Tembusu Growth Fund Ltd v Actatek, Inc: Breach of Contract & Loan Agreement Dispute

In Tembusu Growth Fund Ltd v Actatek, Inc, the High Court of Singapore ruled in favor of the plaintiff, Tembusu Growth Fund Ltd, against the first defendant, Actatek, Inc, on January 22, 2013. The case involved a breach of contract claim arising from a Convertible Loan Agreement. The court found that Actatek, Inc breached an implied term of the agreement by using loan proceeds in a manner inconsistent with the agreed-upon use of proceeds document. The court determined that the repayment of salaries to Thomas Wan and Paul Hung constituted a breach of the agreement.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Tembusu Growth Fund Ltd sued Actatek, Inc for breach of contract related to a convertible loan agreement. The court found Actatek in breach for misusing loan proceeds.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
TEMBUSU GROWTH FUND LTDPlaintiffCorporationJudgment for PlaintiffWon
ACTATEK, INC.DefendantCorporationBreach of Contract FoundLost
HECTRIX, INC.DefendantCorporationNeutralNeutral
THOMROSE HOLDINGS (BVI) LTDDefendantCorporationNeutralNeutral
Thomas WanDefendantIndividualNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Jordan TanAssistant RegistrarYes

4. Counsels

Counsel NameOrganization
Daniel Chia Hsiung WenStamford Law Corporation
Chua Han Yuan KennethStamford Law Corporation
Renganathan NandakumarRHTLaw Taylor Wessing LLP
Vidhi DidwaniaRHTLaw Taylor Wessing LLP

4. Facts

  1. Tembusu invested $1.5m in AI via a Convertible Loan Agreement.
  2. The Agreement included a condition precedent requiring AI to deliver a detailed use of proceeds document.
  3. AI delivered a document stating the use of proceeds for sales & marketing, R&D, IPO, and working capital.
  4. AI used the loan proceeds to repay salaries of Thomas Wan and Paul Hung.
  5. Tembusu argued this was a breach of contract.
  6. AI argued there was no condition limiting the use of proceeds.
  7. Email correspondence showed Tembusu rejected a proposal to repay loans to Thomas Wan and Paul Hung from the investment.

5. Formal Citations

  1. Tembusu Growth Fund Ltd v Actatek, Inc and others, Suit No 642 of 2012/D (Summons No 6148 of 2012/E), [2013] SGHCR 2

6. Timeline

DateEvent
Convertible Loan Agreement signed
AI used moneys to repay Thomas Wan's salaries
AI used moneys to repay Paul Hung's salaries
Email from Daniel Wong of AI to Mahim regarding repayment of proceeds
Financial statement for the first quarter of 2012 sent by Daniel Wong of AI
Suit filed
Judgment reserved
Judgment issued

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that Actatek, Inc breached an implied term of the agreement by using loan proceeds in a manner inconsistent with the agreed-upon use of proceeds document.
    • Category: Substantive
    • Sub-Issues:
      • Deviation from agreed use of proceeds
      • Failure to adhere to condition precedent
  2. Implied Terms in Contract
    • Outcome: The court held that there was an implied term in the agreement that the proceeds of the loan would be used in the manner stated in the manner of use document.
    • Category: Substantive
    • Sub-Issues:
      • Officious bystander test
      • Business efficacy test
  3. Interpretation of Contractual Clauses
    • Outcome: The court interpreted the entire agreement clause and the condition precedent clause in the context of the overall agreement and the parties' intentions.
    • Category: Substantive
    • Sub-Issues:
      • Entire agreement clause
      • Condition precedent

8. Remedies Sought

  1. Determination of issues
  2. Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Breach of Contract
  • Loan Agreements

11. Industries

  • Finance
  • Technology

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Obegi Melissa v Vestwin Trading Pte LtdCourt of AppealYes[2008] 2 SLR(R) 540SingaporeCited for the principle that the court has the power to extend time for the filing of an Order 14 rule 12 application.
Ng Giap Hon v Westcomb Securities Pte LtdSingaporeYes[2009] 3 SLR(R) 518SingaporeCited for the principle that an entire agreement clause may exclude implied terms depending on its wording.
ANB v ANFSingapore High CourtYes[2011] 2 SLR 1SingaporeCited for setting out the legislative history of Order 14 rule 12.
Payna Chettiar v Maimoon bte Ismail & OrsSingapore High CourtYes[1997] 1 SLR(R) 738SingaporeCited for the principle that issues of construction are capable of constituting an issue suitable for disposal under Order 14 rule 12.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Rules of Court (Cap 322, R 5, 2006 Rev Ed Sing)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Convertible Loan Agreement
  • Condition Precedent
  • Use of Proceeds
  • Entire Agreement Clause
  • Implied Term
  • Working Capital
  • Venture Capital
  • NZAX
  • IPO

15.2 Keywords

  • breach of contract
  • loan agreement
  • convertible loan
  • tembusu
  • actatek
  • singapore
  • high court
  • implied terms
  • venture capital

17. Areas of Law

Area NameRelevance Score
Contract Law90
Company Law50
Banking and Finance30
Venture Capital20
Fund Management20

16. Subjects

  • Contract Law
  • Financial Law
  • Venture Capital
  • Breach of Contract