Duck abattoir boss was unfairly removed after a dispute, rules judge
By K.C. Vijayan 25 September 2009
A High Court judge has ordered two partners to buy up the shares of a duck abattoir boss who was unfairly ousted after an internal dispute.
The business was set up based on a verbal and mutual understanding. The judge has ruled that an even higher standard of governance applies to such ‘quasi-partnerships’ than ordinary companies.
Mr. Eng Gee Seng, 72, owns a third of DA Foods Industries in Senoko, which operates one of the largest duck abattoirs here. The other two, Mr. Quek Choon Teck, 57, and Mr. Goh Gok Siang, 57, hold another third each.
Mr. Eng had sued the other two partners under Section 216 of the Companies Act, alleging that the affairs of DA Foods had been conducted in a manner that was oppressive to him as a shareholder.
The duck abattoir was set up in 1990 after the Government banned the slaughter of poultry in wet markets. The firm also trades in duck feathers.
Mr. Eng was ousted in 2005 after falling out with the other two partners, who alleged his son Kwang Chiang, 44, had stored pork at the abattoir, leading to breaches of Agri-Food and Veterinary Authority rules. Mr. Eng, who is illiterate, said he was not told by his partners the reason he could no longer be a director.
Minutes of an October 2005 meeting, when he was removed, stated he had also breached director’s duties by letting a worker take a friend to the abattoir. The worker allegedly threatened Mr. Quek. The judge found this was a private quarrel - and no grounds to remove Mr. Eng.
Mr. Eng, represented by Senior Counsel Ang Cheng Hock from Allen &
Gledhill, said the firm was set up based on a verbal understanding between the three that all would have equal management rights and remuneration, among other things. In breach of this, his removal meant he was excluded from managing the firm and received no director’s fees, salaries or dividends.
The court found the other two had paid themselves $100,000 each in director’s fees while Mr. Eng was paid only $16,670 for the 2006 financial year. They also paid themselves director’s salaries of $89,000 and $34,000 each while Mr. Eng was paid only $2,000.
Justice Chan Seng Onn, in a 40-page judgment published on Wednesday, said ‘quasi-partnerships’ are based on trust and confidence, and that those in charge should govern with integrity: ‘Accordingly, a higher standard of governance is expected of them compared with controllers of ordinary companies.’
The judge found the defendants had ‘acted unscrupulously and had departed from the standard of fair dealing’. He rejected the defendants’ claim that they had ‘no case to answer’.
He ordered the defendants to buy out Mr. Eng’s shares in DA Foods at a price to be set by a qualified valuer appointed by the parties.
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Two ordered to buy up shares of partner
Duck abattoir boss was unfairly removed after a dispute, rules judge
By K.C. Vijayan
25 September 2009
A High Court judge has ordered two partners to buy up the shares of a duck abattoir boss who was unfairly ousted after an internal dispute.
The business was set up based on a verbal and mutual understanding. The judge has ruled that an even higher standard of governance applies to such ‘quasi-partnerships’ than ordinary companies.
Mr. Eng Gee Seng, 72, owns a third of DA Foods Industries in Senoko, which operates one of the largest duck abattoirs here. The other two, Mr. Quek Choon Teck, 57, and Mr. Goh Gok Siang, 57, hold another third each.
Mr. Eng had sued the other two partners under Section 216 of the Companies Act, alleging that the affairs of DA Foods had been conducted in a manner that was oppressive to him as a shareholder.
The duck abattoir was set up in 1990 after the Government banned the slaughter of poultry in wet markets. The firm also trades in duck feathers.
Mr. Eng was ousted in 2005 after falling out with the other two partners, who alleged his son Kwang Chiang, 44, had stored pork at the abattoir, leading to breaches of Agri-Food and Veterinary Authority rules. Mr. Eng, who is illiterate, said he was not told by his partners the reason he could no longer be a director.
Minutes of an October 2005 meeting, when he was removed, stated he had also breached director’s duties by letting a worker take a friend to the abattoir. The worker allegedly threatened Mr. Quek. The judge found this was a private quarrel - and no grounds to remove Mr. Eng.
Mr. Eng, represented by Senior Counsel Ang Cheng Hock from Allen &
Gledhill, said the firm was set up based on a verbal understanding between the three that all would have equal management rights and remuneration, among other things. In breach of this, his removal meant he was excluded from managing the firm and received no director’s fees, salaries or dividends.
The court found the other two had paid themselves $100,000 each in director’s fees while Mr. Eng was paid only $16,670 for the 2006 financial year. They also paid themselves director’s salaries of $89,000 and $34,000 each while Mr. Eng was paid only $2,000.
Justice Chan Seng Onn, in a 40-page judgment published on Wednesday, said ‘quasi-partnerships’ are based on trust and confidence, and that those in charge should govern with integrity: ‘Accordingly, a higher standard of governance is expected of them compared with controllers of ordinary companies.’
The judge found the defendants had ‘acted unscrupulously and had departed from the standard of fair dealing’. He rejected the defendants’ claim that they had ‘no case to answer’.
He ordered the defendants to buy out Mr. Eng’s shares in DA Foods at a price to be set by a qualified valuer appointed by the parties.
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