JES International v Yang Shushan: Breach of Contract, Agency by Estoppel, Damages

In JES International Holdings Ltd v Yang Shushan ([2016] SGHC 52), the High Court of Singapore addressed a breach of contract claim involving JES International Holdings Ltd (Plaintiff) and Yang Shushan (Defendant) concerning a share swap agreement. The Plaintiff alleged that the Defendant breached a moratorium on transferring shares. The Defendant argued the moratorium was not binding or that another agreement was operative. The court found in favor of the Plaintiff, determining that the Defendant breached the moratorium and is liable for damages.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

JES International Holdings Ltd v Yang Shushan ([2016] SGHC 52) concerns a breach of contract claim and agency by estoppel, focusing on share swap agreements.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
JES International Holdings LimitedPlaintiffCorporationJudgment for PlaintiffWon
Yang ShushanDefendantIndividualCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Kannan RameshJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Ooi Huey HienRodyk & Davidson LLP
Foo Maw ShenRodyk & Davidson LLP
Chu Hua YiRodyk & Davidson LLP
Wu XiaowenLexton Law Corporation

4. Facts

  1. Plaintiff and Defendant entered into a share swap agreement.
  2. The agreement included a moratorium on the transfer of shares.
  3. Defendant transferred shares to a third party (Lender) as collateral.
  4. Plaintiff claimed this transfer breached the moratorium.
  5. Defendant argued the moratorium was not binding or another agreement applied.
  6. The First Tranche JES Shares were to be borrowed from JESOIL under the Share Lending Agreement.
  7. The SIC required the Defendant and YN to provide to the Plaintiff an additional undertaking as regards the First Tranche JES Shares.

5. Formal Citations

  1. JES International Holdings Ltd v Yang Shushan, Suit No 815 of 2014, [2016] SGHC 52

6. Timeline

DateEvent
Defendant sent JX an email setting out his proposal for the share swap and the issuance of the Islamic bonds.
Defendant sent a chaser to JX on the proposal for the share swap and the issuance of the Islamic bonds.
Defendant sent an email to JY, Zhu and YN enclosing the Cooperation framework agreement on bond issuance between Scibois and JES.
JY forwarded to the Defendant and YN a Memorandum of Understanding.
Framework Acquisition Agreement executed.
Public announcement made by the Plaintiff that it had entered into the FAA with the Defendant and YN.
JY sent JX an email with specific reference to the moratorium clause and an undertaking to be provided in relation thereto.
JX forwarded JY's email to the Defendant.
SA2 and 23 May SPA signed.
SIC gave approval for the share lending agreement.
YN provided details of the account to receive the First Tranche JES Shares.
YN confirmed that the 23 May SPA might be “re-dated” 4 July 2014, and forwarded an execution page containing what appeared to be the signatures of the Defendant and YN.
The 4 July SPA was announced to the market by the Plaintiff.
Share lending agreement was entered into between the Plaintiff and JESOIL.
Shares received from JESOIL under the Share Lending Agreement were transferred to the Defendant’s securities account in two tranches of 30,000,000 shares.
JY sent YN an email notifying him that the Plaintiff had publicly announced the signing of the 4 July SPA and the transfer of the First Tranche JES shares from JESOIL to the Plaintiff under the Share Lending Agreement.
Defendant transferred 30,000,000 shares to the Lender.
Shares received from JESOIL under the Share Lending Agreement were transferred to the Defendant’s securities account in two tranches of 90,802,800 shares.
Defendant transferred 30,000,000 shares to the Lender.
Plaintiff commenced proceedings.
Application filed to restrain the Defendant from dealing with the First Tranche JES Shares.
Order made to restrain the Defendant from dealing with the First Tranche JES Shares.
Plaintiff terminated the 4 July SPA.
JX stepped down as the Plaintiff’s Chief Executive Officer.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that the Defendant breached the moratorium in the 4 July SPA by transferring the Collateral Shares to the Lender.
    • Category: Substantive
    • Sub-Issues:
      • Breach of Moratorium Clause
      • Failure to Return Shares
  2. Agency by Estoppel
    • Outcome: The court found that YN had actual authority to act on behalf of the Defendant, or in the alternative, YN had apparent authority to deal with the matters relating to the transaction on the Defendant’s behalf or the Defendant is estopped from denying YN’s authority.
    • Category: Substantive
    • Sub-Issues:
      • Apparent Authority
      • Ratification
  3. Measure of Damages
    • Outcome: The court awarded compensatory damages to the Plaintiff, assessed based on the market value of the shares at the time of the breach and the Plaintiff's contractual exposure to JESOIL.
    • Category: Substantive
    • Sub-Issues:
      • Compensatory Damages
      • Negotiating Damages

8. Remedies Sought

  1. Return of Shares
  2. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Shipbuilding
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Pacrim Investments Pte Ltd v Tan Mui Keow Claire and anotherCourt of AppealYes[2008] 2 SLR(R) 898SingaporeCited as one reason why moratoria such as this were insisted upon by the parties in such transactions.
Cheong Ghim Fah and another v Murugian s/o RangasamyN/AYes[2004] 1 SLR(R) 628SingaporeCited for the principles to be applied when considering whether an adverse inference ought to be drawn from the absence or silence of a witness who might be expected to give evidence on an important issue of fact.
ECICS Ltd v Capstone Construction Pte Ltd and othersHigh CourtNo[2015] SGHC 214SingaporeCited regarding whether item (d) above is an absolute necessity if the party in question had sufficient notice of the issue and would be expected to have chosen either to explain or not to explain the absence of the witness.
Spiro v LinternN/AYes[1973] 1 WLR 1002N/ACited for the doctrine of agency by estoppel.
The “Bunga Melati 5”Court of AppealNo[2016] SGCA 20SingaporeCited for the Court of Appeal's opinion that the difference between agency by estoppel and apparent authority was not, as it were, apparent.
Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another and another suitN/AYes[2009] 4 SLR(R) 788SingaporeCited regarding the requirements for apparent or ostensible authority.
Re George Inglefield LtdN/AYes[1933] 1 Ch 1N/ACited for the distinction between a sale, and a mortgage or charge is the obligation to account for the proceeds in the case of latter.
Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group LimitedFederal Court of AustraliaYes[2008] FCA 594AustraliaCited regarding the characterisation of a share lending and borrowing agreement as a mortgage.
The AlbazeroN/AYes[1977] AC 774N/ACited for the expression of the “narrow ground”.
Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd and others and another appealN/AYes[1994] 1 AC 85N/ACited for the “broad ground” set out by Lord Griffiths.
Alfred McAlpine Construction Ltd v Panatown LtdN/AYes[2001] 1 AC 518N/ACited for the “broad ground” supported by Lord Millet and Lord Goff.
Prosperland Pte Ltd v Civic Constructions Pte Ltd and otherN/AYes[2004] 4 SLR(R) 129SingaporeCited for the acceptance of both the “narrow ground” and the “broad ground” as part of Singapore law.
Chia Kok Leong and another v Prosperland Pte LtdCourt of AppealYes[2005] 2 SLR(R) 484SingaporeCited for the acceptance of both the “narrow ground” and the “broad ground” as part of Singapore law.
Family Food Court (a firm) v Seah Boon Lock and another (trading as Boon Luck Duck and Noodle House)Court of AppealYes[2008] 4 SLR(R) 272SingaporeCited for the acceptance of both the “narrow ground” and the “broad ground” as part of Singapore law.
Darlington Borough Council v Wiltshier Northern LtdN/AYes[1995] 1 WLR 68N/ACited for the extension of the “narrow ground”.
Woodar Investment Development Ltd v Wimpey Construction UK LtdN/AYes[1980] 1 WLR 277N/ACited for the observation of Lord Scarman that the fact that a contracting party has required services to be supplied at his own cost to a third party is at least prima facie evidence of the value of those services to the party who placed the order.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and anotherCourt of AppealYes[2008] 2 SLR(R) 623SingaporeCited for the principle that the fact that an assessment is difficult because of the nature of the damage is no reason for awarding no damages or merely nominal damages.
Biggin & Co Ld v Permanite, LdEnglish High CourtYes[1951] 1 KB 422EnglandCited for the approach that a court should adopt where precise evidence is obtainable, the court naturally expects to have it. Where it is not, the court must do the best it can.
Johnson and another v AgnewN/AYes[1980] 1 AC 367N/ACited for the principle that damages awarded in substitution for specific performance under the Lord Cairns’ Act are not ordinarily awarded on a different basis from damages at common law.
Lunn Poly Ltd and another v Liverpool & Lancashire Properties Ltd and anotherEngland and Wales Court of Appeal (Civil Division)Yes[2006] EWCA 430England and WalesCited for the approach to assessing damages under the Act must not be arbitrary; nor should it be indefensibly consistent with the approach to assessment of damages and valuations in other fields; nor should it be unpredictable and therefore likely to lead to litigation.
Wrotham Park Estate Co Ltd v Parkside Homes Ltd and othersN/AYes[1974] 1 WLR 798N/ACited as the leading authority on the approach that the court should take to assessing negotiating damages.
Clearlab SG Pte Ltd v Ting Chong Chai and othersN/AYes[2015] 1 SLR 165SingaporeCited for the recognition of Wrotham Park damages.
Pell Frischmann Engineering Ltd v Bow Valley Iran LtdN/AYes[2011] 1 WLR 2370N/ACited for the principle that the fact that one or both parties would have refused to make the deal is therefore to be ignored.
Duncan Edward Vercoe v Rutland Fund Management LimitedN/AYes[2010] EWHC 424N/ACited for the principle that the court should not award damages on the basis of a hypothetical bargain out of bound with the parties’ realistic expectations and commercial acceptability.
The “Asia Star”N/AYes[2010] 2 SLR 1154SingaporeCited for the principle that the burden of proving that the Plaintiff failed to mitigate its loss is on the Defendant.
Yeoh Wee Liat v Wong Lock Chee and another suitN/ANo[2013] 4 SLR 508SingaporeCited regarding the burden to produce the original share transfer form to prove that the signature therein was Phuah’s.
Alwie Handoyo v Tjong Very Sumito and another and another appealN/AYes[2013] 4 SLR 308SingaporeCited for the definition of an agency relationship.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97, 1997 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed)Singapore
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Moratorium
  • Share Swap
  • Share Lending Agreement
  • Collateral Shares
  • First Tranche JES Shares
  • First Tranche Scibois Shares
  • SA2
  • 4 July SPA
  • JESOIL
  • SIC Undertaking

15.2 Keywords

  • Breach of Contract
  • Agency by Estoppel
  • Moratorium
  • Share Swap
  • Damages
  • Singapore Law

17. Areas of Law

Area NameRelevance Score
Breach of Contract95
Contract Law90
Agency Law80
Damages75
Measure of Damages70
Implied authority of agent70
Agency by estoppel70
Estoppel60
Company Law40

16. Subjects

  • Contract Law
  • Agency Law
  • Commercial Law
  • Securities Law