Contractual Disputes

Mark Yeo, Director

Contractual Disputes

When contract disputes arise in business, it is crucial to get them resolved as quickly as possible.

However, resolving contract disputes can be expensive and stressful without the proper assistance. That’s why at Engelin Teh Practice LLC (ETP), we offer tactical and strategic dispute resolution services that cover everything from disputes about contract terms to disagreements about alleged contract breaches.

 

At ETP, we focus on dispute resolution approaches that help you meet your commercial needs and goals. That’s why we work closely with you and your team to fully understand your business, the dispute affecting it, and your overall commercial objectives.

 

Our aim is to make sure any dispute is resolved quickly, efficiently and with minimal impact on your business. We’ll always explore the most practical and cost-effective avenues to resolve your dispute, taking control of the situation and leaving you to get on with running your business.

 

Get in touch with our experienced team of contract dispute solicitors today, and we’ll get back to you in 3 hours or less.

This case was for a client in Dubai

A multi-million breach of Trust Case

We acted for a high net worth client (“B”) against her husband (“M”), who had misappropriated more than USD 60 million in cash and securities from the Singapore bank accounts held jointly in their names and held in the name of 2 British Virgin Island (“BVI”) companies (in which both B and M were equal shareholders and directors). It was not disputed that these Singapore bank accounts were funded by B’s inheritance. However, M’s position was that he was entitled to withdraw all such monies and securities whenever he wanted because they were all gifted to him by B previously. To support his position, M called their son (who was estranged from B) as a witness to give evidence supporting M’s contention of such a gift. B denied any such gift being made to M. The High Court has found that there was no such gift as alleged by M and that B did not intend to make gifts of the money placed in all the Singapore bank accounts including the accounts of the 2 BVI companies.

 

As more than USD 30 million was misappropriated by M from their joint Singapore accounts and placed in M’s own personal sole accounts, the High Court declared that M held such sums on trust for B and ordered M to provide an account. Tracing orders were also granted accordingly.

 

No orders were made by the High Court relating to the monies and securities which were misappropriated by M from the Singapore bank accounts of the 2 BVI companies although B sought various declarations of trust over such monies and securities. The High Court was of the view that B’s intention at the time she transferred funds to the Singapore bank accounts of the BVI companies (which were incorporated as investment holding companies) must have been to protect and “immunise” the funds from her mother and sister using the shield that incorporation affords. As such, BVI companies therefore did not hold the monies and securities on trust for her but instead that title to such monies and securities vested in the BVI companies in the usual way. On that basis, it was held that B did not have locus standi to bring the action against M for such monies and securities.

The “Borneo” Case

We acted for Borneo Ventures Pte Ltd (“BV”), a subsidiary of GSH Corporation Limited (a listed company in Singapore) in a High Court case against Datuk Edward Ong Han Nam (“OHN”). Through a subscription agreement dated 30 December 2013 (“Contract”), BV acquired 77.5% of the share capital in The Sutera Harbour Group Sdn Bhd (“SH Group”) for a consideration of about RM 700 million. Completion for the acquisition occurred about 3 months later on 26 March 2014.

The Case:

Unknown to BV, on 21 March 2014 (just 5 days before completion of BV’s acquisition), OHN got SHGCC to execute a sale and purchase agreement to sell a part of the Land measuring 1.459 acres where a power plant was situated (“Subject Land”) a company called Omega Brilliance Sdn Bhd (“OBSB”) for only RM 1,000 (“S&P”). When the S&P was executed, OHN was a director of SHGCC and the ultimate controller of OBSB. The S&P was back-dated to 1 March 2014 (“S&P”). BV was never told or given a copy of the S&P at any time. BV only discovered the S&P amongst the files of SHGCC more than a year later in a tax review.

The Judgement:

The High Court of Singapore determined that OHN breached the warranties in the SA and found in BV’s favour – ordering injunctions against OHN to restrain him from completing the transaction and/or enforcing the S&P and for him to procure that OBSB (which he controls) to discharge / terminate the S&P forthwith. Damages and costs were also awarded to BV.

 

For a further description please read below:

The remaining share capital in the SH Group is ultimately owned by OHN through a BVI entity. SH Group is the holding company of Sutera Harbour Resort Sdn Bhd (“SH Resort”) – which owns and operates the fully integrated resort known as Sutera Harbour Resorts in Kota Kinabalu, Sabah through its wholly owned subsidiaries. One of these subsidiaries is Sutera Harbour Golf & Country Club Bhd (“SGHCC”), which owns and has title to a 99-year leasehold land of about 95.58 hectares in Kota Kinabalu (“Land”) – land upon which Sutera Harbour Resorts is situated. Under the Contract, OHN provided various warranties and in particular – that SHGCC “is the sole legal and beneficial owner” of the Land without encumbrances.  In a disclosure letter dated 18 March 2014 issued by OHN, this said warranty was not qualified in any way.

 

Unknown to BV, on 21 March 2014 (just 5 days before completion of BV’s acquisition), OHN got SHGCC to execute a sale and purchase agreement to sell a part of the Land measuring 1.459 acres where a power plant was situated (“Subject Land”) a company called Omega Brilliance Sdn Bhd (“OBSB”) for only RM 1,000 (“S&P”). When the S&P was executed, OHN was a director of SHGCC and the ultimate controller of OBSB. The S&P was back-dated to 1 March 2014 (“S&P”). BV was never told or given a copy of the S&P at any time. BV only discovered the S&P amongst the files of SHGCC more than a year later in a tax review.

 

SHGCC sued OBSB and OHN in Malaysia to set aside / void the S&P based on inter alia a breach by OHN of his fiduciary duty owed to SHGCC. OHN’s position was that the S&P was merely a formality as there was a “common expectation” shared between SHGCC and PHSB (and with OBSB after July 2013) that the Subject Land was to be owned by Profound Heritage Sdn Bhd (“PHSB”) and then by OBSB. Since 1997, PHSB was owned and controlled by OHN until it was wound up and liquidated in 2012. Prior to PHSB’s liquidation, PHSB owned and operated of the power plant situated on the Subject Land. In the middle of and to July 2013, OHN arranged for OBSB to pay a settlement sum to PHSB’s secured creditor, and also agreed with PHSB’s liquidators under an Asset Sale Agreement (“ASA”) for the power plant’s equipment and assets to be sold to OBSB in consideration for the said settlement sum paid. The sale under the ASA specifically excluded the Subject Land and fixtures thereto. SHGCC did not succeed at trial and on its appeals in Malaysia. The Malaysian courts accepted OHN’s assertion of such a “common expectation” – premised inter alia on the fact that PHSB had paid RM 155 million for the construction of the power plant and OBSB had paid the settlement sum to PHSB’s secured creditor.

 

BV sued OHN in Singapore for breach of warranties in the SA. OHN’s raised various defences – BV was estopped from denying OBSB’s proprietary interest in the Subject Land based on the “common expectation”, OHN had told BV and/or that BV knew that the acquisition of SH Group did not include the Subject Land and that the warranty given in the SA about SHGCC’s ownership of the Land (which included the Subject Land) was a “mistake”. OHN counterclaimed for rectification of the warranty in the SA.

 

The High Court of Singapore determined that OHN breached the warranties in the SA and found in BV’s favour – ordering injunctions against OHN to restrain him from completing the transaction and/or enforcing the S&P and for him to procure that OBSB (which he controls) to discharge / terminate the S&P forthwith. Damages and costs were also awarded to BV.

 

In coming to its determination, the High Court found that (1) OHN was dishonest and hid the execution and existence of the S&P from BV; (2) PHSB did not have a proprietary interest in the Subject Land based on the evidence; (3) PHSB could not possibly have had the “common expectation” as it was absurd for OHN to do so as a person wearing the hats of SHGCC and PHSB/OBSB; (4) PHSB never actually fully paid the construction loan used to build the power plant; (5) OBSB did not actually pay the settlement sum to PHSB’s secured creditor; (6) the “common expectation” was a contrived defence in the Malaysian action; (7) OHN did not disclose various facts to the Malaysian courts and the Malaysian court had been misled by OHN; (8) the Malaysian judgment would not be given effect to or recognised by the Singapore court as a result; and (8) even if the Malaysian judgment was recognised, no issue estoppel arose as there was no identity of parties or identity of subject matter in the 2 proceedings.

 

The full grounds of decision of the High Court is published on the Supreme Court website at –

https://www.supremecourt.gov.sg/docs/default-source/module-document/judgement/2020-sghc-91-(5-5-2020)-for-uploading-pdf.pdf

Our Expertise

Mark Yeo, Director

Contractual Disputes

When contract disputes arise in business, it is crucial to get them resolved as quickly as possible.

However, resolving contract disputes can be expensive and stressful without the proper assistance. That’s why at Engelin Teh Practice LLC (ETP), we offer tactical and strategic dispute resolution services that cover everything from disputes about contract terms to disagreements about alleged contract breaches.

 

At ETP, we focus on dispute resolution approaches that help you meet your commercial needs and goals. That’s why we work closely with you and your team to fully understand your business, the dispute affecting it, and your overall commercial objectives.

 

Our aim is to make sure any dispute is resolved quickly, efficiently and with minimal impact on your business. We’ll always explore the most practical and cost-effective avenues to resolve your dispute, taking control of the situation and leaving you to get on with running your business.

 

Get in touch with our experienced team of contract dispute solicitors today, and we’ll get back to you in 3 hours or less.

Breach of Trust Case

This case was for a client in Dubai

A multi-million breach of Trust Case

We acted for a high net worth client (“B”) against her husband (“M”), who had misappropriated more than USD 60 million in cash and securities from the Singapore bank accounts held jointly in their names and held in the name of 2 British Virgin Island (“BVI”) companies (in which both B and M were equal shareholders and directors). It was not disputed that these Singapore bank accounts were funded by B’s inheritance. However, M’s position was that he was entitled to withdraw all such monies and securities whenever he wanted because they were all gifted to him by B previously. To support his position, M called their son (who was estranged from B) as a witness to give evidence supporting M’s contention of such a gift. B denied any such gift being made to M. The High Court has found that there was no such gift as alleged by M and that B did not intend to make gifts of the money placed in all the Singapore bank accounts including the accounts of the 2 BVI companies.

 

As more than USD 30 million was misappropriated by M from their joint Singapore accounts and placed in M’s own personal sole accounts, the High Court declared that M held such sums on trust for B and ordered M to provide an account. Tracing orders were also granted accordingly.

 

No orders were made by the High Court relating to the monies and securities which were misappropriated by M from the Singapore bank accounts of the 2 BVI companies although B sought various declarations of trust over such monies and securities. The High Court was of the view that B’s intention at the time she transferred funds to the Singapore bank accounts of the BVI companies (which were incorporated as investment holding companies) must have been to protect and “immunise” the funds from her mother and sister using the shield that incorporation affords. As such, BVI companies therefore did not hold the monies and securities on trust for her but instead that title to such monies and securities vested in the BVI companies in the usual way. On that basis, it was held that B did not have locus standi to bring the action against M for such monies and securities.

The Borneo Case

The “Borneo” Case

We acted for Borneo Ventures Pte Ltd (“BV”), a subsidiary of GSH Corporation Limited (a listed company in Singapore) in a High Court case against Datuk Edward Ong Han Nam (“OHN”). Through a subscription agreement dated 30 December 2013 (“Contract”), BV acquired 77.5% of the share capital in The Sutera Harbour Group Sdn Bhd (“SH Group”) for a consideration of about RM 700 million. Completion for the acquisition occurred about 3 months later on 26 March 2014.

The Case:

Unknown to BV, on 21 March 2014 (just 5 days before completion of BV’s acquisition), OHN got SHGCC to execute a sale and purchase agreement to sell a part of the Land measuring 1.459 acres where a power plant was situated (“Subject Land”) a company called Omega Brilliance Sdn Bhd (“OBSB”) for only RM 1,000 (“S&P”). When the S&P was executed, OHN was a director of SHGCC and the ultimate controller of OBSB. The S&P was back-dated to 1 March 2014 (“S&P”). BV was never told or given a copy of the S&P at any time. BV only discovered the S&P amongst the files of SHGCC more than a year later in a tax review.

The Judgement:

The High Court of Singapore determined that OHN breached the warranties in the SA and found in BV’s favour – ordering injunctions against OHN to restrain him from completing the transaction and/or enforcing the S&P and for him to procure that OBSB (which he controls) to discharge / terminate the S&P forthwith. Damages and costs were also awarded to BV.

 

For a further description please read below:

The remaining share capital in the SH Group is ultimately owned by OHN through a BVI entity. SH Group is the holding company of Sutera Harbour Resort Sdn Bhd (“SH Resort”) – which owns and operates the fully integrated resort known as Sutera Harbour Resorts in Kota Kinabalu, Sabah through its wholly owned subsidiaries. One of these subsidiaries is Sutera Harbour Golf & Country Club Bhd (“SGHCC”), which owns and has title to a 99-year leasehold land of about 95.58 hectares in Kota Kinabalu (“Land”) – land upon which Sutera Harbour Resorts is situated. Under the Contract, OHN provided various warranties and in particular – that SHGCC “is the sole legal and beneficial owner” of the Land without encumbrances.  In a disclosure letter dated 18 March 2014 issued by OHN, this said warranty was not qualified in any way.

 

Unknown to BV, on 21 March 2014 (just 5 days before completion of BV’s acquisition), OHN got SHGCC to execute a sale and purchase agreement to sell a part of the Land measuring 1.459 acres where a power plant was situated (“Subject Land”) a company called Omega Brilliance Sdn Bhd (“OBSB”) for only RM 1,000 (“S&P”). When the S&P was executed, OHN was a director of SHGCC and the ultimate controller of OBSB. The S&P was back-dated to 1 March 2014 (“S&P”). BV was never told or given a copy of the S&P at any time. BV only discovered the S&P amongst the files of SHGCC more than a year later in a tax review.

 

SHGCC sued OBSB and OHN in Malaysia to set aside / void the S&P based on inter alia a breach by OHN of his fiduciary duty owed to SHGCC. OHN’s position was that the S&P was merely a formality as there was a “common expectation” shared between SHGCC and PHSB (and with OBSB after July 2013) that the Subject Land was to be owned by Profound Heritage Sdn Bhd (“PHSB”) and then by OBSB. Since 1997, PHSB was owned and controlled by OHN until it was wound up and liquidated in 2012. Prior to PHSB’s liquidation, PHSB owned and operated of the power plant situated on the Subject Land. In the middle of and to July 2013, OHN arranged for OBSB to pay a settlement sum to PHSB’s secured creditor, and also agreed with PHSB’s liquidators under an Asset Sale Agreement (“ASA”) for the power plant’s equipment and assets to be sold to OBSB in consideration for the said settlement sum paid. The sale under the ASA specifically excluded the Subject Land and fixtures thereto. SHGCC did not succeed at trial and on its appeals in Malaysia. The Malaysian courts accepted OHN’s assertion of such a “common expectation” – premised inter alia on the fact that PHSB had paid RM 155 million for the construction of the power plant and OBSB had paid the settlement sum to PHSB’s secured creditor.

 

BV sued OHN in Singapore for breach of warranties in the SA. OHN’s raised various defences – BV was estopped from denying OBSB’s proprietary interest in the Subject Land based on the “common expectation”, OHN had told BV and/or that BV knew that the acquisition of SH Group did not include the Subject Land and that the warranty given in the SA about SHGCC’s ownership of the Land (which included the Subject Land) was a “mistake”. OHN counterclaimed for rectification of the warranty in the SA.

 

The High Court of Singapore determined that OHN breached the warranties in the SA and found in BV’s favour – ordering injunctions against OHN to restrain him from completing the transaction and/or enforcing the S&P and for him to procure that OBSB (which he controls) to discharge / terminate the S&P forthwith. Damages and costs were also awarded to BV.

 

In coming to its determination, the High Court found that (1) OHN was dishonest and hid the execution and existence of the S&P from BV; (2) PHSB did not have a proprietary interest in the Subject Land based on the evidence; (3) PHSB could not possibly have had the “common expectation” as it was absurd for OHN to do so as a person wearing the hats of SHGCC and PHSB/OBSB; (4) PHSB never actually fully paid the construction loan used to build the power plant; (5) OBSB did not actually pay the settlement sum to PHSB’s secured creditor; (6) the “common expectation” was a contrived defence in the Malaysian action; (7) OHN did not disclose various facts to the Malaysian courts and the Malaysian court had been misled by OHN; (8) the Malaysian judgment would not be given effect to or recognised by the Singapore court as a result; and (8) even if the Malaysian judgment was recognised, no issue estoppel arose as there was no identity of parties or identity of subject matter in the 2 proceedings.

 

The full grounds of decision of the High Court is published on the Supreme Court website at –

https://www.supremecourt.gov.sg/docs/default-source/module-document/judgement/2020-sghc-91-(5-5-2020)-for-uploading-pdf.pdf