Freight Links v DB International: Put & Call Option Agreement Dispute over JTC Lease & Due Diligence

Freight Links Fabpark Pte Ltd sued DB International Trust (Singapore) Ltd in the High Court of Singapore, with Lee Seiu Kin J presiding, on 7 May 2010, regarding a dispute over a Put and Call Option Agreement. DB International rescinded the agreement, citing a material adverse change in the financial position of AEM Holdings Limited, the guarantor of the existing tenant, and the failure to obtain the requisite JTC Approvals. The court ruled in favor of DB International, finding that the rescission was valid due to the material adverse change and the lack of JTC Approvals by the stipulated deadline.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Defendant

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Freight Links sued DB International over a rescinded Put and Call Option Agreement. The court found DB International validly rescinded the agreement due to material adverse change and lack of JTC approvals.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Freight Links Fabpark Pte LtdPlaintiffCorporationClaim DismissedLost
DB International Trust (Singapore) LtdDefendantCorporationJudgment for DefendantWon
Michael Hwang of Michael Hwang

3. Judges

Judge NameTitleDelivered Judgment
Lee Seiu KinJudgeYes

4. Counsels

Counsel NameOrganization
Tan Cheng HanTSMP Law Corporation
Charmaine KongTSMP Law Corporation
Karen TeoTSMP Law Corporation
Clara LeowTSMP Law Corporation
Dinesh Dhillon SinghAllen & Gledhill LLP
Michael HwangMichael Hwang
Melanie ChngAllen & Gledhill LLP

4. Facts

  1. Freight Links granted DB International an option to purchase the JTC Lease.
  2. The agreement was conditional on JTC Approvals by 30 November 2008.
  3. DB International rescinded the agreement citing a material adverse change in AEM's financial position.
  4. The supporting material showed that AEM had a bad year, incurring a loss of $15.2m.
  5. DB International also cited the lack of JTC Approvals as a ground for rescission.
  6. The JTC letters required DB International to apply for formal consent at applicable intervals.
  7. The objective of the transaction was to secure a stable income stream.

5. Formal Citations

  1. Freight Links Fabpark Pte Ltd v DB International Trust (Singapore) Ltd, Originating Summons No 1562 of 2008, [2010] SGHC 146

6. Timeline

DateEvent
JTC Lease commenced
ST Microelectronics Pte Ltd assigned the JTC Lease to the plaintiff
Plaintiff sub-leased the Property to Microcircuit Technology (2002) Pte Ltd
Put and Call Option Agreement signed
Defendant sent Rescission Letter to the plaintiff
Deadline for JTC Approvals
Plaintiff commenced action for specific performance
Defendant rescinded the Agreement on two other grounds
Judgment issued

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that the defendant did not breach the contract because the rescission was valid.
    • Category: Substantive
    • Sub-Issues:
      • Validity of rescission
      • Material adverse change
      • Failure to obtain JTC Approvals
    • Related Cases:
      • [2008] SGHC 129
  2. Due Diligence
    • Outcome: The court found that the defendant's updated due diligence investigations revealed a material and adverse difference, justifying the rescission.
    • Category: Substantive
    • Sub-Issues:
      • Material and adverse difference in due diligence results
      • Reasonableness of purchaser's actions
  3. JTC Approvals
    • Outcome: The court held that the JTC letters did not constitute the requisite JTC Approvals, providing a further ground for rescission.
    • Category: Substantive
    • Sub-Issues:
      • Sufficiency of JTC letters as approvals
      • Compliance with JTC requirements
    • Related Cases:
      • [2008] SGHC 129

8. Remedies Sought

  1. Specific Performance
  2. Damages

9. Cause of Actions

  • Breach of Contract
  • Specific Performance

10. Practice Areas

  • Commercial Litigation
  • Real Estate Transactions

11. Industries

  • Real Estate
  • Trust Management

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Spanners International Pte Ltd v Laredo Pte LtdHigh CourtYes[2008] SGHC 129SingaporeCited to support the argument that JTC Approvals must ensure certainty of the income stream and that the Third JTC Letter did not provide the certainty required.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Put and Call Option Agreement
  • JTC Lease
  • JTC Approvals
  • Due Diligence Investigations
  • Material Adverse Change
  • Rescission
  • Specific Performance
  • Anchor Tenant
  • Subletting Policies

15.2 Keywords

  • Put and Call Option Agreement
  • JTC Lease
  • Due Diligence
  • Rescission
  • Specific Performance
  • Singapore High Court
  • Contract Law
  • Real Estate Law

17. Areas of Law

Area NameRelevance Score
Contract Law90
Commercial Disputes70
Due Diligence60
Real Estate50

16. Subjects

  • Contract Law
  • Real Estate Law
  • Option Agreements
  • Due Diligence
  • Leases
  • JTC Approvals