Asian Infrastructure Ltd v Kam Thai Leong Dennis
Jurisdiction | Singapore |
Judge | Dedar Singh Gill JC |
Judgment Date | 10 December 2019 |
Neutral Citation | [2019] SGHC 288 |
Court | High Court (Singapore) |
Docket Number | Suit No 397 of 2017 |
Year | 2019 |
Published date | 14 December 2019 |
Hearing Date | 22 May 2019,17 May 2019,21 May 2019,14 May 2019,16 May 2019,23 May 2019,15 May 2019 |
Plaintiff Counsel | Mathiew Christophe Rajoo and Gerard Nicholas (DennisMathiew) |
Defendant Counsel | Tham Wei Chern, Chuah Hui Fen Christine and Shirlene Leong Hong Mei (Fullerton Law Chambers LLC) |
Subject Matter | Contract,Contractual terms,Oral agreement between parties,Misrepresentation,Equity,Estoppel,Promissory estoppel |
Citation | [2019] SGHC 288 |
This is a claim by Asian Infrastructure Limited (“AIL”) against Mr Dennis Kam (“Mr Kam”) under two contracts of personal guarantee for outstanding sums owed by Perfect Earth Management Pte Ltd (“PEM”).1
The facts and the evidence The parties It is necessary to highlight the identities of the following parties in the present dispute:
Mr Chang and Mr Tin Jing Soon (“Mr Tin”), the Business Development Manager of Infraavest Private Limited, a company controlled by Mr Chang, testified on behalf of the plaintiff.5
In addition to Mr Kam, two other witnesses testified for the defendant. These were Ms Eileen Tan E-Lin (“Ms Tan”) and Mr Yeo Siang Cher (“Mr Yeo”). Ms Tan was a director and shareholder of APTSA, as well as a director of PEM.6 Like Mr Kam, Mr Yeo was a director of PT ARI.7
Background factsThe following facts are not substantially in dispute.
Sometime in August or September 2013, Mr Kam approached Mr Chang for a loan to be used as “working capital” for PT ARI.8 PT ARI operated a rubber factory in Aceh, Indonesia.9 Both Mr Kam and Mr Chang agreed that the borrowing entity would be a Singapore incorporated company, PEM.10 PEM was a company controlled by Mr Kam.11
On 23 September 2013, AIL loaned US$500,000 to PEM with interest payable at 1% per month. The loan was to be repaid on 31 December 2013 (“the 2013 loan”).12 On the same day, Mr Kam provided a personal guarantee to AIL guaranteeing the repayment of this sum.13 By mid-January 2014, only US$150,000 had been repaid by PT ARI (on behalf of PEM) to AIL.14 AIL agreed to extend the repayment date of the balance sum to 31 December 2014.15
Subsequently, AIL loaned a further sum of US$650,000 to PEM at the same rate of interest of 1% per month. This was due to be repaid by 31 December 2014 (“the 2014 loan”). Mr Kam gave another personal guarantee on 16 March 2014 to AIL guaranteeing repayment of the 2014 loan.
AIL now claims against Mr Kam under both contracts of personal guarantee for the outstanding sums owed by PEM under the 2013 and 2014 loans.
The relevant terms of both personal guarantees are as follows:16
The defendant’s caseI, [Mr Kam], personally guarantee to you [AIL]… any obligation of [PEM] and hereby agree to bind myself to pay you on demand the sum which may become due to you by the company whenever [PEM] shall fail to pay the same.
It is understood that this guarantee shall be a continuing and irrevocable guarantee and indemnity for such indebtedness of [PEM].
Mr Kam denied that he was liable under the personal guarantees. He relied on an agreement which he characterised as a “joint venture” between PEM, PT ARI, APTSA, ARI, and AIL. I refer to this as “the Agreement”. In his view, the Agreement novated the 2013 and 2014 loans from PEM to ARI (a company controlled by Mr Chang) on the date of the Agreement. As the underlying loan agreements were novated, he submitted that his liability as guarantor fell away. Mr Kam also relied on Clause 5(e) of the Agreement as extinguishing his liability under the personal guarantees on the date of the Agreement.
Further, Mr Kam alleged the existence of a collateral oral agreement reached on 24 July 2015 which discharged his liability as guarantor.
Lastly, Mr Kam submitted that AIL is estopped from denying that his liability under the personal guarantees had been discharged.17
The plaintiff’s case AIL adopted a different view from Mr Kam on the significance and contractual effect of the Agreement. It submitted that Clause 5 of the Agreement should be interpreted contextually. In its view, the “proper context” was that AIL entered into the Agreement because PEM was unable to repay the outstanding loans owed to AIL.18 The Agreement was meant to embody a “turnaround plan” in which AIL would take an equity stake in APTSA and, in the process, receive dividends which it would use to repay the outstanding sums owed to it. In exchange, AIL would agree to the novation of the 2013 and 2014 loans. This would discharge PEM of its outstanding liabilities and extinguish Mr Kam’s liabilities under the personal guarantees. Given the “proper context”, AIL submitted that both parties could not have intended for the liabilities of PEM and Mr Kam to be extinguished on the date of Agreement. On the contrary, their liabilities would only be discharged
Further and in the alternative, AIL claimed that the Agreement should be rescinded by virtue of Mr Kam’s misrepresentations and/or breach of warranties. The misrepresentations and/or breach of warranties related to two matters. First, PT ARI’s production capacity. Second, Mr Kam’s failure to disclose that not all of the sums loaned by AIL were used for PT ARI’s factory (which was the very reason why the loans had been extended in the first place), but were siphoned off to various third parties.
Lastly, AIL rejected Mr Kam’s argument that it was estopped from denying that he was liable under the personal guarantees.
Issues to be determined The issues are:
The first two issues will be dealt with together.
Mr Kam did not dispute either the existence of the 2013 and 2014 loans and that a total of US$1,000,000 (excluding interest) was due and payable to AIL by PEM as at 31 December 2014. Neither did he challenge the existence of the two contracts of personal guarantee with AIL.
Relying on Clauses 5(d) and 5(e) of the Agreement, 19 Mr Kam’s defence to AIL’s claim was that, based on his interpretation of the clauses, his liability under the personal guarantees was discharged “immediately” (
I noted in [17a] above that there was a disagreement between the parties regarding the date on which both parties entered into the Agreement. According to AIL’s pleadings, the relevant month in which the Agreement was entered into was September 2015.21 AIL, however, departed from its pleaded position during cross-examination and in its written submissions. It took 3 November 2015 to be the date of the Agreement. However, Mr Chang’s affidavit stated that AIL entered into the Agreement “[o]n or about 29 September 2015”.22 More significantly, the date stated on the Agreement itself is September 2015, although the precise day of the month is left blank.23
Mr Kam argued that AIL should not be permitted to alter its position, given that it had pleaded that the Agreement was entered into in September 2015.
In the circumstances, I adopt September 2015 as the month in which the Agreement was concluded. In any case, the difference in the dates makes no material difference to the contractual analysis below. The crux of Mr Kam’s case is that the loan agreements had been novated “immediately” (
The relevant principles concerning contractual interpretation may be summarised as follows:
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