Judah Value Activist Fund v Open Faith Investment Ltd
Jurisdiction | Singapore |
Court | International Commercial Court (Singapore) |
Judge | Sir Henry Bernard Eder IJ |
Judgment Date | 02 July 2021 |
Neutral Citation | [2021] SGHC(I) 7 |
Citation | [2021] SGHC(I) 7 |
Hearing Date | 25 February 2021,24 February 2021,23 February 2021,12 March 2021,22 February 2021 |
Docket Number | Suit No 6 of 2020 |
Defendant Counsel | Tnee Zixian Keith (Zheng Zixian), Chan Michael Karfai and Lim Weisheng Joseph (Tan Kok Quan Partnership) |
Plaintiff Counsel | Zhulkarnain Bin Abdul Rahim, Tan Yiren Leon, Chen Siang En Sean and Cheong Wei Wen John (Dentons Rodyk & Davidson LLP) |
Published date | 07 July 2021 |
Subject Matter | Remedies,Causation,Quantum,Breach,Contract |
The plaintiff, Judah Value Activist Fund, is an exempted company incorporated in the Cayman Islands. It is an activist hedge fund which targets mainly Singapore and Hong Kong listed companies. Activist hedge funds typically seek to make a large investment in a company so as to be able to participate in or influence the management and decision-making of the company invested in. Activist hedge funds are also different from traditional funds in that they usually have a less diversified portfolio.
The plaintiff’s Chief Investment Officer (“CIO”) is Mr Roland Jude Thng Qida (“Mr Thng”). His role was to monitor the plaintiff’s portfolio of assets and liaise with investors. He was the individual in charge of making decisions on behalf of the plaintiff. Mr Thng is also a shareholder of the plaintiff (through Judah Group Limited) together with a number of other corporate and individual investors. The plaintiff is also managed by Swiss-Asia Financial Services Pte Ltd (“Swiss Asia”) under an investment management agreement. The fund administrator is the Apex Group (“Apex”).
At the relevant time,
The plaintiff had a margin loan facility (“MLF”) with Maybank Kim Eng Securities Pte Ltd (“Maybank”) under which, according to the plaintiff, the plaintiff was required to maintain a Loan-to-Value Ratio (“LTV Ratio”) below 70%. The terms of the MLF were contained in a letter dated 22 November 2018 (the “MLF Letter”) which provided in material part as follows:
We are pleased to inform you that your application for a Margin Facility has been approved, subject to the terms and conditions governing the Margin Facility (the “Margin Facility Terms”) and the terms and conditions set out below … The Margin Facility Terms is available on our website …
[…]
During the trial, there was a dispute between the parties concerning what were, in fact, the relevant and applicable “Margin Facility Terms” stated to be “available on [Maybank’s] website” as referred to in the letter extracted above. I was told by the plaintiff’s Counsel that the plaintiff did not have a copy of those terms. Certainly, none had been disclosed by the plaintiff. However, the defendant’s expert, Mr Kon Yin Tong (“Mr Kon”), had sourced a copy of what he considered to be the relevant terms from Maybank’s website (as referred to in the MLF Letter). He appended those terms to his report and referred to them extensively in the body of his report. I shall refer to these as Maybank’s T&Cs. In the course of Mr Kon’s cross-examination, it was suggested by the plaintiff’s Counsel, for the first time, that these terms were not, or at least might not be, the relevant terms applicable to the MLF; such suggestion subsequently developed into a forceful submission by Counsel on behalf of the plaintiff in the course of closing arguments at the end of the trial that these terms were inapplicable. Given that Mr Kon’s report had been served some four weeks before the trial, and further that the parties’ experts had been in communication and produced a Joint Statement (“JS”) without any suggestion that these terms were or might be inapplicable, that belated suggestion and subsequent submission by Counsel on behalf of the plaintiff were, to say the least, somewhat surprising. If those terms were neither relevant nor applicable, this could and should have been raised much earlier: trial by ambush is inappropriate in modern commercial litigation.
By way of riposte, it was the defendant’s submission that the Court should draw an adverse inference against the plaintiff that the plaintiff had failed, refused, or neglected to disclose the Maybank T&Cs because its contractual provisions are applicable to how the Margin Ratio was to be computed and would show that Mr Kon’s approach is correct. In support of that submission, I was referred to illustration (g) of s 116 of the Evidence Act (Cap 97, 1997 Rev Ed.),
In my view, Maybank’s T&Cs were plainly highly material to this case. As appears below, the issue of causation (which is important in this case) turns on how the Margin Ratio is computed, and the Maybank T&Cs are potentially critical to that issue because they contain the relevant provisions to compute the Margin Ratio. I find it surprising that the plaintiff did not have a copy of the Maybank T&Cs. But, even if that is correct, it seems to me that it would have been entitled to request a copy from Maybank and, as such, the Maybank T&Cs would have been within the plaintiff’s “control” and therefore discoverable in these proceedings. At the very least, it seems to me that it would have been very easy indeed for the plaintiff to ask Maybank for a copy of the Maybank T&Cs, and there is no reason to suppose that Maybank would not have complied with such a request. In my view, it is no answer that the defendant might itself have requested Maybank to provide a copy of the Maybank T&Cs, particularly since I was told that they were, in any event, publicly available on the Maybank website and, as I understand, no objection had been raised by the plaintiff to the fact that Mr Kon had exhibited a copy of the Maybank T&Cs to his report and made extensive reference to them in the body of his report.
Be all this as it may, the plaintiff has not pointed to a different set of terms as it could easily have done if different terms were applicable. In these circumstances, I accept Mr Kon’s evidence that he had sourced Maybank’s T&Cs from Maybank’s website as referred to in the MLF Letter and proceed on the basis that these were the applicable terms.
As to the relevant terms of the contractual relationship between the plaintiff and Maybank, I note the following:
The defendant is a company incorporated in the British Virgin Islands. It is in the business of consultancy and investment holdings. The defendant’s sole director and shareholder is Mr Tay Jing Yi Joseph (“Mr Tay”).
Before this dispute, Mr Thng and Mr Tay had known each other for about 3 years. They were friends. They share the same Christian faith, went to the same church, and had common interests in investment and fund management. They also periodically met up for coffee. As appears below,...
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Contract Law
...Pte Ltd [2022] 1 SLR 302 at [152]. 111 iVenture Card Ltd v Big Bus Singapore City Sightseeing Pte Ltd [2022] 1 SLR 302 at [157]. 112 [2021] 5 SLR 114. 113 Judah Value Activist Fund v Open Faith Investment Ltd [2021] 5 SLR 114 at [67], where Sir Henry Bernard Eder IJ went on to observe that:......