Bidvest Australia Ltd v Deacons Singapore Ltd and another
Jurisdiction | Singapore |
Judge | Belinda Ang Saw Ean J |
Judgment Date | 27 April 2010 |
Neutral Citation | [2010] SGHC 128 |
Court | High Court (Singapore) |
Docket Number | Originating Summons No 667 of 2009 |
Year | 2010 |
Published date | 06 May 2010 |
Hearing Date | 20 November 2009 |
Plaintiff Counsel | Lee Kiat Seng, Daniel Chia and Shaun Lee (Wong & Leow LLC) |
Defendant Counsel | Hri Kumar SC and Gary Low (Drew & Napier LLC),Ang Cheng Hock SC, Tan Xeauwei and Sylvia Tee (Allen & Gledhill LLP) |
Subject Matter | Contract |
Citation | [2010] SGHC 128 |
By this Originating Summons No. 667 of 2009 (“OS 667”), the plaintiff, Bidvest Australia Ltd (“Bidvest”) sought,
On 27 July 2009, Vestey was joined as a second defendant in OS 667. Thereafter, in an affidavit filed on 23 September 2009, Mr Phillip Crowley, who is the managing partner of D1, raised a counterclaim against Bidvest in OS 667 claiming that, in the event that D1 was adjudged liable by this court for the release of the Escrow Sum, by virtue of the Escrow Agreement, D1 would be exempted from liability towards Bidvest; alternatively, D1 would be entitled to an indemnity against Bidvest and Vestey pursuant to the Escrow Agreement.
In brief, the nub of the dispute was a legal opinion issued by a law firm in the People of Republic China (“PRC”) (the “Chinese legal opinion”) which D1 received and relied upon as the basis for the release of the Escrow Sum to Vestey. The first issue before this court was whether, on a proper construction of the Escrow Agreement, D1 was obliged to release the Escrow Sum to Vestey upon receipt of the Chinese legal opinion; and in the event D1 was adjudged to be in breach, the second issue was whether D1 could rely on the Escrow Agreement to exclude liability or to seek an indemnity from Bidvest and Vestey.
I agreed with Mr Hri Kumar SC representing D1 that on the proper construction of the Escrow Agreement, D1 was obliged to release the Escrow Sum to Vestey upon receipt of the Chinese legal opinion. In reaching that conclusion, it was therefore unnecessary to consider D1’s counterclaim. Accordingly, OS 667 was dismissed with costs. In dismissing OS 667, I informed the parties that I was not making any ruling on whether Vestey had complied with its obligations in accordance with the contract underlying the Escrow Agreement, namely the Sale and Purchase Agreement between Bidvest and Vestey dated 30 April 2007 (“the SPA”).
Bidvest has since appealed against my decision, and I now publish my reasons for dismissing OS 667.
Bidvest is an Australian corporation and part of a group of companies that specialise in the supply and distribution of food in Australia, South Africa, New Zealand, and Asia. Vestey is a company incorporated in England.
On 30 April 2007, Bidvest and Vestey (which was then known as Angliss International Limited) entered into the SPA whereby Bidvest, for the price of US$80m, agreed to purchase the shares and assets of several companies owned by Vestey, which included 80% of the total registered capital of Guangzhou Angliss Jin Pan Refrigerated Co Ltd (“Jin Pan”), a company incorporated in the PRC. D1 was the solicitor acting for Vestey in the transaction.
On 30 April 2007 and pursuant to cl 3.2 of the SPA (“SPA/3.2”), Bidvest, D1, and Vestey entered into the Escrow Agreement in the form of a letter addressed to D1. Under this Escrow Agreement, D1 was appointed the Escrow Agent to hold the total sum of US$7m (the “Escrow Funds”) in a bank account on behalf of Bidvest and Vestey. The relevant section of SPA/3.2 is reproduced here with the sections relevant to OS 667 emphasised in bold. SPA/3.2 refers to cl 7.3 of the SPA (“SPA/7.3”), which in turn refers to cl 3.2A of the SPA (“SPA/3.2A”), both of which are also be set out below:
and [Bidvest] and [Vestey] shall, contemporaneously with the execution of this Agreement, sign the Escrow Agreement and shall procure that the Escrow Agent accepts the Escrow Agreement.
Pursuant to the Escrow Agreement, the PRC Escrow Funds shall be disbursed to the Seller as follows :in respect of the amount of US$4 million, as soon as any of the documents described in Clause 7.3(a)(i) to (iii) have been delivered to the Escrow Agent ;…each of the obligations above and their related obligations in Clause 7.3 hereinafter referred to as an
Escrow Obligation .
…
…
as soon as reasonably practicable after the Completion Date and in any case within 2 years from the Completion Date (or such later date as the parties hereto may agree). Pending fulfilment of the above obligations and without limiting the generality of Clause 7.1 and Clause 2.9 of Schedule 3, [Vestey] confirms that it shall act in accordance with reasonable instructions of [Bidvest] in relation to the operations of the Chinese Companies and, to the extent that the registered capital of any Chinese Company is not held, directly or indirectly, by [Bidvest], shall hold the interests in the Chinese Companies for the benefit of [Bidvest] subject always to Clause 3.2A.[Bidvest] agrees to provide all assistance, to sign all documents and do all acts and things (subject always to agreement on costs as expressly specified above) as [Vestey] may require in order for [Vestey] to fulfil its obligations under this Clause 7.3 . In carrying out reasonable efforts to satisfy its obligations in Clauses 7.3(b) and (c), [Vestey] agrees (subject to the remainder of this Clause) that it will follow the steps outlined as 1.1 to 1.3 and 2.1 to 2.3 on the PRC Checklist. The parties hereto agree that the purpose of the PRC Checklist is to find a means to achieve the outcomes set out in Clauses 7.3(b) and (c) and that the means to achieve the outcomes are not fixed. The parties hereto agree to reasonably consider any proposal to amend the PRC Checklist, including the steps referred to above, and any consent to a request to amend the PRC Checklist shall not be unreasonably withheld.[emphasis added in bold]
Clause 5(a) of the Escrow Agreement (“EA/5(a)”) listed the conditions and the corresponding amount of US$ 4m to be released from the Escrow Funds to Vestey in the event that any one of the three conditions was satisfied. Clause 5A of the Escrow Agreement (“EA/5A”) provided that the conditions in EA/5 had to be satisfied within 24 months of the Completion Date and that D1 was obliged to return any unpaid portion of the Escrow Funds to Bidvest at the expiry of 24 months from the Completion Date. The Completion Date was defined as 8 May 2007 in the SPA, and accordingly the deadline for the fulfilment of any of the three conditions was 8 May 2009 (the “Deadline”). The relevant portions of...
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