Akfel Commodities v. Townsend: Conditional Leave to Defend & Sham Contract Allegations
In Akfel Commodities Turkey Holding Anonim Sirketi v Adam Townsend, the Court of Appeal of Singapore heard an appeal regarding the imposition of a condition for leave to defend in a breach of contract claim. The plaintiff, Adam Townsend, sought summary judgment for his claim, while the defendant, Akfel Commodities Turkey Holding Anonim Sirketi, argued the contract was a sham or illegal. The lower court granted leave to defend on the condition that Akfel furnish security of $2 million. The Court of Appeal dismissed Akfel's appeal, upholding the conditional leave to defend.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal dismissed; conditional leave to defend ordered by the court below upheld.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court grants conditional leave to defend in a breach of contract claim, addressing allegations of a sham contract and illegality.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Akfel Commodities Turkey Holding Anonim Sirketi | Appellant | Corporation | Appeal Dismissed | Lost | |
| Townsend, Adam | Respondent | Individual | Conditional Leave to Defend Upheld | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Senior Judge | Yes |
| Woo Bih Li | Judge | No |
4. Counsels
4. Facts
- Akfel is the main holding company for a group of companies trading gas and power in Turkey.
- Townsend provided consultancy services to the Akfel Group since 2009.
- A Consultancy Agreement was executed between Townsend and Akfel in 2016.
- Akfel Singapore guaranteed Akfel’s performance of the Consultancy Agreement.
- Akfel terminated the Consultancy Agreement on 16 March 2017.
- Akfel's primary defense was that the Consultancy Agreement was a sham contract.
- Akfel averred that the Consultancy Agreement was concluded in furtherance of an illegal venture.
5. Formal Citations
- Akfel Commodities Turkey Holding Anonim Sirketi v Townsend, Adam, Civil Appeal No 116 of 2018, [2019] SGCA 43
6. Timeline
| Date | Event |
|---|---|
| Mr. Townsend provided consultancy services to the Akfel Group on a non-exclusive basis. | |
| Akfel Commodities Pte Ltd (Akfel Singapore) incorporated in Singapore. | |
| The Baltaci Brothers transferred all their shares in Akfel to Akfel Singapore. | |
| Oral agreement reached between MFB and Mr. Townsend to increase monthly retainer fee. | |
| The Baltaci Brothers resigned from the Akfel board. | |
| Commencement date of the Consultancy Agreement. | |
| Istanbul courts issued the August 2016 Injunction for the confiscation of assets owned by various persons, including those of the Baltaci Brothers. | |
| Internal Akfel e-mail referencing Mr. Townsend to discuss with MFB. | |
| Istanbul courts accepted the Istanbul Chief Public Prosecutor’s Office’s request for the Savings Deposit Insurance Fund (SDIF) to be appointed as trustee for Akfel. | |
| Mr. Townsend issued Akfel an invoice for his retainer fees for the preceding quarter. | |
| TMSF’s lawyers sent Mr. Townsend a termination letter. | |
| Mr. Townsend commenced Suit No 329 of 2017 against Akfel. | |
| The Judge delivered his decision on the appeal. | |
| Court heard the parties. | |
| Grounds of decision delivered. |
7. Legal Issues
- Breach of Contract
- Outcome: The court granted conditional leave to defend, indicating that there was a triable issue regarding the breach of contract claim.
- Category: Substantive
- Sham Contract
- Outcome: The court found that Akfel had raised a triable issue that the Consultancy Agreement was either a sham or a device to circumvent a foreseeable seizure of control over Akfel by the Turkish government.
- Category: Substantive
- Illegality
- Outcome: The court considered the argument that the Consultancy Agreement was concluded in furtherance of an illegal venture, designed to avoid or circumvent the consequences under Turkish law.
- Category: Substantive
- Conditional Leave to Defend
- Outcome: The court dismissed the appeal and upheld the conditional leave to defend ordered by the court below.
- Category: Procedural
8. Remedies Sought
- Liquidated Damages
- Damages for Breach of Notice Period
- Retainer Fees
- Reimbursement of Expenses
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
11. Industries
- Energy
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Wee Cheng Swee Henry v Jo Baby Kartika Polim | High Court | Yes | [2015] 4 SLR 250 | Singapore | Cited regarding conditional leave to defend and the concept of a 'shadowy' defense. |
| Abdul Salam Asanaru Pillai (trading as South Kerala Cashew Exporters) v Nomanbhoy & Sons Pte Ltd | High Court | Yes | [2007] 2 SLR(R) 856 | Singapore | Cited regarding conditional leave to defend and the court's discretion to impose conditions. |
| Mohd Zain bin Abdullah v Chimbusco International Petroleum (Singapore) Pte Ltd and another appeal | Court of Appeal | Yes | [2014] 2 SLR 446 | Singapore | Cited regarding triable issues and the principles governing summary judgment and bankruptcy applications. |
| Millennium Commodity Trading Ltd v BS Tech Pte Ltd | High Court | Yes | [2017] SGHC 58 | Singapore | Cited regarding triable issues and the proper form of leave to defend to be granted. |
| Ebony Ritz Sdn Bhd v Sumatec Resources Bhd | High Court | Yes | [2017] SGHC 282 | Singapore | Cited regarding the law applicable to summary judgment. |
| Habibullah Mohamed Yousuff v Indian Bank | Court of Appeal | Yes | [1999] 2 SLR(R) 880 | Singapore | Cited regarding the power to give summary judgment and the test for granting leave to defend. |
| Concentrate Engineering Pte Ltd v United Malayan Banking Corp Bhd | High Court | Yes | [1990] 1 SLR(R) 465 | Singapore | Cited regarding 'some other reason' for a trial. |
| Lau Hwee Beng and Another v Ong Teck Ghee | High Court | Yes | [2007] SGHC 90 | Singapore | Cited regarding the articulation of the defendant’s position with sufficient particularity and supported by cogent evidence. |
| B2C2 Ltd v Quoine Pte Ltd | Court of Appeal | Yes | [2018] 4 SLR 1 | Singapore | Cited regarding the articulation of the defendant’s position with sufficient particularity and supported by cogent evidence. |
| Goh Chok Tong v Chee Soon Juan | Court of Appeal | Yes | [2003] 3 SLR(R) 32 | Singapore | Cited regarding the refusal to grant leave because there was no reasonable probability that the defendant has a real or bona fide defence in relation to the issues. |
| Chng Bee Kheng and another (executrixes and trustees of the estate of Fock Poh Kum, deceased) v Chng Eng Chye | Court of Appeal | Yes | [2013] 2 SLR 715 | Singapore | Cited regarding the requirement to prove a common intention to mislead in order to establish a claim of sham. |
| Wayne Burt Commodities Pte Ltd v Singapore DSS Pte Ltd | High Court | Yes | [2017] SGHC 70 | Singapore | Cited regarding the phrase 'reasonable probability of a bona fide defence' used synonymously with the first limb in O 14 r 3(1) of finding a triable issue. |
| Ritzland Investment Pte Ltd v Grace Management & Consultancy Services Pte Ltd | High Court | Yes | [2014] 2 SLR 1342 | Singapore | Cited regarding the phrase 'reasonable probability of a bona fide defence' used synonymously with the first limb in O 14 r 3(1) of finding a triable issue. |
| Paclantic Financing Co Inc and Others v Moscow Narodny Bank Ltd | Court of Appeal | Yes | [1984] 1 WLR 930 | England and Wales | Cited as an example of circumstances justifying conditional leave to defend. |
| Wiseway Global Co Ltd v Qian Feng Group Ltd | High Court | Yes | [2015] SGHC 85 | Singapore | Cited regarding adverse inference from a decision by a plaintiff not to pursue a remedy against a guarantor. |
| Billion Silver Development Ltd v All Wide Investments Ltd | Hong Kong Court of Appeal | Yes | [1999] HKCA 467 | Hong Kong | Cited regarding unconditional leave to defend where there are suspicions about the plaintiff’s case. |
| Extraktionstechnik Gesellschaft Fur Anlagenbau MBH v Oskar | English Court of Appeal | Yes | (1984) 128 SJ 417 | England and Wales | Cited regarding unconditional leave to defend where there are suspicions about the plaintiff’s case. |
| Peter Nolan v Graham Michael Wright | English High Court | Yes | [2009] EWHC 305 (Ch) | England and Wales | Cited regarding unconditional leave to defend where there are suspicions about the plaintiff’s case. |
13. Applicable Rules
| Rule Name |
|---|
| Order 14 Rule 3 of the Rules of Court |
| Order 14 Rule 4 of the Rules of Court |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Rules of Court | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Consultancy Agreement
- Conditional Leave to Defend
- Sham Contract
- FETO/PDY
- Baltaci Brothers
- TMSF
- Security for Costs
15.2 Keywords
- Contract
- Breach
- Summary Judgment
- Singapore
- Conditional Leave to Defend
- Sham Contract
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Summary Judgement | 85 |
| Civil Practice | 75 |
| Sham Contract | 70 |
| Contract Law | 65 |
| Breach of Contract | 60 |
| Commercial Disputes | 50 |
| Jurisdiction | 40 |
| Evidence | 30 |
16. Subjects
- Contract Law
- Civil Procedure
- Summary Judgment