Yuanta Asset Management v Telemedia Pacific: Breach of Contract, Fiduciary Duty, and Conversion in Joint Venture

Yuanta Asset Management International Limited and Yeh Mao-Yuan appealed against the decision of the Singapore International Commercial Court in favor of Telemedia Pacific Group Limited and Hady Hartanto, who cross-appealed. The dispute arose from a joint venture where TPG was to transfer NexGen shares to Yuanta as collateral for loans to Asia Energy Management Ltd (AEM). The court found Yuanta liable for misapplication of trust property related to unauthorized sales of NexGen shares and Mr. Yeh liable for dishonest misappropriation of shares. The appeal was allowed in part, modifying the damages awarded, while the cross-appeal was dismissed.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part, cross-appeal dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a joint venture dispute over misapplied funds, contractual breaches, and fiduciary breaches related to NexGen shares.

1.7 Decision Date

19 June 2018

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Yuanta Asset Management International Limited	Appellant, Defendant	Corporation	Appeal allowed in part	Partial	Lim Joo Toon of Joo Toon LLC Deborah Barker of KhattarWong LLP
Yeh Mao-Yuan	Appellant, Defendant	Individual	Appeal allowed in part	Partial	Lim Joo Toon of Joo Toon LLC Deborah Barker of KhattarWong LLP
Telemedia Pacific Group Limited	Respondent, Plaintiff	Corporation	Cross-appeal dismissed	Lost	Devathas Satianathan of Rajah & Tann Singapore LLP Yam Wern-Jhien of Rajah & Tann Singapore LLP Josephine Chee of Rajah & Tann Singapore LLP Paul Tan of Rajah & Tann Singapore LLP
Hady Hartanto	Respondent, Plaintiff	Individual	Cross-appeal dismissed	Lost	Devathas Satianathan of Rajah & Tann Singapore LLP Yam Wern-Jhien of Rajah & Tann Singapore LLP Josephine Chee of Rajah & Tann Singapore LLP Paul Tan of Rajah & Tann Singapore LLP

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Andrew Phang Boon Leong	Judge of Appeal	No
Sir Bernard Rix	International Judge	Yes

4. Counsels

Counsel Name	Organization
Lim Joo Toon	Joo Toon LLC
Deborah Barker	KhattarWong LLP
Devathas Satianathan	Rajah & Tann Singapore LLP
Yam Wern-Jhien	Rajah & Tann Singapore LLP
Josephine Chee	Rajah & Tann Singapore LLP
Paul Tan	Rajah & Tann Singapore LLP

4. Facts

TPG and Yuanta entered into a joint venture to carry out securities and other diverse investments via AEM.
TPG was to transfer up to 3.6bn NexGen shares to Yuanta as collateral for loans.
Yuanta was to re-pledge the shares as security for loans provided by Yuanta or a third party lender.
Yuanta sold 101.5m shares and repurchased them at a lower price, yielding a profit of S$1,774,733.20.
Yuanta sold 60m shares, yielding proceeds of S$1,374,620.20.
Yuanta pledged 765m shares to EFH in several tranches.
Mr. Yeh authorised TPG to transfer 225m shares from the TPG Account into an account in the name of Fullerton.

5. Formal Citations

Yuanta Asset Management International Limited and another v Telemedia Pacific Group Limited and another and another appeal, Civil Appeal Nos 189 of 2016 and 1 of 2017 and Summons No 58 of 2016, [2018] SGCA(I) 03

6. Timeline

Date	Event
2008-08-01	TPG acquired a 51% stake in NexGen.
2010-11-15	Yuanta was incorporated.
2010-07-01	Mr. Hartanto and Mr. Yeh met to discuss their businesses.
2010-11-14	First and Second Loan Agreements were signed.
2010-11-15	Supplementary Agreement was signed.
2010-12-21	Master Loan Agreement and Master Pledge Agreement entered into between Yuanta and EFH.
2011-01-01	TPG transferred 300m shares to Yuanta Account.
2011-02-01	Yuanta sold 101.5m shares.
2011-03-01	Yuanta repurchased 101.5m shares.
2011-03-11	TPG transferred 225m shares to Yuanta Account.
2011-03-01	Mr. Hartanto heard that Yuanta was trading with the shares.
2011-04-01	Mr. Hartanto instructed Yuanta to cease re-pledging.
2011-04-29	S$1,200,024.50 was withdrawn by TPG from the JV Account.
2011-05-04	TPG transferred 300m shares to Yuanta Account.
2011-06-01	Yuanta repurchased 101.5m shares.
2011-06-01	Mr. Hartanto asked for documentary proof from the lender.
2011-06-29	S$1,800,024.70 was withdrawn by TPG from the JV Account.
2011-06-29	Yuanta transferred S$1.8m from the Yuanta Account to the JV Account.
2011-06-29	Mr. Yeh instructed Crédit Agricole to transfer S$1.8m from the JV Account to TPI’s account.
2011-08-01	Yuanta sold 60m shares.
2011-08-01	Mr. Hartanto sought the whereabouts of the shares from Mr. Yeh and Mr. Goh.
2011-08-17	Mr. Goh informed Mr. Hartanto that the 765m Re-Pledged Shares were being held by the Bank of New York Mellon, Deutsche Bank and Morgan Stanley.
2011-09-09	TPG received a margin call letter from Yuanta.
2011-09-12	Mr. Hartanto sought proof that 60m shares remained in the Yuanta Account and the 765m Re-Pledged Shares had been transferred to the three banks specified.
2011-09-13	TPG received a margin call letter from Yuanta.
2011-09-26	TPG received a margin call letter from Yuanta.
2011-09-28	Mr. Yeh alleged that Mr. Hartanto had failed to keep his promises.
2011-10-03	Mr. Hartanto wrote to Mr. Yeh demanding to find out who the true custodian of the 825m Shares was.
2011-10-04	Mr. Hartanto wrote to Mr. Yeh demanding to find out whether either the custodian or Yuanta had been selling the 825m Shares.
2011-10-10	Mr. Yeh authorised TPG to transfer 112.5m shares from the TPG Account into an account in the name of Fullerton.
2011-10-14	Mr. Yeh authorised TPG to transfer 112.5m shares from the TPG Account into an account in the name of Fullerton.
2011-10-01	Yuanta sold 225m shares.
2011-11-01	Mr. Hartanto discovered that the October 225m shares had been removed from the TPG Account.
2011-11-08	The remainder of S$1.88m in the Yuanta Account was transferred to Mr. Yeh.
2011-11-01	The joint venture relationship had broken down.
2011-11-01	The value of NexGen shares plummeted to S$0.01 per share.
2011-12-31	The loans from EFH were terminated.
2012-05-09	The plaintiffs brought the Earlier Suit against Crédit Agricole.
2014-05-26	The Suit below was commenced.
2015-04-15	The Suit below was transferred by consent into the Singapore International Commercial Court.
2014-11-18	The plaintiffs’ claims were dismissed by the High Court.
2016-06-30	The trial judge delivered her judgment on liability.
2017-07-04	Judgment reserved.
2018-06-20	Judgment reserved.

7. Legal Issues

Breach of Contract
- Outcome: The court found that Yuanta did not breach the agreements when it carried out the 60m Sale and the 101.5m Sale & Repurchase because these sales were expressly authorized by the Agreements.
- Category: Substantive
Breach of Fiduciary Duty
- Outcome: The court found that Yuanta misapplied trust property in its dealings in the proceeds of sale.
- Category: Substantive
Conversion
- Outcome: The court found that the 60m Sale and 101.5m Sale & Repurchase were not acts of conversion since they were authorized under the Agreements.
- Category: Substantive
Inducement of Breach of Contract
- Outcome: The court found that Mr. Yeh could not have induced a breach of contract because Yuanta was not in breach of contract.
- Category: Substantive
Unlawful Means Conspiracy
- Outcome: The court found that the conspiracy claim fails on the pleadings and, even if it did not, the Judge’s factual findings were insufficient to infer an intention to injure and causation of the Portfolio Loss and the Re-Pledged Shares Loss.
- Category: Substantive
Breach of Trust
- Outcome: The court found Yuanta in breach of trust for misapplying the trust property when it transferred the proceeds of the 60m Sale and the 101.5m Sale & Repurchase to Yuanta’s related companies and Mr. Yeh’s associates and relatives.
- Category: Substantive

8. Remedies Sought

Monetary Damages
Equitable Compensation
Account of Profits

9. Cause of Actions

Breach of Contract
Breach of Fiduciary Duty
Conversion
Inducement of Breach of Contract
Conspiracy
Breach of Trust

10. Practice Areas

Commercial Litigation
Joint Ventures
Appeals

11. Industries

Finance
Investment Management

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Qilin World Capital Ltd v CPIT Investments Ltd	Court of Appeal	Yes	[2018] SGCA(I) 1	Singapore	Cited for the principle that pledging applies to choses in possession, not choses in action like shares.
CPIT Investments Ltd v Qilin World Capital Ltd	High Court	Yes	[2017] 5 SLR 1	Singapore	Cited for the principle that the deposit of shares as collateral provides security for a transaction.
Chase Manhattan Bank NA v Wong Tui Sun	Unknown	No	[1992] 3 SLR(R) 436	Singapore	Cited for the principle that pledging applies to choses in possession.
MCST Plan No 1933 v Liang Huat Aluminium Ltd	Unknown	No	[2001] 2 SLR(R) 91	Singapore	Cited for the principle that a recital in an instrument can assist in the construction of the substantive terms thereof.
Said v Butt	King's Bench	No	[1920] 3 KB 497	England and Wales	Cited for the principle that a director acting bona fide within the scope of authority is immune from tortious liability for procuring the company’s breach of contract.
Nagase Singapore Pte Ltd v Ching Kai Huat	Unknown	Yes	[2008] 1 SLR(R) 80	Singapore	Cited for affirming the principle in Said v Butt.
M+W Singapore Pte Ltd v Leow Tet Sin	Unknown	Yes	[2015] 2 SLR 271	Singapore	Cited for affirming the principle in Said v Butt.
PT Sandipala Arthaputra v STMicroelectronics Asia Pacific Pte Ltd	Court of Appeal	Yes	[2018] SGCA 17	Singapore	Cited for clarifying the scope of the principle in Said v Butt.
EFT Holdings Inc v Marineteknik Shipbuilders (S) Pte Ltd	Unknown	No	[2014] 1 SLR 860	Singapore	Cited for the elements of the tort of conspiracy by unlawful means.
Su Sh-Hsyu v Wee Yue Chew	Unknown	No	[2007] 3 SLR(R) 673	Singapore	Cited for the principle that the adduction of new evidence is assessed with more latitude where there is deception, fraud or deliberate suppression of material evidence.
Ladd v Marshall	Unknown	No	[1954] 1 WLR 149	England and Wales	Cited for the test for further evidence to be adduced on appeal.
Westdeutsche Bank v Islington London Borough Council	House of Lords	No	[1996] 1 AC 669	United Kingdom	Cited for the principle that when property is obtained by fraud, equity imposes a constructive trust on the fraudulent recipient.
Brickenden v London Loan & Savings Co of Canada	Unknown	No	[1934] 3 DLR 465	Canada	Cited for the proposition that where a fiduciary has wilfully failed to disclose information from the principal, the transaction embarked upon by a fiduciary is voidable.
Bristol and West Building Society v May May & Merrimans	Unknown	No	[1996] 2 All ER 801	England and Wales	Cited for the proposition that where a fiduciary has wilfully failed to disclose information from the principal, the transaction embarked upon by a fiduciary is voidable.
Hospital Products Limited v United States Surgical Corp	High Court of Australia	No	(1984) 156 CLR 41	Australia	Cited for the principle that where contractual and fiduciary relationships co-exist, the fiduciary relationship cannot be superimposed upon the contract in a way that alters the operation of the contract according to its true construction.
Telemedia Pacific Group Ltd v Crédit Agricole (Suisse) SA (Yeh Mao-Yuan, third party)	High Court	No	[2015] 1 SLR 338	Singapore	Cited for background facts.

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

NexGen shares
Joint venture
Pledged Securities
Loan Agreement
Yuanta Account
EFH Loan
Share Sales
Re-Pledged Shares
Unpledged Shares
Margin calls

15.2 Keywords

Joint venture
Breach of contract
Fiduciary duty
Conversion
NexGen shares
Singapore
Appeal
Trust
Misappropriation

17. Areas of Law

Area Name	Relevance Score
Fiduciary Duties	80
Contract Law	75
Trust Law	70
Equity	65
Torts	60
Business Litigation	30
Corporate Law	20
Arbitration	20

16. Subjects

Contract Dispute
Fiduciary Duty
Trusts
Securities Law