Compass Consulting v Lim Siau Hing: Contractual Terms & Statutory Illegality in RTO
In [2023] SGHC 17, Compass Consulting Pte Ltd sued Mr. Lim Siau Hing and Mr. Lim Vhe Kai in the General Division of the High Court of Singapore, claiming $500,000 in company shares and $480,000 in cash related to a reverse take-over agreement. The court, presided over by Goh Yihan JC, allowed the claim in part, awarding Compass $500,000, finding the agreement valid and not tainted by illegality, but denying the cash fee claim.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Judgment for Plaintiff in part.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Compass Consulting sues Lims for unpaid shares and fees from a reverse take-over agreement. Court allows claim for shares but not cash fee.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Lim Siau Hing @ Lim Kim Hoe | Defendant | Individual | Judgment against Defendant in part | Lost | |
| Lim Vhe Kai | Defendant | Individual | Judgment against Defendant in part | Lost | |
| Compass Consulting Pte Ltd | Plaintiff | Corporation | Judgment for Plaintiff in part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Goh Yihan | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- Compass Consulting was engaged as project manager for the RTO of KTM Group on SGX.
- The terms of Compass’s engagement were spread out over three separate agreements.
- Compass was promised $500,000 worth of shares and $480,000 in cash upon successful completion of the RTO.
- The RTO was completed on 18 February 2019.
- The Lims did not pay Compass the Bonus Shares and the Cash Fee.
- The Lims argued that the agreement was subject to a condition that their shares be worth at least $30m.
- Compass and its representatives did not possess capital market licence(s) under the SFA.
5. Formal Citations
- Compass Consulting Pte Ltd v Lim Siau Hing (alias Lim Kim Hoe) and another, Suit No 433 of 2021, [2023] SGHC 17
6. Timeline
| Date | Event |
|---|---|
| Compass Consulting Pte Ltd incorporated in Singapore. | |
| Kelvin introduced the Lims to Mr Ong Puay Koon to explore listing KTM Group on SGX through an RTO of Lereno. | |
| Corporate Advisory Agreement (1st LOE) signed, appointing Compass as project manager. | |
| Addendum to Corporate Advisory Agreement (2nd LOE) signed, estimating Compass's fees at $1,100,000. | |
| Meeting held where Lims and Compass agreed on Bonus Shares and Cash Fee. | |
| Lereno entered into an option agreement with Mr Lim to acquire 100% of the issued ordinary shares in Knit Textile and Apparel Pte Ltd. | |
| RTO completed; Lereno acquired Mr Lim’s shares in KTA. | |
| Meeting between Kevin and Damien in Kuala Lumpur. | |
| Telephone call between CLC and Damien. | |
| Statement of Claim filed. | |
| Defence of the 1st and 2nd Defendants dated. | |
| Reply dated. | |
| Defence (Amendment No 1) dated. | |
| AEIC of Ong Puay Koon dated. | |
| Defendants’ Opening Statement dated. | |
| Trial Transcript Day 1. | |
| Trial Transcript Day 2. | |
| Trial Transcript Day 3. | |
| Trial Transcript Day 4. | |
| Trial Transcript Day 5. | |
| Trial began. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Judgment reserved. | |
| Defendant's Reply Closing Submissions dated. | |
| Judgment issued. |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the Lims breached the agreement by failing to provide the bonus shares.
- Category: Substantive
- Statutory Illegality
- Outcome: The court found that the agreement was not tainted by illegality.
- Category: Substantive
- Contractual Interpretation
- Outcome: The court interpreted the agreement to determine the parties' obligations.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Specific Performance (Shares)
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Corporate Advisory
- Reverse Take-overs
11. Industries
- Finance
- Investment
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appeal | Court of Appeal | Yes | [2018] 1 SLR 170 | Singapore | Cited for the principles of contractual interpretation. |
| Lucky Realty Co Pte Ltd v HSBC Trustee (Singapore) Ltd | Court of Appeal | Yes | [2016] 1 SLR 1069 | Singapore | Cited as the starting point for contractual interpretation. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | Court of Appeal | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the principle of considering relevant context in contractual interpretation. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the court's role in ascertaining parties' objective intentions. |
| Yap Son On v Ding Pei Zhen | Court of Appeal | Yes | [2017] 1 SLR 219 | Singapore | Cited for the principle that the meaning ascribed to the terms of the contract must be one which the expressions used by the parties can reasonably bear and for adopting a common sense approach to interpreting agreements not drafted by lawyers. |
| Sun Electric Pte Ltd and another v Menrva Solutions Pte Ltd and another | High Court | Yes | [2021] 5 SLR 648 | Singapore | Cited for adopting a common sense approach to interpreting agreements not drafted by lawyers. |
| Master Marine AS v Labroy Offshore Ltd and others | Court of Appeal | Yes | [2012] 3 SLR 125 | Singapore | Cited for the principle of adopting the more commercially sensible interpretation when there are two competing interpretations. |
| Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd (formerly known as Tian Jian Hua Xia Medical Group Holdings Pte Ltd) (in judicial management) and another | Court of Appeal | Yes | [2022] 1 SLR 884 | Singapore | Cited for respecting the doctrine of separate legal personality. |
| Tembusu Growth Fund II Ltd and another v Yee Fook Khong and another | High Court | Yes | [2020] SGHC 104 | Singapore | Cited for the principle that the parties’ subsequent conduct in that case supported its interpretation of the contract concerned. |
| Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa Corinna | Court of Appeal | Yes | [2016] 2 SLR 1083 | Singapore | Cited for the use of subsequent conduct to interpret contracts. |
| Ngee Ann Development Pte Ltd v Takashimaya Singapore Ltd | Court of Appeal | Yes | [2017] 2 SLR 627 | Singapore | Cited for referring to 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 appeal | Court of Appeal | Yes | [2018] 1 SLR 180 | Singapore | Cited for observing that subsequent conduct in contractual interpretation was permissible but is “in general 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 Kuan | High Court | Yes | [2019] 4 SLR 577 | Singapore | Cited for finding subsequent conduct to be an aid to interpretation as it satisfied the tripartite requirements of relevancy, reasonable availability, and relation to a clear or obvious context. |
| MCH International Pte Ltd and others v YG Group Pte Ltd and others and other appeals | Court of Appeal | Yes | [2019] 2 SLR 837 | Singapore | Cited for forestalling expressing a definitive view as to the admissibility of subsequent conduct for contractual interpretation. |
| Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon | Court of Appeal | Yes | [2019] 1 SLR 696 | Singapore | Cited for forestalling expressing a definitive view as to the admissibility of subsequent conduct for contractual interpretation. |
| The “Luna” and another appeal | Court of Appeal | Yes | [2021] 2 SLR 1054 | Singapore | Cited for holding that the distinction between the evidential rules applicable to the formation and interpretation of contracts should remain on the basis of principle and authority, ie, it is permissible to consider evidence of subsequent conduct for contract formation but not interpretation. |
| Audi Construction Pte Ltd v Kian Hup Construction Pte Ltd | Court of Appeal | Yes | [2018] 1 SLR 317 | Singapore | Cited for the principle that a party’s silence or inaction will not normally amount to an unequivocal representation unless there is a duty to speak. |
| Seah Han v Onwards Media Group Pte Ltd | High Court | Yes | [2021] SGHC 179 | Singapore | Cited for the principle that a court can draw the relevant inference from a party’s failure to speak up against what to him would be an erroneous representation. |
| Ting Siew May v Boon Lay Choo and another | Court of Appeal | Yes | [2014] 3 SLR 609 | Singapore | Cited for the analytical framework for statutory illegality. |
| Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) and another | Court of Appeal | Yes | [2018] 1 SLR 363 | Singapore | Cited for the analytical framework for statutory illegality. |
| Rockeby biomed Ltd v Alpha Advisory Pte Ltd | High Court | Yes | [2011] SGHC 155 | Singapore | Cited for interpreting paragraph 7(1)(c) of the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Regulations. |
| KBC Bank N V v Stratech Systems Limited | District Court | Yes | [2009] SGDC 483 | Singapore | Cited for the principle that a mandatory general offer of shares must be made if a certain percentage shareholding in the company was acquired, this is subject to the proviso “[e]xcept with the Council’s consent”. |
| In re Noble Group Ltd | Unknown | Yes | [2019] Bus LR 947 | Singapore | Cited for the principle that a mandatory general offer of shares must be made if a certain percentage shareholding in the company was acquired, this is subject to the proviso “[e]xcept with the Council’s consent”. |
| MP-Bilt Pte Ltd v Oey Widarto | High Court | Yes | [1999] 1 SLR(R) 908 | Singapore | Cited for the position that Compass is not entitled to claim damages in the alternative. |
13. Applicable Rules
| Rule Name |
|---|
| Rule 14 of the Singapore Code on Take-overs and Mergers |
| Rule 14.1 of the Singapore Code on Take-overs and Mergers |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities and Futures Act (Cap 289, 2006 Rev Ed) | Singapore |
| s 82(1) of the Securities and Futures Act | Singapore |
| s 2(1) of the Interpretation Act 1965 | Singapore |
| s 99(1) of the Securities and Futures Act | Singapore |
| s 12 of the Civil Law Act 1909 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Reverse Take-Over
- RTO
- Bonus Shares
- Cash Fee
- Completion Fee
- Capital Markets Services Licence
- Corporate Advisory Agreement
- Securities and Futures Act
- Catalist Board
- Project Manager
15.2 Keywords
- contract
- reverse take-over
- securities
- illegality
- shares
- fees
- SFA
- RTO
- corporate finance
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Contract Law | 90 |
| Commercial Disputes | 60 |
| Reverse Take-Over | 50 |
| Illegality and public policy | 40 |
| Corporate Law | 30 |
| Company Law | 30 |
16. Subjects
- Contract Law
- Securities Regulation
- Reverse Take-Over
- Corporate Finance