Soemarli Lie v NG Min Hong

• Jurisdiction: British Virgin Islands
• Judge: Wallbank, J.
• Judgment Date: 25 October 2021
• Neutral Citation: VG 2021 HC 078
• Docket Number: BVIHC(Com) 2020/147 (formerly BVIHCM 2018/0114)
• Court: High Court (British Virgin Islands)

IN THE HIGH COURT OF JUSTICE

COMMERCIAL DIVISION

BVIHC(Com) 2020/147 (formerly BVIHCM 2018/0114)

Between

[1] Soemarli Lie

Claimant

and

[1] Ng Min Hong

[2] Success Overseas Finance Limited

Defendants

Appearances:

Mr. Matthew Hardwick, QC, with him Mr. Richard Evans and Dr. Alecia Johns for the Claimant

Mr. Alain Choo-Choy, QC, with him Mr. James Noble and Ms. Monique Hansen for the First Defendant

1 Wallbank, J. (Ag.): This is the judgment of the Court on the trial of this action.

INTRODUCTION

2 By these proceedings, the Claimant (‘ Mr. Lie’) seeks unfair prejudice relief pursuant to Section 184I of the BVI Business Companies Act, 2004 1 (the ‘ Act’), against the First Defendant (‘ Mr. Ng’), in

relation to the conduct of the affairs of the Third Defendant, Success Overseas Finance Limited (‘ SOFL’), a company incorporated in this Territory (‘BVI’). Emir Siregar (‘ Mr. Siregar’), formerly the Second Defendant, transferred his shareholding in SOFL to Mr. Ng on 8 ^th September 2016: when this was discovered by Mr. Lie, the Claim against Mr. Siregar was discontinued

Outline Summary

3 In brief summary, Mr. Lie is a minority shareholder in SOFL. Mr. Ng owns a majority shareholding in SOFL, which he previously held directly between 8 ^th September 2016 and 13 ^th September 2019. Since 13 ^th September 2019, Mr. Ng's shareholding in SOFL has been held via a nominee, Mr. Wong Yong Fei (‘ Mr. Fei’).

4 Mr. Lie used to be a palm oil plantation contractor in Indonesia. In around 1988, Mr. Lie entered the palm oil production business. He established a joint venture with Mr. Ng's father Mr. Aleh Wiyono (‘Mr. Wiyono’), who was a distant family member. Mr. Lie claims, and Mr. Ng denies, that the basis of the relationship was a partnership, in which both Mr. Lie and Mr. Wiyono expected to be and were involved in the management of what Mr. Lie refers to as ‘the Business’, with both Mr. Lie and Mr. Wiyono having full access to all financial and operational records.

5 Mr. Wiyono had a son, Mr. Ng. Mr. Ng entered the Business in around 1990. He was given a position with the title of ‘Commissioner’, which Mr. Lie says was a purely supervisory position. Two years later, Mr. Wiyono passed away. His son, Mr. Ng, inherited Mr. Wiyono's shareholding. Mr. Lie agreed that Mr. Ng would also accede to his late father's position in the Business as Chief Executive Officer.

6 Between 1992 and 1998 relations between Mr. Lie and Mr. Ng continued as they had been between Mr. Lie and Mr. Wiyono. In 1998 they discussed a restructuring in light of economic turmoil then afflicting Indonesia. It was Mr. Ng who initiated this. The structure as we have it before the Court today eventually grew out of this.

7 Mr. Ng owns 54.15% of the issued share capital of SOFL. Mr. Lie has 45.85%. SOFL currently has a single director, a person chosen and nominated by Mr. Ng, one Mr. Daud Achmad (‘ Mr. Achmad’). SOFL in turn originally (after the re-structuring) held around 63% of the issued share capital in an Indonesian company called PT PDP. PT PDP held and still holds the shares in five Indonesian subsidiaries, which are operating companies. Mr. Ng is currently the sole director of PT PDP. Thus, through PT PDP, Mr. Ng has exclusive control over the Business. PT PDP is where the value of the enterprise converges. Moreover, since he controls the majority shareholding in SOFL, Mr. Ng has power to influence and ultimately replace the sole director of SOFL should that director not do Mr. Ng's bidding.

8 Relations between Mr. Ng and Mr. Lie broke down in or about November 2015. Up to that point, Mr. Lie had been a director of PT PDP, but was then either sacked or he resigned (versions differ).

9 Until 1 ^st January 2016, Mr. Lie held an executive role in SOFL. With effect from 1 ^st January 2016, Mr. Lie retired from that role, whilst retaining his shareholding. This followed certain health issues as well as a disagreement with Mr. Ng about whether the Business should be floated by way of an Initial Public Offering (‘IPO’). Mr. Ng was strongly in favour, but Mr. Lie did not support this course.

10 Mr. Lie alleges that the entire value of the Business has since effectively been diverted away from Mr. Lie to Mr. Ng through a series of transactions, each of which were deliberately orchestrated by Mr. Ng to this end, leaving Mr. Lie's shareholding in SOFL completely worthless.

11 The first such transaction that Mr. Lie complains of is this. In around July 2017, a number of SOFL's shares in PT PDP were disposed of by SOFL to an entity called PT Grahaidea Selarassindo (‘Grahaidea’), reducing SOFL's shareholding in PT PDP from around 63% to around 29%. Grahaidea is owned as to 50% each by Mr. Ng and his brother, Mr. Ng Ming Hwie. Mr. Lie complains that this transfer was contrary to section 175 of the Act, in that it effected a disposal of around 54% of SOFL's shareholding in PT PDP, which Mr. Lie contends required the approval of the members of SOFL, himself included, which Mr. Ng did not obtain. Mr. Lie contends that this type of conduct is typical of Mr. Ng's cavalier disregard towards Mr. Lie's rights and interests and as such that it adds an important contextual insight into Mr. Ng's motives.

12 Then, on or about 18 ^th September 2018, PT PDP carried out a rights issue in the form of an amendment to its Articles of Association to increase its authorized and issued share capital. Following the rights issue, Grahaidea's shareholding in PT PDP was increased very significantly, as did that of another shareholder. SOFL's shareholding however remained the same. SOFL did not acquire any additional shares in PT PDP following the rights issue. This left SOFL with a negligible 1.38% shareholding in PT PDP.

13 Thirdly, on or about 16 ^th September 2019, SOFL disposed of its shares in PT PDP to PT PDP itself. This reduced SOFL's shareholding in PT PDP to 0%, and with it, the entire value of Mr. Lie's shareholding in SOFL.

14 Mr. Lie alleges that by reason of Mr. Ng's position as sole director of PT PDP and his interest in Grahaidea and his control over SOFL, it is reasonable to infer that Mr. Ng caused, suffered, and/or permitted these transactions thereby causing unfair prejudice to Mr. Lie in his capacity as a member of SOFL.

15 Mr. Lie has other complaints:

• (1) SOFL refused and/or failed to pay Mr. Lie dividends, contrary to a long-established practice of the business of SOFL. In this regard, Mr. Lie contends that he received dividends consistently every year up until and including 2014. For 2015 and 2016, however, Mr. Lie did not receive a dividend. Mr. Lie avers that SOFL did declare a dividend for 2015, but it was not paid to him. Mr. Lie claims that he has been unfairly prejudiced as a member by reason of this departure from the long-established practice and the withholding of his share of the 2015 dividend, and, if it transpires that others indeed received dividends in 2016, 2017 and 2018, then he would also have been unfairly prejudiced thereby. The 2015 dividends that were resolved to be paid amounted to approximately US$9million. That followed many years of high figure dividends being declared and paid. Now, suddenly, shortly after the relationship breakdown, the dividends dried up. Mr. Lie argues that that was no coincidence. He argues that in reality Mr. Ng had decided not to have the dividends paid in order to deprive Mr. Lie of the portion of them that would otherwise be due to him.

• (2) SOFL and Mr. Ng have refused to provide information to Mr. Lie. The information withheld has included documents that Mr. Lie is entitled to see as a shareholder, pursuant to section 100(2) of the Act, being SOFL's register of directors, register of members and copies of all resolutions and minutes of meetings of members of SOFL. Mr. Lie claims a right to see information both as a member of SOFL and by dint of the partnership he alleges existed.

16 Mr. Ng denies Mr. Lie's complaints.

17 Mr. Ng, for his part, brings complaints under several heads of alleged wrongdoing on the part of Mr. Lie. Mr. Ng. alleges that Mr. Lie:

• (1) misappropriated funds from a corporate bank account;

• (2) misappropriated proceeds of sale of used palm kernels;

• (3) caused significant loss and damage by purchasing uncertified seedlings;

• (4) diverted a corporate opportunity by secretly negotiating the purchase of two palm oil plantation owning companies while he was still a director of PT PDP;

• (5) secretly owned and operated two palm oil plantation companies in competition with PT PDP;

• (6) poached staff away from PT PDP's business.

18 Mr. Lie denies Mr. Ng's complaints.

Particular Summary

19 Turning to specific details: prior to July 2017, SOFL owned 3,789,473 shares (amounting to nearly 63.16% of the shareholding) in an Indonesian holding company incorporated in February 1988 and originally named PT Panca Daya Utama but subsequently renamed PT Panca Daya Perkasa (‘ PT PDP’). In turn, PT PDP owned and continues to own controlling shareholdings in the following subsidiaries, which are the operating companies in a palm oil production business in Indonesia:

• (1) 85% of the shares in an Indonesian company called PT Padasa Enam Utama (‘ PT PEU’) which was incorporated in June 2004 and operates a plantation in Sumatra — the other (15%) shareholder of PT PEU being an Indonesian government entity formerly known as PT Perkebunan VI (‘ PTP 6’), but which was subsequently consolidated with other Indonesian entities to become PT Perkebunan Nusantara IV (‘ PTPN 4’);

• (2) 99.99% of the shares in an Indonesian company called PT Alam Permai Makmur Raya (‘ PT APMR’) which was incorporated in June 2004 and operates a plantation and a palm oil factory in East Kalimantan;

• (3) 99.99% of the shares in an Indonesian company called PT Bumi Mulia Makmur Lestari (‘ PT BMML’) which was incorporated in June 2004 and operates a plantation in...