Qilin World Capital Ltd v CPIT Investments Ltd: Breach of Contract & Mortgage of Personal Property Dispute

In a dispute before the Court of Appeal of Singapore, Qilin World Capital Ltd appealed against orders made by Ramsey IJ in favor of CPIT Investments Ltd concerning a loan transaction. CPIT Investments Ltd also appealed against the dismissal of its counterclaim. The court allowed Qilin's appeal, finding no breach of contract in the 2 December transaction, and dismissed CPIT's appeal, concluding that CPIT failed to prove causation for damages related to the sale of pledged shares.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Qilin's appeal allowed; CPIT's appeal dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case involving Qilin World Capital Ltd and CPIT Investments Ltd concerning breach of contract and mortgage of personal property.

1.7 Decision Date

5 March 2018

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
QILIN WORLD CAPITAL LTD	Appellant, Respondent	Corporation	Appeal Allowed	Won	Renganathan Nandakumar of RHTLaw Taylor Wessing LLP Nandhu of RHTLaw Taylor Wessing LLP Yap Yongzhi Gideon of RHTLaw Taylor Wessing LLP Martin Roderick Edward of RHTLaw Taylor Wessing LLP
CPIT INVESTMENTS LTD	Respondent, Appellant, Plaintiff, Defendant	Corporation	Appeal Dismissed	Lost	Tan Poh Ling Wendy of Morgan Lewis Stamford LLC Chua Han Yuan Kenneth of Morgan Lewis Stamford LLC

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Bernard Rix	International Judge	No
Dyson Heydon	International Judge	Yes

4. Counsels

Counsel Name	Organization
Renganathan Nandakumar	RHTLaw Taylor Wessing LLP
Nandhu	RHTLaw Taylor Wessing LLP
Yap Yongzhi Gideon	RHTLaw Taylor Wessing LLP
Martin Roderick Edward	RHTLaw Taylor Wessing LLP
Tan Poh Ling Wendy	Morgan Lewis Stamford LLC
Chua Han Yuan Kenneth	Morgan Lewis Stamford LLC

4. Facts

On 16 November 2015, Qilin and CPIT entered into a Stock Secured Financing Agreement and a Control Agreement.
Qilin lent CPIT HK$31.25 million, secured by 25 million shares in Millennium Pacific Group Holdings Ltd.
The loan was a non-recourse loan, meaning Qilin could only enforce its rights against the pledged shares.
On 2 December 2015, Qilin transferred the pledged shares to its own account with Haitong.
Between 8 December 2015 and 14 January 2016, Qilin sold most of the pledged shares on the open market.
CPIT claimed Qilin's sales were a repudiatory breach of the agreements, which Qilin disputed.
CPIT commenced proceedings seeking an injunction to restrain Qilin from selling further shares.

5. Formal Citations

Qilin World Capital Ltd v CPIT Investments Ltd and another appeal, Civil Appeal Nos 126 and 145 of 2017, [2018] SGCA(I) 01

6. Timeline

Date	Event
2015-11-16	Parties entered into a Stock Secured Financing Agreement and a Control Agreement.
2015-12-01	Stock price of HK$2.50 was set.
2015-12-02	Loan was advanced.
2015-12-02	Qilin instructed the Depository Broker to create a sub account and transfer the Pledged Shares.
2015-12-03	Pledged Shares were transferred from Prominence Account 20 to Qilin’s account with Haitong.
2015-12-04	CPIT became aware of the transfer of Pledged Shares.
2015-12-08	Qilin sold most of the Pledged Shares on the open market.
2015-12-14	Qilin sold most of the Pledged Shares on the open market.
2015-12-18	Qilin claimed a decrease in the price of the collateral.
2015-12-22	Qilin claimed a decrease in the price of the collateral.
2016-01-04	CPIT contended that Qilin’s sales of Pledged Shares were in repudiatory breach of the Loan Agreement and the Control Agreement.
2016-01-11	Solicitors for Qilin challenged CPIT's contention.
2016-01-12	CPIT commenced proceedings in the High Court of Singapore.
2016-01-12	CPIT applied for an injunction to restrain Qilin from selling further Pledged Shares.
2016-01-13	CPIT applied for an injunction to restrain Qilin from selling further Pledged Shares.
2016-01-14	Qilin sold most of the Pledged Shares on the open market.
2016-01-18	The First Injunction was granted.
2016-02-12	Parties reached an agreement for Qilin to pay the proceeds of sale of the Pledged Shares into a designated solicitor’s account.
2016-06-28	The proceedings were transferred to the Singapore International Commercial Court.
2016-11-30	Qilin filed its Third Supplementary List of Documents.
2016-12-13	Trial took place.
2016-12-14	Trial took place.
2016-12-15	Trial took place.
2017-07-17	Ramsey IJ made orders.
2017-07-31	Ramsey IJ's orders were sealed.
2017-12-06	Appeals were argued.
2018-01-15	Judgment reserved.
2018-03-06	Judgment delivered.

7. Legal Issues

Breach of Contract
- Outcome: The court found that Qilin's 2 December transaction was not a breach of contract, but the sales of pledged shares from 8 December 2015 to 14 January 2016 were in breach of contract.
- Category: Substantive
- Sub-Issues:
  - Repudiatory breach
  - Breach of condition
- Related Cases:
  - [2008] 2 SLR(R) 898
Causation of Loss
- Outcome: The court found that CPIT failed to prove that Qilin's breach caused the fall in the market price of Millennium shares.
- Category: Substantive
- Related Cases:
  - [2007] 3 SLR(R) 782

8. Remedies Sought

Account of Profits
Damages

9. Cause of Actions

Breach of Contract

10. Practice Areas

Commercial Litigation
Banking and Finance

11. Industries

Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Chase Manhattan Bank NA v Wong Tui Sun and others	High Court	Yes	[1992] 3 SLR(R) 436	Singapore	Cited to define the term 'pledging' as it applies to choses in possession.
Pacrim Investments Ltd v Tan Mui Keow Claire	Court of Appeal	Yes	[2008] 2 SLR(R) 898	Singapore	Cited for the principle that the meaning of terms like 'sell', 'assign', and 'dispose of' depends on the context, intention of the parties, and the purpose for which the restriction was agreed to or imposed.
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric	Court of Appeal	Yes	[2007] 3 SLR(R) 782	Singapore	Cited for the principle that the relevant test for causation of damage in the law of contract is whether the breach was an “effective” or “dominant” cause.
Hengshi International Investments v Bayspring International Ltd	Court of First Instance	Yes	[2015] HKCFI 2282	Hong Kong	Cited for the principle that the sale of a large volume of publicly listed shares on the open market would have a destabilising effect on the market price.
CPIT Investments Ltd v Qilin World Capital Ltd	Singapore International Commercial Court	Yes	[2017] SGHC(I) 05	Singapore	The decision being appealed from.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Hong Kong Stamp Duty Ordinance (Cap 117)	Hong Kong

15. Key Terms and Keywords

15.1 Key Terms

Pledged Shares
Loan Agreement
Control Agreement
Non-recourse loan
Event of Default
Repudiatory Breach
Equitable Mortgagee
2 December Transaction

15.2 Keywords

breach of contract
mortgage
pledged shares
loan agreement
security interest
Singapore
Court of Appeal

17. Areas of Law

Area Name	Relevance Score
Credit and Security	80
Contract Law	75
Mortgage of Personal Property	70
Non-recourse Loan Agreement	65
Stocks and shares	60
Banking and Finance	60
Causation of Loss	55
Arbitration	40
Corporate Law	30
Real Estate	20

16. Subjects

Contract Law
Secured Financing
Mortgages
Securities Law