In buy-out orders, the independent valuer's determination of fair value is binding, and cross-examination is not permitted unless significant errors or mala fide are demonstrated.

Ong Chee Kwan J:

Introduction

[1] When should the Court permit an application by a party to cross-examine an independent valuer on his valuation report made pursuant to a buy-out order to fix the fair value for the purchase of the successful plaintiff's shares in a minority oppression action? Should there be a distinction between a buy-out order where the final fair value for the shares is to be fixed by the Court and one where the final fair value is fixed by the appointed independent valuer? What must be demonstrated before the Court will permit the independent valuer to be cross-examined on his valuation report?

[2] Enclosure 385 is an application filed by the 4th Defendant to make representation and cross-examination of the valuation report prepared by Deloitte Business Advisory Sdn Bhd ("Deloitte") in respect of the Plaintiff's 6,466,666 shares in the 4th Defendant ("the Plaintiff's Shares") as at 24 December 2019 ("the Valuation Date").

[3] In this judgment, this Court had to examine the questions raised above.

Background Facts

[4] On 9 November 2022, pursuant to an oppression action in the Originating Summons filed herein ("the OS"), this Court granted the Plaintiff, inter alia, a buy-out order on the following terms ("the Buy-Out Order"):

"2. The Plaintiff do sell all his 6,466,666 shares in the 4th Defendant, and the 4th Defendant and/or alternatively the 1st Defendant and/or the 2nd Defendant and/or the 3rd Defendant do purchase and/or cause and procure the purchase of the same, at a fair value to be determined by an independent valuer appointed by the Court without any minority discount. The costs of the valuation to be borne by the 4th Defendant"

[5] Subsequent to the Buy-Out Order, a further order was made by this Court on 12 January 2023 where the procedure for the appointment of the independent valuer to determine the fair value for the Plaintiff's Shares was set out ("Order dated 12 January 2023"). The terms of the Order dated 12 January 2023 are reproduced below:

1. That the Plaintiff nominate two professional valuers and the 1st to 4th Defendants each nominate one professional valuer for consideration of this Honourable Court for the purposes of appointment of an independent valuer, pursuant to para 2 of the Order dated 9 November 2022, to determine the fair value of the 6,466,666 shares in the 4th Defendant without any minority discount;

2. That the curriculum vitae and particulars of the said professional valuers be furnished to this Honourable Court within 7 days and the independent valuer be appointed by this Honourable Court within 14 days thereafter;

3. That the date of the valuation of the said 6,466,666 shares in the 4th Defendant shall be as at 24 December 2019;

4. The said independent valuer shall have unhindered access to all the books, records and financial information of the 4th Defendant wherever such may be kept and in whatever form at any time and from time to time, including with the auditors of the 4th Defendant;

5. That the parties are entitled to appoint a professional adviser each who shall have the same right of unhindered access to all the books, records and financial information of the 4th Defendant wherever such may be kept and in whatever form at any time and from time to time, including with the auditors of the 4th Defendant which bear upon the value of the said 6,466,666 shares in the 4th Defendant;

6. The said professional advisers shall have the right to make written representations to the independent valuer and/or this Honourable Court on matters which have a bearing on the fair value of the said 6,466,666 shares in the 4th Defendant;

7. That the said independent valuer shall complete the valuation exercise and submit to this Honourable Court and to the parties a valuation report within 3 months from the date of this Order;

8. That the said valuation report shall contain reasons for the valuation on the fair value of the said 6,466,666 shares in the 4th Defendant