Yuanta Asset Management International Limited and another v Telemedia Pacific Group Limited and another and another appeal

CourtCourt of Appeal (Singapore)
JudgeSundaresh Menon CJ
Judgment Date20 June 2018
Neutral Citation[2018] SGCA(I) 3
Citation[2018] SGCA(I) 3
Subject MatterEquitable compensation,Fiduciary relationships,Conversion,Equity,Breach,Inducement of breach of contract,Tort,Breach of trust,Trusts,Remedies,Conspiracy,Contract
Plaintiff CounselDeborah Barker, SC (KhattarWong LLP, instructed counsel) and Lim Joo Toon (Joo Toon LLC),Paul Tan, Yam Wern-Jhien, Josephine Chee and Devathas Satianathan (Rajah & Tann Singapore LLP)
Published date23 June 2018
Hearing Date04 July 2017
Date20 June 2018
Docket NumberCivil Appeal Nos 189 of 2016 and 1 of 2017 and Summons No 58 of 2016
Bernard Rix IJ (delivering the judgment of the court): Introduction

The genesis of this appeal and cross-appeal is a joint venture between Telemedia Pacific Group Limited (“TPG”) and Yuanta Asset Management International Limited (“Yuanta”). Under the terms of this joint venture, TPG was to transfer shares owned by it in Next Generation Satellite Communications Limited (“NexGen”) to Yuanta for the purpose of using the shares as collateral for loans to the joint venture company, Asia Energy Management Ltd (“AEM”). These loans could be advanced by Yuanta or a third party lender. The loans were to supply the funds for investments by AEM.

In the suit below (“the Suit”) before the Singapore International Commercial Court, TPG and its director, Mr Hady Hartanto (“Mr Hartanto”), were the plaintiffs while Yuanta and its sole director, Mr Yeh Mao-Yuan (“Mr Yeh”), were the defendants. As these are cross-appeals, to avoid confusion, we shall refer to the parties according to their capacities in the proceedings below. The parties brought competing claims that monies had been misapplied and that contractual, tortious and fiduciary breaches had been committed in the course of various dealings with the NexGen shares and joint venture monies.

The trial judge, Patricia Bergin IJ (“the Judge”), delivered her judgment on liability on 30 June 2016, finding partially in favour of the plaintiffs on their claims and dismissing the defendants’ counterclaims in their entirety: see Telemedia Pacific Group Ltd and another v Yuanta Asset Management International Ltd and another [2016] 5 SLR 1 (the “Judgment”). The plaintiffs succeeded in their claims that, without authority, Yuanta had sold the NexGen shares which TPG had deposited into an account in Yuanta’s name but which had not been pledged against a loan. The Judge found that by carrying out these sales, Yuanta had breached the parties’ contract, committed the tort of conversion, and breached its fiduciary duty of honesty and the fiduciary no-profit rule. Mr Yeh was found liable for inducing Yuanta’s breach of contract. Subsequently, the parties made submissions on the appropriate final orders in respect of quantum, interest and costs: the decision in respect of these issues may be found in Telemedia Pacific Group Ltd and another v Yuanta Asset Management International Ltd and another [2017] 3 SLR 47 (the “Supplemental Judgment”).

In Civil Appeal No 189 of 2016 (“the Appeal”), the defendants appeal against the Judge’s order at [78(b)] of the Supplemental Judgment for them to pay the plaintiffs $6,464,839.37 comprising the profits on, and proceeds of, Yuanta’s unauthorised sales of the unpledged NexGen shares. The defendants do not dispute the Judge’s factual findings but contend that the Judge erred in law in finding that each cause of action alleged in respect of the sales had been established. Hence, the Appeal turns on the correct legal characterisation of Yuanta’s sales of the NexGen shares and dealings with the proceeds thereof, in the light of the parties’ contractual arrangements and joint venture relationship.

In addition, the defendants appeal against the Judge’s dismissal of three of their counterclaims. In relation to one of their counterclaims, the defendants filed Summons No 58 of 2017 (“CA/SUM 58/2017”) for leave to adduce fresh evidence. The defendants also applied in Summons No 55 of 2017 (“CA/SUM 55/2017”) for the execution of the Judge’s orders to be stayed. At the close of the oral hearing, we made no order on CA/SUM 55/2017 as the plaintiffs’ counsel, Mr Paul Tan, confirmed that any payment of the amount set out at [78(b)] of the Supplemental Judgment could be made to the plaintiffs’ solicitors, Rajah & Tann Singapore LLP, on terms that Rajah & Tann Singapore LLP undertook to hold such amount and not to pay it over to their clients pending further order of this court.

The cross-appeal, Civil Appeal No 1 of 2017 (“the Cross-Appeal”), concerns the plaintiffs’ claims that failed before the Judge. The plaintiffs seek to recover compensation for (a) the loss of 765m NexGen shares which were placed in Yuanta’s account, then further pledged by Yuanta to a third party lender, and never redeemed (“the Re-Pledged Shares Loss”); and (b) the loss suffered by TPG’s wider portfolio of 2.6bn NexGen shares which plummeted in value allegedly as a result of the defendants’ actions (“the Portfolio Loss”). The plaintiffs claim that the defendants are liable to pay equitable compensation for these losses because they flowed from defendants’ breaches of fiduciary duty. Further, the plaintiffs claim that they should have succeeded in their action for unlawful means conspiracy, which gave rise to these losses.


Bearing in mind the overview above, we shall traverse only the facts essential to these appeals. A detailed recital of the facts may be found in the Judgment below at [8]–[157].

TPG is registered in the British Virgin Islands (“BVI”) and operates a satellite communications business in Hong Kong. Mr Hartanto is the controlling shareholder and director of TPG. From 2008 to 2012, Mr Hartanto held a 75% stake in TPG while his then business partner, Mr Hardi Koesnadi (“Mr Koesnadi”), held the remaining 25% stake via his company, Telemedia Pacific International Inc (“TPI”).

In August 2008, TPG acquired a 51% stake in NexGen (formerly known as Ban Joo & Company Limited), a company listed on the Singapore Exchange. At the same time, TPG acquired a number of warrants entitling it to purchase new NexGen shares for S$0.03 per share (“Share Warrants”). Sometime in 2010, Mr Koesnadi decided to part ways with Mr Hartanto and was offering TPI’s 900m NexGen shares (amounting to 15% of NexGen’s total issued share capital) for sale.

Yuanta was incorporated on 15 November 2010, around the time when the parties entered into a joint venture. It is also registered in the BVI and Mr Yeh is its sole director.

The joint venture agreements

Having been acquainted socially for several years, Mr Hartanto and Mr Yeh met between July and October 2010 to discuss their respective businesses and potential investment opportunities. In the course of these discussions, they decided to pool their connections and resources to embark on joint investments. In late 2010, the parties entered into a joint venture to carry out securities and other diverse investments via AEM, a special purpose vehicle registered in the BVI, using funds from loan facilities arranged by the defendants. These loan facilities were to be secured by shares held by TPG in NexGen. It was common ground that NexGen was on the watch list of the Singapore Stock Exchange (“SGX”) and in danger of being de-listed, so it was potentially difficult to realise the value of these shares. The joint venture was structured to leverage on the plaintiffs’ stock of NexGen shares on the one hand, and the defendants’ allegedly good credit rating and reputation on the other hand, to obtain the loan facilities. At the material time, the plaintiffs were unaware that Yuanta was newly-incorporated and were under the impression that the defendants were related to a company named “Yuanta Financial Holdings”, which the plaintiffs understood to be a large and reputable Taiwanese securities house.

To execute this joint venture, the parties entered into three agreements in Mandarin (collectively “the Agreements”), namely: a contract dated 14 November 2010 between Yuanta as Grantor and both plaintiffs as Grantee entitled “Non-Recourse Loan Agreement complete with Share Delivery, Securities, and Re-delivery Agreement, and Securities Co-operation Agreement” (“the First Loan Agreement”); a contract dated 14 November 2010 between Yuanta and the plaintiffs entitled “Non-Recourse Loan Agreement complete with Share Delivery, Securities, and Re-delivery Agreement, and Securities Co-operation Agreement (2)” (“the Second Loan Agreement”); and a contract dated 15 November 2010 between Mr Yeh and Mr Hartanto entitled “Supplementary Agreement – Securities Co-operation Agreement” (“the Supplementary Agreement”). We shall refer to the First and Second Loan Agreements together as the “Loan Agreement”.

Under the Loan Agreement, TPG was to transfer as collateral up to 3.6bn NexGen shares to a “Delivery Account” which was later specified to be Yuanta’s account with the Singapore branch of “Crédit Agricole Corporate and Investment Bank”. (This was a reference to Crédit Agricole (Suisse) SA, now known as CA Indosuez (Switzerland) SA, to which we shall refer as “Crédit Agricole”.) The contractual limit of 3.6bn shares had been adjusted upwards from an initial limit of 200m shares. Upon receiving the shares, Yuanta was in turn to re-pledge the shares as security for loans that were either provided by Yuanta or procured from a third party lender using Yuanta’s name. The quantum of the loan was to be based on 50–55% of the closing price of the NexGen shares. For the purposes of the Appeal, the parties dispute the construction of the terms governing Yuanta’s right to deal with the shares transferred into its account.

The material terms of the Loan Agreement, as translated from the original Mandarin into English, provide as follows (with all references to Ban Joo & Company and Taisan Co being a reference to NexGen):

This Agreement is made between [Yuanta] (“Grantor”) and [Mr Hartanto]/([TPG]) (“Grantee”) on the 14th day of November, 2010 as follows:

WHEREAS, the Grantee or the person so arranged owns Ban Joo & Company (B07.S1) Co. Ltd. [sic] (“Pledged Securities”), and is desirous of delivering the securities to the Grantor as pledge for a non-recourse loan; and

WHEREAS, the Grantee agrees to deliver the aforesaid securities in compliance with the terms;

Therefore, in consideration of the detailed contents of the bilateral agreement herein set forth, and in the spirit of goodwill and other desires deemed worthy of respect,...

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