Kroll v Cyberdyne Tech: Striking Out in Minority Oppression Claim

In the case of Kroll, Daniel v Cyberdyne Tech Exchange Pte Ltd and others, before the General Division of the High Court of Singapore on 5 July 2022 and 21 September 2022, Justice Mavis Chionh Sze Chyi considered an application by the second to fourth defendants to strike out the plaintiff Daniel Kroll's claim of minority oppression under s 216 of the Companies Act. Kroll alleged that the defendants conducted the affairs of Cyberdyne Tech in a manner oppressive and prejudicial to him, wrongfully diluting his shareholding. The defendants argued that Kroll rejected a reasonable buyout offer, rendering the suit an abuse of process. The court declined to strike out the claim, finding that the offer did not cover all disputed issues and reliefs sought, and it was reasonable for Kroll to proceed with the action. The court struck out specific paragraphs related to MAS Form 11 Forgery Pleadings, deeming them legally unsustainable.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Application for striking out declined.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Daniel Kroll's minority oppression claim against Cyberdyne Tech and others was not struck out, as the buyout offer didn't cover all disputed issues.

1.7 Decision Date

20 September 2022

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Daniel Kroll	Plaintiff	Individual	Application for striking out declined	Partial	Tan Chee Meng, Chang Qi-Yang, Tan Ee Hsien, Thio Li Fong Michelle Theresa
Cyberdyne Tech Exchange Pte Ltd	Defendant	Corporation	Application for striking out granted in part	Partial	Jimmy Yim Wing Kuen, Chen Jie’An Jared, Eunice Lau Guan Ting
Wong Yoke Qieu, Gabriel	Defendant	Individual	Application for striking out granted in part	Partial	Raeza Khaled Salem Ibrahim, Shannon Yeo Feng Ting, Kimberly Ng Qi Yuet
Bai Bo	Defendant	Individual	Application for striking out granted in part	Partial	Raeza Khaled Salem Ibrahim, Shannon Yeo Feng Ting, Kimberly Ng Qi Yuet
Lily Hong Yingli	Defendant	Individual	Application for striking out granted in part	Partial	Raeza Khaled Salem Ibrahim, Shannon Yeo Feng Ting, Kimberly Ng Qi Yuet

3. Judges

Judge Name	Title	Delivered Judgment
Mavis Chionh Sze Chyi	Judge	Yes

4. Counsels

Counsel Name	Organization
Tan Chee Meng	WongPartnership LLP
Chang Qi-Yang	WongPartnership LLP
Tan Ee Hsien	WongPartnership LLP
Thio Li Fong Michelle Theresa	WongPartnership LLP
Jimmy Yim Wing Kuen	Drew & Napier LLC
Chen Jie’An Jared	Drew & Napier LLC
Eunice Lau Guan Ting	Drew & Napier LLC
Raeza Khaled Salem Ibrahim	Salem Ibrahim LLC
Shannon Yeo Feng Ting	Salem Ibrahim LLC
Kimberly Ng Qi Yuet	Salem Ibrahim LLC

4. Facts

Daniel Kroll, a minority shareholder in Cyberdyne Tech Exchange Pte Ltd, claimed oppression by the other shareholders.
Kroll alleged that the second, third, and fourth defendants conducted the company's affairs in a manner oppressive and prejudicial to him.
Kroll's shareholding was allegedly wrongfully and severely diluted from 7.67% to 0.67%.
The defendants applied to strike out Kroll's claim, arguing that he rejected a reasonable buyout offer.
The buyout offer fixed Kroll's shareholding at 7.67% and determined the purchase price using a formula based on company value.
Kroll rejected the buyout offer, contending that it did not adequately address all reliefs sought and that the valuation was lower than expected.
Kroll claimed that the allotment of shares to Dr. Bai at the 30 April 2021 EGM was a fundamental issue of dispute affecting share valuation.

5. Formal Citations

Kroll, Daniel v Cyberdyne Tech Exchange Pte Ltd and others, HC/S 915/2021, [2022] SGHC 231

6. Timeline

Date	Event
2018-07-30	Cyberdyne Tech Exchange Pte Ltd incorporated.
2019-03-31	Daniel Kroll invested in Cyberdyne Tech Exchange Pte Ltd.
2019-05-31	First Capital Markets Services license application made.
2020-05-08	Wong Yoke Qieu, Gabriel resigned as director.
2020-05-12	Share Trust Agreement entered.
2020-05-23	Chong appointed as CEO.
2020-06-05	Second license application made to MAS.
2020-12-14	MAS informed CTX of in-principle approval.
2020-12-29	Convertible loan agreement signed.
2020-12-30	Chong resigned as CEO.
2021-01-28	Second convertible loan agreement signed.
2021-02-10	Wong agreed to give Kroll additional shares.
2021-02-11	Share Trust Termination Agreement and Deed for Transfer of Additional Shares entered.
2021-02-22	Daniel Kroll resigned as director.
2021-02-28	Third convertible loan agreement signed.
2021-03-23	Investment Agreement with CTX entered.
2021-03-31	First installment for repurchase of Xiamen Anne’s shares payable.
2021-04-16	Asia Green Fund extended loan to CTX.
2021-04-29	Notice of EGM circulated.
2021-04-30	Extraordinary General Meeting held.
2021-05-05	Bai Bo became CEO.
2021-05-09	Amended Restated Investment Agreement entered.
2021-05-12	Additional shares issued by CTX.
2021-05-15	Maturity date of loan.
2021-05-17	CTX obtained CMS license.
2021-05-21	Tele-conversation between Kroll and Wong.
2021-07-16	CTX recognized as RMO by MAS.
2021-11-08	Writ of Summons filed.
2022-03-14	Buyout offer issued.
2022-03-22	Formal rejection of buyout proposal issued.
2022-05-09	Kroll's reply affidavit.
2022-07-05	Hearing held.
2022-09-21	Judgment issued.

7. Legal Issues

Minority Oppression
- Outcome: The court found that the buyout offer did not cover all disputed issues and reliefs sought, and it was reasonable for Mr Kroll to proceed with the action.
- Category: Substantive
- Sub-Issues:
  - Share dilution
  - Breach of legitimate expectations
  - Opaque management of company affairs
Striking Out
- Outcome: The court declined to strike out the claim, finding that the offer did not cover all disputed issues and reliefs sought, and it was reasonable for Mr Kroll to proceed with the action. The court struck out specific paragraphs related to MAS Form 11 Forgery Pleadings, deeming them legally unsustainable.
- Category: Procedural
- Sub-Issues:
  - Abuse of process
  - Reasonable cause of action
  - Frivolous or vexatious pleadings

8. Remedies Sought

Declaration that the 30 April EGM and all resolutions passed thereat are invalid
Order that Mr Kroll’s shareholding in CTX be restored to the percentage of shares that Mr Kroll held as at 29 April 2021 (7.67%)
Order that any of the Defendants shall purchase all of Mr Kroll’s shares in CTX at a price to be determined by the Court
Order that CTX be wound up by the Court pursuant to section 216(2)(f) CA
Damages to be assessed and/or equitable compensation be paid to Mr Kroll

9. Cause of Actions

Minority Oppression

10. Practice Areas

Commercial Litigation
Corporate Law

11. Industries

Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and others	High Court	No	[1997] 3 SLR(R) 649	Singapore	Cited to establish that the power granted to the court under O 18 r 19 is a draconian one.
Harun bin Syed Hussain Aljunied and another v Abdul Samad bin O K Mohamed Haniffa and others	High Court	No	[2017] SGHC 248	Singapore	Cited to establish that the power granted to the court under O 18 r 19 is a draconian one and the threshold for striking out is high.
Chee Siok Chin and others v Minister for Home Affairs and another	High Court	No	[2006] 1 SLR(R) 582	Singapore	Cited to establish that the power granted to the court under O 18 r 19 is a draconian one and the threshold for striking out is high.
Trinity Construction Development Pte Ltd v Sinohydro Corp Ltd (Singapore Branch)	High Court	Yes	[2021] 3 SLR 1039	Singapore	Cited to establish that the threshold for striking out is a high one: the court will exercise its power to strike out where it is plain and obvious that the plaintiff does not have a cause of action.
Ng Chee Weng v Lim Jit Ming Bryan and another	High Court	Yes	[2012] 1 SLR 457	Singapore	Cited to establish that the pleading itself must fail to make out a reasonable cause of action without reference to other evidence.
The “Bunga Melati 5”	High Court	No	[2012] 4 SLR 546	Singapore	Cited to define the terms “frivolous” and “vexatious” to connote obvious unsustainability.
Lai Swee Lin Linda v Attorney-General	High Court	No	[2006] 2 SLR(R) 565	Singapore	Cited to define the term “scandalous”.
Tong Seak Kan and anor v Jaya Sudhir a/l Jayaram	High Court	No	[2016] 5 SLR 887	Singapore	Cited to establish the third ground for striking out applies where the pleading may prejudice, embarrass or delay the fair trial of the action.
O’Neill v Phillips	House of Lords	Yes	[1999] 1 WLR 1092	United Kingdom	Cited for the requirements to determine what constitutes a reasonable offer in minority oppression claims.
Balk v Otkritie International Investment Management Ltd	England and Wales Court of Appeal (Civil Division)	Yes	[2017] EWCA Civ 134	United Kingdom	Cited to establish that it is an abuse of process for an applicant to reject an offer that would provide him with everything sought and to continue instead with proceedings.
TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch)	High Court	Yes	[2019] 5 SLR 69	Singapore	Cited to establish that there is public interest that the court’s resources should not be used for a claim that had become academic in view of the offer.
Lim Swee Khiang and another v Borden Co (Pte) Ltd and others	High Court	Yes	[2005] 4 SLR(R) 141	Singapore	Cited to establish that where there is a reasonable offer to purchase the allegedly oppressed party’s shares, an action for oppression cannot be sustained.
Lim Swee Khiang and anor v Borden Co (Pte) Ltd and others	Court of Appeal	No	[2006] 4 SLR(R) 745	Singapore	Cited to establish that the appeal was not an abuse of process as the buyout offer was not a reasonable one: it did not include the damages claimed by the plaintiffs arising from the defendants’ oppressive acts.
Lim Chee Twang v Chan Shuk Kuen Helina and others	High Court	No	[2010] 2 SLR 209	Singapore	Cited to establish that the offer to buy out the plaintiff’s shareholding in the companies - “reasonable as it was” - did not render the continuation of the action an abuse of process, because the offer did not cover all the entities involved and also failed to address a number of contested issues.
Tan Eck Hong v Maxz Universal Development Group Pte Ltd and others	High Court	No	[2019] 3 SLR 161	Singapore	Cited to establish that the two buyout offers made to the plaintiff were not reasonable.
Re a Company No. 00836 of 1995	Unknown	Yes	[1996] BCC 432	United Kingdom	Cited to establish that it was almost inevitable that the majority shareholder, JT, would be ordered to buy out his father’s shares in the event that his father’s petition succeeded.
Re a Company No. 006834 of 1988	Unknown	Yes	(1989) 5 BCC 218	United Kingdom	Cited to establish that when it is “plain that the appropriate solution to a breakdown of relations is for the petitioner to be able to sell his shares at a fair price, and the articles contain provisions for determining a price which the respondent is willing to pay or the respondent has offered to submit to an independent determination of a fair price, the presentation or maintenance of a petition under s 459 will ordinarily be an abuse of process.
North Holdings Ltd v Southern Tropics Ltd and others	England and Wales Court of Appeal (Civil Division)	No	[1999] 2 BCLC 625	United Kingdom	Cited to establish that since there had not yet been any findings of fact as to whether the respondents had misused any of the assets of S Ltd, it was proper – for the purposes of determining whether the petition should be struck out – to assume that the pleaded allegations would be established.
Loveridge v Loveridge	England and Wales Court of Appeal (Civil Division)	Yes	[2021] EWCA Civ 1697	United Kingdom	Cited to establish that the petition in respect of the company Kingsford was an abuse of process given that the other two owners had made an offer to purchase Michael’s shares in Kingsford at a fair market value.
Re Sprintroom Ltd Prescott v Potamianos and another; Potamianos v Prescott and another	England and Wales Court of Appeal (Civil Division)	No	[2019] EWCA Civ 932	United Kingdom	Cited to establish that the question whether Mr Prescott had made a reasonable offer to buy Dr Potamianos’ shares was not logically antecedent to questions of unfairly prejudicial conduct, because the factors that indicated the reasonableness or otherwise of an offer would often be closely bound up with the behaviour that was alleged to be unfairly prejudicial.
Harborne Road Nominees Ltd v Karvaski	High Court	No	[2011] EWHC 2214 (Ch)	United Kingdom	Cited to establish that the guidance provided in O’Neill went into considerable detail, “(n)evertheless it does not have the status of legislation”.
Re Prudential Enterprise Ltd	Unknown	No	[2001]	Hong Kong	Cited to establish that the basic requirements for a reasonable offer were as set out in the judgement of Lord Hoffmann in O’Neill.
Re Prudential Enterprise Ltd	Court of Appeal	No	[2002] 2 HKC 375	Hong Kong	Cited to establish that the petitioners were entitled to a fair and reasonable price for their shares, but that the requirements that were necessary to ensure that the petitioners would be given a fair and reasonable price varied, depending on the facts in each case.
ACB v Thomson Medical Pte Ltd and ors	High Court	Yes	[2017] 1 SLR 918	Singapore	Cited to establish that O 33 r 2 is a power-conferring provision, and in deciding whether this power should be exercised, the only question the court has to consider is whether substantial time and expenditure would be saved in respect of the trial of the action as a whole if it is exercised.
Federal Insurance Co v Nakano Singapore (Pte) Ltd	High Court	Yes	[1991] 2 SLR(R) 982	Singapore	Cited to establish that O 33 r 2 is a power-conferring provision, and in deciding whether this power should be exercised, the only question the court has to consider is whether substantial time and expenditure would be saved in respect of the trial of the action as a whole if it is exercised.
Humpuss Sea Transport Pte Ltd v PT Humpuss Intermoda Transportasi TBK	Court of Appeal	Yes	[2015] 4 SLR 625	Singapore	Cited to establish that the Rules of Court 2014 is based on the UK Rules of Supreme Court 1965.
Foss v Harbottle	Unknown	Yes	[1843] 2 Hare 461	United Kingdom	Cited to establish the proper plaintiff rule.
Leong Chee Kin (on behalf of himself and as a minority shareholder of Ideal Design Studio Pte Ltd) v Ideal Design Studio Pte Ltd and others	High Court	Yes	[2018] 4 SLR 331	Singapore	Cited to establish the proper plaintiff rule and the bar on recovering reflective loss.
Ng Kek Wee v Sim City Technology Ltd	High Court	Yes	[2014] 4 SLR 723	Singapore	Cited to establish that allowing an essentially corporate claim to be pursued under s 216 of the Companies Act would be an abuse of process.
Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters	Court of Appeal	Yes	[2018] 2 SLR 333	Singapore	Cited to establish that where a s 216 oppression action features both personal wrongs and corporate wrongs, the framework is to ascertain whether the claim is an abuse of process.
Robinson v H. G. Robinson & Sons Ltd and others	High Court	Yes	[2020] EWHC 1 (Ch)	United Kingdom	Cited to establish that even if an alternative remedy existed and the petitioner was acting unreasonably in seeking to have the company wound up regardless of the offer, the court still had a discretion whether or not to strike out the petition.

13. Applicable Rules

Rule Name
Rules of Court 2014

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Minority oppression
Share dilution
Buyout offer
Reasonable offer
Abuse of process
Legitimate expectations
Company valuation
Corporate wrong
Personal wrong
Striking out

15.2 Keywords

minority oppression
striking out
buyout offer
share dilution
companies act
singapore

16. Subjects

Corporate Law
Civil Procedure
Shareholder Rights

17. Areas of Law

Civil Procedure
Companies
Minority Shareholders
Striking Out