Leow Tiak Cheow v Pan-United Industries: Breach of Warranty in Share Sale Agreement
In Leow Tiak Cheow & Another v Pan-United Industries Pte Ltd, the High Court of Singapore addressed a dispute arising from a Share Sale Agreement (SSA) where Leow Tiak Cheow and Leow Tiak Chuan (Plaintiffs) sued Pan-United Industries Pte Ltd (Defendant) for breach of warranty concerning the net tangible asset (NTA) value of Nam Kee Asphalt Pte Ltd. The court, presided over by Judicial Commissioner Woo Bih Li, found that the plaintiffs had breached the NTA warranty but ordered the defendant to pay the plaintiffs $38,808.95 after setting off the shortfall against the Retention Sum. The defendant's counterclaim was dismissed.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for the Plaintiffs for part of their claim
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Share sale agreement dispute over breach of net tangible asset warranty. Court found a breach but ordered Pan-United to pay the plaintiffs $38,808.95.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Leow Tiak Cheow | Plaintiff | Individual | Judgment for Plaintiff | Partial | Jeffrey Beh Eng Siew, Leow Tiat Hong |
| Leow Tiak Chuan | Plaintiff | Individual | Judgment for Plaintiff | Partial | Jeffrey Beh Eng Siew, Leow Tiat Hong |
| Pan-United Industries Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Francis Xavier, Mark Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Jeffrey Beh Eng Siew | Lee Bon Leong & Co |
| Leow Tiat Hong | T H Leow & Co |
| Francis Xavier | Rajah & Tann |
| Mark Tan | Rajah & Tann |
4. Facts
- Leow Tiak Cheow was the beneficial shareholder of Nam Kee Asphalt Pte Ltd.
- Pan-United Industries Pte Ltd was interested in buying all the issued shares in Nam Kee.
- A Share Sale Agreement (SSA) was entered into between the parties on 8 January 2001.
- Clause 8.4.1 of the SSA contained a warranty regarding the net tangible asset (NTA) value of Nam Kee.
- The Completion Accounts showed an NTA value of Nam Kee to be $2,038,808.95.
- The plaintiffs asserted that there should be a revaluation of Nam Kee’s leasehold land.
- The defendant claimed a breach of the NTA warranty due to the shortfall in NTA value.
5. Formal Citations
- Leow Tiak Cheow & Another v Pan-United Industries Pte Ltd, Suit No 1568 of 2001, [2002] SGHC 250
6. Timeline
| Date | Event |
|---|---|
| Memorandum of Understanding dated | |
| Sale and Purchase of Assets Agreement dated | |
| Valuation of the Property done by Wong Kum Sek | |
| Share Sale Agreement dated | |
| Contractual Completion Date | |
| Actual completion date | |
| Completion Accounts provided by Irving Tan | |
| Meeting held at Rajah & Tann’s office | |
| Revised set of Completion Accounts forwarded with a cover letter | |
| Valuation report by Richard Ellis | |
| Rajah & Tann wrote to Irving Tan | |
| Judgment Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the plaintiffs breached the net tangible asset warranty in the share sale agreement.
- Category: Substantive
- Sub-Issues:
- Breach of warranty
- Interpretation of contractual terms
- Contractual Interpretation
- Outcome: The court interpreted the share sale agreement as not requiring a revaluation of the property for the completion accounts.
- Category: Substantive
- Sub-Issues:
- Interpretation of net tangible asset clause
- Obligation to revalue property
8. Remedies Sought
- Payment of Retention Sum
- Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Mergers and Acquisitions
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Pacific Century Regional Developments Ltd v Estate of Seow Khoon Seng | Court of Appeal | Yes | [1997] 3 SLR 761 | Singapore | Distinguished from the present case regarding the interpretation of clauses related to net tangible asset valuation and the necessity of revaluation of assets. |
| Lim Bio Hiong Roger v City Developments Ltd | N/A | Yes | [2000] 1 SLR 289 | Singapore | Cited regarding the treatment of eaves area as part of the floor area for valuation purposes, but found not applicable to the present case. |
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
- Net Tangible Asset (NTA)
- Share Sale Agreement (SSA)
- Completion Accounts
- Retention Sum
- Revaluation
- Warranty
15.2 Keywords
- Share Sale Agreement
- Net Tangible Asset
- Breach of Warranty
- Singapore High Court
- Contract Law
- Pan-United Industries
- Leow Tiak Cheow
- Nam Kee Asphalt
16. Subjects
- Contract Law
- Corporate Law
- Mergers and Acquisitions
- Share Valuation
17. Areas of Law
- Contract Law
- Share Sale Agreement
- Accounting Standards