Hyflux Ltd v SM Investments Pte Ltd: Striking Out Counterclaim & Summary Determination of Restructuring Agreement
In Hyflux Ltd v SM Investments Pte Ltd, the High Court of Singapore addressed two summonses: one by Hyflux Ltd to strike out SM Investments Pte Ltd's counterclaim, and the other by SM Investments for determination of a question of law or construction, both arising from a restructuring agreement. Hyflux Ltd, undergoing restructuring with a moratorium under s 211B of the Companies Act, sued SM Investments for breach of contract, while SM Investments counterclaimed for the release of an escrow sum. The court ruled that SM Investments could raise the counterclaim as a defense without leave of court, but required leave to pursue remedies beyond a pure defense. The court denied the application for determination under Order 14 Rule 12 of the Rules of Court at this time, pending amendment of pleadings.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Counterclaim can be raised as a defence without leave of Court. Leave is granted to pursue remedies beyond a pure defence, but no execution of any judgment is to occur without leave while the moratorium is in place. Application for determination under Order 14 Rule 12 of the Rules of Court is denied at this time, pending amendment of pleadings.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Hyflux Ltd sues SM Investments for breach of contract. SM Investments counterclaims. Court addresses striking out counterclaim and summary determination.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Hyflux Ltd | Plaintiff | Corporation | Counterclaim Allowed in Part, Application Denied | Partial, Lost | Leo Zhen Wei Lionel, Liu Zhao Xiang, Tan Kai Yun, Muhammad Ismail K.O. Noordin |
| SM Investments Pte Ltd | Defendant | Corporation | Counterclaim Allowed in Part, Application Denied at this time | Partial, Neutral | Chelva Retnam Rajah, Baratham Sayana, Sudhershen Hariram, Yap En Li, Yong Manling Jasmine |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Leo Zhen Wei Lionel | Wongpartnership LLP |
| Liu Zhao Xiang | Wongpartnership LLP |
| Tan Kai Yun | Wongpartnership LLP |
| Muhammad Ismail K.O. Noordin | Wongpartnership LLP |
| Chelva Retnam Rajah | Tan Rajah & Cheah |
| Baratham Sayana | Tan Rajah & Cheah |
| Sudhershen Hariram | Tan Rajah & Cheah |
| Yap En Li | Tan Rajah & Cheah |
| Yong Manling Jasmine | Tan Rajah & Cheah |
4. Facts
- Hyflux Ltd was undergoing restructuring and covered by a moratorium under s 211B of the Companies Act.
- Hyflux and SM Investments entered into a Restructuring Agreement for investment by SM Investments in Hyflux.
- Clause 5.1(e)(i) of the Restructuring Agreement stipulated that consent of the Public Utilities Board (PUB) for the change in control of Tuaspring was to be obtained.
- On 25 March 2019, the PUB informed Tuaspring by letter that it consented to the change in control of Tuaspring, subject to provisos.
- SM Investments asserted it had the right to terminate the Restructuring Agreement due to non-fulfilment of condition precedents.
- Hyflux claims SM Investments committed a repudiatory breach of the Restructuring Agreement.
- A deposit of S$38,900,000 was placed in escrow pursuant to cl 3.1(a) of the Restructuring Agreement.
5. Formal Citations
- Hyflux Ltd v SM Investments Pte Ltd, Suit No 397 of 2019 (Summons Nos 2747 and 3287 of 2019), [2019] SGHC 236
6. Timeline
| Date | Event |
|---|---|
| Negotiations between Hyflux Ltd and SM Investments Pte Ltd commenced | |
| Public Utilities Board informed Tuaspring by letter that it consented to the change in control of Tuaspring, subject to provisos | |
| Long-stop date of the Restructuring Agreement | |
| Oral hearing for application to pursue counterclaim | |
| Oral hearing on Summons Nos 2747 and 3287 of 2019 | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Striking Out Counterclaim
- Outcome: The court ruled that the defendant could raise the counterclaim as a defense without leave of court, but required leave to pursue remedies beyond a pure defense.
- Category: Procedural
- Sub-Issues:
- Breach of moratorium
- Failure to obtain leave of court
- Summary Determination of Contractual Interpretation
- Outcome: The court denied the application for determination under Order 14 Rule 12 of the Rules of Court at this time, pending amendment of pleadings.
- Category: Substantive
- Sub-Issues:
- Interpretation of condition precedent
- Fulfilment of contractual terms
- Breach of Contract
- Outcome: Undetermined at this stage.
- Category: Substantive
8. Remedies Sought
- Release of escrow sum
- Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Insolvency
- Restructuring
11. Industries
- Utilities
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Mortgage Debenture Ltd (in administration) v Chapman and others | N/A | Yes | [2016] 1 WLR 3048 | England | Cited regarding exceptions to moratoriums for counterclaims that are defensive and pleaded solely to raise a defence by way of set off. |
| CGU Insurance Bhd v Asean Security Paper Mills Sdn Bhd and other appeals | Federal Court of Malaysia | Yes | [2002] 2 MLJ 1 | Malaysia | Cited for the proposition that proceedings commenced to escape liability do not fall within the ambit of a statutory moratorium. |
| Thomas Evan Cook v Mortgage Debenture Limited | English Court of Appeal | Yes | [2016] EWCA Civ 103 | England | Cited for the proposition that proceedings commenced to escape liability do not fall within the ambit of a statutory moratorium. |
| In re David Lloyd & Co | N/A | Yes | 6 Ch. D. 339 | N/A | Cited to support the submission that a statutory moratorium does not bar a claim by a claimant to his own property. |
| Langley Constructions (Brixham) Ltd v Wells | English Court of Appeal | Yes | [1969] 1 WLR 503 | England | Cited to demonstrate that a defendant is entitled to proceed with its counterclaim without leave to the extent of the plaintiff’s claim. |
| Humber & Co v John Griffiths Cycle Co | N/A | Yes | (1901) 85 LT 141 | N/A | Cited to support the principle that a statutory moratorium does not apply to defensive steps taken in legal proceedings. |
| In re Atlantic Computer Systems Plc | N/A | Yes | [1992] 2 WLR 367 | N/A | Cited as the primary case regarding the granting of leave in relation to the enforcement of security, and its considerations are applicable generally. |
| Barang Barang Pte Ltd v Boey Ng San | N/A | Yes | [2002] 1 SLR(R) 949 | Singapore | Cited to illustrate the conjunctive requirements for determination of questions of law or construction of documents. |
| Olivine Capital Pte Ltd and another v Chia Chin Yan and another matter | Court of Appeal | Yes | [2014] 2 SLR 1371 | Singapore | Cited to illustrate the conjunctive requirements for determination of questions of law or construction of documents. |
| Payna Chettiar v Maimoon bte Ismail and others | N/A | Yes | [1997] 1 SLR(R) 738 | Singapore | Cited to support that it is not necessary that the determination dispose of the entire matter as the language of O 14 r 12 of the ROC permits its use even if the issue in play is only part of the overall claim. |
| United Overseas Bank Ltd v Lippo Marina Collection Pte Ltd and others | N/A | Yes | [2016] 2 SLR 597 | Singapore | Cited to support the overriding consideration of O 14 r 12 of the ROC, which is the saving of time and costs for the parties. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | N/A | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited regarding the requirements to govern the admissibility of extrinsic evidence. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal | N/A | Yes | [2013] 4 SLR 193 | Singapore | Cited regarding the contextual approach to contractual interpretation and construction in Singapore. |
| Y.E.S F&B Group Pte Ltd v Soup Restaurant Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd | N/A | Yes | [2015] 5 SLR 1187 | Singapore | Cited regarding the contextual approach to contractual interpretation and construction in Singapore. |
| Xia Zhengyan v Geng Changqing | N/A | Yes | [2015] 3 SLR 732 | Singapore | Cited regarding the contextual approach to contractual interpretation and construction in Singapore. |
| Rainy Sky SA v Kookmin Bank | N/A | Yes | [2011] 1 WLR 2900 | N/A | Cited regarding the principle that an interpretation that is absurd is to be avoided. |
| Tay Theng Khoon and another v Lee Kim Tah (Pte) Ltd | N/A | Yes | [1992] 1 SLR(R) 509 | Singapore | Cited regarding the principle that a consent that is subject to significant or onerous conditions would not satisfy the requirements of the Restructuring Agreement. |
| Ideal City Development Sdn Bhd v Dynamic Mould Sdn Bhd | N/A | Yes | [2003] 3 MLJ 152 | N/A | Cited regarding the principle that a consent that is subject to significant or onerous conditions would not satisfy the requirements of the Restructuring Agreement. |
13. Applicable Rules
| Rule Name |
|---|
| Order 18 Rule 19 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
| Order 14 Rule 12 of the Rules of Court |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| s 211B of the Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
| Companies Act 1948 (c 38) (UK) | United Kingdom |
| Companies Act (No 125 of 1965) (M’sia) | Malaysia |
| Insolvency Act 1986 (c 45) (UK) | United Kingdom |
15. Key Terms and Keywords
15.1 Key Terms
- Restructuring Agreement
- Moratorium
- Condition precedent
- Escrow sum
- Repudiatory breach
- Public Utilities Board
- Tuaspring
- Water purchase agreement
15.2 Keywords
- moratorium
- striking out
- counterclaim
- summary determination
- restructuring agreement
- condition precedent
- breach of contract
- escrow
- Companies Act
16. Subjects
- Civil Procedure
- Contract Law
- Insolvency Law
- Restructuring
17. Areas of Law
- Civil Procedure
- Contract Law
- Restructuring Law
- Insolvency Law