ESR Group v HSBC: Interpretation of Trust Deed & Voting Rights in REIT Internalization
The Appellate Division of the High Court of Singapore heard an appeal by ESR Group Ltd, E-SHANG Jupiter Cayman Ltd, and E-SHANG Infinity Cayman Ltd against HSBC Institutional Trust Services (Singapore) Ltd and Quarz Capital Asia (Singapore) Pte Ltd, concerning the interpretation of a trust deed related to Sabana Industrial Real Estate Investment Trust (Sabana REIT). The dispute centered on whether a conflict-of-interest clause in the trust deed prohibited the ESR Entities, major unitholders, from voting on proposed amendments to facilitate the internalisation of Sabana REIT's management. The court dismissed the appeal, holding that the conflict-of-interest clause barred the ESR Entities from voting, and ordered the ESR Entities to pay costs to the respondents.
1. Case Overview
1.1 Court
Appellate Division of the High Court1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal on trust deed interpretation regarding voting rights of unitholders in Sabana REIT's internalisation. Court held ESR Entities were barred from voting.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| ESR Group Ltd | Appellant | Corporation | Appeal Dismissed | Lost | |
| E-SHANG Jupiter Cayman Ltd | Appellant | Corporation | Appeal Dismissed | Lost | |
| E-SHANG Infinity Cayman Ltd | Appellant | Corporation | Appeal Dismissed | Lost | |
| HSBC Institutional Trust Services (Singapore) Ltd | Respondent | Corporation | Appeal Dismissed | Won | |
| Quarz Capital Asia (Singapore) Pte Ltd | Respondent | Corporation | Appeal Dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kannan Ramesh | Judge of the Appellate Division | Yes |
| Debbie Ong Siew Ling | Judge of the Appellate Division | No |
| See Kee Oon | Judge of the Appellate Division | No |
4. Counsels
4. Facts
- Sabana REIT was managed by an external manager, Sabana Real Estate Investment Management Pte Ltd.
- The External Manager was indirectly wholly owned by the ESR Entities.
- The ESR Entities were unitholders in Sabana REIT, holding about 21% of the units.
- The Trustee was the trustee of Sabana REIT.
- Quarz was a unitholder holding about 14% of the units in Sabana REIT and was the main driver of the internalisation effort.
- The internalisation was a result of ordinary resolutions passed at an Extraordinary General Meeting on 7 August 2023.
- The Trustee sought declarations in relation to the method of implementation of the internalisation.
5. Formal Citations
- ESR Group Ltd and others v HSBC Institutional Trust Services (Singapore) Ltd and another and another matter, , [2024] SGHC(A) 25
6. Timeline
| Date | Event |
|---|---|
| Trust deed dated | |
| Trust deed amended | |
| Trust deed amended | |
| Extraordinary General Meeting held | |
| Originating application HC/OA 19/2024 taken out | |
| Singapore Exchange Regulation Pte Ltd wrote to ESR Group Ltd | |
| Judge issued his judgment with brief grounds | |
| Grounds of decision published | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Interpretation of Trust Deed
- Outcome: The court held that the conflict-of-interest clause in the trust deed barred the ESR Entities from voting on the proposed amendments.
- Category: Substantive
- Sub-Issues:
- Conflict of interest
- Voting rights of unitholders
- Material interest
8. Remedies Sought
- Declarations regarding the interpretation of the trust deed
- Orders regarding the voting rights of unitholders
9. Cause of Actions
- Declaratory Relief
- Breach of Trust
10. Practice Areas
- Commercial Litigation
- Trusts
- Appellate Practice
11. Industries
- Real Estate
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| HSBC Institutional Trust Services (Singapore) Ltd v Quarz Capital Asia (Singapore) Pte Ltd and others | High Court | Yes | [2024] SGHC 153 | Singapore | Affirmed the Judge's decision that the ESR Entities should be prohibited from voting on the Proposed Amendments. |
| Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others and other appeals | N/A | Yes | [2013] 1 SLR 374 | Singapore | Cited for the general law on how unitholders/shareholders were entitled to vote. |
| North-West Transportation Co Ltd and Beatty v Beatty | N/A | Yes | (1887) 12 App Cas 589 | N/A | Cited for the principle that a departure from the general position on voting rights could be achieved by operation of a provision in the charter or other instrument by which the entity was incorporated. |
| AMP Life Ltd v AMP Capital Funds Management Ltd | New South Wales Court of Appeal | Yes | [2016] NSWCA 176 | Australia | Cited in relation to the interpretation of s 253E of the Australian Corporations Act 2001. |
| Southern Wine Corporation Pty Ltd v Perera | Western Australia Supreme Court of Appeal | Yes | [2006] WASCA 275; 33 WAR 174 | Australia | Cited in relation to the interpretation of s 253E of the Australian Corporations Act 2001. |
| Eller, Urs v Cheong Kiat Wah | High Court | Yes | [2020] SGHC 106 | Singapore | Cited for principles of contractual interpretation. |
| Singapore Airlines Ltd and Another v Buck Consultants Ltd | N/A | Yes | [2012] Pens. L.R. 1 | N/A | Cited for principles underlying costs in first-instance proceedings. |
| Trilogy Management v YT and others | Jersey Court of Appeal | Yes | [2012] JCA 204 | Jersey | Cited for principles regarding costs in appellate proceedings. |
| Re Stuart | Court of Appeal | Yes | [1940] 4 All E.R. 80 | England and Wales | Cited for the principle that trustees ought to appear in the Court of Appeal to ensure the proper administration of the estate. |
13. Applicable Rules
| Rule Name |
|---|
| SGX Mainboard Listing Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities and Futures Act 2001 | Singapore |
| Australian Corporations Act 2001 s 253E | Australia |
15. Key Terms and Keywords
15.1 Key Terms
- Trust Deed
- Internalisation
- Sabana REIT
- Unitholders
- Conflict of Interest
- Material Interest
- Voting Rights
- External Manager
- Proposed Amendments
- Extraordinary General Meeting
15.2 Keywords
- Trust Deed Interpretation
- REIT Internalization
- Voting Rights
- Conflict of Interest
- Sabana REIT
- ESR Group
- HSBC
- Quarz Capital
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Trust Deed Interpretation | 90 |
| Conflict of Interest | 85 |
| Trusts and Estates | 80 |
| Commercial Disputes | 75 |
| Real Estate Investment Trust (REIT) | 70 |
| Contracts | 60 |
| Property Law | 40 |
| Corporate Law | 30 |
| Arbitration | 30 |
16. Subjects
- Trusts
- Real Estate Investment Trusts
- Corporate Governance
- Voting Rights
- Conflict of Interest