LIM CHANG HUAT v STRONGHOLD GLOBAL HOLDINGS LIMITED (IN LIQUIDATION)

Facts

Under a share purchase agreement dated 30 June 2017, Mr Lim Chang Huat agreed to sell Stronghold Global Holdings Limited his shares in NEP Holdings (Malaysia) Berhad, the parent of a group of companies. Completion depended on Stronghold being satisfied with its due diligence, and Mr Lim had to hand over the group's audited financial statements for the year ending 30 June 2016 and consolidated management accounts for the eleven months to 31 May 2017. He also had to give reasonable access to records and information and use commercially reasonable efforts to complete the deal. Stronghold had paid a deposit of RM5m.

Stronghold's parent company and its auditors, Ernst & Young, chased the documents for months, but some were never provided. Stronghold terminated the agreement, and the Singapore International Commercial Court found that Mr Lim had breached the agreement, that the termination was valid, and that he had to return the deposit. Mr Lim appealed in Civil Appeal No 5 of 2023.

Issues

1. Whether the trial judge should have applied Malaysian law, the governing law of the agreement, when it had not been pleaded or proved.
2. Whether an Ernst & Young note and email correspondence were properly admitted as hearsay business records under the Evidence Act 1893.
3. Whether Mr Lim failed to provide the required audited financial statements and management accounts.
4. Whether Stronghold repudiated the agreement in December 2017 by proposing revised timelines and a smaller purchase.
5. Whether Mr Lim had to return the RM5m deposit to Stronghold.

Holding

The Court of Appeal dismissed the appeal in an ex tempore judgment and upheld every finding below. Relying on a costs indemnity in the agreement, it ordered Mr Lim to pay Stronghold costs fixed at $80,000 (all-in).

Reasoning

Foreign law: Mr Lim had neither pleaded nor proved Malaysian law, and his counsel had agreed at a case management conference that Malaysian law could be treated as the same as Singapore law, so Singapore law applied (EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another [2014] 1 SLR 860). The Malaysian cases he cited were in any event beside the point: Stronghold relied on express contractual termination rights, not on common law rescission, and handing over only some due diligence documents is of little use.

Evidence: the note and emails were reliable, contemporaneous business communications made during a due diligence exercise, with no reason to suspect fabrication. They went straight to whether the documents had been provided, so the court saw no basis for excluding them.

Breach: an email of 28 December 2017 listed the outstanding items, including audited statements for three subsidiaries, and no one on Mr Lim's side ever disputed it. The attachments he relied on did not contain audited statements, and other records showed them still missing. The management accounts were never provided, and the judge's finding that one of Mr Lim's officers had repeatedly lied about them was not challenged.

Repudiation: the argument was not pleaded, and in any case proposing revised timelines when completion by the end date was plainly impossible did not show that Stronghold no longer intended to be bound. Deposit: there was no evidence of the private arrangement Mr Lim alleged, the agreement itself called the deposit refundable, and Stronghold was the proper party to recover it.

From the judgment