Ng Koon Yee Mickey v Mah Sau Cheong

JurisdictionEngland & Wales
JudgeQuentin Loh JAD,See Kee Oon J,Chua Lee Ming J
Judgment Date30 September 2022
CourtHigh Court
Docket NumberCivil Appeal No 57 of 2021
Ng Koon Yee Mickey
and
Mah Sau Cheong

[2022] SGHC(A) 33

Quentin Loh JAD, See Kee Oon J and Chua Lee Ming J

Civil Appeal No 57 of 2021

Appellate Division of the High Court

Contract — Contractual terms — Implied terms — Duty to co-operate — Contract connecting payment obligation to execution of another contract by specified date — Contract silent on whether parties were obliged to co-operate to secure execution of that other contract by that date — Whether duty to co-operate should be implied — Whether duty to co-operate ought to be implied in fact or in law — Circumstances in which duty to co-operate should be implied in fact

Contract — Prevention principle — Contract connecting payment obligation to execution of another contract by specified date — Party taking steps to cause that other contract to be executed after specified date — Party relying on late execution of that other contract in order to exercise contractual right of termination — Whether prevention principle could be excluded or modified by express provisions to contrary — Whether prevention principle was engaged — Whether there were separate “equitable” and “common law” conceptions of prevention principle

Contract — Termination — Contract providing that it could be terminated upon occurrence or non-occurrence of particular event by specified date — Party issuing notice of termination prior to that specified date — Whether notice of termination was valid

Debt and Recovery — Right of set-off — Foreign currencies — Principles of determining date on which cross-claims for different currencies should be set off against each other

Held, allowing the appeal:

Whether Mah had given Ng valid notice of termination

(1) Mah's contention that he was not obliged to give notice of termination was rejected. The SPA conferred on Mah a discretion to terminate the SPA if the Operational Agreement was not signed by the Deadline. This discretion had to be exercised and communicated to Ng. None of the terms of the SPA suggested that it would automatically terminate in the event the Deadline was not met. The question to be answered, accordingly, was whether the 21 October Letter had validly terminated the SPA: at [34] and [35].

(2) In respect of Ng's submission that the 21 October Letter was not valid because it pre-dated the Deadline, the authorities established two key points. First, determining when the right to exercise an option arose was a question of contractual interpretation. If, based on the wording of the relevant clause, such a right could only be exercised after the occurrence or non-occurrence of certain specific events, any notice given prior to such events would be deemed premature and invalid. Second, in interpreting the relevant clause, attention ought to be paid to the context of each contract, including the policy considerations underlying the relevant clause in the contract: at [37] to [44].

(3) The SPA granted Mah the discretion to terminate the SPA if the relevant event (ie, the signing of the Operational Agreement) did not “materialise on or before 24 October 201[6]”. It was apparent from these words that Mah's right to terminate the SPA only arose after 24 October 2016. Nothing about the context of the SPA suggested that there was a reason to construe this clause in a manner that would allow for early termination. Accordingly, the 21 October Letter was issued by Mah prematurely, and thus, invalid: at [6] and [45] to [47].

(4) As the 21 October Letter was not a valid notice of termination, this was sufficient to dispose of the appeal: at [53].

Whether Mah was entitled to terminate the SPA

(5) The prevention principle rested on the underlying notion that a party could not insist on his contractual rights when he had himself caused the non-performance of a contractual event. The principle had been applied in different contexts and extended beyond building and construction contracts. However, the principle did not have the status of a rule of law and, as such, it could be modified or excluded by express terms in the contract to the contrary: at [80] to [82].

(6) The terms of the SPA did not suggest that the applicability of the prevention principle had been restricted or excluded. Accordingly, it applied to preclude Mah from terminating the SPA if it could be established that he had caused the Operational Agreement not to be signed by the Deadline, and, in doing so, had committed a breach of the SPA. This turned on whether Mah owed an implied duty to co-operate under the SPA and breached that duty: at [83] to [86].

(7) Given the myriad of factual circumstances in which a contract could be said to require parties to concur in doing something so as to render their contract effectual, there was no definable category of contractual relationships in which a duty to co-operate could be implied as a necessary incident. Therefore, if such a duty was to be implied at all, it was to be implied in fact, not in law: at [91] and [94].

(8) The evidence showed that, at the time the SPA was entered into, Mah and Ng would have assumed that getting the Operational Agreement signed was a common goal. Mah's own evidence was that shares in Enersave International were “effectively worth nothing” until the Nangang Project had materialised. Ng shared this understanding, and, accordingly, that the SPA did not set out the parties' obligations in respect of securing the signing of the Operation Agreement was a gap in the SPA. The evidence also showed that Mah played a crucial role in the operation of the Nangang Project; he was not merely a backseat investor. It was therefore necessary, and made commercial sense, for Mah to be subject to a duty to co-operate. This was not a strict duty requiring him to secure the signing of the Operational Agreement by the Deadline. Instead, the duty only required him to make reasonable efforts to achieve the signing of the agreement by the Deadline, and certainly not to hinder its signing by such time: at [106] to [111].

(9) The entirety of the evidence showed that Mah played a significant role in determining when the Operational Agreement would be signed. Most pertinently, he was involved in, or, at the very least, aware of or privy to discussions with the Malaysian embassy to capitalise on PM Najib's visit to Tianjin to witness the signing of the agreement. Once the signing of the Operational Agreement had been fixed for the date of PM Najib's visit, it was impossible for it to be signed any earlier. Mah was thus responsible for causing the agreement to be signed after the Deadline. In doing so, he acted in breach of his implied duty to co-operate under the SPA. This conclusion was bolstered by the inference that Mah was not a forthcoming witness. On one hand, he claimed that he had wanted to leverage PM Najib's visit to Tianjin to secure the signing of the Operational Agreement. On the other hand, however, Mah issued the 21 October Letter after PM Najib's attendance at the signing of the Operational Agreement had been confirmed. If Mah had wished for PM Najib's attendance in Tianjin to act as a catalyst for the signing of the agreement, there was no logical reason for him to purport to terminate the SPA. It was therefore reasonable to infer from Mah's conduct that he simply did not wish to complete his purchase of Ng's then-5% shareholding in Enersave International: at [112] to [133].

(10) Given that Mah had breached his duty to co-operate with Ng to secure the signing the Operational Agreement by the Deadline, the prevention principle precluded him from relying on the non-fulfilment of such condition to terminate the SPA. Thus, even if Mah had not issued a premature notice of termination, the SPA would still not have been validly terminated. Mah was, accordingly, liable to complete the SPA and effect the final cash payment of RMB8m: at [136].

Whether Mah's claim should be set off against Ng's counterclaim

(11) The defence of legal set-off could be relied on when the debt or liquidated sum claimed could be ascertained with precision at the time of pleading. Ng's counterclaim for RMB8m under the SPA plainly satisfied this requirement. There was therefore no need to determine whether Ng was also entitled to rely on the defence of equitable set-off: at [138] and [139].

(12) Ng's counterclaim exceeded Mah's claim. Mah's claim was therefore dismissed, and Ng was entitled to judgment for the balance of his counterclaim after set-off. However, to determine the exact sum Ng was entitled to receive, two dates needed to be ascertained. The first was the date on which Mah was entitled to be repaid the Disbursed Sums, from which pre-judgment interest ought to be awarded. The second was the date on which the Singapore dollar portion of the Disbursed Sums ought to be converted to RMB and set off against Ng's RMB8m counterclaim. As no submissions were made on these issues, the parties were granted liberty to seek clarification if they were not able to reach an agreement on these two points: at [140] and [141].

[Observation: In Chua Tian Chu v Chin Bay Ching[2011] SGHC 126 (“Chua Tian Chu”), the High Court opined that the prevention principle afforded an “equitable remedy”. However, apart from Chua Tian Chu and Fundamental Investors Pte Ltd v Palm Tree Investment Group Pte Ltd[2020] 4 SLR 1328 which cited the former, there did not appear to be any other authority which expressly recognised an “equitable” version of the principle. As the parties did not advance arguments on this supposed distinction between the “equitable” and “common law” versions of the principle, the question of whether Chua Tian Chu correctly recognised an “equitable” conception of the principle was left open: at [73], [74] and [77] to [79].]

Case(s) referred to

Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSCA 201 (refd)

Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195 (refd)

Alghussein Establishment v Eton College [1988] 1 WLR 587 (refd)

BDW Trading Ltd...

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