Tembusu Growth Fund II Ltd v Yee Fook Khong: Contract Breach, Remoteness of Damages, Promissory Estoppel

In Tembusu Growth Fund II Ltd v Yee Fook Khong, the Singapore High Court addressed a dispute arising from an investment in a Chinese business. Tembusu Growth Fund II Ltd and Tembusu Investment Management Co., Ltd sued Yee Fook Khong and Tan Chin Loke Eugene for breach of contract. Yee Fook Khong filed a counterclaim. The court found Yee Fook Khong liable for breaching the Term Sheet by failing to make installment payments and dismissed his counterclaim for lost profits. The court ordered Yee Fook Khong to pay RMB 30,025,000 and S$4,410,000 to the plaintiffs and to hand over share certificates representing 13.8% of the shareholding of Metro as continuing security for the outstanding amount.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff; Defendant's counterclaim dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court judgment on contract breach, promissory estoppel, causation, and remoteness of damages in an investment dispute.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Tembusu Growth Fund II LtdPlaintiff, Defendant in CounterclaimCorporationClaim AllowedWon
Tembusu Investment Management Co., LtdPlaintiff, Defendant in CounterclaimCorporationClaim AllowedWon
Yee Fook KhongDefendant, Plaintiff in CounterclaimIndividualClaim DismissedLost
Tan Chin Loke EugeneDefendantIndividualOrder to deliver up share certificatesLost

3. Judges

Judge NameTitleDelivered Judgment
Ang Cheng HockJudgeYes

4. Counsels

Counsel NameOrganization
Ker YanguangMorgan Lewis Stamford LLC
Daniel Chia Hsiung WenMorgan Lewis Stamford LLC
Wong Ru Ping JeanetteMorgan Lewis Stamford LLC
Chan Ming Onn DavidShook Lin & Bok LLP
Zhang YitingShook Lin & Bok LLP
Lin RuiziShook Lin & Bok LLP

4. Facts

  1. First plaintiff invested in OOB HK from 2012 to 2014, becoming a 38.64% shareholder.
  2. First plaintiff provided a RMB 5 million loan to OOB HK under a Convertible Loan Agreement.
  3. First plaintiff elected not to convert the loan into equity, and OOB HK did not repay the loan.
  4. First plaintiff's shareholding in OOB HK was converted to shares in OOB Sichuan.
  5. First plaintiff and first defendant entered into a Share Transfer Agreement, which was not performed.
  6. First plaintiff and OOB HK signed a Loan Extension Agreement to extend the payment deadline.
  7. Second plaintiff and first defendant entered into a Shares Sale and Purchase Agreement.
  8. First defendant made several payments to the second plaintiff, falling short of the agreed amounts.
  9. Plaintiffs and defendants entered into a Term Sheet with a payment schedule.
  10. First defendant agreed to a charge over his Metro shareholding to secure payment.
  11. First defendant made some payments under the Term Sheet, but defaulted on subsequent instalments.
  12. Plaintiffs commenced proceedings against the defendants for breach of the Term Sheet.

5. Formal Citations

  1. Tembusu Growth Fund II Ltd and another v Yee Fook Khong and another, Suit No 326 of 2018, [2020] SGHC 104

6. Timeline

DateEvent
First plaintiff entered into a Convertible Loan Agreement with OOB HK.
Agreement reached to convert first plaintiff’s shareholding in OOB HK to shares in OOB Sichuan.
OOB Sichuan listed on the NEEQ.
First plaintiff and first defendant entered into a Share Transfer Agreement.
First plaintiff and OOB HK signed a Loan Extension Agreement.
Second plaintiff and first defendant entered into a Shares Sale and Purchase Agreement.
Plaintiff's lawyers sent a letter to the first defendant demanding payment.
OOB Sichuan shares suspended from trading on the NEEQ.
Plaintiffs and defendants entered into a Term Sheet.
First instalment payment due under the Term Sheet.
Suspension of OOB Sichuan shares lifted.
Plaintiffs' lawyers sent a letter to the first defendant demanding payment of the Outstanding Amount.
Plaintiffs commenced proceedings against the defendants.
Trial began.
Trial concluded.
Judgment reserved.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the first defendant breached the Term Sheet by failing to make the instalment payments set out in its payment schedule.
    • Category: Substantive
    • Sub-Issues:
      • Failure to make instalment payments
      • Condition precedent
  2. Promissory Estoppel
    • Outcome: The court found that the plaintiffs were not estopped from enforcing the Term Sheet against the defendants.
    • Category: Substantive
  3. Remoteness of Damages
    • Outcome: The court found that the damages sought by the first defendant in its counterclaim were too remote.
    • Category: Substantive
  4. Contractual Interpretation
    • Outcome: The court interpreted the Term Sheet and the SSP Agreement to determine the parties' obligations.
    • Category: Substantive
    • Sub-Issues:
      • Rules of construction
      • Express terms

8. Remedies Sought

  1. Payment of RMB 30,025,000 and S$4,410,000
  2. Order for the defendants to deliver up the first defendant’s 13.8% shareholding in Metro

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Finance
  • Private Equity

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the principle that the primary task of the Court when interpreting contractual terms is to give effect to the parties’ intentions objectively.
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] 5 SLR 1187SingaporeCited for the principle that the text of the contract should be the “first port of call” in interpreting contractual terms.
Fairview Developments Pte Ltd v Ong & Ong Pte LtdCourt of AppealYes[2014] 2 SLR 318SingaporeCited for the principle that the court must consider the relevant contractual, contextual and commercial background against which the document containing the disputed words and phrases came about.
Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa CorinnaCourt of AppealYes[2016] 2 SLR 1083SingaporeCited regarding the use of subsequent conduct in contractual interpretation.
Ngee Ann Development Pte Ltd v Takashimaya Singapore LtdCourt of AppealYes[2017] 2 SLR 627SingaporeCited regarding the use of subsequent conduct to determine the parties’ agreement on the meaning of a term of the contract.
Centre for Laser and Aesthetic Medicine Pte Ltd v GPK Clinic (Orchard) Pte Ltd and others and another appealCourt of AppealYes[2018] 1 SLR 180SingaporeCited regarding the use of subsequent conduct in contractual interpretation.
Solomon Alliance Management Pte Ltd v Pang Chee KuanHigh CourtYes[2019] 4 SLR 577SingaporeCited regarding the use of subsequent conduct in contractual interpretation.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealCourt of AppealYes[2009] 2 SLR(R) 332SingaporeCited for the principle that subsequent conduct cannot be used to support an interpretation that is in direct contradiction to the express terms.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the principles on the implication of terms into a contract.
Nanyang Medical Investments Pte Ltd v Kuek Bak Kim Leslie and othersHigh CourtYes[2018] SGHC 263SingaporeCited for the elements required to successfully raise promissory estoppel as a defence.
Oriental Investments (SH) Pte Ltd v Catalla Investments Pte LtdHigh CourtYes[2013] 1 SLR 1182SingaporeCited for the elements required to successfully raise promissory estoppel as a defence.
Low Heng Leon Andy v Low Kian Beng Lawrence (administrator of the estate of Tan Ah Kng, deceased)High CourtYes[2018] 2 SLR 799SingaporeCited for the principle that the party asserting the estoppel must properly plead the representation that it is relying on.
Fundamental Investors Pte Ltd v Palm Tree Investment Group Pte LtdHigh CourtYes[2020] SGHC 73SingaporeCited for the principle that the party asserting the estoppel must properly plead the representation that it is relying on.
V Nithia (co-administratrix of the estate of Ponnusamy Sivapakiam, deceased) v Buthmanaban s/o Vaithilingam and anotherCourt of AppealYes[2015] 5 SLR 1422SingaporeCited for the importance of properly pleading the details of the estoppel relied on.
Britestone Pte Ltd v Smith & Associates Far East, LtdHigh CourtYes[2007] 4 SLR(R) 855SingaporeCited for the rule in Browne v Dunn.
Armstrong, Carol Ann (executrix of the estate of Peter Traynor, deceased, and on behalf of the dependents of Peter Traynor, deceased) v Quest Laboratories Pte Ltd and another and other appealsCourt of AppealYes[2020] 1 SLR 133SingaporeCited for the consideration in deciding whether to reject or accept expert evidence.
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd and anotherCourt of AppealYes[2005] 1 SLR(R) 661SingaporeCited for the two-stage test in relation to ascertaining an actionable loss of a chance.
MK Distripark Pte Ltd v Pedder Warehousing & Logistics (S) Pte LtdHigh CourtYes[2013] 3 SLR 433SingaporeCited for the principle that evidence must be adduced to show causation of the loss of chance, and to show that any lost chance is real or substantial.
Sports Connection Pte Ltd v Asia Law Corp and anotherHigh CourtYes[2015] SGHC 213SingaporeCited for the principle that evidence must be adduced to show causation of the loss of chance, and to show that any lost chance is real or substantial.
Out of the Box Pte Ltd v Wanin Industries Pte LtdCourt of AppealYes[2013] 2 SLR 363SingaporeCited for the assessment of whether a particular loss claimed was too remote.
SCK Serijadi Sdn Bhd v Artison Interior Pte LtdCourt of AppealYes[2019] 1 SLR 680SingaporeCited for the principle that an equitable charge may arise whenever property is expressly or constructively made liable, or specially appropriated to the discharge of a debt or some other obligation.
National Provincial and Union Bank of England v CharnleyKing's BenchYes[1924] 1 KB 431England and WalesCited for the principle that where in a transaction for value both parties evince an intention that property shall be made available as security for the payment of a debt, and that the creditor shall have a present right to have it made available, there is a charge.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Term Sheet
  • Shares Sale and Purchase Agreement
  • Convertible Loan Agreement
  • OOB Sichuan shares
  • Metro shares
  • Outstanding Amount
  • NEEQ
  • Promissory estoppel
  • Condition precedent
  • Share transfer
  • Loan Extension Agreement
  • Entrusted Shareholding Agreement

15.2 Keywords

  • Contract breach
  • Promissory estoppel
  • Remoteness of damages
  • Investment dispute
  • Share transfer
  • Loan agreement
  • Payment schedule
  • Security
  • Equitable charge

17. Areas of Law

Area NameRelevance Score
Contract Law95
Chancery and Equity70
Estoppel60
Damages50
Corporate Law20

16. Subjects

  • Contract Law
  • Investment Law
  • Civil Procedure
  • Promissory Estoppel