Nanyang Medical Investments v Kuek Bak Kim: Contractual Interpretation & Default Call Options

Nanyang Medical Investments Pte Ltd sued Leslie Kuek Bak Kim, Cheong Choi Shoon Sarah, and Aesthetic Alchemy Pte. Ltd. in the High Court of Singapore, Suit No 152 of 2017, on 28 November 2018, for specific performance of a share purchase agreement and dividends. The Defendants counterclaimed for specific performance to compel the Plaintiff to transfer shares for $1. The primary legal issue was the interpretation of contractual clauses regarding call and put options, specifically the validity of default call options. The court dismissed the Plaintiff's claims and allowed the Defendants' counterclaim, ordering specific performance for the transfer of shares to the Defendants for $1.

1. Case Overview

1.1 Court

High Court of Singapore

1.2 Outcome

Plaintiff’s claims dismissed and Defendants’ counterclaim for an order of specific performance allowed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case involving contractual interpretation of call and put options in a share sale agreement. Judgment for Defendants.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Nanyang Medical Investments Pte. Ltd.Plaintiff, Defendant in CounterclaimCorporationClaim DismissedLost
Leslie Kuek Bak KimDefendant, Plaintiff in CounterclaimIndividualCounterclaim AllowedWon
Cheong Choi Shoon SarahDefendant, Plaintiff in CounterclaimIndividualCounterclaim AllowedWon
Aesthetic Alchemy Pte. Ltd.Defendant, Plaintiff in CounterclaimCorporationCounterclaim AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Mavis ChionhJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Eugene Singarajah ThuraisingamEugene Thuraisingam LLP
Syazana Binte YahyaEugene Thuraisingam LLP
Teo Sher MinEugene Thuraisingam LLP
Ho Pei Shien MelanieWongPartnership LLP
Lim Xian YongWongPartnership LLP
Alvin Chia Shi JinWongPartnership LLP

4. Facts

  1. Plaintiff, 1st Defendant, and 2nd Defendant were shareholders of the 3rd Defendant.
  2. Plaintiff became a shareholder of the 3rd Defendant pursuant to a Share Sale Agreement.
  3. Parties entered into Shareholders’ Agreement, Put Option Agreements, and Call Option Agreements.
  4. Plaintiff sought specific performance to compel the 1st and 2nd Defendants to purchase its shares for $1.2m.
  5. Defendants denied the validity of the Plaintiff’s put option notices.
  6. Defendants asserted the occurrence of a Default Event: failure to refer 60 clients within six months.
  7. Defendants exercised their call options to purchase the Plaintiff’s shares for $1.

5. Formal Citations

  1. Nanyang Medical Investments Pte Ltd v Kuek Bak Kim Leslie and others, Suit No 152 of 2017, [2018] SGHC 263

6. Timeline

DateEvent
Nanyang Ventures approached the 1st Defendant
Term Sheet signed by the Defendants and Nanyang Ventures
Shook Lin engaged by Nanyang Ventures
Defendants’ representative forwarded a set of draft agreements
Nanyang Medical Investments Pte Ltd incorporated
Shook Lin circulated new drafts of the COAs and the POAs
Share Sale Agreement signed
Shareholders’ Agreement signed
Put Option Agreements signed
Call Option Agreements signed
End of six-month period from the date of the COAs
Defendants notified the Plaintiff of the occurrence of a Default Event
Defendants exercised their call options under the COAs
Plaintiff served put option notices on the 1st and 2nd Defendants
Suit No 152 of 2017 filed
Trial began
Trial concluded
Further submissions
Judgment issued

7. Legal Issues

  1. Contractual Interpretation
    • Outcome: The court interpreted the contractual clauses related to call and put options, finding that the Defendants validly exercised their default call options.
    • Category: Substantive
    • Sub-Issues:
      • Express terms
      • Admissibility of evidence
      • Penalty clause
  2. Penalty Clause
    • Outcome: The court held that the clauses in question did not amount to a penalty clause.
    • Category: Substantive
  3. Promissory Estoppel
    • Outcome: The court rejected the Plaintiff's argument that the Defendants were estopped from exercising the default call options.
    • Category: Substantive
  4. Validity of Compromise Agreement
    • Outcome: The court rejected the Plaintiff's argument that parties had concluded a valid and binding Settlement Agreement.
    • Category: Substantive

8. Remedies Sought

  1. Specific Performance
  2. Monetary Damages

9. Cause of Actions

  • Breach of Contract
  • Specific Performance

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Medical
  • Investment

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Ang Tin Yong v Ang Boon Chye and anotherCourt of AppealYes[2012] 1 SLR 447SingaporeCited for the objective approach to contractual interpretation, considering the commercial purpose and circumstances of the contract.
Yap Son On v Ding Pei ZhenCourt of AppealYes[2017] 1 SLR 219SingaporeCited for the principles of contractual interpretation, emphasizing the objectively ascertained intentions of the parties and the primacy of the text.
Investors Compensation Scheme Ltd v West Bromwich Building SocietyUnknownYes[1998] 1 WLR 896EnglandCited for the principle that the meaning of a word should not be confused with the meaning conveyed by its use in a document.
Arnold v BrittonUnknownYes[2015] 2 WLR 1593EnglandCited for the principle that the language of a contractual provision is the most obvious source of its meaning.
Lucky Realty Co Pte Ltd v HSBC Trustee (Singapore) LtdCourt of AppealYes[2016] 1 SLR 1069SingaporeCited for the contextual approach to contractual interpretation, starting with the parties' words and considering the rest of the contract and extrinsic evidence.
Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd)Court of AppealYes[2015] 2 SLR 1187SingaporeCited for the principle that the text of a contract might be plain and unambiguous, and the need for careful analysis if the meaning leads to an absurd result.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdUnknownYes[2008] 3 SLR(R) 1029SingaporeCited for the principle that ambiguity is no longer a prerequisite for considering extrinsic material in contractual interpretation.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the reservations expressed by the Court of Appeal regarding the admissibility of prior negotiations as extrinsic evidence.
Xia Zhengyan v Geng ChangqingCourt of AppealYes[2015] 3 SLR 732SingaporeCited for the use of previous drafts of an agreement to confirm the interpretation of a clause, and the caution regarding evidence of subsequent conduct.
A&J Inglis v John Buttery & CoUnknownYes3 App Cas 552EnglandCited as an example of an 'extremely clear' case where evidence of prior negotiations would be admissible.
Sheng Siong Supermarket Pte Ltd v Carilla Pte LtdHigh CourtYes[2011] 1094SingaporeCited as an authority for the acceptance of evidence of term sheets in contractual interpretation.
Cavendish Square Holding BV v Makdessi and another appealSupreme Court of the United KingdomYes[2016] AC 1172United KingdomCited as the locus classicus for the governing principles on penalty clauses.
Export Credits Guarantee Department v Universal Oil Products CoHouse of LordsYes[1983] 1 WLR 399EnglandCited for the principle that the law relating to penalty clauses aims to prevent recovery of sums disproportionate to the actual loss suffered.
Allplus Holdings Pte Ltd and others v Phoon Wui Nyen (Pan Weiyuan)High CourtYes[2016] SGHC 144SingaporeCited for endorsing the analysis applied by the UKSC in Cavendish Square on penalty clauses.
iTronic Holdings Pte Ltd v Tan Swee Leon & anorHigh CourtYes[2016] 3 SLR 663SingaporeCited for illustrating the application of the Cavendish Square reasoning on penalty clauses, particularly regarding conditional primary obligations.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealCourt of AppealYes[2009] 2 SLR(R) 332SingaporeCited as the authority for the elements of a valid compromise agreement.
Quek Kheng Leong Nicky and another v Teo Beng Ngoh and others and another appealCourt of AppealYes[2009] 4 SLR(R) 181SingaporeCited for the principle that 'without prejudice' communications are admissible to determine whether a compromise was reached.
Oriental Investments (SG) Pte Ltd v Catallal Investments Pte LtdUnknownYes[2013] 1 SLR 1182SingaporeCited for the elements required to establish a promissory estoppel.
Emmanuel Ayodeji Ajayi v RT Briscoe (Nigeria) LtdPrivy CouncilYes[1964] 1 WLR 1326NigeriaCited for the requirement of showing a change in position to demonstrate reliance in a promissory estoppel claim.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore
Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Call Option
  • Put Option
  • Default Event
  • Share Sale Agreement
  • Shareholders’ Agreement
  • Exercise Price
  • Default Period
  • Call Option Period
  • Settlement Agreement
  • Promissory Estoppel

15.2 Keywords

  • Contractual Interpretation
  • Call Option
  • Put Option
  • Default Event
  • Specific Performance
  • Singapore High Court

17. Areas of Law

Area NameRelevance Score
Contract Law95
Contractual Interpretation80
Breach of Contract70
Estoppel60
Promissory estoppel50
Penalty Clause50
Shareholders Agreement40
Specific performance40
Compromise Agreement40
Company Law30
Civil Procedure20
Damages20

16. Subjects

  • Contract Law
  • Shareholder Agreements
  • Options (Finance)