Merrill Lynch v Harjani: Tort of Deceit & Contract Breach over Indonesian Shares
In Merrill Lynch Pierce, Fenner & Smith Inc v Prem Ranchand Harjani and Renaissance Capital Management Investment Pte Ltd, the High Court of Singapore ruled in favor of Merrill Lynch against both defendants. The case involved a breach of contract claim against Renaissance Capital for failing to pay for shares in PT Triwira Insanlestari (PTTI) purchased on its behalf, and a tort of deceit claim against Prem Ranchand Harjani for inducing Merrill Lynch to purchase the shares based on false representations. The court found Renaissance Capital liable for the outstanding sum of US$9,437,687.18, and Harjani liable for the same amount due to deceit. The second defendant's counterclaim was dismissed.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Merrill Lynch sues Harjani for deceit and Renaissance Capital for contract breach over unpaid Indonesian shares. Judgment for Merrill Lynch.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Merrill Lynch Pierce, Fenner & Smith Inc | Plaintiff | Corporation | Judgment for Plaintiff | Won | |
| Prem Ranchand Harjani | Defendant | Individual | Judgment for Plaintiff | Lost | |
| Renaissance Capital Management Investment Pte Ltd | Defendant | Corporation | Judgment for Plaintiff | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
4. Facts
- The plaintiff set up a Corporate Investor Account for the second defendant.
- The first defendant had sole authority to give instructions in respect of the Account on behalf of the second defendant.
- The first defendant instructed the plaintiff to purchase approximately 120 million shares in PTTI on behalf of the second defendant.
- There were no moneys in the Account with the plaintiff to pay for such purchase.
- The first defendant assured the plaintiff’s representatives that the funds would be transferred into the Account to pay for the PTTI Shares before the Settlement Date, but no moneys came in by that date.
- The purchase price was debited against the Account which fell into deficit.
- The plaintiff liquidated the PTTI Shares, leaving US$9,437,687.18 outstanding.
5. Formal Citations
- Merrill Lynch Pierce, Fenner & Smith Inc v Prem Ranchand Harjani and another, Suit No 773 of 2008, [2010] SGHC 249
- Merrill Lynch Pierce, Fenner & Smith Inc v Prem Ramchand Harjani, , [2009] 4 SLR(R) 16
6. Timeline
| Date | Event |
|---|---|
| First defendant instructed plaintiff to purchase PTTI Shares. | |
| Settlement Date for PTTI Shares purchase. | |
| Plaintiff informed first defendant of intention to liquidate PTTI Shares. | |
| Defendants made part payment of US$50,000 for PTTI Shares. | |
| Defendants made part payment of US$1.95m for PTTI Shares. | |
| Second defendant filed defence and counterclaim. | |
| Liquidation of PTTI shares completed. | |
| Outstanding Sum was US$9,437,687.18. | |
| Second defendant informed it would not be making any submissions. | |
| Decision Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court found the second defendant liable for breach of contract for failing to pay for the PTTI Shares.
- Category: Substantive
- Tort of Deceit
- Outcome: The court found the first defendant liable for the tort of deceit for making false representations that induced the plaintiff to purchase the PTTI Shares.
- Category: Substantive
8. Remedies Sought
- Recovery of Outstanding Sum
- Damages for Tort of Deceit
9. Cause of Actions
- Breach of Contract
- Tort of Deceit
- Conspiracy by Unlawful Means
10. Practice Areas
- Commercial Litigation
- Fraud
- Breach of Contract
11. Industries
- Finance
- Investment Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Merrill Lynch Pierce, Fenner & Smith Inc v Prem Ramchand Harjani | High Court | Yes | [2009] 4 SLR(R) 16 | Singapore | Cited for the admission by the first and second defendants that the second defendant was liable to the plaintiff for the purchase of the PTTI Shares. |
| Alliance Management SA v Pendleton Lane P | Court of Appeal | Yes | [2008] 4 SLR(R) 1 | Singapore | Cited for the doctrine of issue estoppel obviates the need to re-litigate issues that have already been decided in interlocutory applications. |
| Cytec Industries Pte Ltd v APP Chemicals International (Mau) Ltd | Court of Appeal | Yes | [2009] 4 SLR(R) 769 | Singapore | Cited for the principle that admissions and acknowledgments of an outstanding debt are sufficient to make out a prima facie case against a defendant. |
| Panatron Pte Ltd v Lee Cheow Lee | Court of Appeal | Yes | [2001] 2 SLR(R) 435 | Singapore | Cited for the elements of the tort of deceit. |
| Pasley v Freeman | N/A | Yes | (1789) 3 TR 51 | N/A | Cited as the case that settled that a person can be held liable in tort to another, if he knowingly or recklessly makes a false statement to that other with the intent that it would be acted upon, and that other does act upon it and suffers damage. |
| Derry v Peek | House of Lords | Yes | (1889) 14 App Cas 337 | United Kingdom | Cited for the principle that in an action of deceit the plaintiff must prove actual fraud. |
| Bradford Building Society v Borders | N/A | Yes | [1941] 2 All ER 205 | N/A | Cited for the essential elements of the tort of deceit. |
| Wishing Star Ltd v Jurong Town Corp | Court of Appeal | Yes | [2008] 2 SLR(R) 909 | Singapore | Cited for the principle that making a representation without belief in its truth will satisfy the knowledge element in the tort of deceit. |
| Raiffeisen Zentralbank Osterreich AG v Archer Daniels Midland Co | Court of Appeal | Yes | [2007] 1 SLR(R) 196 | Singapore | Cited for the principle that the issue of reliance is closely tied to the issue of how material the representations are. |
| Jurong Town Corp v Wishing Star Ltd | Court of Appeal | Yes | [2005] 3 SLR(R) 283 | Singapore | Cited for the definition of a material misrepresentation. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Civil Law Act (Cap 43, 1999 Rev Ed) s 12(1) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- PTTI Shares
- Settlement Date
- Outstanding Sum
- Corporate Investor Account
- False Representation
- Tort of Deceit
- Breach of Contract
- Pioneer Capital LLC
- Remittance Form
15.2 Keywords
- Merrill Lynch
- Harjani
- Renaissance Capital
- PTTI Shares
- Deceit
- Breach of Contract
- Singapore
- High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fraud and Deceit | 95 |
| Breach of Contract | 80 |
| Contract Law | 70 |
| Conspiracy by Unlawful Means | 60 |
16. Subjects
- Contract Dispute
- Securities Trading
- Fraudulent Misrepresentation