
  - Failure to comply with applicable laws
- Related Cases:
  - [2009] 2 SLR 385
  - [2014] 2 SLR 573
  - [1991] 2 EGLR 103

8. Remedies Sought

Declaration that the EY Report be final and binding
Order for the defendants to pay US$4,165,675 plus accrued interest

9. Cause of Actions

Breach of Contract

10. Practice Areas

Commercial Litigation
Valuation Disputes
Shareholder Litigation

11. Industries

Real Estate
Financial Services

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Poh Cheng Chew v K P Koh & Partners Pte Ltd and another	N/A	Yes	[2014] 2 SLR 573	Singapore	Cited for the grounds to challenge a determination of an expert.
Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd	N/A	Yes	[2006] 1 SLR(R) 634	Singapore	Cited to support the principle that courts should not substitute their views for an expert's determination when parties have agreed to rely on the expert's expertise.
Campbell v Edwards	N/A	Yes	[1976] 1 WLR 403	N/A	Cited for the principle that parties are bound by a valuation agreed upon, even if the valuer made a mistake, provided the valuation was done honestly and in good faith.
Baber v Kenwood Manufacturing Co Ltd and Whinney Murray & Co	N/A	Yes	[1978] 1 Lloyd’s Rep 175	N/A	Cited for the principle that parties accepting an expert's opinion also accept the risk of the expert being wrong or negligent.
Geowin Construction Pte Ltd (in liquidation) v Management Corporation Strata Title Plan No 1256	N/A	Yes	[2007] 1 SLR(R) 1004	Singapore	Cited for the narrow approach to manifest error, referring to a patent error on the face of the award or decision.
Quek Kwee Kee Victoria (in her personal capacity and as executor of the estate of Quek Kiat Song, deceased) and another v Quek Khuay Chuah	N/A	Yes	[2014] 4 SLR 1	Singapore	Cited for adopting the narrow approach to manifest error.
The Oriental Insurance Co Ltd v Reliance National Asia Re Pte Ltd	N/A	Yes	[2009] 2 SLR 385	Singapore	Cited for a less strict approach, opining that there was no absolute rule precluding reference to matters beyond the face of the award or decision to establish a manifest error.
Jayanti Nadarajoo v Bronwyn Helen Matthews and another	High Court	Yes	[2015] SGHC 222	Singapore	Cited to clarify that not all error is manifest error, and only error capable of affecting the outcome and admitting no difference of opinion amounts to manifest error.
Walton Homes Ltd v Staffordshire County Council	N/A	Yes	[2013] EWHC 2554 (Ch)	N/A	Cited as an example of manifest error where the expert valuer refers to a building that does not exist.
Veba Oil Supply & Trading GmbH v Petrotrade Inc	N/A	Yes	[2002] 1 All ER 703	N/A	Cited for the definition of manifest errors as oversights and blunders so obvious and obviously capable of affecting the determination as to admit of no difference of opinion.
Nikko Hotels (UK) Ltd v MEPC plc	N/A	Yes	[1991] 2 EGLR 103	N/A	Cited to illustrate the distinction between a departure from instructions and mistakes made by the expert, using the analogy of answering the right or wrong question.
Holt v Cox	N/A	Yes	(1997) 23 ACSR 590	N/A	Cited to support the principle that courts have no greater expertise than expert valuers and judicial restraint is appropriate where parties have chosen to commit the determination of valuation to an expert.
Jones v Sherwood Computer Services plc	N/A	Yes	[1992] 1 WLR 277	N/A	Cited for examples of fundamental mistakes that would cause an expert to exceed the scope of their contractual mandate.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Housing Law No. 65/2014/QH13	Vietnam

15. Key Terms and Keywords

15.1 Key Terms

Settlement Agreement
Valuation
Fair Market Value
Independent Valuer
Manifest Error
Contractual Mandate
Net Tangible Assets
Vietnam Project
Social Houses
Land Costs
CBRE Report
EY Report
Savills Report

15.2 Keywords

Valuation dispute
Share sale agreement
Judicial review
Settlement agreement
Manifest error
Contractual mandate

17. Areas of Law

Area Name	Relevance Score
Company Law	70
Minority Oppression	60
Contract Law	50
Valuation Law	40
Civil Procedure	30
Settlement Agreement	30
Arbitration	30
Share Valuation	30
Litigation	20

16. Subjects

Valuation
Contract Law
Shareholder Dispute
Judicial Review