Tembusu Growth Fund v ACTAtek: Fraudulent Misrepresentation & Breach of Contract
In a case before the Singapore High Court on 5 August 2015, Tembusu Growth Fund Ltd sued ACTAtek, Inc and others for fraudulent misrepresentation, breach of contract, inducement of breach of contract, and conspiracy, related to two convertible loan agreements. ACTAtek counterclaimed for breach of contract, breach of a duty of care in tort, and conspiracy by unlawful means. The court allowed Tembusu’s claim against ACTAtek, Inc and Wan Wah Tong Thomas, dismissing the claims against the remaining defendants and the counterclaim in its entirety. The case centered on the use of proceeds from a 2012 convertible loan agreement and whether ACTAtek misused those funds.
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
Singapore High Court case involving Tembusu Growth Fund's claims of fraudulent misrepresentation and breach of contract against ACTAtek, Inc. The court allowed Tembusu's claim.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| TEMBUSU GROWTH FUND LTD | Plaintiff | Corporation | Claim Allowed, Claim Allowed | Won, Won | Daniel Chia, Kenneth Chua, Stephany Aw, Ker Yanguang |
| ACTATEK, INC. | Defendant | Corporation | Claim Allowed, Claim Allowed, Counterclaim Dismissed | Lost, Lost, Dismissed | S Magintharan, James Liew |
| WAN WAH TONG THOMAS | Defendant | Individual | Claim Allowed, Claim Allowed, Counterclaim Dismissed | Lost, Lost, Dismissed | S Magintharan, James Liew |
| ACTATEK PTE. LTD. | Defendant | Corporation | Claim Dismissed, Counterclaim Dismissed | Dismissed, Dismissed | S Magintharan, James Liew |
| HECTRIX, INC. | Defendant | Corporation | Claim Dismissed, Counterclaim Dismissed | Dismissed, Dismissed | S Magintharan, James Liew |
| THOMROSE HOLDINGS (BVI) LTD | Defendant | Corporation | Claim Dismissed, Counterclaim Dismissed | Dismissed, Dismissed | S Magintharan, James Liew |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Vinodh Coomaraswamy | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Daniel Chia | Stamford Law Corporation |
| Kenneth Chua | Stamford Law Corporation |
| Stephany Aw | Stamford Law Corporation |
| Ker Yanguang | Stamford Law Corporation |
| S Magintharan | Essex LLC |
| James Liew | Essex LLC |
4. Facts
- Tembusu extended loans to ACTAtek under two convertible loan agreements in 2007 and 2012.
- The 2012 CLA included a condition precedent that ACTAtek provide details on the use of proceeds.
- ACTAtek provided a 'Use of Proceeds' document outlining the intended use of the S$1.5m loan.
- ACTAtek used a portion of the 2012 CLA proceeds to repay a loan to Hectrix, its holding company.
- Tembusu claimed this was a misuse of funds and a breach of the 2012 CLA.
- Thomas, ACTAtek's CEO, misrepresented the intended use of the funds to Tembusu.
- The court found that ACTAtek breached an implied term of the 2012 CLA.
5. Formal Citations
- Tembusu Growth Fund Ltd v ACTAtek, Inc and others, Suit No 642 of 2012, [2015] SGHC 206
6. Timeline
| Date | Event |
|---|---|
| 2007 Convertible Loan Agreement signed | |
| 2012 Convertible Loan Agreement signed | |
| Tembusu paid S$1.5m into ASg’s bank account | |
| Tembusu sent an email to AI calling an event of default under the 2012 CLA | |
| Tembusu’s solicitors wrote to AI also declaring an event of default under the 2012 CLA | |
| Tembusu instituted the present suit | |
| Decision Date | |
| Appeal to this decision in Civil Appeal No 191 of 2014 was allowed by the Court of Appeal |
7. Legal Issues
- Fraudulent Misrepresentation
- Outcome: The court found that Thomas fraudulently misrepresented his intention to use the 2012 CLA proceeds for the stated purposes.
- Category: Substantive
- Sub-Issues:
- Misrepresentation of future intent
- Dishonesty
- Reliance on representation
- Related Cases:
- [2001] 2 SLR(R) 435
- [2014] SGHC 160
- (1885) 29 Ch D 459
- [2008] 2 SLR(R) 909
- Breach of Contract
- Outcome: The court found that ACTAtek breached an implied term of the 2012 CLA by misapplying the loan proceeds.
- Category: Substantive
- Sub-Issues:
- Implied term
- Material breach
- Remedy of breach
- Related Cases:
- [2013] 4 SLR 193
- [2011] 4 SLR 1094
- [2015] SGHC 93
- [2008] 3 SLR(R) 1029
- [2009] 3 SLR(R) 518
- [2009] EWHC 600
- Phoenix Media Ltd v Cobweb Information (unreported, 16 May 2000)
- [2012] SGHC 61
- Inducement of Breach of Contract
- Outcome: The court found Thomas liable for inducing ACTAtek's breach of contract.
- Category: Substantive
- Sub-Issues:
- Director's liability
- Acting in good faith
- Scope of authority
- Related Cases:
- [1920] 3 KB 497
- [2004] 4 SLR 801
- [2005] SGHC 98
- [1949] Ch 556
- Moneylending Act Applicability
- Outcome: The court held that the Moneylenders Act did not apply to the convertible loan agreements.
- Category: Substantive
- Related Cases:
- [2007] 2 SLR(R) 321
- [2011] 2 SLR 758
8. Remedies Sought
- Damages for fraudulent misrepresentation
- Damages for breach of contract
- Damages for inducement of breach of contract
- Damages for conspiracy
9. Cause of Actions
- Fraudulent Misrepresentation
- Breach of Contract
- Inducement of Breach of Contract
- Conspiracy
10. Practice Areas
- Commercial Litigation
- Corporate Law
- Venture Capital Investments
11. Industries
- Finance
- Technology
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Panatron Pte Ltd v Lee Cheow Lee | Court of Appeal | Yes | [2001] 2 SLR(R) 435 | Singapore | Cited to establish the elements of the tort of deceit. |
| Chu Said Thong and another v Vision Law LLC | High Court | Yes | [2014] SGHC 160 | Singapore | Cited to establish the elements of the tort of deceit. |
| Edgington v Fitzmaurice | English Court of Appeal | Yes | (1885) 29 Ch D 459 | England and Wales | Cited for the principle that a representation as to the representor’s current intent is a representation of fact and is therefore actionable if the representor does not in fact have that intent at the time he makes the representation. |
| Wishing Star Ltd v Jurong Town Corp | High Court | Yes | [2008] 2 SLR(R) 909 | Singapore | Cited for the principle that the victim of a fraudulent misrepresentation is entitled to damages to put him in the position he would have been in if the misrepresentation had not been made. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the principles on implying terms in a contract and the three-step process to be followed. |
| Sheng Siong Supermarket Pte Ltd v Carilla Pte Ltd | High Court | Yes | [2011] 4 SLR 1094 | Singapore | Cited for the principle that the express terms of a contract can be expressed not just in words but also in pictures or diagrams. |
| HSBC Trustee (Singapore) Ltd v Lucky Realty Co Pte Ltd | High Court | Yes | [2015] SGHC 93 | Singapore | Cited for the jurisprudence in Singapore pertaining to contractual interpretation. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | High Court | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the principle that extrinsic evidence of circumstances surrounding the formation of the contract is admissible to elucidate what the parties’ intention, objectively ascertained, were. |
| Ng Giap Hon v Westcomb Securities Pte Ltd and others | High Court | Yes | [2009] 3 SLR(R) 518 | Singapore | Cited for the principle that an entire agreement clause does not prevent the implication of a term in fact unless there is clear and unambiguous language to that effect. |
| Crosstown Music Company 1, LLC (a company incorporated under the laws of the State of California) v Rive Droite Music Limited, Mark Taylor, Paul Barry | High Court | Yes | [2009] EWHC 600 | England and Wales | Cited for the meaning of the phrase “material breach”. |
| Phoenix Media Ltd v Cobweb Information | High Court | Yes | Phoenix Media Ltd v Cobweb Information (unreported, 16 May 2000) | England and Wales | Cited for the factors to consider when determining materiality of a breach. |
| Edwards Jason Glenn v Australian and New Zealand Banking Group Ltd | High Court | Yes | [2012] SGHC 61 | Singapore | Cited for discussion on fetters on contractually conferred discretions. |
| Donald McArthy Trading Pte Ltd and others v Pankaj s/o Dhirajlal (trading as TopBottom Impex) | Court of Appeal | Yes | [2007] 2 SLR(R) 321 | Singapore | Cited for the objective of the Moneylenders Act. |
| Real Estate Consortium Pte Ltd v East Coast Properties Pte Ltd and another | High Court | Yes | [2011] 2 SLR 758 | Singapore | Cited for the principle that a convertible bond agreement did not contravene the Moneylenders Act because there was a genuine commercial purpose for the agreement. |
| CLAAS Medical Centre Pte Ltd v Ng Boon Ching | High Court | Yes | [2010] 2 SLR 386 | Singapore | Cited for the principle that the burden falls on the defendants to prove that the repayment provisions coupled with default interest were penalties and not genuine pre-estimates of loss. |
| Said v Butt | King's Bench Division | Yes | [1920] 3 KB 497 | England and Wales | Cited for the principle that a director is not liable to a third party for inducing or procuring the breach of contract of by the company of which he is a director if he is acting bona fide in the discharge of his office as a director and he is acting within the scope of his authority. |
| Chong Hon Kuan Ivan v Levy Maurice (No 2) | High Court | Yes | [2004] 4 SLR 801 | Singapore | Cited for the principle that a director is not liable to a third party for inducing or procuring the breach of contract of by the company of which he is a director if he is acting bona fide in the discharge of his office as a director and he is acting within the scope of his authority. |
| Otech Pakistan Pvt Ltd v Clough Engineering Ltd and another | High Court | Yes | [2005] SGHC 98 | Singapore | Cited for the principle that if claim against the defendant director is pleaded without reference to his office as director, the burden is on the director to show that he acted in good faith and within the scope of his authority. |
| British Motor Trade Association v Salvadori | Chancery Division | Yes | [1949] Ch 556 | England and Wales | Cited for the principle that a party is liable for all loss suffered as a result of the breach, provided the loss is not too remote. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Moneylenders Act (Cap 188, 2010 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Convertible Loan Agreement
- Use of Proceeds
- Event of Default
- Cross-Default
- Working Capital
- IPO
- Material Breach
- Implied Term
- Fraudulent Misrepresentation
- Inducement of Breach of Contract
15.2 Keywords
- fraudulent misrepresentation
- breach of contract
- inducement of breach
- convertible loan
- venture capital
- Singapore
- High Court
- ACTAtek
- Tembusu
- loan agreement
- use of proceeds
- implied term
16. Subjects
- Contract Law
- Corporate Finance
- Commercial Litigation
- Venture Capital
- Fraud
17. Areas of Law
- Contract Law
- Tort Law
- Fraudulent Misrepresentation
- Inducement of Breach of Contract
- Company Law
- Venture Capital