Freight Links Fabpark Pte Ltd v DB International Trust (Singapore) Ltd
Jurisdiction | Singapore |
Judge | Lee Seiu Kin J |
Judgment Date | 07 May 2010 |
Neutral Citation | [2010] SGHC 146 |
Plaintiff Counsel | Tan Cheng Han SC, Karen Teo, Clara Leow and Charmaine Kong (TSMP Law Corporation) |
Docket Number | Originating Summons No 1562 of 2008 |
Date | 07 May 2010 |
Hearing Date | 18 September 2009,06 November 2009 |
Subject Matter | Contract |
Published date | 21 July 2010 |
Citation | [2010] SGHC 146 |
Defendant Counsel | Michael Hwang SC (Michael Hwang) and Dinesh Dhillon Singh and Melanie Chng (Allen & Gledhill LLP) |
Court | High Court (Singapore) |
Year | 2010 |
This dispute arose from a Put and Call Option Agreement dated 7 December 2007 (the “Agreement”) between the plaintiff and the defendant (acting in a representative capacity) relating to factory premises at 30 and 32 Tuas Avenue 8, Singapore (the “Property”).
The Property was originally leased by ST Microelectronics Pte Ltd (“STM”) from JTC Corporation (“JTC”) for a term of 60 years commencing 1 September 1996 (the “JTC Lease”) and ending in 2056. STM subsequently assigned the JTC Lease to the plaintiff in 2005. That same year, the plaintiff sub-leased the Property to Microcircuit Technology (2002) Pte Ltd (“Microcircuit”) for a period of ten years commencing 28 September 2005 (the “Existing Tenancy Agreement”) and ending on 27 September 2015. Microcircuit’s obligations under the Existing Tenancy Agreement were secured by a banker’s guarantee of $700,000 and a guarantee by its parent company, AEM Holdings Limited (“AEM”). The relationships between the various entities are illustrated in the following chart:
Under the Agreement, the plaintiff granted the defendant the right to purchase the JTC Lease (the Call Option), and at the same time, the defendant granted the plaintiff an option to sell the JTC Lease (the Put Option). Both parties were entitled to exercise the options upon certain terms, the principal one being that the price shall be $20,800,000. As the JTC Lease was subject to a prohibition against assignment to a third party for a period of three years, the Agreement could not be completed until around December 2008, one year after it was made. The Agreement was also conditional upon approval by JTC (“JTC Approvals”) being obtained by 30 November 2008.
By letter of 30 October 2008 (“the Rescission Letter”), the defendant wrote to the plaintiff to rescind the Agreement under cl 9.4 of the Agreement. The plaintiff disputed this and continued to take steps to procure the JTC Approvals. On 11 December 2008, the plaintiff commenced this action for,
The plaintiff’s contentions may be summarised under the following three issues:
Under issue (a),
[emphasis in bold in original, emphasis in italics added]
In the Rescission Letter, the defendant stated that its updated Due Diligence Investigations disclosed that the financial position of AEM was materially and adversely different from the results obtained in December 2007, prior to execution of the Agreement.
The plaintiff proceeded with its first line of argument by setting out the proposition that “due diligence had to be done as a whole and reasonably, and difference in results of updated due diligence had to be material and adverse as a whole”. The plaintiff then argued that the defendant had conducted its Due Diligence Investigations solely in respect of one factor,
Furthermore, the due diligence clause existed for the benefit of the defendant. It was for the defendant to elect what areas it wished to carry out due diligence on. The defendant could not be faulted for deciding against carrying out due diligence on the building or mechanical and electrical works or whatever other matters...
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