Song Jianbo v Sunmax Global Capital: Misrepresentation & Breach of Contract in GIP Investment

In Song Jianbo v Sunmax Global Capital Fund 1 Pte Ltd and Li Hua, the General Division of the High Court of Singapore ruled in favor of the plaintiff, Song Jianbo, against both defendants, Sunmax Global Capital Fund 1 Pte Ltd and Li Hua, for misrepresentation and breach of contract. The case arose from Song's investment in Sunmax, induced by Li's representations. The court found that Li misrepresented Sunmax as a principal-guaranteed fund. The court also dismissed Li's counterclaim against Song for breach of an oral agreement.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Song Jianbo sued Sunmax and Li Hua for misrepresentation and breach of contract related to a GIP investment. The court ruled in favor of Song.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Li HuaDefendantIndividualJudgment against DefendantLost
Song JianboPlaintiffIndividualJudgment for PlaintiffWon
Sunmax Global Capital Fund 1 Pte LtdDefendantCorporationJudgment against DefendantLost

3. Judges

Judge NameTitleDelivered Judgment
Chua Lee MingJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Daniel KohEldan Law LLP
Ng Wei YingEldan Law LLP
Clarence CheangEldan Law LLP
Toh Wei YiHarry Elias Partnership LLP
Andy Lem Jit MinHarry Elias Partnership LLP
Marcus Ng Hua MengHarry Elias Partnership LLP

4. Facts

  1. Song invested $1.5m in Sunmax, a GIP-approved fund, for a fixed period of five years.
  2. Li represented that Sunmax was a principal-guaranteed fund.
  3. The 2009 PPM stated that Sunmax was a principal-guaranteed fund and investors would get at least $1,237,500 back after 5 years.
  4. Sunmax failed to redeem Song's preference shares for $1,237,500 after five years.
  5. Li handed Song the 2009 PPM, which contained the principal-guaranteed representation.
  6. Sunmax also offered principal-protection to another investor, Sun Ke.
  7. Li's counterclaim against Song for a 15% shareholding in UC was dismissed.

5. Formal Citations

  1. Song Jianbo v Sunmax Global Capital Fund 1 Pte Ltd and another, Suit No 427 of 2019, [2021] SGHC 217

6. Timeline

DateEvent
SPRING Singapore informed Li that an eight-year Section 13H Tax Incentive had been approved for Sunmax.
Li prepared a private placement memorandum.
Contact Singapore informed Li that Sunmax would be eligible to participate as a GIP-approved Fund.
Sunmax was incorporated.
Sunmax accepted the offer from Contact Singapore to participate as a GIP-approved fund.
Li prepared another private placement memorandum.
Song submitted his application for PR status through the GIP.
Song deposited $1.5m into Sunmax’s account.
Sunmax issued a preference share certificate in Song’s name.
Song was granted PR status pursuant to the GIP.
Song became a Singapore citizen.
Sunmax informed its investors that its investment portfolio had been fully liquidated save for some illiquid assets.
Sunmax provided its investors with an update.
Li resigned as a director of Sunmax.
Li was re-appointed as a director of Sunmax.
Li sent to Song invoices for reimbursement of expenses that Li had incurred in connection with the setting up of NSG, NSA and UC.
UC’s Hong Kong subsidiary company, International Alliance Financial Leasing Co Ltd (“IAFL”), was listed on the Hong Kong stock exchange.
The defence and counterclaim was filed in these proceedings.
Trial began.
Court heard the parties on costs.
Judgment Date

7. Legal Issues

  1. Misrepresentation
    • Outcome: The court found the defendants liable for fraudulent misrepresentation.
    • Category: Substantive
    • Related Cases:
      • [2018] 1 SLR 894
  2. Breach of Contract
    • Outcome: The court found Sunmax liable for breach of contract.
    • Category: Substantive
  3. Conspiracy to Injure
    • Outcome: The court found the defendants liable for conspiracy to injure.
    • Category: Substantive
  4. Shareholder's Right to Claim Damages
    • Outcome: The court held that the principle in Houldsworth did not apply to preclude Song from being awarded damages.
    • Category: Substantive
    • Related Cases:
      • (1880) 5 App Cas 317
      • [1887] 37 ChD 191
      • [1897] AC 22
      • [1992] 2 VR 613
      • (1993) 117 ALR 321
      • [1997] 3 WLR 840
      • [2007] 232 ALR 232
      • [2019] 3 SLR 786

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Misrepresentation
  • Breach of Contract
  • Conspiracy to Injure

10. Practice Areas

  • Commercial Litigation
  • Investment Disputes

11. Industries

  • Finance
  • Investment Management

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Ernest Ferdinand Perez De La Sala v Compania De Navegacion Palomar, SA and others and other appealsHigh CourtYes[2018] 1 SLR 894SingaporeCited for the principle that a representation as to the future is not actionable unless it is an implied representation as to an existing fact or implicitly represents the existence of an intention at the time of making the statement.
Houldsworth v City of Glasgow Bank and LiquidatorsHouse of LordsYes(1880) 5 App Cas 317United KingdomCited by the defendants to argue that Song, as a shareholder, should not be allowed to claim the return of his investment as damages. The court distinguished this case, finding that the principle in Houldsworth did not apply.
In re Addlestone Linoleum CompanyCourt of AppealYes[1887] 37 ChD 191United KingdomCited to describe the principle in Houldsworth, focusing on the shareholder's contract to contribute to the company's debts.
Salomon v A Salomon & Co LtdHouse of LordsYes[1897] AC 22United KingdomCited as the landmark decision establishing that a company is a separate legal entity from its shareholders.
State of Victoria v Hodgson and othersSupreme Court of VictoriaYes[1992] 2 VR 613AustraliaCited for its observation that Houldsworth bears the stamp of its era and has received little judicial comment.
Webb Distributors (Aust) Pty Ltd and others v State of Victoria and anotherHigh Court of AustraliaYes(1993) 117 ALR 321AustraliaCited for comments on Houldsworth and criticisms of the decision.
Soden and another v British & Commonwealth Holdings PLC and anotherHouse of LordsYes[1997] 3 WLR 840United KingdomCited to restrict Addlestone to cases involving the purchase of shares directly from the company.
Sons of Gwalia Ltd (subject to deed of company arrangement) v Margaretic and AnotherHigh Court of AustraliaYes[2007] 232 ALR 232AustraliaCited for its commentary on the elusive nature of the principle in Houldsworth.
BTY v BUA and other mattersHigh CourtYes[2019] 3 SLR 786SingaporeCited as authority for the proposition that a shareholder cannot recover damages from the company on a claim related to his status as a member.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Income Tax Act (Cap 134, 2008 Rev Ed)Singapore
Limitation Act (Cap 163, 1996 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Principal-guaranteed fund
  • Global Investor Programme
  • Preference shares
  • Private placement memorandum
  • Redemption of shares
  • Misrepresentation
  • Breach of contract
  • Conspiracy to injure
  • Liquidating special purpose vehicle
  • In-specie distribution

15.2 Keywords

  • Misrepresentation
  • Breach of Contract
  • Investment
  • GIP
  • Singapore
  • Principal-guaranteed
  • Damages

17. Areas of Law

Area NameRelevance Score
Breach of Contract90
Misrepresentation90
Conspiracy by Unlawful Means70
Contract Law60
Damages50
Corporate Law30

16. Subjects

  • Contract Law
  • Tort Law
  • Investment Law
  • Misrepresentation
  • Breach of Contract
  • Conspiracy