Judah Value Activist Fund v Open Faith Investment Ltd: Breach of Contract & Causation in Share Transfer Agreement

In Judah Value Activist Fund v Open Faith Investment Limited, the Singapore International Commercial Court addressed a breach of contract claim where Judah Value Activist Fund alleged that Open Faith Investment Limited failed to transfer 60 million Agritrade shares by the agreed deadline of December 31, 2019, leading to a margin call and subsequent losses. Open Faith Investment Limited denied the deadline and causation. The court found Open Faith Investment Limited in breach but ruled against Judah Value Activist Fund, concluding that the fund failed to prove that Open Faith Investment Limited's breach caused the losses claimed.

1. Case Overview

1.1 Court

Singapore International Commercial Court

1.2 Outcome

Judgment for Defendant

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case involving Judah Value Activist Fund and Open Faith Investment Ltd concerning breach of contract related to a share transfer agreement and causation of losses.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Judah Value Activist FundPlaintiffCorporationClaim DismissedLost
Open Faith Investment LimitedDefendantCorporationJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Henry Bernard EderInternational JudgeYes

4. Counsels

Counsel NameOrganization
Zhulkarnain bin Abdul RahimDentons Rodyk & Davidson LLP
Cheong Wei Wen JohnDentons Rodyk & Davidson LLP
Tan Yiren LeonDentons Rodyk & Davidson LLP
Chen Siang En SeanDentons Rodyk & Davidson LLP
Tnee Zixian KeithTan Kok Quan Partnership
Chan Michael KarfaiTan Kok Quan Partnership
Lim Weisheng JosephTan Kok Quan Partnership

4. Facts

  1. Judah Value Activist Fund had a margin loan facility with Maybank.
  2. Open Faith Investment Limited agreed to subscribe for shares in Judah Value Activist Fund by transferring 60 million Agritrade shares.
  3. Judah Value Activist Fund claimed Open Faith Investment Limited failed to transfer the shares by December 31, 2019.
  4. Judah Value Activist Fund claimed the failure to transfer shares led to a margin call by Maybank.
  5. Maybank force sold Judah Value Activist Fund's Agritrade shares.
  6. Open Faith Investment Limited denied the existence of a deadline for the share transfer.
  7. The market price of Agritrade shares declined in January 2020.

5. Formal Citations

  1. Judah Value Activist Fund v Open Faith Investment Ltd, Suit No 6 of 2020, [2021] SGHC(I) 7

6. Timeline

DateEvent
Margin Loan Facility Letter issued
Mr. Thng explores options concerning the plaintiff’s margin loan with Maybank
Mr. Thng and Mr. Tay discuss the possibility of Open Faith Investment investing in Judah Value Activist Fund
Sale of Agritrade shares to Saurav through Power One Limited
Subscription Application Form and Private Placement Memorandum signed
Bought-Sold Note signed
Mr. Tay paid stamp duty in Hong Kong
Swiss-Asia's due diligence process completed
Deadline for transfer of Agritrade shares
AIPL filed an application for a moratorium in the Singapore High Court
Maybank issued a margin call for S$ 235,000
Maybank force sold 30 million of the plaintiff’s Agritrade shares
Moratorium Announcement released
Maybank issued a further immediate margin call for S$ 1.27 million
Maybank force sold a further 127,745,000 shares
Maybank sold the last tranche of the plaintiff’s Agritrade shares
Face-to-face meeting between Mr. Thng and Mr. Tay
Plaintiff sent a letter of demand to the defendant
Suit commenced
Trial began
Trial concluded
Judgment reserved

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the defendant breached the contract by failing to transfer the shares by the agreed deadline.
    • Category: Substantive
    • Sub-Issues:
      • Failure to transfer shares by agreed deadline
      • Interpretation of contract terms
      • Implied terms
      • Waiver
      • Estoppel
  2. Causation
    • Outcome: The court found that the plaintiff failed to prove that the defendant's breach caused the losses claimed.
    • Category: Substantive
    • Sub-Issues:
      • Whether the breach caused the losses claimed
      • Remoteness of damages
      • Intervening events
  3. Remoteness of Damages
    • Outcome: The court found that the losses claimed by the plaintiff were not too remote in law.
    • Category: Substantive
  4. Implied Term
    • Outcome: The court assumed the existence of the alleged implied term but found that it did not assist the defendant.
    • Category: Substantive
  5. Waiver
    • Outcome: The court rejected the defendant's case that the plaintiff had waived the requirement to transfer the Agritrade Shares by 31 December 2019.
    • Category: Substantive
  6. Estoppel
    • Outcome: The court rejected the defendant's case that the plaintiff was estopped from contending that the Agritrade Shares should have been transferred by 31 December 2019.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Breach of Contract Litigation
  • Financial Litigation

11. Industries

  • Finance
  • Investment Management

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Sudha Natrajan v The Bank of East Asia LtdCourt of AppealYes[2017] 1 SLR 141SingaporeCited for guiding principles on drawing adverse inferences from absent witnesses.
CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appealUnknownYes[2018] 1 SLR 170SingaporeCited for the principle that the court may consider the factual context when interpreting a contract.
Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd)UnknownYes[2015] 5 SLR 1187SingaporeCited for the principle that the relevant context will generally be of the first importance when the text of a contract is ambiguous.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the principle that Singapore Courts are open to relying on prior negotiations and subsequent conduct to interpret a contract.
MCH International Pte Ltd and others v YG Group Pte Ltd and others and other appealsCourt of AppealYes[2019] 2 SLR 837SingaporeCited as the Court of Appeal refused to express a definitive view on the admissibility of subsequent conduct for the purposes of contractual interpretation.
Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa CorinnaCourt of AppealYes[2016] 2 SLR 1083SingaporeCited as the Court of Appeal refused to express a definitive view on the admissibility of subsequent conduct for the purposes of contractual interpretation.
Ngee Ann Development Pte Ltd v Takashimaya Singapore LtdCourt of AppealYes[2017] 2 SLR 627SingaporeCited for the principle that subsequent conduct can be used 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 for the principle that subsequent conduct in contractual interpretation is permissible, but is only of relevance if the subsequent conduct provides cogent evidence of the parties’ agreement at the time when the contract was concluded.
Solomon Alliance Management Pte Ltd v Pang Chee KuanUnknownYes[2019] 4 SLR 577SingaporeCited for the principle that post-contractual conduct can be used as an aid in contractual interpretation.
Tembusu Growth Fund II Ltd and another v Yee Fook Khong and anotherHigh CourtYes[2020] SGHC 104SingaporeCited for the principle that post-contractual conduct can be used as an aid in contractual interpretation.
Audi Construction Pte Ltd v Kian Hiap Construction Pte LtdUnknownYes[2018] 1 SLR 317SingaporeCited for the principle that silence or inaction can be significant if there is a duty to speak.
T2 Networks Pte Ltd v Nasioncom Sdn BhdUnknownYes[2008] 2 SLR (R) 1SingaporeCited for the principle that silence or inaction can be significant if there is a duty to speak.
Eller, Urs v Cheong Kiat WahHigh CourtYes[2020] SGHC 106SingaporeCited for the applicable principles of waiver.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the three-step analysis in relation to implied terms.
Anti-Corrosion Pte Ltd v Berger Paints Singapore Pte Ltd and another appealCourt of AppealYes[2012] 1 SLR 427SingaporeCited for the principle that the but-for test of causation in tort also applies in ascertaining whether there has been factual causation for the purposes of contract law.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and anotherUnknownYes[2008] 2 SLR(R) 623SingaporeCited for the principle that the Court should ascertain what would have been within the reasonable contemplation of the contracting parties, and what damages flow naturally from this.
Out of the Box Pte Ltd v Wanin Industries Pte LtdUnknownYes[2013] 2 SLR 363SingaporeCited for the principle that damages will not be too remote if they flow naturally from the breach or where losses arise in the context of special facts and circumstances.
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming EricUnknownYes[2007] 3 SLR(R) 782SingaporeCited for the principle that the burden of proving causation on the balance of probabilities lies on the party claiming damages.
Qingdao Bohai Construction Group Co, Ltd and others v Goh Teck Beng and anotherHigh CourtYes[2016] 4 SLR 977SingaporeCited as to what constitutes an admission in law.
Oei Hong Leong and another v Chew Hue SengHigh CourtYes[2020] SGHC 39SingaporeCited for the principle that the application of a blockage discount is appropriate.
Hadley v BaxendaleCourt of ExchequerYesHadley v Baxendale (1854) 9 Exch 341EnglandCited for the principle that damages will not be too remote if they flow naturally from the breach or where losses arise in the context of special facts and circumstances.
MFM Restaurants Pte Ltd and another v Fish & Co. Restaurants Pte Ltd and another appealCourt of AppealYes[2011] 1 SLR 150SingaporeCited for the principle that the assumption of responsibility principle is inapplicable because it has been rejected by the Court of Appeal in Singapore.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97, 1997 Rev Ed.)Singapore
Companies Act (Cap 50, 2006 Rev Ed)Singapore
s 211B(1) of the Companies Act (Cap 50, 2006 Rev Ed)Singapore
Sale of Goods Act (Cap 393, 1999 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Margin Loan Facility
  • Loan-to-Value Ratio
  • Margin Call
  • Subscription Application Form
  • Private Placement Memorandum
  • Agritrade Shares
  • Transfer in Specie
  • Net Asset Value
  • Bought-Sold Note
  • Due Diligence
  • Moratorium Application
  • Force Sell

15.2 Keywords

  • breach of contract
  • share transfer
  • margin call
  • causation
  • Singapore
  • Agritrade
  • investment fund

17. Areas of Law

Area NameRelevance Score
Breach of Contract75
Contract Law70
Damages65
Causation60
Commercial Disputes60
Quantum50
Remedies40
Margin Loan Facility35
Loan-to-Value Ratio30
Company Law30
Margin Ratio25
Banking and Finance25
Force Sale20
Arbitration15
Moratorium Application15
Misrepresentation10
Bought-Sold Note10
Fraud and Deceit10
Bankruptcy5

16. Subjects

  • Contract Law
  • Financial Law
  • Breach of Contract
  • Civil Litigation