Case Update: Thio Syn Kym Wendy v Thio Syn Pyn [2018] SGHC 54 – Singapore High Court set out legal principles on minority discount in share buyout

Significance: Singapore High Court set out legal principles on whether a minority discount (for lack of control by the minority shareholding, and not non-marketability of minority shares) should be applied in a share buyout following a finding of minority oppression.

Where the company in question is a quasi-partnership, there is a strong presumption that no discount should be applied: In re Bird at 430; Strahan v Wilcock [2006] 2 BCLC 555 (“Strahan”) at [1]; Robin Hollington, Hollington on Shareholders’ Rights (Sweet & Maxwell, 7th Ed, 2013) (“Hollington”) at para 8-152. This presumption may be displaced in special circumstances (O’Neill and Another v Phillips and Others [1999] 1 WLR 1092 at 1107), such as when the minority shareholder has acted in such a manner as to deserve his exclusion from the company or has contributed to the oppressive conduct of the majority: see In re Bird at 430–431; Hollington at para 8-152: at [25].

There is no general rule in cases involving companies that are not quasi-partnerships: In re Bird at 431 (affirmed on appeal in In re Bird Precision Bellows Ltd [1986] 1 Ch 658). This view adequately takes into account the balance of competing considerations: (a) generally, an oppressed minority shareholder should not be treated as having elected freely to sell his shares; (b) the court should ensure that the oppressor does not profit from his wrongful behaviour (at [29]). There is no presumption or “baseline”. See [30].

The court must look at all the facts and circumstances when determining whether a discount should be applied in any case. E.g. the court will be more inclined to order no discount where the majority’s oppressive conduct was directed at worsening the position of the minority as shareholders so as to compel them to sell out (see Re Sunrise Radio Ltd [2009] EWHC 2893 (Ch) at [305]), or entirely responsible for precipitating the breakdown in the parties’ relationship: Over & Over Ltd v Bonvests Holdings Ltd and another [2010] 2 SLR 776. As with cases involving quasi-partnerships the court is likely to order a discount where the conduct of the minority contributed to their exclusion from the company or the oppressive conduct complained of: Sharikat Logistics Pte Ltd v Ong Boon Chuan and others [2014] SGHC 224 at [246]. The court will also consider relevant background facts such as whether the minority had originally purchased their shares at a discounted price to reflect their minority status, or for full value: Hollington at para 8-153; Re Blue Index Ltd at [51]. Ultimately, the broad task for the courts is to ensure that the forced buyout is fair, just and equitable for the parties in all the circumstances. See [31].

As regards minority discount for non-marketability of minority shares, the concern of preventing unfairness to a minority shareholder
who otherwise would not have sold out applies with equal force, but the countervailing considerations are different. Such a discount arises from the difficulty of selling shares due to share transfer restrictions and the narrowness of the market, regardless of whether the shares are majority or minority shares. The factors to be weighed are also distinct. For instance, the company may not be a listed company and there may be share transfer restrictions which stipulate that the shares may only be sold to Singaporeans. These are considerations that would be more appropriately evaluated by the expert valuer when assessing the value of the company and its shares as a whole, rather than by the court. The question of whether to apply a discount for non-marketability should ordinarily be left to be determined by the independent valuer in his expertise. However, it is possible that in an exceptional case, the circumstances may warrant an order by the court that no discount be applied in order to remedy the unfairness to the minority that would otherwise result. See [32].

March 10, 2018March 11, 2018

Acts meditation 2:36 – Cut to the Heart

“Let all the house of Israel therefore know for certain that God has made him both Lord and Christ, this Jesus whom you crucified.” – Acts 2:36

These words cut the hearts of the Jewish pilgrims that fateful day, and they cried out, “what shall we do?”

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March 10, 2018March 14, 2018

Case Update: PropertyGuru Pte Ltd v 99 Pte Ltd [2018] SGHC 52 – Singapore High Court dismisses claim for copyright infringement by cross-posting listing app (inter alia)

Significance

Singapore High Court (coram Justice Hoo Sheau Peng) held, inter alia, that PropertyGuru did not have copyright over photographs which property agent users uploaded onto their website for real estate listings and which they edited and imposed their watermark on. This was not a material alteration or embellishment to become original new work. Their website’s Terms of Use also merely asserted that they had copyright, but this did not take them far since at law, there was no copyright in the first place.

Facts of the Case

In this case, a well-established Singapore property / real estate listings website PropertyGuru sued a relatively younger startup competitor 99.co for breach of a settlement agreement, tort of inducement of breach of contract (by PropertyGuru’s users), and copyright infringement. Much of the case centred on Xpressor app, an app which allowed cross-posting or cross-listing on multiple property listings platforms. It was found that 99.co had co-developed the app: at [18]. The Xpressor app allows users to log in to their PropertyGuru account and choose the listings therein to cross-post onto 99.co’s website: at [19].

When 99.co first started, it employed a software to “scrape” listings on PropertyGuru’s website and post them on 99.co’s website. Sometime around 2015, the two competitors entered into a Settlement Agreement. This prohibited 99.co from, inter alia, reproducing content from PropertyGuru’s website onto their own. Sometime around August 2016, 99.co offered its users a Premium Account service where it employed independent contractors to manually copy information in property agent’s listings on PropertyGuru and list it on 99.co: at [22].

Breach of Settlement Agreement

On PropertyGuru’s breach of settlement agreement claim, the Court found that there was insufficient evidence for this claim regarding some January and February 2016 reproductions on 99.co’s website (which had photographs bearing PropertyGuru’s watermark) because it was plausible that the property agents who made these listings had used other means to reproduce them. Based on the evidence, it was likely that these reproductions were not done through the Xpressor app because by then, the app made sure to remove the watermark before cross-posting: at [54]-[55]. The Court also rejected the argument that 99.co had reproduced the listings simply by developing, marketing, and hosting on its server, the Xpressor app; it remained the individual property agent’s decision whether or not to cross-post listings, not 99.co’s: at [57].

However, the Court did find that the reproduction of 9 photographs through the Premium Account service amounted to a breach of the settlement agreement and thus awarded damages to be assessed and an injunction restraining 99.co from continuing breaches: at [62]. It should be noted also that the Judge had to address an argument that the Premium Account service point was not expressly pleaded by PropertyGuru.

The Court also rejected arguments that 99.co had breached the Settlement Agreement by connecting to PropertyGuru’s website to cross-post listings. The Court found that it was the end users of the Xpressor app who connected to PrpoertyGuru’s website, not 99.co: at [70]-[72]. The Judge also made some comments on the odd drafting of the relevant clauses in the Settlement Agreement: at [72].

Tort of Inducement of Breach of Contract

The Court rejected PropertyGuru’s claim on this head. The discussion however is interesting. Users of PropertyGuru’s website are deemed to have entered into a contract with PropertyGuru. The contract’s terms include the Terms of Use and Acceptable Use Policy. These terms prohibited users from reproducing material from PropertyGuru’s website and using any software to access PropertyGuru’s services or collect information through PropertyGuru. The Court observed that it could be possible that property agents who had used the Xpressor app to make cross-postings were in breach of the Terms of Use and Acceptable Use Policy: at [84].

However, because there was no evidence that the property agents did actually use the Xpressor app to make cross-postings, the claim on this head failed: at [85]-[87]. As regards the Premium Account service, the Court rejected the claim on this evidence because it was not expressly pleaded that this was a mode by which 99.co induced property agents to breach their contract with PropertyGuru: at [88]-[89]. Unlike the earlier head where the matter of Premium Account services could be seen as evidence, in this instance, PropertyGuru did not amend its Statement of Claim to expressly nail its case down.

Copyright Infringement

The Court also rejected this claim. The issue was whether PropertyGuru owned copyright in the photographs which it obtained from property agents and which it then edited by resizing them, altering their light balance, softening the edges, and adding a watermark: [96].

The Court reviewed three decisions—Interlego AG v Tyco Industries Inc [1989] AC 217 (“Interlego”); The Reject Shop Plc v Robert Manners [1995] FSR 870; Virtual Map (Singapore) Pte Ltd v Suncool International Pte Ltd [2005] 2 SLR(R) 157 (“Virtual Map”)—and held that “the copying, enlargement or resizing of an artistic work, such as a drawing, painting or photograph, does not make the resulting image a copyrighted work. There must be a material alteration or embellishment to the original work to confer originality (and hence copyright protection) on the resulting work. What counts as “material” for this purpose is a question of fact and degree. There was some alteration in Interlego, namely the addition of new written information to the drawing, but this was insufficient to confer originality on what was otherwise a visually similar copy of an image. On the other hand, Virtual Map provided a clear example of a material alteration. While the alteration in that case was extremely substantial, it does not mean that alterations to an original work must necessarily be to a similar degree before the derivative work becomes original and copyrightable”: at [102].

The Court found that PropertyGuru’s editing of the photographs did not amount to an original work which gave rise to copyright: at [103]-[104]. There was no “skill and labour as conferred originality of an artistic character” (at [100], [103]).

As regards PropertyGuru’s Terms of Use, and in particular this sentence—“We shall have the right to watermark the photographs within the Content and the copyright in the final watermarked photographs shall belong solely to us”—the Court found that this was merely an assertion that PropertyGuru had copyright. But if at law, they did not have copyright, then the clause does nothing further: at [107].

Groundless Threats of Infringement Proceedings

Finally, the Court considered 99.co’s counterclaim for PropertyGuru’s groundless threats of infringement proceedings under section 200 of the Copyright Act. The Court rejected the counterclaim. First, it thought that PropertyGuru was justified in thinking that it had basis to sue 99.co: at [116]. Second, 99.co did not adduce evidence of loss. It merely asserted that the threat of the lawsuit affected its ability to obtain funding and strained its relationship with its investors, but there was no evidence for this: at [117].

Comments on Wider Repercussions and Other Issues to Consider

Platforms’ Terms of Use

This case raises issues about platforms, websites, apps’ Terms of Use or Terms of Service. Many of us use these platforms and entered into legally binding contracts with them without realizing what we agreed to. When it comes down to it, a lot of it is an issue of construction of the terms.

In this case, the terms were deemed as merely an assertion of copyright. But the Court found there’s no copyright in the edited watermarked photographs.

Generally, however, terms of use may be drafted in a way to amount to an assignment or license of copyright or intellectual property (“IP”) when posting or listing on websites, apps and other platforms. If it’s an assignment, you effectively give ownership of your IP away. If it’s a non-exclusive licence, you retain ownership and the licensee does not have right to enforce the IP. If it’s an exclusive licence, you retain ownership but the licensee can enforce IP rights, and you technically cannot license your IP to other persons.

Copyright In Edited Images

As the Court held, there must be material alteration or embellishment to become original new work giving rise to copyright. Resizing, altering light balance, softening edges and adding watermarks to a photograph does not amount to material alteration or embellishment to make the work an original new work with copyright conferred on the editor.

This is important for web users (which is almost all of us), platforms, apps, websites, which edit images and content uploaded online. This may not be original new work. It may even amount to copyright infringement of the first work.

Cross-Posting Apps

Some of us use cross-posting applications, software, platforms. This case highlights that the mechanism of how content is cross-posted or cross-listed on multiple platforms can have legal repercussions.

If the app takes content from a first platform and post on other platforms, then there may be issues of whether the first platform has copyright over the content, and whether that copyright has been infringed.

If the app takes content direct from the app user and post on multiple platforms, then likely there is no copyright infringement issue since the app is dealing with the app user’s copyright.

Hyperlinking, Crawling, Framing, Inline Linking

There was no discussion on whether hyperlinking, crawling, framing, deep linking, inline linking, etc. would amount to IP infringement. In this case, the issue only arose as a matter of a breach of contract, and even so, there was no evidence for the claim.

Generally hyperlinking to the home page of a website is unlikely to raise issues. Deep linking – linking to a particular page within another website rather than the homepage – is uncertain but per se is unlikely to constitute IP infringement (based on decisions and authoritative opinions from other jurisdictions). Also, framing (creating frames on the web page which load another person’s website) and inline/embedding/img-src linking (i.e. in simple HTML code, <img src=”some third party image”>) is also uncertain.

In this case, PropertyGuru’s Terms of Use prohibits a user from hyperlinking to content on their website and from using software to crawl and obtain information from their website. Hence, this should give us pause as to whether some of our online actions may constitute breaches of contract.

Authorization Liability

Although this was not an issue in the case at all, platforms, websites, apps, should also be careful that their functionalities, including hyperlinking, crawling and re-posting, does not amount to IP infringement by way of authorizing another person to breach IP. For copyright, granting or purporting to grant a right to a third party to do a copyright infringing act would incur authorization liability. The law in Singapore on this, reflected in the Court of Appeal’s landmark decision in the RecordTV case, is calibrated narrowly. Various factors would be taken into account, including the relationship between the alleged authorizer and the direct infringer, whether the alleged authorizer had actual or constructive knowledge of the infringement, whether the alleged authorizer had the ability to prevent infringement.

Conclusion

All in all, while this decision does not lay down any new law, it is nonetheless interesting because of the application of law to relatively new and evolving technology and scenarios. It also raises important questions for all of us as to the rights and obligations we have when we use various platforms, websites or apps, or the rights and intellectual property we are assigning and thus giving away. It should be noted that either party may appeal this decision to the Court of Appeal, so we shall wait and see if there are any further developments on this.

February 24, 2018February 24, 2018

Acts meditation 2:4, 11 – Thousands of Tongues

“And they were all filled with the Holy Spirit and began to speak in other tongues as the Spirit gave them utterance.” – Acts 2:4

“… we hear them telling in our own tongues the mighty works of God.” – Acts 2:11

What’s the significance of the Holy Spirit giving the disciples supernatural utterance in other languages?

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February 23, 2018February 24, 2018

Acts meditation 1:21-22 – A Few Humble Witnesses

“21 So one of the men who have accompanied us during all the time that the Lord Jesus went in and out among us, 22 beginning from the baptism of John until the day when he was taken up from us-one of these men must become with us a witness to his resurrection.” – Acts 1:21-22

“to take the place in this ministry and apostleship from which Judas turned aside to go to his own place.” – Acts 1:25

What was the main reason for the apostles to appoint a replacement for Judas Iscariot?

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February 12, 2018

Case Update: High Court lays down sentencing framework for negligence in road traffic accidents

Summary by Tedric Chai & Ronald JJ Wong

In Tang Ling Lee v Public Prosecutor [2018] SGHC 18, the High Court judge laid down the sentencing framework for road traffic cases under Section 338(b) of the Penal Code. The judge emphasized that it applied only to road traffic cases (at [24]). A flowchart summarizing the sentencing framework is set out here.

The sentencing framework consists of 3 broad sentencing bands on the basis of: (1) the degree of harm caused by the offence; and (2) the culpability of the offender (at [25]).

Degree of harm caused by offence

The degree of harm caused would generally refer to the nature and degree of grievous bodily injury caused to the victim (at [25]).
The period of hospitalisation leave or medical leave would be a relevant consideration insofar as it represents a medical professional’s opinion as to the length of time required for treatment of the injuries and for the victim to resume his daily activities (at [26]).
Nevertheless, the period of hospitalisation or medical leave is a rough-and-ready proxy for the severity of the victim’s injuries at best, as the assessment of time required for treatment and subsequent recovery may vary from case to case and may also depend on an interplay of various other circumstances, including the opinion of the medical professional as well as the personal characteristics of the victim (at [26]).

Degree of culpability of offender

The degree of culpability would generally refer to the degree of relative blameworthiness disclosed by an offender’s actions, and is measured chiefly in relation to the extent and manner of the offender’s involvement in the criminal act (i.e. the offender’s manner of driving) (at [25]).
Factors that the Court will take into account include: (i) the manner of driving, i.e. how dangerous the driving was and the extent of danger to road users posed by the offender’s conduct; and (ii) the circumstances of driving which might have increased the danger to road users during the incident (at [27]).
For (i) the manner of driving, some examples of situations where culpability would be increased include speeding, drink-driving, sleepy driving, driving while under the influence of drugs, driving while using a mobile phone, flouting traffic rules, driving against the flow of traffic or off the road, involvement in a car chase or a racing competition, or exhibiting poor control of the vehicle. These circumstances in relation to the offender’s manner of driving are aggravating due to the increased danger to road users posed by such conduct. (At [28])
For (ii) the circumstances of driving, this would include instances where the offender drives without a licence or while under disqualification. Also, there may be increased risk where the offender drives: (a) during rush hours when the volume of traffic is heavy; (b) within a residential or school zone; (c) a heavy vehicle that is more difficult to control and requires a quicker reaction time; or (d) where he intends to travel a substantial distance to reach his destination. These circumstances may heighten the danger posed to road users. (At [29])
Where some of the culpability-increasing factors arise, it is possible and indeed likely that additional charges may be preferred and proceeded with. In such circumstances, the respective sentences upon conviction ought to be calibrated as appropriate, avoiding loading or double-counting of the culpability-increasing factors. (At [30])

The sentencing framework comprising 3 presumptive sentencing ranges, which applies where the accused person claims trial, is as follows (at [31]):

Category	Circumstances	Presumptive sentencing range (excluding an appropriate period of disqualification from driving)
1	Lesser harm and lower culpability	Fines
2	Greater harm and lower culpability OR lesser harm and higher culpability	One to two weeks’ imprisonment
3	Greater harm and higher culpability	More than two weeks’ imprisonment

Presumptive sentencing ranges are merely starting points which seek to guide the exercise of sentencing discretion, and are not rigid or immutable anchors. In the final analysis, the appropriate sentence to be imposed will be the product of a fact-sensitive exercise of discretion, taking into account all the circumstances of the case. (At [33])

With regard to the sentencing framework, the Court will adopt a 2-step inquiry as follows (at [32]):

First, the Court should identify the sentencing band within which the offence in question falls, and also where the particular case falls within the applicable presumptive sentencing range, having regard to the twin considerations of harm and culpability, in order to derive the starting point sentence.
Second, further adjustments should then be made to take into account the relevant mitigating and aggravating factors, which may take the eventual sentence out of the applicable presumptive sentencing range.

Examples of relevant mitigating factors may include an offender’s timely plea of guilt, stopping to render assistance to the victim(s), a good driving record, and evidence of remorse.

Relevant aggravating factors may include efforts to avoid detection or apprehension, and the existence of similar antecedents which are indicative of persistent or prolonged bad driving.

For Category 1 cases, culpability-increasing factors would either be absent altogether or present only to a very limited extent, thus suggesting negligence to be at the lowest end of the spectrum. The harm occasioned to the victim(s) would generally be characterised by the lack of very serious or permanent injuries. This is often reflected in the victim having undergone a relatively brief duration of hospitalisation and medical leave (or none at all) and minimal surgical procedures (if any). (At [34])

For Category 2 cases, they comprise offences of a higher level of seriousness. These are usually cases where: (a) the harm is at the lower end of the spectrum but the culpability of the offender is moderate to high; or (b) the harm is serious but the culpability of the offender remains low. Where there are two or more culpability-increasing factors or injuries of a more serious or permanent nature and/or which necessitate significant surgical procedures, the offence would generally fall into Category 2. (At [35])

For Category 3 cases, there are both serious injuries and a moderate to high degree of culpability. A case falling within the Category 3 sentencing band would usually feature at least two culpability-increasing factors and injuries of a very serious or permanent nature and/or which necessitate significant surgical procedures. In this connection, serious long-term injuries occasioned to the victim, such as loss of limb, sight or hearing or paralysis in particular, would generally attract the sentencing band in Category 3. (At [36])

February 8, 2018February 9, 2018

Acts Meditation 1:6-8 – Whither the Kingdom?

J.J.

6 So when they had come together, they asked him, “Lord, will you at this time restore the kingdom to Israel?” 7 He said to them, “It is not for you to know times or seasons that the Father has fixed by his own authority. 8 But you will receive power when the Holy Spirit has come upon you, and you will be my witnesses in Jerusalem and in all Judea and Samaria, and to the end of the earth.” – Acts 1:6-8

Now that Jesus had shown Himself to be the Messiah-Christ, would He at this time finally restore the Kingdom of Israel? The disciples had in mind, still, an earthly kingdom. One with military and executive government, taxes and territory.

Jesus does not reject the question outright. It was a valid question. The Kingdom of Israel would eventually be restored. But the question was too narrow.

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January 29, 2018February 10, 2018

Acts Meditation 1:4, 14 – Waiting for Promise

J.J.

“And while staying with them he ordered them not to depart from Jerusalem, but to wait for the promise of the Father…” – Acts 1:4

“All these with one accord were devoting themselves to prayer, together with the women and Mary the mother of Jesus, and his brothers.” – Acts 1:14

Jesus ordered, not suggested, His disciples wait in Jerusalem for the promise of the Father.

In fact, Jesus had conveyed this promise before His crucifixion and after His resurrection (Luke 24:49). Why did the disciples have to wait for God to fulfil His promise? Surely, He could fulfil it in an instant?

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January 27, 2018January 29, 2018

Acts Meditation 1:3 – The Disciples’ Journey

J.J.

He [Jesus] presented himself alive to them after his suffering by many proofs, appearing to them during forty days and speaking about the kingdom of God. – Acts 1:3

Three things Luke describes in this verse. Jesus presented many proofs of his resurrection. Jesus appeared to the disciples for 40 days. Jesus spoke about the Kingdom of God. Our doctor-writer must have meant to say something important here.

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