Columbia Asia Healthcare v Hong Hin Kit: Share Purchase Agreement & Breach of Warranties
In 2014, the High Court of Singapore heard three consolidated suits: Suits 861 and 862 of 2008, and Suit 964 of 2009, involving Columbia Asia Healthcare Sdn Bhd (Columbia), PT Nusautama Medicalindo (PTNM), Edward Hong Hin Kit, Albert Hong Hin Kay (the Hongs), and Thermal Industries & Supplies (Pte) Ltd. The suits arose from Columbia's purchase of Gleni International Hospital from the Hongs and Boelio Muliadi via a share purchase agreement (SSA). Columbia and PTNM sued the Hongs for breaches of the SSA, while Thermal Industries and Thermal International (controlled by Edward Hong) sued PTNM for unpaid debts. The Hongs counterclaimed for abuse of process and conspiracy. The court found partially in favor of Columbia, granting judgment for damages to be assessed for costs to remove a charge on the land title, a declaration that the Hongs must indemnify Columbia against claims by DVI, and an order that the Hongs indemnify Columbia for tax liabilities. The court also granted Thermal Industries judgment against PTNM for some claims, but dismissed other claims and the Hongs' counterclaim.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Partial Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Columbia Asia Healthcare sues Hong Hin Kit for breaches of a share purchase agreement related to Gleni International Hospital.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Columbia Asia Healthcare Sdn Bhd | Plaintiff, Defendant | Corporation | Partial Judgment for Plaintiff | Partial | |
| PT Nusautama Medicalindo | Plaintiff, Defendant | Corporation | Partial Judgment for Plaintiff | Partial | |
| Edward Hong Hin Kit | Defendant | Individual | Partial Judgment against Defendant | Lost | |
| Albert Hong Hin Kay | Defendant | Individual | Partial Judgment against Defendant | Lost | |
| Thermal Industries & Supplies (Pte) Ltd | Plaintiff | Corporation | Partial Judgment for Plaintiff | Partial | |
| Thermal International (S) Pte Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judge | Yes |
4. Counsels
4. Facts
- Columbia purchased Gleni International Hospital from the Hongs via a share purchase agreement (SSA).
- The land title for the hospital was encumbered by the MEC Charge at the time of completion.
- PTNM had under-declared and under-paid taxes while under the control of the Hongs.
- Columbia discovered the under-declaration and under-payment of taxes after taking over management of the hospital.
- The Hongs warranted that the land would be free from encumbrances and that PTNM had good and marketable title.
- The Hongs warranted that PTNM had duly made all tax returns and that the information was correct.
- Columbia paid S$26,974,858 to MKP to settle the Goldman Sachs Indebtedness.
5. Formal Citations
- Columbia Asia Healthcare Sdn Bhd and another v Hong Hin Kit Edward and another and other suits, Suits No 861 and 862 of 2008 and 964 of 2009, [2014] SGHC 65
- Columbia Asia Healthcare Sdn Bhd and another v Hong Hin Kit Edward and another and other suits, Civil Appeal No 68 of 2014, [2015] SGCA 3
- Columbia Asia Healthcare Sdn Bhd and another v Hong Hin Kit Edward and another and other suits, Civil Appeal No 69 of 2014, [2015] SGCA 3
- Columbia Asia Healthcare Sdn Bhd and another v Hong Hin Kit Edward and another and other suits, , [2014] 3 SLR 164
6. Timeline
| Date | Event |
|---|---|
| Share Sale Agreement signed | |
| Call Option Agreement signed | |
| Suits 861 and 862 filed | |
| Suit 964 filed | |
| Judgment reserved | |
| Decision Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the Hongs breached the SSA by failing to deliver the land free of encumbrances, breaching tax warranties, and inflating revenue figures.
- Category: Substantive
- Sub-Issues:
- Failure to deliver land free of encumbrances
- Breach of tax warranties
- Inflation of revenue figures
- Encumbrance on Land Title
- Outcome: The court held that the MEC Charge constituted an encumbrance under the SSA and that the Hongs were in breach of their obligations to deliver the land title free from encumbrances.
- Category: Substantive
- Tax Exposure
- Outcome: The court found that the Hongs breached tax warranties in the SSA due to PTNM's under-declaration and under-payment of taxes.
- Category: Substantive
- Sub-Issues:
- Under-declaration of taxes
- Under-payment of taxes
- Rectification of Contract
- Outcome: The court rejected the Hongs' claim for rectification of the SSA, finding that the terms reflected the true intentions of the parties.
- Category: Procedural
- Indemnity
- Outcome: The court declared that the Hongs were liable to indemnify Columbia against claims by DVI and for tax liabilities.
- Category: Substantive
- Contracts (Rights of Third Parties) Act
- Outcome: The court held that PTNM was not entitled to rely on the Contracts (Rights of Third Parties) Act to enforce the terms of the SSA.
- Category: Substantive
8. Remedies Sought
- Damages for breach of contract
- Indemnity
- Declaratory Relief
- Damages for abuse of process and conspiracy
9. Cause of Actions
- Breach of Contract
- Breach of Warranty
- Unjust Enrichment
10. Practice Areas
- Commercial Litigation
- Mergers and Acquisitions
11. Industries
- Healthcare
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Huang Ching Hwee v Heng Kay Pah and Anor | Court of Appeal | Yes | [1992] 3 SLR(R) 452 | Singapore | Cited regarding whether the continued entry of MEC’s name on the register was a defect of title. |
| Metalform Asia Pte Ltd v Ser Kim Koi and another (Holland Leedon Pte Ltd (in liquidation), third party) | High Court | Yes | [2009] 1 SLR(R) 369 | Singapore | Cited for the principle that the measure of damages must be calculated either on the basis of the costs of cure or the diminution in value. |
| Watts v Marrow | N/A | Yes | [1991] 1 WLR 1421 | N/A | Cited for the proposition that the correct measure of damages in cases where the claimant would not have acquired the property in question had it known of the defects is the diminution in value of the property and not the costs of cure. |
| Turner v Moon | N/A | Yes | [1901] 2 Ch 825 | N/A | Cited to show that the proper measure of damages was “the difference between the value of the property as purported to be conveyed, and that which the vendor had power to convey”. |
| Karaha Bodas Co LLC v Pertamina Energy Trading Ltd | Court of Appeal | Yes | [2006] 1 SLR(R) 112 | Singapore | Cited for the requirements that must be satisfied before the court grants declaratory relief. |
| Holland Leedon Pte Ltd v Metalform Asia Pte Ltd | High Court | Yes | [2012] 3 SLR 377 | Singapore | Cited for the principle that damages for breach of a warranty in a contract are to be assessed on the basis of what would be required to put a plaintiff in the position he would have been in, had there been no breach of the warranty. |
| Senate Electrical Wholesalers Ltd v Alcatel Submarine Networks Ltd (formerly STC Submarine Systems Ltd) | English Court of Appeal | Yes | [1999] 2 Lloyd’s Rep 423 | England | Cited to show that applying a multiplier to the difference in actual and warranted figures might be appropriate where the purchase price had been derived in that manner. |
| Sycamore Bidco Ltd v Breslin | English High Court | Yes | [2013] EWHC 3443 | England | Cited to show that the exercise was an essentially factual one, of valuation. |
| CLAAS Medical Centre Pte Ltd v Ng Boon Ching | N/A | Yes | [2010] 2 SLR 386 | Singapore | Cited to show that a provision to indemnify a third party has been held to confer a benefit on the third party for the purposes of s 2(1)(b) of the CRTPA. |
| Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening | English High Court | Yes | [2009] Lloyd’s Rep 123 | England | Cited to show that a contract does not purport to confer a benefit on a third party simply because the position of that third party will be improved if the contract is performed. |
| Chng Bee Kheng and another (executrixes and trustees of the estate of Fock Poh Kum, deceased) v Chng Eng Chye | N/A | Yes | [2013] 2 SLR(R) 715 | Singapore | Cited for the elements that have to be satisfied for estoppel by representation to be made out. |
| Livingstone v Rawyards Coal Co | N/A | Yes | (1880) LR 5 App Cas 25 | N/A | Cited for the fundamental principle of compensation is that the appropriate measure of damages is “that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation” |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed) | Singapore |
| Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) | Singapore |
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Share Sale Agreement
- Encumbrance
- Tax Indemnity
- EBITDA
- MEC Charge
- Goldman Sachs Indebtedness
- PTNM
- UMPL
- DVI Shares
- Costs of Cure
- Diminution in Value
- Trade Debt
- Capital Reserves
15.2 Keywords
- Share Purchase Agreement
- Breach of Contract
- Tax Liabilities
- Encumbrance
- Indemnity
- Hospital Acquisition
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Share Purchase Agreement | 80 |
| Contract Law | 75 |
| Breach of Warranty | 70 |
| Company Law | 70 |
| Indemnity | 65 |
| Corporate Law | 60 |
| Encumbrances | 55 |
| Litigation | 50 |
| Good and Marketable Title | 45 |
| Rectification | 40 |
| Property Law | 30 |
| Estoppel | 25 |
| Abuse of Process | 20 |
| Trust Law | 15 |
16. Subjects
- Contract Law
- Commercial Law
- Tax Law
- Mergers and Acquisitions