Lim Siew Fern v Tan Beng Yong and others (Tan Meng Hin, third party)

[2] KPMG Services Pte Ltd (“KPMG”) was appointed by the parties to carry out the said valuation (the “Original Valuation”).

[3] As the valuation was being conducted, KPMG was also asked to make an additional assessment as to whether related party transactions (“RPT”) between the third defendant and Exquisite Accomm Pte Ltd (a related party of the third defendant) (“Exquisite”) were arm’s length transactions for fair value (the “RPT Review”).

[4] In the course of this additional assessment, KPMG identified four invoices (numbered 30157, 30158, 30159 and 30160) issued by Exquisite to the third defendant (the “Four Invoices”) which were relevant to the RPT Review.

[5] KPMG’s work on the RPT Review was however hampered by the unavailability of electronic and physical documents from the third defendant as a result of a server crash and the disposal of physical documents by employees of the third defendant respectively. Further details of this loss of data are provided at [44] below.

[6] KPMG issued its final report on the RPT Review on 26 June 2023.

[8] I dismissed the plaintiff’s application for the reasons set out below and the plaintiff has appealed against the decision.

[9] The plaintiff in this present summons, Mdm Lim Siew Fern (“Mdm Lim”), was the plaintiff in HC/S 170/2014 and the registered owner of 45,000 shares in the third defendant, Agile Accomm Pte Ltd (“Agile”) (Seaquest (GD) at [5]). She held the shares as a nominee for Seaquest (Seaquest (GD) at [11]). Seaquest was incorporated in 2003 and had been in the business of, inter alia, shipbuilding and ship repairing (Seaquest (GD) at [3]).

[10] The third defendant, Agile, was incorporated in 2009 to carry on the business of marine accommodation work for shipbuilding. The first defendant, Mr Tan Beng Yong, was a director and majority shareholder of Agile. His wife, Mdm Ho Shen Shen, was also a director and shareholder of Agile and she was the second defendant in the suit (Seaquest (GD) at [4]).

[11] Seaquest and Agile were once business partners (Seaquest (GD) at [6]). Their relationship subsequently broke down, which led to the commencement of litigation by Seaquest and Mdm Lim against Agile (Seaquest (GD) at [9]).

[13] On 3 October 2016, KPMG was jointly engaged by the parties to value the plaintiff’s shares.

[15] On 29 September 2017, the plaintiff took out HC/SUM 4540/2017 seeking, inter alia, an expansion of KPMG’s scope of work to include expressing a view on whether and/or to what extent the information provided to KPMG was reliable, and to perform an investigation of the documents made available to KPMG in the course of the valuation exercise. HC/SUM 4540/2017 was dismissed by Ramesh J on 20 April 2018.

[17] On 20 May 2022, the plaintiff took out HC/SUM 1901/2022. This was an application for orders varying the terms of KPMG’s appointment for the valuation exercise for the plaintiff’s shares, and fixing the terms of KPMG’s RPT Review. In summary, KPMG had proposed a higher charge for the valuation exercise in view of delays in the valuation exercise. Prior to the hearing of HC/SUM 1901/2022, parties agreed to the higher charge, so this issue fell away. The live issue before the court for HC/SUM 1901/2022 was the terms of the RPT Review, including the scope of work to be undertaken by KPMG and the timelines for KPMG’s review. For present purposes, it suffices to mention that on 30 August 2022, Ramesh J gave orders for the variation of the terms of appointment of KPMG for the valuation exercise for the plaintiff’s shares to revise the fees payable to KPMG, and also fixed the terms of the RPT Review.

[18] The letter setting out the finalised engagement terms for KPMG to carry out the RPT Review, as signed by the parties, was dated 22 September 2022. On 31 May 2023, KPMG e-mailed the draft RPT Review report to the parties and gave them one week to comment on the draft report, after which no further comments would be accepted. At para 5.1.2 of the draft RPT Review report, KPMG flagged the existence of the Four Invoices, which appeared prima facie relevant to the RPT Review. On 7 June 2023, the plaintiff’s solicitors e-mailed KMPG to convey her position, with accompanying reasons, that three identified suppliers which had supplied materials to Exquisite in relation to the Four Invoices should be contacted by KPMG for further investigation. That same e-mail from the plaintiff’s solicitors further indicated that the plaintiff could help put KMPG in touch with said suppliers, if needed. Thereafter, on 26 June 2023, KPMG e-mailed the solicitors for the respective parties the finalised RPT Review Report and explained why KPMG did not find it helpful to take up the plaintiff’s suggestion of contacting the said suppliers.

[19] On 7 July 2023, the plaintiff took out HC/SUM 2036/2023, which is the present summons before this court. In this summons, the plaintiff sought (a) disclosure by KPMG to the plaintiff of all versions of the Four Invoices in KPMG's possession; (b) that the plaintiff be given an opportunity to provide her comments on KPMG’s report after KPMG’s disclosure of the Four Invoices​; and (c) that KPMG accounts for the plaintiff’s comments in the revision of its report or in a supplementary report.

[20] The plaintiff’s case may be summarised as follows:

(a) Whilst KPMG had finalised its report on the RPT Review, the plaintiff contended that she was able to provide additional information (such as contact with the suppliers involved with the Four Invoices) to KPMG which might help KPMG arrive at a different conclusion on the RPT Review. The plaintiff argued that she had substantial industry knowledge that could be helpful in allowing KPMG to reach a different conclusion. Amongst other things, the plaintiff submitted that Seaquest carried out projects similar to the projects to which the RPT Review relate.

(b) There was no prejudice in allowing the plaintiff to take this additional step and to prolong the RPT Review as the plaintiff had already waited this long for a proper valuation.

(c) The plaintiff added that the information she wanted to provide was not intended to interfere with the independence of the RPT Review, but was merely information which KPMG could use to update the RPT Review which had already been finalised, should they wish to do so. The plaintiff also submitted that she would not object should any of the defendants wish to also provide additional information to KPMG for the same purposes.

(d) Connected with [20(a)] above, the plaintiff made reference to a data loss incident involving the third defendant (which included data related to the RPT Review and which prevented KPMG from undertaking a more detailed examination of the Four Invoices) which appeared convenient. The plaintiff expressed suspicion as to the separate incidents that had led to the loss of both softcopy and hardcopy records relating to a substantial number of documents related to the RPT Review (collectively the “Data Loss Incidents”).

[21] The defendants made the following points in their arguments resisting this application:

(a) This application is the fifth in a long line of applications on the part of the plaintiff that has delayed and prolonged the valuation of the plaintiff’s shares in the third defendant. KPMG was first appointed in October 2016 for the valuation exercise and the cost of the exercise was intended to be $45,000. This has now ballooned to $440,000 for the RPT Review alone.

(b) The application was an indirect way for the plaintiff to obtain confidential information on the third defendant’s operations and proprietary pricing information in contravention of the spirit of Ramesh J’s orders in HC/SUM 2735/2019, one of which being that information made available to KPMG by Agile for the purpose of the RPT Review should not be disclosed to the plaintiff unless otherwise directed by the court.

(c) The points and issues that the plaintiff wanted to share with KPMG had already been covered in KPMG’s review.

(d) The plaintiff was not in a position to replace KPMG as the forensic investigator appointed by the court for the RPT Review.

(e) KPMG had conducted an evaluation and determined that there was no foul play with respect to the Data Loss Incidents.

(f) This application was a last-ditch attempt by the plaintiff to change the decision that KPMG had already made in the RPT Review.

(a) the basis of the RPT Review, ie, the Orders of Court which established the scope of the RPT Review and the appointment of KPMG to undertake the RPT Review; and

(b) the review carried out by KPMG leading up to the release of the document titled “HC/SUM No. 1901 of 2022 Report of Owen M. Hawkes” dated 26 June 2023 (the “RPT Final Report”) including the review of the Data Loss Incidents.

[26] For the sake of completeness, it is also useful to set out the original judgment of the court, issued by Edmund Leow JC (as he then was), dated 3 December 2015 ordering the Original Valuation:

[28] By their very nature, forensic investigations are intended to be detailed and thorough. In that pursuit, the methodology behind the investigation is just as important as its substantive objectives. This explains the detailed scope of work and methodology set out in Appendices A through C of KPMG’s Engagement Letter for carrying out the RPT Review.

[29] It is not necessary to set out here all the details of the RPT Review, but the summary below is helpful to understand the key aspects of the review.

(a) KPMG’s methodology for gathering evidence relevant to the RPT Review included interviews with personnel relevant to the RPT Review – for example, the first defendant was interviewed on three occasions – and the extraction of documents in both physical and soft copies.

(b) As part of the RPT Review, KPMG also conducted a thorough analysis of the Data Loss Incidents and this is addressed at [37]–[45] below.

(c) Finally, and based on the evidence obtained, KPMG identified the Four Invoices as being relevant to the RPT Review, ie, relevant to whether the third defendant had overpaid Exquisite for the materials purchased under each of these invoices.

[30] I will summarise briefly the analysis undertaken by KPMG with respect to the Four Invoices.

(a) Due to the Data Loss Incidents, only one of the Four Invoices revealed sufficient information to allow KPMG to undertake the arm’s length analysis – invoice 30158 (“Invoice 30158”).

(c) KPMG did, however, have access to pricing spreadsheets which the third defendant had used for certain projects and which contained pricing information for materials which were the same as or similar to the materials in Invoice 30158 (“Individual Pricing Spreadsheets”).

(d) KPMG organised the various line items for materials from Invoice 30158 into groups (or brackets). KPMG then compared the pricing for these brackets (“RPT Bracket Prices”) against the pricing for the same or similar brackets derived from the Individual Pricing Spreadsheets (“Reference Bracket Prices”) to ascertain the difference in prices (after making calculations for the same amount of materials purchased as in Invoice 30158) and summarised its findings in the RPT Final Report.

(e) For the sake of completeness, KPMG also had 2,253 supplier invoices from the third defendant’s other suppliers for the period from 2018–2022 from which it wanted to extract a similar bracket comparison as that used for the Individual Pricing Spreadsheets, but KPMG was unable to do so.

[31] Based on KPMG’s analysis as described in [30], KPMG concluded that the RPT Bracket Prices exceeded the Reference Bracket Prices by between 5% to 20%, depending on the brackets in question. Specific to Invoice 30158, KPMG concluded that the RPT Bracket Prices exceeded the Reference Bracket Prices by $233,051.32 which comprises 13.33% of the total invoice value of $1,748,104.40 for Invoice 30158. KPMG noted that the third defendant did not appear to have made a loss on the transaction involving the materials purchased under Invoice 30158 but the profit would have been lower.

[32] When this conclusion was extrapolated and compared against the total value of transactions subject to the RPT Review ($4,957,891.00), KPMG concluded that the value of the third defendants’ transactions with Exquisite would exceed equivalent arm’s length transactions by $660,969.10.

[33] Whilst being cautious on the strength of its conclusions given the paucity of evidence, and bearing in mind that the first defendant had given explanations in his interviews with KPMG as to why there was a difference between the RPT Bracket Prices and the Reference Bracket Prices, KPMG concluded that there was some evidence that some of the RPTs were not carried out on an arm’s length basis but stressed that its extrapolations as set out at [32] were a reasonable assumption rather than a concrete conclusion.

[34] KPMG prepared a draft report which was shared with the parties for comment on 31 May 2023. Comments on the draft report were received by KPMG on 7 June 2023 and those comments were considered by KPMG before the RPT Final Report was finalised on 26 June 2023.

[35] Specifically, there was an e-mail dated 7 June 2023 from the plaintiff’s counsel to KPMG where the plaintiff first broached the idea of KPMG contacting some of Exquisite’s suppliers in relation to the Four Invoices (identified as Staco, Sungmi and Morgan Technical Ceramics) to verify their invoices to Exquisite.

[36] KPMG responded to this e-mail on 26 June 2023 where it stated:

[37] The plaintiff relied on the Data Loss Incidents as one of the reasons why she should be allowed to review the Four Invoices and to provide KPMG with the plaintiff’s inputs, if any. Put in another way, the plaintiff argued that if the Data Loss Incidents had not occurred, KPMG would have had sufficient information to enable it to carry out a more thorough RPT Review.

[38] The RPT Final Report pointed to the general absence of documents (including e-mails relating to the Four Invoices):

[39] This led to KPMG only being able to carry out the RPT Review on the basis of limited documents, as set out in the RPT Final Report:

[40] In the plaintiff’s view, this hampered KPMG’s conduct of the RPT Review.

[41] When preparing the RPT Final Report, KPMG conducted a detailed investigation of the Data Loss Incidents and how they occurred including:

(a) three interviews with the first defendant;

(b) interviews with the third defendant’s employees allegedly present at the third defendant’s warehouse at the time the hardcopy records were disposed of; and

(c) interviews with Ever Higher Data Recovery Centre Pte Ltd (“Ever Higher”) whom the third defendant had engaged to assist with data recovery of the softcopy records following the Data Loss Incidents.

[42] KPMG’s findings on the Data Loss Incidents were ultimately inconclusive as to whether there had been any intentional actions by the defendants that led to the Data Loss Incidents. The RPT Final Report states:

[44] I disagreed. Even though the plaintiff was notified of the Data Loss Incidents in July 2021, the Data Loss Incidents actually occurred in 2020. The softcopy records were lost in the “NAS Crash” (crash of the third defendant’s server) on 7 April 2020. The hardcopy records were lost during the “Circuit Breaker Period” (ie, a period of societal lockdown in view of the COVID-19 pandemic) which started in Malaysia on 18 March 2020 such that the third defendant’s employees had to stay in the third defendant’s warehouse (as they presumably could not return to Malaysia) and allegedly disposed of the hardcopy records to make space for their stay.

[45] It is plain from the RPT Final Report that the lack of data and documents hampered KPMG’s review. The plaintiff’s position is that if Seaquest is allowed to review the Four Invoices, it may have information that KPMG would find useful because Seaquest is in the same business as the third defendant and has undertaken similar projects.

[52] Third, the appellants had complained that Mr Hayler had allegedly failed to take into account certain information in his assessment of the business that a party had diverted from the joint venture company. Some of this information had been raised by the appellants to Mr Hayler by way of a letter dated 7 September 2018, which was before the valuation report was finalised by Mr Hayler on 2 November 2018 (Feen at [6]). The Court of Appeal found that Mr Hayler had properly considered the appellants’ submissions in their 7 September letter. In Mr Hayler’s valuation report, he addressed the appellants’ key arguments in the letter and had considered the relevant evidence before him (Feen at [29]).

[54] The Court of Appeal also made the following comments at [23] of Feen when discussing the principles in Oriental Insurance:

[55] The decision in Feen made reference to how the valuation exercise by an independent valuer should, by analogy, be considered to be akin to an expert determination (see [53] above). In that regard, the decision by the Court of Appeal in Ngee Ann Development Pte Ltd v Takashimaya Singapore Ltd [2017] 2 SLR 627 (“Ngee Ann”) was also relevant. In Ngee Ann, the Court of Appeal laid out the principles that would apply in a situation “where the court’s involvement is sought before the expert has made his determination” [emphasis added] (Ngee Ann at [41]). The Court of Appeal explicitly noted at [41]–[42] that Oriental Insurance and related cases set out the principles that apply where the court was invited to intervene after an expert’s determination had been rendered. This suggests that Ngee Ann is part of the same line of case law as Oriental Insurance relating to the principles undergirding curial intervention in the work of experts. Since the Oriental Insurance principles on post-valuation interventions were held to be applicable in the context of a s 216(2) Companies Act share valuation, the Ngee Ann principles on pre-valuation interventions applied similarly by analogy.

[56] The Court of Appeal in Ngee Ann at [43] opined that Hoffmann LJ in Mercury Communications Ltd v The Director General of Telecommunications [1994] CLC 1125 (“Mercury Communications”) had “set out a useful statement of principle” on the permissible scope of curial intervention. The Court of Appeal went on at [44] to cite the relevant passage from Hoffmann LJ’s decision in Mercury Communications at 1139–1140. For present purposes, the relevant portion of Hoffmann LJ’s decision is as follows:

[59] It should be noted that the plaintiff did not make any explicit submissions in this application that she was challenging the RPT Review based on any of the three principles in Oriental Insurance. The plaintiff had not challenged the veracity of the RPT Final Report, but simply made a bare request for disclosure and review of the Four Invoices so that she could comment. In that respect, this application did not sit squarely with Oriental Insurance. Therefore, in my view, both Oriental Insurance and Ngee Ann provided relevant guidance for the disposal of the present matter.

[60] The plaintiff’s application implied a disagreement with KPMG’s decision (in its e-mail of 26 June 2023) not to pursue contact with the vendors the plaintiff had identified. This at least implied that there had been an error on KPMG’s part or that KPMG had acted contrary to its terms of reference in choosing not to further investigate the Four Invoices in the manner suggested by the plaintiff.

[62] As the defendants had pointed out, KPMG were already at liberty to question third parties and suppliers of the third defendant as part of their methodology and scope of work:

[63] KPMG declined to do so. KPMG knew that these invoices were from identified third parties (Staco, Sungmi and Morgan Technical Ceramics) who were suppliers to Exquisite, but chose not to contact them. That was a decision that KPMG made as forensic investigators. Crucially, it bears mention that KPMG had the benefit of considering the plaintiff’s solicitors’ 7 June 2023 e-mail stating the plaintiff’s suggestion, with accompanying reasons, that the said suppliers should be contacted by KPMG, and conveying that the plaintiff could help put KMPG in touch with the suppliers if needed.

[64] KPMG’s e-mail of 26 June 2023 to the plaintiff made it clear that KPMG did not expect that these vendors would have kept records dating so far back and that more recent pricing was less relevant to the RPT Review. KPMG therefore did not find it useful to seek any blanket confirmation of prices relevant at the time of the RPTs. The situation that I had before me bore some resemblance with the situation in Feen (see [52] above), where the Court of Appeal noted that the valuer in that case had properly considered submissions made by one of the parties via letter before finalising his valuation report.

[65] Following the Court of Appeal’s decision in Feen (at [23]), I was slow to find error on KPMG’s part as the court had delegated the task of forensic investigation in this instance to them as experts and their decisions should not be readily overturned.

[66] In a similar vein, as per Ngee Ann, where an expert was acting within the parameters of his terms of reference, I also avoided interfering with the expert’s judgment in how it made its valuation decision. KPMG had been appointed as independent experts in a detailed forensic exercise in connection with the RPT Review. So long as they acted within their terms of reference, they should be allowed to carry out their work independently and without interference from the parties or the courts. The decision not to pursue further queries with Exquisite’s vendors (Staco, Sungmi and Morgan Technical Ceramics) was a judgment call that KPMG was allowed to make under their terms of reference (see at paragraph [62]) and the court should not question this decision.

[67] There is a final point to be made to close the discussion on the Data Loss Incidents (see [41]–[42] above). Even if the plaintiff had made a fair case that any additional information or inputs she could provide might be relevant to KPMG in the RPT Review, KPMG’s e-mail of 26 June 2023 showed that KPMG, in not inviting further information from the plaintiff, had weighed the potential for additional useful insights that could be gleaned from further investigations, against the insights and conclusions that could already be arrived at using the available information, and came to the conclusion that the RPT Final Report could stand ready. Again, this was a judgment call that KPMG should be allowed to make without interference from the court.

[68] For these reasons, I dismissed the plaintiff’s application.

[69] For completeness, while my decision to dismiss the application did not turn on these issues, I briefly address some of the other points raised in arguments by counsel.

[71] The defendants also contended that this application was the latest in a long line of applications that had delayed the Original Valuation (see [21(a)] above). This was not a consideration relevant to my decision to dismiss this application, as the fact that there were earlier applications by the plaintiff does not, in this case, detract from the merits of other applications.

[73] Whilst it is entirely possible to go down every rabbit hole in the hope of finding another lead or some other fact or issue that would allow for a reconsideration of what has already been found, there needs to be finality at some point and perfection cannot always be achieved. Given the amount of time and money that has been spent on the RPT Review (not to mention the wider valuation), it is time for KPMG to be allowed to continue with and finalise their work for the Original Valuation.