Neptune Capital Group Ltd and others v Sunmax Global Capital Fund 1 Pte Ltd and another

JurisdictionSingapore
JudgeJudith Prakash J
Judgment Date28 July 2016
Neutral Citation[2016] SGHC 148
Plaintiff CounselMuralli Rajaram and Andrew Heng (Straits Law Practice LLC)
Docket NumberSuit No 630 of 2012 (HC/AD No 3 of 2015)
Date28 July 2016
Hearing Date03 February 2015,08 April 2016,26 May 2016
Subject MatterMeasure of damages,Cross-undertaking in damages,Damages,Injunctions,Res judicata
Published date23 September 2016
Citation[2016] SGHC 148
Defendant CounselEighth plaintiff in person,Lee Eng Beng SC, Chua Beng Chye and Raelene Pereira (Rajah & Tann Singapore LLP)
CourtHigh Court (Singapore)
Year2016
Judith Prakash J: Introduction

Owing to certain undertakings they had given to the plaintiffs, the defendants in this action were unable to dispose of certain publicly-listed shares between 2 August 2012 and 7 October 2013. During that period, the prices of the shares plunged drastically. Subsequently, the plaintiffs’ claims were struck out and the defendants obtained judgment against the plaintiffs on their counterclaims. Among the orders made in favour of the defendants was an order that there be an inquiry as to the damages sustained by the defendants under the order of court dated 30 July 2012 and the undertaking given by the defendants pursuant to the order of court dated 2 August 2012. This judgment deals with the inquiry as to damages.

The parties

The eight plaintiffs in this action comprised five companies and three individuals bearing various nationalities. During the bulk of the proceedings, the eighth plaintiff, Ms Quah Su-Ling (“Ms Quah”), directed the proceedings on behalf of all the plaintiffs. She gave instructions to the plaintiffs’ then solicitors, M/s Tan Rajah & Cheah. After the plaintiffs’ claims were struck out, M/s Tan Rajah & Cheah ceased to act for the plaintiffs and Ms Quah represented herself. Subsequently, late last year, the second plaintiff, China Data System Investments Pte Ltd (“China Data”), appointed its own counsel to act for it in relation to the inquiry as to damages.

There were two defendants to the action: a Singapore company called Sunmax Global Capital Fund 1 Pte Ltd (“Sunmax”) and, secondly, its managing director, Mr Li Hua (“Mr Li”) who is also known as Tony Li.

The injunction and undertaking

The plaintiffs started this action on 29 July 2012. They immediately applied for an injunction to restrain Sunmax and Mr Li, whether by themselves or through their agents, from parting with, selling, charging, transferring or in any other way disposing of the shares listed in the schedules annexed to the plaintiffs’ application. The shares listed in Schedule 1 were shares in the possession or control of Sunmax (“Schedule 1 shares”) whilst the shares listed in Schedule 2 were in the possession or control of Mr Li (“Schedule 2 shares”).

According to the affidavit of Ms Quah in support of the injunction, the plaintiffs had procured or provided to the defendants various shares in publicly-listed companies as collateral for advances extended to the first to fifth plaintiffs by Sunmax. These shares belonged to the sixth to eighth plaintiffs as well as to other persons who were not parties to the action. The approximate value of the shares based on their closing prices on 27 July 2012 was $68.4m. According to Ms Quah, in breach of the agreements between the parties, Mr Li had threatened to forthwith “dump” all the shares held by Sunmax as collateral. It was the plaintiffs’ position that it had been previously agreed that the first to fifth plaintiffs had until 31 July 2012 to make repayment of all the outstanding sums due and therefore any collateral could not be realised before the end of that day. If the shares were dumped, there would be irreparable harm to the plaintiffs.

After considering the affidavit and the arguments of counsel for the plaintiffs and upon the plaintiffs giving the usual undertaking as to damages, I made, inter alia, the following orders: an order restraining Sunmax from selling or disposing of the Schedule 1 shares until 1 August 2012 or until further order (“Order 1”); and an order restraining Mr Li from selling or disposing of the Schedule 2 shares until further order (“Order 2”).

Orders 1 and 2 were served on the defendants, forthwith. Thereafter, negotiations took place between the parties. As a result of these negotiations, counsel for the parties saw me again on 2 August 2012. By consent, on the basis of an undertaking (the “Voluntary Undertaking”) by the defendants that they would not part with, sell, charge, transfer or in any other way dispose of the Schedule 1 shares and the Schedule 2 shares except as authorised in writing by Ms Quah or her solicitors, Orders 1 and 2 were discharged.

It was as a result of the Voluntary Undertaking that the defendants were unable to sell the Schedule 1 or Schedule 2 shares except as authorised by Ms Quah or as permitted by the court.

The course of the proceedings

The plaintiffs filed their statement of claim in the action on 25 September 2012 and on 17 October 2012, the defendants responded with their defence and counterclaim. By their counterclaim, the defendants prayed for, amongst others, the following orders: That against the first to fifth plaintiffs, it be declared that Sunmax was entitled to sell, assign, transfer or deal with certain shares; That against the sixth to eighth plaintiffs, it be declared that Mr Li was entitled to sell, assign, transfer or deal with certain shares; and An inquiry be made as to the damages sustained by Sunmax and Mr Li by reason of the injunction under Orders 1 and 2 and the Voluntary Undertaking given subsequently.

It may be helpful at this stage to mention that amongst the shares comprised in Schedule 1 were 8 million shares in Liongold Corp Ltd (“Liongold”) and amongst the shares comprised in Schedule 2 were 6 million shares in Asiasons Capital Ltd (“Asiasons”) and 5.2 million shares in Liongold.

Summons 5031

Shortly before their defence was filed, the defendants filed an application (“Summons 5031”) for, among other things, Orders 1 and 2 to be set aside and for the Voluntary Undertaking to be discharged. The plaintiffs strenuously resisted this application, leading to a number of affidavits being filed on both sides.

The first hearing of Summons 5031 took place on 16 November 2012 but arguments could not be completed and the hearing was adjourned. On 1 March 2013, the plaintiffs issued seven cashier’s orders to pay various amounts outstanding under various agreements entered into between Sunmax and the first to fifth plaintiffs. The defendants accepted six of these cashier’s orders but they returned one cashier’s order in the sum of $4,658,498.28, being the amount which had been tendered by China Data, the second plaintiff, to settle its indebtedness to Sunmax. Sunmax took the position that there was no longer any amount due and payable to it by China Data because on 22 December 2011, Sunmax had exercised its rights under an Escrow Agreement dated 29 October 2010 (“the Escrow Agreement”), and had appropriated 8 million Liongold shares, the subject of the Escrow Agreement, in settlement of the debt owed by China Data. It should be noted here that the legal owner of the 8 million Liongold shares was not China Data, but a BVI company named Whitefield Management Ltd (“Whitefield”) and this company was accordingly a party to the Escrow Agreement.

On the same day, the plaintiffs applied for a mandatory injunction to compel Sunmax to return the Schedule 1 shares to them since the indebtedness had been discharged. On 11 March 2013, I ordered the return of the Schedule 1 shares to the plaintiffs save for the 8 million Liongold shares since the ownership of the latter shares was disputed.

In May 2013, during the hearing of an application by the plaintiffs against Mr Li, Mr Li’s counsel proposed that the 8 million Liongold shares and the Schedule 2 shares be sold on the basis that the proceeds would be paid into an interest-bearing account pending the disposal of Summons 5031. The plaintiffs, however, did not accept this proposal (“the First Sale Proposal”).

Summons 5031 was heard again on 22 July 2013 and 6 August 2013. The matter was then adjourned for decision. Initially, the date of decision was fixed as 10 September 2013 but subsequently the date for decision was changed to 14 October 2013.

In the meantime, the defendants proposed to the plaintiffs on 10 September 2013 that Mr Li be allowed to sell his 6 million Asiasons shares. The plaintiffs’ response was to ask why this request was being made. Counsel for the defendants replied that there had been a change of circumstances in the share market, in particular, the price of the Asiasons shares had spiked and, in order to mitigate the risks of a falling market, Mr Li proposed to sell the shares and pay the proceeds into court. The plaintiffs did not respond to this proposal (“the Second Sale Proposal”). On 18 September 2013, Mr Li filed a summons asking for liberty to sell the Asiasons shares. Although an urgent date was requested, the application could only be heard on 7 October 2013 and, unfortunately, on Friday, 4 October 2013 the price of the Asiasons shares fell drastically from its earlier level of $2.70 per share. On Monday, 7 October 2013, the Asiasons share price was $0.10 per share. The Liongold share price crashed as well: from $1.50 per share to $0.16 per share.

On 7 October 2013, I granted Mr Li permission to sell his Asiasons shares on the basis that the proceeds from the sale thereof were to be paid into court pending the outcome of Summons 5031. On 14 October 2013, I granted the defendants’ application in Summons 5031 and discharged Orders 1 and 2 and the Voluntary Undertaking.

The entry of judgment in favour of the defendants

While the parties were making submissions in relation to Summons 5031, the main action was proceeding in the normal way. At a pre-trial conference held on 15 August 2013, the parties were given directions to file and exchange their respective affidavits of evidence-in-chief (“AEICs”) by 18 November 2013. Further, trial dates from 7 to 30 January 2013 were allocated for the hearing of the action.

The plaintiffs failed to exchange AEICs on 18 November 2013. Instead, they applied for an extension of time to file and exchange their AEICs and for the trial dates in January 2014 to be vacated. As a consequence the January dates were vacated and hearing dates from 18 February 2014 to 7 March 2014 were given...

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