Canadian Imperial v Pacific Century: Breach of Tag-Along Clause in Joint Venture Agreement
Canadian Imperial Investment Pte Ltd sued Pacific Century Regional Developments Limited in the High Court of Singapore on 18 September 2000, alleging breach of a 'tag along' clause in a joint venture agreement. Canadian Imperial claimed that Pacific Century failed to obtain an offer for Canadian Imperial's shares in Quinliven Pte Ltd on the same terms as Tricom's offer to acquire Pacific Century's shares. The court found in favor of Canadian Imperial, awarding damages based on the market price of Tricom shares at the date of judgment and reimbursement of shareholder loans.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiffs' claim allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Canadian Imperial sued Pacific Century for breaching a tag-along clause in a joint venture agreement. The court found in favor of Canadian Imperial, awarding damages.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Canadian Imperial Investment Pte Ltd | Plaintiff | Corporation | Claim Allowed | Won | |
| Pacific Century Regional Developments Limited | Defendant | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lai Kew Chai | Judge | Yes |
4. Counsels
4. Facts
- Canadian Imperial and Pacific Century entered into a joint venture agreement on 31 January 1997.
- The agreement included a 'tag along' clause (cl 11(E)) regarding the transfer of shares.
- Pacific Century transferred its shares in Quinliven to Newco as part of a larger transaction with Tricom.
- Canadian Imperial alleged that Pacific Century failed to obtain an offer for Canadian Imperial's shares on the same terms.
- The Tricom transaction resulted in Tricom becoming a subsidiary of Pacific Century.
- Canadian Imperial claimed US$1.025m for shareholder's loans injected into Quinliven.
5. Formal Citations
- Canadian Imperial Investment Pte Ltd v Pacific Century Regional Developments Limited, Suit 1091/1999, [2000] SGHC 189
6. Timeline
| Date | Event |
|---|---|
| Shareholders' agreement made between Canadian Imperial Investment Pte Ltd and Pacific Century Regional Developments Limited. | |
| Acquisition Agreement dated between Pacific Century Regional Developments Limited, Pacific Century Group Holdings Ltd, Tricom Holdings Ltd and Star Telecom International Holding Ltd. | |
| Transfer of Pacific Century Regional Developments Limited's shares in Quinliven Pte Ltd to Newco. | |
| End of period for which Canadian Imperial Investment Pte Ltd claims shareholder's loans. | |
| Judgment issued. |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the defendants breached the tag-along clause of the agreement.
- Category: Substantive
- Sub-Issues:
- Failure to comply with tag-along clause
- Interpretation of contractual terms
- Interpretation of Contractual Terms
- Outcome: The court interpreted the relevant clauses of the agreement, considering the factual matrix and the intent of the parties.
- Category: Substantive
- Sub-Issues:
- Admissibility of factual matrix
- Meaning of 'offer'
- Meaning of 'Associated Company'
- Interpretation of 'transferor' vs 'transferee'
- Assessment of Damages
- Outcome: The court determined that damages should be assessed as of the date of judgment, to adequately compensate the plaintiffs.
- Category: Substantive
- Sub-Issues:
- Date of assessment
- Mitigation of damages
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Corporate Law
11. Industries
- Investment
- Real Estate Development
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Investors Compensation Scheme Ltd v West Bromwich Building Society | House of Lords | Yes | [1998] 1 All ER 98 | England and Wales | Cited for the principles of interpreting contractual documents, including the admissibility of background knowledge and the factual matrix. |
| Mannai Investment Co Ltd v Eagle Star Life Assurance Ltd | N/A | Yes | [1997] 3 All ER 352 | N/A | Cited in relation to the interpretation of documents and the possibility that parties may have used the wrong words or syntax. |
| Wickman Machine Tool Sales v L Schuler AG | N/A | Yes | [1974] AC 235 | N/A | Cited for the principle that a construction leading to a very unreasonable result is unlikely to have been intended by the parties. |
| Johnson v Agnew | House of Lords | Yes | [1980] AC 367 | England and Wales | Cited for the general principle of assessing damages in contract law, which is to put the innocent party in the same position as if the contract had been performed. |
| City Securities Pte Ltd v Associated Management Services Pte Ltd | Court of Appeal | Yes | [1996] 1 SLR 727 | Singapore | Cited for the measure of damages in a contract for the sale of shares, which is the difference between the contract price and the market price at the date of the breach. |
| Akas Jamal v Moolla Dawood, Sons & Co | N/A | Yes | [1916] 1 AC 175 | N/A | Cited for the principle of assessing damages at the date of the breach in a contract for the sale of shares. |
| Rodrigues v Robert Wee & Co | N/A | Yes | [1968] 2 MLJ 95 | Malaysia | Cited for the principle of using the mean value between the date of breach and the date of judgment to assess damages. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Tag-along clause
- Joint venture agreement
- Shareholders agreement
- Factual matrix
- Associated Company
- Shareholder's loans
- Tricom transaction
- Offer
- Transferor
- Transferee
15.2 Keywords
- contract
- breach
- tag-along clause
- joint venture
- shareholder agreement
- damages
- singapore
- high court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Contract Law | 90 |
| Shareholders Agreement | 85 |
| Tag-along Rights | 80 |
| Breach of Contract | 75 |
| Damages | 70 |
| Joint Venture Agreement | 70 |
| Contractual Interpretation | 65 |
| Commercial Disputes | 60 |
| Company Law | 50 |
16. Subjects
- Contract Law
- Corporate Law
- Joint Ventures
- Shareholder Agreements