Case Update: Shareholder Oppression Relief Does Not Extend to Trademark Claims

The High Court in Chuah Seong Keat and 3 others v Din Tan Yong Chia and 21 others, or otherwise referred to as the Thai Odyssey case, allowed the striking out of certain reliefs from a shareholder oppression action. The Court found that those reliefs were claims under trademarks and domain name and fell outside the oppression relief. You can access the full Grounds of Judgment dated 12 May 2021.

Summary of the Decision and Significance

Decision by: Ong Chee Kwan JC

There were disputes between the founding shareholders of the Thai Odyssey business. Thai Odyssey offered Thai massage spa services. The business itself was spread over various joint venture companies.

The 1st Plaintiff, Dr Leon Chuah, is the founder and spearheaded the Thai Odyssey group. He and two other shareholders filed an oppression action against the other shareholders and the Thai Odyssey companies as other defendants.

As part of some of the reliefs in the oppression action, Dr Leon Chuah claimed that he was the legal and beneficial owner of the “Thai Odyssey” trademarks and domain name and that the companies held the trademarks and domain name on trust for him.

Thai Odyssey Sdn Bhd (the 7th Defendant) and Spa Odyssey Sdn Bhd (the 11th Defendant) are the registered proprietors of the “Thai Odyssey” trademarks. These companies applied to strike out the reliefs and grounds concerning the trademarks and domain name.

The High Court allowed the striking out. Ong Chee Kwan JC held that the trademark claims were wholly separate issues and not concerning shareholder oppressive acts. The trademark claims are personal claims of Dr Leon Chuah and not claims qua shareholder.

This decision shows that while the oppression action is flexible on the types of reliefs that may be granted, the reliefs must be in relation to the oppressed party’s status qua shareholder. Here, the oppression action could not extend to matters concerning disputes over the ownership of trademarks and a domain name.

Background Facts

The 1st Plaintiff, Dr Leon Chuah, originally started the Thai Odyssey business in 2013.

After the initial expansion of the business, the 1st to 3rd Plaintiffs entered into a joint venture with Tan Sri Danny Tan to further expand the Thai Odyssey business. Tan Sri Danny Tan’s involvement in the business venture was through his proxies.

The parties signed two joint venture agreements in relation to the Thai Odyssey business. The key terms were that:

  • Dr Leon Chuah was in charge of the day to day running of the Thai Odyssey business.
  • Dr Leon Chuah shall be the Chairman of the Board of Directors.
  • The trading name of the business venture shall be known as “Thai Odyssey”.
  • On the use of the name “Thai Odyssey” and its associated trademarks and logos, the parties agreed that upon Dr Leon Chuah ceasing to be a shareholder, the relevant companies shall discontinue any usage of “Thai Odyssey”.

The Plaintiffs claimed that the majority shareholders had sidelined Dr Leon Chuah from his management role in Thai Odyssey and where he was eventually wrongfully ousted from his role as Managing Director of the Thai Odyssey Group. Further, the Plaintiffs claimed that there was unfair dilution of the Plaintiffs’ shareholding in the Thai Odyssey Group.

The Plaintiffs filed an oppression action and sought for the dissolution of their association in the joint venture. This would be through a winding up of the Thai Odyssey companies (the 7th to 22nd Defendants) or compelling the majority shareholders (the 1st to 6th Defendants) to purchase the Plaintiffs’ shares in the Thai Odyssey Group.

The Plaintiffs also sought various consequential orders to facilitate the exit of the Plaintiffs from the Thai Odyssey business, including orders in respect of the trademarks claimed to be beneficially owned by Dr Leon Chuah.

Thai Odyssey Sdn Bhd (the 7th Defendant) and Spa Odyssey Sdn Bhd (the 11th Defendant) filed a striking out application. They were the registered proprietors of the Thai Odyssey trademarks since 2005. The Plaintiffs resisted the striking out.

Decision

The oppression relief is contained in section 346 of the Companies Act 2016 (CA 2016). This section is enacted to protect the rights of the shareholders against commercial unfairness or unfair departure of fair dealings in the management of the company’s affairs.

From reading section 346, it is clear that the section only regulates corporate impropriety and wrongs in the realm of company law. Only if and when a case of oppression is established, would the Court then be vested with the powers to grant remedies with the aim of bringing to an end or remedying the matters complained of.

The Plaintiffs’ pleaded complaints of purported oppressive conduct involved matters summarised as:

  • Termination of Dr Leon Chuah as Group Managing Director.
  • Appointment of additional directors.
  • Salaries and allowances to directors.
  • Capital call in the company.

The trademark claims are wholly separate issues not arising from or contingent upon the above oppressive acts. The trademark claims are personal claims of Dr Leon Chuah involving a different set of facts and laws and not qua shareholder.

On the other hand, the trademark rights are obtained by way of registration with the relevant Intellectual Property Office. In this case, the trademarks were registered under the Trademarks Act 1976 (now revoked and replaced by the Trademarks Act 2019).

On the Plaintiffs’ trademark claims, Dr Leon Chuah claimed that he is entitled to the trademarks based on beneficial ownership and that the two companies purportedly held the trademarks on trust for him.

Nonetheless, the Court noted that this oppression action is not filed under the Trademarks Act 2019. Dr Leon Chuah did not rely on this express legal provision. Instead, he sought to argue the issue of alleged beneficial ownership and trust relating to the trademarks under the oppression action.

The trademark claims also cover certain domain names. Disputes relating to domain names are mainly governed by the UDRP (adopted by the Internet Corporation for Assigned Names and Numbers (ICANN)).

The Court found that both the trademarks and the domain name are governed by their respective laws. These claims are neither governed nor related to section 346 of the CA 2016. Even if the Plaintiffs were to prevail in the oppression action, the issue relating to the beneficial and legal ownership of the trademarks would still have to be determined.

While the Court does have jurisdiction to make such a determination, nevertheless, this would convert the current action into a different character from an oppression action.

Further, the reliefs on ownership and assignment of trademarks would not have been within the purport, purview and intent of section 346 of the CA 2016. The trademark claims are also not claims made by the 1st Plaintiff qua shareholder. The trademark claims should be heard separately and more conveniently by the Intellectual Property Court.

 

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