CIFG Special Assets Capital I Ltd v Ong Puay Koon: Contractual Term Interpretation & Indemnity
In CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others, the Singapore Court of Appeal addressed the interpretation of an indemnity clause within a set of Convertible Bond Subscription Agreements (CBSAs). CIFG, the plaintiff, sought to enforce the indemnity clause against Ong Puay Koon, Lee Sin Peng, Andy Ho, and Yap Tien Sung, the defendants, arguing that it made them jointly and severally liable for Polimet Pte Ltd’s default. The court dismissed the appeal, holding that the indemnity clause, when read in the context of the entire agreement and surrounding circumstances, did not extend to making each party responsible for any breach of the contract. The court made no order as to costs in Civil Appeal No 43 of 2017 and fixed the costs of Civil Appeal No 42 of 2017 in the aggregate sum of $50,000 in favour of the Respondents.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal dismissed; the court found that the indemnity clause did not make each party responsible for the breach of any term of the contract.
1.3 Case Type
Civil
1.4 Judgment Type
Ex Tempore Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal case concerning the interpretation of an indemnity clause in Convertible Bond Subscription Agreements and its effect on liability.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Limited) | Appellant, Respondent | Corporation | Appeal dismissed | Lost | |
| Ong Puay Koon | Respondent, Appellant | Individual | Appeal Allowed | Won | |
| Lee Sin Peng | Respondent, Appellant | Individual | Appeal Allowed | Won | |
| Andy Ho | Respondent, Appellant | Individual | Appeal Allowed | Won | |
| Yap Tien Sung | Respondent, Appellant | Individual | Appeal Allowed | Won | |
| Chris Chia Woon Liat | Respondent | Individual | Neutral | Neutral | |
| Yeo Kar Peng | Respondent | Individual | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Andrew Phang Boon Leong | Judge of Appeal | No |
| Steven Chong | Judge of Appeal | No |
4. Counsels
4. Facts
- CIFG and the Initial Shareholders entered into Convertible Bond Subscription Agreements (CBSAs).
- The CBSAs contained an indemnity clause (cl 12.1) that CIFG sought to enforce.
- The Initial Shareholders were involved in the business of manufacturing components.
- Polimet was incorporated as a holding company for the Initial Shareholders’ other companies.
- CIFG provided a US$5m loan by subscribing for convertible bonds issued by Polimet.
- The indemnity clause was introduced at the Salzburg meeting.
- The parties entered into a partial settlement agreement and recorded a consent judgment on 22 August 2016.
5. Formal Citations
- CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd)vOng Puay Koon and others and another appeal, Civil Appeal No 42 of 2017, [2017] SGCA 70
6. Timeline
| Date | Event |
|---|---|
| Initial Shareholders met with Kendall Court Capital Partners Limited between June and October. | |
| Draft term sheet was sent to Lee. | |
| Revised draft term sheet was sent to Lee. | |
| KC sent Lee drafts of the 2007 CBSA and the PGs. | |
| The documents were reviewed by some of the parties in Salzburg. | |
| The parties executed the 2007 CBSA and incorporated Polimet. | |
| CIFG issued demands. | |
| CIFG issued demands. | |
| Parties entered into a partial settlement agreement and recorded a consent judgment. | |
| Judgment delivered. |
7. Legal Issues
- Interpretation of Contractual Indemnity Clause
- Outcome: The court held that the indemnity clause, when read in context, did not make each party responsible for the breach of any term of the contract.
- Category: Substantive
- Sub-Issues:
- Scope of indemnity
- Joint and several liability
- Related Cases:
- [2016] 1 SLR 1069
- [2008] 3 SLR(R) 1029
- [2013] 4 SLR 193
- [2017] 1 SLR 219
- [2017] 2 SLR 850
8. Remedies Sought
- Monetary Damages
- Enforcement of Indemnity Clause
9. Cause of Actions
- Breach of Contract
- Enforcement of Indemnity
10. Practice Areas
- Commercial Litigation
11. Industries
- Finance
- Manufacturing
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Lucky Realty Co Pte Ltd v HSBC Trustee (Singapore)Ltd | Singapore High Court | Yes | [2016] 1 SLR 1069 | Singapore | Cited for the principle that the starting point in contract interpretation is the text used by the parties. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | Singapore Court of Appeal | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the principle that it is permissible to have regard to the relevant context in contract interpretation. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd | Singapore Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the principle that the court has regard to the relevant context to ascertain the parties’ objective intentions. |
| Yap Son On v Ding Pei Zhen | Singapore High Court | Yes | [2017] 1 SLR 219 | Singapore | Cited for the principle that the meaning ascribed to the terms of the contract must be one which the expressions used by the parties can reasonably bear. |
| Tan Cheng Bock v Attorney-General | Singapore Court of Appeal | Yes | [2017] 2 SLR 850 | Singapore | Cited for the principle that the entirety of the statute in question is considered in discerning the correct interpretation of a particular provision. |
| CIFG Special Assets Capital I Ltd v Polimet Pte Ltd and others (Chris Chia Woon Liat and another, third parties) | Singapore High Court | Yes | [2017] SGHC 22 | Singapore | The judgment below, which this appeal concerns. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Convertible Bond Subscription Agreement
- CBSA
- Indemnity
- Initial Shareholders
- Polimet
- Personal Guarantees
- PGs
- Salzburg meeting
- Boiler-plate provision
15.2 Keywords
- contract law
- indemnity clause
- convertible bond
- contractual interpretation
- singapore court of appeal
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Contract Law | 95 |
| Contractual terms | 90 |
| Interpretation of contractual terms | 85 |
| Estoppel | 30 |
| Agency Law | 20 |
16. Subjects
- Contract Law
- Financial Law
- Corporate Finance
- Indemnity Agreements