Straits Advisors Pte Ltd v Behringer Holdings (Pte) Ltd and Another and Another Application

JudgeChan Sek Keong CJ
Judgment Date18 November 2009
Neutral Citation[2009] SGCA 55
Citation[2009] SGCA 55
Defendant CounselGregory Vijayendran and Sung Jingyin (Rajah & Tann LLP)
Published date17 December 2009
Plaintiff CounselChenthil Kumar Kumarasingam (Drew & Napier LLC)
Date18 November 2009
Docket NumberCivil Appeal No 59 of 2009 (Summons No 4678 of 2009)
CourtCourt of Appeal (Singapore)
Subject MatterContract,Civil Procedure

18 November 2009

Judgment reserved.

Andrew Phang Boon Leong JA (delivering the judgment of the court):


1 This is an appeal against the decision of the judge (“the Judge”) in Straits Advisors Pte Ltd v Behringer Holdings (Pte) Ltd [2009] SGHC 86 (“the Judgment”).

Background and issue on appeal

2 The appellant, Straits Advisors Pte Ltd (“Straits Advisors”), is a corporate advisory firm. The first respondent, Behringer Holdings (Pte) Ltd (“BH”), is a local company in the business of general wholesale trading. The second respondent, Behringer Corporation Limited (“BCL”), is a foreign company and the sole shareholder of BH. For convenience, the respondents will be referred to collectively as “Behringer”.

3 In contemplation of an initial public offering (“IPO”) of BCL’s shares, Behringer contracted with Straits Advisors for the provision of consultancy services and the secondment of personnel. The first set of contracts (“the Original Agreements”), all dated 11 January 2006, comprised:

(a) a letter releasing one Dominic Andrla (“DA”) from Straits Advisors in order for him to act as Behringer’s group chief financial officer (“Group CFO”) (“the Release Letter”);

(b) an employment agreement, governing DA’s duties as Behringer’s Group CFO and the remuneration payable by Behringer to Straits Advisors for the services of DA (“the Employment Agreement”);

(c) a letter clarifying the details in the Release Letter (“the Side Letter”); and

(d) a secondment agreement, providing for the secondment of one Ricardo Villanueva to Behringer to act as head of Corporate Finance (“the Secondment Agreement”).

The first three contracts (ie, all except the Secondment Agreement) were wholly and expressly superseded by a consultancy agreement dated 10 November 2006 (“the Consultancy Agreement”).

4 The material part of section 4 of the Consultancy Agreement (around which the present proceedings centre) provided as follows:[note: 1]

4 Success Fee

We refer to the paragraph entitled “Shares” in section 2 of the Release Letter, and 3.1 of the CFO Agreement and paragraphs 1 to 3 of the Side Letter referred to above. It is agreed, with immediate effect, as follows:-

Behringer hereby agrees to issue shares in BCL to Straits Advisors or its nominee equivalent to 0.37 per cent of the post IPO (or post takeover, as applicable) share capital of BCL for a total nominal sum of US$100/- (the “Shares”). The shares will be issued under the following circumstances:

(i) When approval has been granted by a recognised stock exchange for the listing of BCL’s shares, the Shares shall be issued upon receipt of the said approval. For the avoidance of doubt, the approval to list BCL’s shares shall be a condition precedent for the issuance of the Shares under this clause (i).

(ii) In the event of a takeover of Behringer of all or substantially all of its business, the Shares shall be issued on the offer becoming unconditional and, if applicable, the acquirer having secured more than 50 per cent of the issued share capital of BCL.

In the event that Behringer terminates the appointment of [DA] and/or Straits Advisors (other than for gross negligence or willful default), prior to the conditions in (i) or (ii) above being satisfied, the Shares shall immediately be issued to Straits Advisors or its nominee for the total nominal sum of US$100/-


For the purposes of this agreement, IPO of Behringer will include the listing of any corporate vehicle as a result of any restructuring of the Behringer group resulting ultimately in the present business of BCL being listed. In the event that post IPO or post takeover share capital cannot be ascertained, the parties will agree to an equivalent number of shares in the existing share capital of BCL (or relevant corporate vehicle), provided that in any event it will not be less than 0.37 per cent of the present share capital of BCL.

[emphasis added]

5 In its action against Behringer (viz, Suit No 487 of 2008 (“Suit 487”)), Straits Advisors claimed for shares (defined in the second paragraph of section 4 as set out in the preceding paragraph) to be issued pursuant to the paragraph of section 4 italicised above (“the Shares”), alleging in this regard that the appointment of DA and/or Straits Advisors had been terminated by Behringer without any gross negligence or wilful default on their part.

6 In response, Behringer took out an application for construction of the Consultancy Agreement pursuant to O 14 r 12 of the Rules of Court (Cap 322, R5, 2006 Rev Ed) to determine whether or not, on the true construction of the Consultancy Agreement, section 4 was only operative upon “IPO Activation”, an event defined in section 3 of the Consultancy Agreement as one month after Straits Advisors receives written notification from Behringer of BCL’s decision to proceed with a plan to list on a recognised stock exchange, or of an anticipated takeover action of BCL. The parties are agreed that no IPO Activation has ever occurred. Therefore, if the question presented is answered in the affirmative, Straits Advisors will necessarily fail in its action against Behringer.

7 In the proceedings below, Behringer succeeded before both the assistant registrar and the Judge, who both answered the question in the affirmative. Straits Advisors now appeals to this court. At the hearing of the appeal, Straits Advisors also applied via Summons No 4678 of 2009 for leave to raise further arguments. Since the further arguments sought to be raised were not materially different from those already raised in Straits Advisors’ written submissions, we allowed the application.

Our decision

8 Before addressing the arguments raised on appeal, we must first emphasise that contractual terms must be construed in the light of the context in which they were drafted (see generally the decision of this court in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR 1029). Narrow and technical constructions which are inconsistent with the whole scheme of a given contract and the circumstances in which it was concluded must be eschewed. We would also add that a contextual understanding is especially important in the instant case, where the relevant agreements can, with respect, hardly be said to be models of precise – let alone exemplary – draftsmanship.

9 It is therefore of the first importance to ascertain what the specific context was at the time the parties entered into the Original Agreements. It would also be equally (if not more) important to ascertain whether, and (if...

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