Transpac Investments Limited v TIH Limited

[2024] SGHC(I) 23 Singapore International Commercial Court 20 August 2024 • SIC/OA 8/2023 • 113 min read

18 cases cited (13 SG, 5 foreign) Cited by 1 case

Key facts

Court	Singapore International Commercial Court
Decided	20 August 2024
Judge	Sir Henry Bernard Eder
Charges / claim	Equity, Contract, Limitation of Actions
Counsel	FC Legal Asia LLC, PK Wong & Nair LLC, Alex Chia Yao Wei, Chu Hua Yi, Foo Jyh Howe, Foo Maw Shen, Nair Suresh Sukumaran, Noel Chua Yi How

Source: [2024] SGHC(I) 23, Singapore International Commercial Court, decided 20 August 2024 — eLitigation. Updated 25 June 2026.

Catchwords

Equity — Estoppel — Duty to speak Contract — Contractual terms — Express terms Contract — Contractual terms — Implied terms Limitation of Actions — Particular causes of action — Contract

Practice Areas

Equity Contract Limitation of Actions

Judges (1)

Sir Henry Bernard Eder Delivered

Counsel (8)

FC Legal Asia LLC Firm PK Wong & Nair LLC Firm Alex Chia Yao Wei Counsel Defendant Chu Hua Yi Counsel Claimant Foo Jyh Howe Counsel Claimant Foo Maw Shen Counsel Claimant Nair Suresh Sukumaran Counsel Defendant Noel Chua Yi How Counsel Defendant

Parties (2)

TIH Limited Defendant Transpac Investments Limited Claimant

Case Significance

Transpac Investments Ltd v TIH Ltd [2024] SGHC(I) 23 was decided by Sir Henry Bernard Eder IJ in the Singapore International Commercial Court in Originating Application No 8 of 2023, heard over 27-31 May and 3 and 5 June 2024 with judgment reserved and delivered on 20 August 2024. The claimant, Transpac Investments Limited (TIL), is an investment holding company incorporated in the British Virgin Islands which owns a 10.17% stake in the defendant, TIH Limited (TIH), an investment fund company listed on the Singapore Exchange. Investment and fund management services were previously provided to TIH by Transpac Capital Pte Ltd (TCPL), whose arrangements with TIH were due to expire on 31 December 2015 and were addressed by a Deed of Termination dated 30 December 2013; TCPL was put into members' voluntary liquidation on 28 November 2016 and dissolved on 18 January 2024. Since 2014, TIH's investment manager has been TIH Investment Management Pte Ltd (TIHIM).

As set out in the judgment, the suit involves a dispute over a sum of US$10 million originally deposited by TIL into a bank account (the Bond Account) at Bank Pictet & Cie (Asia) Ltd pursuant to a Deed of Agreement dated 30 December 2013 between TIL and TIH (the Bond Deed), the broad purpose of the deposit being to cover potential contingencies. The catchwords identify the issues as estoppel and the duty to speak in equity, express and implied contractual terms, and limitation of actions for a cause of action in contract, with the Limitation Act among the statutes engaged. FC Legal Asia LLC, including Foo Maw Shen, acted for the claimant, while PK Wong & Nair LLC, including Nair Suresh Sukumaran, acted for the defendant.

Summary

SUPREME COURT OF SINGAPORE

20 August 2024

Case summary

Transpac Investments Ltd v TIH Ltd [2024] SGHC(I) 23
Originating Application No 8 of 2023

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Judgment of the Singapore International Commercial Court (delivered by Justice Sir Henry Bernard Eder):

Outcome: A Judge of the Singapore International Commercial Court held that an “account closure event” (the “Account Closure Event”) falling within a clause of an agreement (the “BOA”) regulating the operation of a bond account (the “Bond Account”) had occurred, such that the claimant was entitled to give notice to the custodian of the Bond Account that the account should be closed and the moneys therein returned to the claimant. As per the terms of the BOA, the custodian shall then take immediate steps to execute a pre-drafted instruction (the “Instruction”) to the bank maintaining the Bond Account to close the Bond Account and return the moneys in the account forthwith to the claimant.

Pertinent and significant points of the judgment

• In every case where there was an allegation made that a fiduciary had acted/omitted to act in relation to a transaction where the fiduciary was allegedly in a position of conflict, it was important to consider the scope of the fiduciary’s duty. The precise scope of the no-conflict duty must be moulded according to the nature of the relationship. In this regard, the state of the principal’s knowledge was an important consideration. All the facts and circumstances of the case, along with the surrounding context, must be considered as well: at [102].

• The Limitation Act did not bar the right but only the remedy: at [147].

• As the present claim was one which was for the release of money that incontrovertibly belonged to TIL and clause 2.8 of the BOA merely provided the machinery for enabling TIL to recover its own money, the better argument was that the present action was not one founded on a contract but one which was founded on proprietary principles, ie, TIL’s ownership of the Bond Amount. The moneys in the Bond Account were being held by the bank on a resulting trust for TIL: at [148].

• The clean hands doctrine did not operate to bar a claim where a party was seeking to recover its own money: at [153(c)].

Background

1 The claimant (“TIL”) and the defendant (“TIH”) were investment companies which once belonged in the same corporate group. Around May 2014, an internalisation exercise was completed, which resulted in TIH coming under new management.

2 As part of the internalisation exercise, it was necessary for the claimant’s group and TIH’s new management to agree how to deal with potential contingent claims that might arise in relation to certain investment transactions entered into by the parties and their affiliates prior to the internalisation exercise. In very broad terms, the total of these potential contingent claims (the “Contingent Claim(s)”) was approximately US$63 million. Of that sum, parties agreed in principle that these would, in effect, be shared between TIH (approximately 80%) and TCPL (ie, an affiliated company of TIL) (20%). TIH’s portion was to be provided for through a US$50 million cash reserve and TCPL’s portion by TIL in the form of a US$10 million bond.

3 A sum of US$10 million (the “Bond Amount”) was thus deposited by TIL into a bank account (the “Bond Account”) in Bank Pictet & Cie (Asia) Ltd (“Bank Pictet”) pursuant to the terms of a Deed of Agreement dated 30 December 2013 between TIL and TIH (the “Bond Deed”). TIL and TIH entered into a further agreement dated 29 May 2014 entitled TIL Bond Account Operating Agreement (the “BOA”) to regulate the operation of the Bond Account.

4 TIL’s primary case was that the Bond Account should be closed and the Bond Amount released in full. That case rested upon a contention that there had been the occurrence of one or more events triggering closure of the Bond Account (the “Account Closure Event(s)”) within the meaning of clause 2.7 of the BOA. TIL relied upon clauses 2.7.2, 2.7.3, and 2.7.5 of the BOA.

a. Clause 2.7.2 provided for account closure where certain named advisors provided advice that there was no claim for a sufficient period of time and it was prudent for the relevant contingent liability or a large part thereof to be released, or that there was a claim, and, in the good faith opinion of the relevant advisor, the claim should be settled and any balance of the reserves kept for the relevant contingent claim be released.

b. Clause 2.7.3 provided for account closure where not less than 99% of the reserves kept in certain investment funds related to the claimant’s group (the “Parallel Funds”) for the Contingent Claims have been settled or distributed to the beneficiaries of the Parallel Funds in accordance with the trust deeds and management agreements of the Parallel Funds.

c. Clause 2.7.5 provided for account closure where there was a material breach of the BOA or the Bond Deed by TIH, its affiliates or its officers.

d. Alternatively, TIL asserted that a proportionate part of the Bond Amount should be released and returned, as the only remaining provision made by TIH in its own accounts for the Contingent Claims was for the Contingent Claim associated with a transaction known as the Foodstar Transaction (the “Contingent Foodstar Tax Claim”).

5 TIH argued that:

a. No advice in writing falling within the scope of clause 2.7.2 was ever received.

b. It was incorrect that not less than 99% of the Parallel Funds’ reserves kept for the Contingent Claims have been settled or distributed to the beneficiaries of the Parallel Funds.

c. Any such settlement or distribution was not made in accordance with the terms of the trust deeds and management agreements of the Parallel Funds in particular because any such settlement or distribution was made in circumstances where there was a conflict of interest and/or a breach of the trust deeds.

d. Even if clause 2.7.3 of the BOA was triggered, TIH disputed that this meant that the Bond Account must be closed and the Bond Amount returned to TIL. In that context, TIH relied on clause 4 of the Bond Deed which provided, in effect, that the Bond Account shall be maintained for as long as there were any provisions for Contingent Claims as determined in good faith by TIH with the consent of its auditors (as TIH maintains was the case).

e. All of TIL’s claims must be rejected because they were time-barred under the Limitation Act 1959 (2020 Rev Ed) (“Limitation Act”).

f. TIL was not entitled to seek equitable relief (ie, specific performance) as it came to equity with “unclean hands”.

Decision

Preliminary point: Clause 2.7.2 of the BOA

6 No advice in writing falling within the scope of clause 2.7.2 was ever received; and, as such, it followed that there was no Account Closure Event within the meaning of clause 2.7.2: at [89].

Issue 1: Clause 2.7.3 of the BOA

7 On the basis of the evidence given by TIH’s witnesses, the Court concluded that not less than 99% of the Parallel Funds Contingent Claims have been settled or distributed to the beneficiaries of the Parallel Funds and that, to that extent, the requirements of clause 2.7.3 have been satisfied: at [96] and [106].

8 In every case where there was an allegation made that a fiduciary had acted/omitted to act in relation to a transaction where the fiduciary was allegedly in a position of conflict, it was important to consider the scope of the fiduciary’s duty. The precise scope of the no-conflict duty must be moulded according to the nature of the relationship. In this regard, the state of the principal’s knowledge was an important consideration. All the facts and circumstances of the case, along with the surrounding context, must be considered as well: at [102].

9 The interest of TIH in maintaining the Bond Account and the Bond Amount and in minimising the sums that it might potentially have to pay in respect of potential People’s Republic of China (“PRC”) tax liabilities was not an interest qua beneficiary of the Parallel Funds. Thus, such an interest was not an interest that was within the scope of the Parallel Funds’ trustee’s no-conflict duty, in the context of its role as the trustee of the Parallel Funds: at [103].

10 The Parallel Funds’ trust deeds were all drawn up in the 1990s. The BOA was entered into on 29 May 2014. The Parallel Funds’ trustee (“TTCL”) was never a party to the BOA. The Parallel Funds’ trust deeds were never amended to import any aspect of the BOA into those trust deeds. TIH knew about TTCL’s role as trustee of the Parallel Funds, and knew about the nature of the Parallel Funds, and yet chose to include an Account Closure Event in clause 2.7.3 of the BOA which depended on TTCL’s exercise of its powers and functions under the Parallel Funds’ trust deeds. Thus, TIH could not complain that its interests, not qua beneficiary of the Parallel Funds, but instead qua contracting party to the BOA, have been affected: at [105].

11 TIH was equitably estopped or barred by the doctrine of acquiescence from claiming non-satisfaction of clause 2.7.3 of the BOA: at [107] and [116].

12 A duty to speak arose on TIH’s part (which duty to speak would cause TIH to be estopped from contesting TIL’s compliance with clause 2.7.3 of the BOA) because of three main factors: at [111].

a. TIH was sent letters on 9 December 2015 by TTCL (as trustee of the Parallel Funds), and the letters expressly invited responses to the trustee’s proposed distribution of the reserves kept by the Parallel Funds for the Contingent Claims;

b. TIH (through its wholly-owned subsidiary, LRG) received the 9 December 2015 letters and its decision-makers subjectively appreciated and considered the 9 December 2015 letters, before deciding not to respond; and

c. once the reserves kept for the Parallel Funds Contingent Claims were distributed with the consent of the Parallel Funds’ investor-beneficiaries, the money was distributed. The trustee had no power to claw the moneys back.

13 To the extent that TIH had argued that TIL was estopped from relying on clause 2.7.3 of the BOA because TIL expressly and by its conduct represented to TIH that it would not rely on the said clause to seek a release of the Bond Amount, the Court was unpersuaded as there was no unequivocal representation that TIL or its related company TCL would not insist on its legal rights: at [122].

Issue 2: Clause 2.7.5 of the BOA

14 The Court rejected TIL’s case that there was an Account Closure Event as a result of a material breach within the meaning of clause 2.7.5 of the BOA: at [135].

15 On the basis of the evidence provided by the parties’ experts on the tax law of the PRC, there was no risk of the PRC tax authorities being able to recover the Contingent Claims given that the 10-year PRC limitation period had expired and there was no proper basis now for TIH maintaining provisions in its accounts for the Contingent Foodstar Tax Claim: at [130].

16 It was quite impossible to say that TIH acted otherwise than in good faith in maintaining the provisions in its accounts for the Contingent Foodstar Tax Claim in the past as this decision by TIH was based in large part on external professional advice: at [133].

17 TIL’s allegation that TIH wrongly interfered with and/or influenced KPMG Singapore and KPMG’s PRC office to refrain from issuing the requisite opinion under clause 2.7.2 of the BOA was almost entirely speculative and unsupported by any cogent evidence: at [134].

Issue 3: clause 4 of the Bond Deed

18 Clause 2.8 of the BOA contained mandatory language obliging both parties or at least one of the parties in the event of an Account Closure Event to give the custodian of the Bond Account the necessary notification to close the Bond Account in accordance with the instruction (the “Instruction”) annexed to the BOA: at [137(a)].

19 The effect of clause 5 of the BOA was that, to the extent of any inconsistency, clause 2.8 of the BOA must “prevail” over clause 4 of the Bond Deed. Thus, the mandatory language obliging account closure in clause 2.8 of the BOA prevailed over clause 4 of the Bond Deed which appeared to provide that even after the occurrence of an Account Closure Event, the Bond Account needed to be maintained, and thus cannot be closed, as long as there were any provisions for Contingent Claims (as determined in good faith by TIH with the consent of its auditors): at [137(b)].

Issue 4: Implied terms

20 Given the Court’s conclusion that there was an Account Closure Event falling within clause 2.7.3 of the BOA, it was unnecessary to say anything further about the implied terms portion of TIL’s case: at [139].

Issue 5: Limitation Act

21 TIL’s action was not time-barred. at [146] and [151].

22 The Limitation Act did not bar the right but only the remedy: at [147].

23 The present claim was one which was for the release of money that incontrovertibly belonged to TIL and clause 2.8 of the BOA merely provided the machinery for enabling TIL to recover its own money. The better argument was that the present action was not one founded on a contract but one which was founded on proprietary principles, ie, TIL’s ownership of the Bond Amount. Bank Pictet must be holding the Bond Amount on a resulting trust for TIL: at [148].

24 Clause 2.8 of the BOA allowed any party to the BOA, after becoming aware of the occurrence of an Account Closure Event, to either “jointly or severally” notify the custodian of the Bond Account that it should be closed, and the custodian shall thereafter take steps to execute the Instruction to close the account. The Instruction was executed in blank and already bore the signatures of the authorised signatories. All that needed to be done was for the custodian to present it to Bank Pictet. The custodian was a director of TIL and a long-time associate of the key witness for TIL, so there should be no practical barrier to TIL simply asking the custodian to present the Instruction to Bank Pictet to instruct it to close the Bond Account: at [149].

25 There was an argument that it was only as a result of this present judgment that it could properly be said that the parties have become “...aware of the occurrence of an Account Closure Event...” under clause 2.8 of the BOA. Further, in circumstances where, for at least 8 years, TIH’s steadfast position had been that there was no Account Closure Event and that (as TIH specifically and repeatedly instructed) the custodian must not close the Bond Account, it seemed difficult to say that it was “reasonably practicable” for TIL to take its own unilateral steps to effect closure of the Bond Account under clause 2.8 of the BOA: at [150].

Issue 6: Clean hands

26 The Court did not consider that the relief sought by TIL was precluded or otherwise affected by the unclean hands doctrine: at [154].

27 The clean hands doctrine did not operate to bar a claim where a party was seeking to recover its own money: at [153(c)].

28 The release of the provisions in the Parallel Funds for the Contingent Claims was not in breach of the Parallel Funds’ trust deeds. On the contrary, such release was effected with full notice to the relevant investor-beneficiaries as well as to TIH without any objection by any party: at [153(d)(i)].

29 To the extent that TIH had contended that other companies related to the claimant owed TIH moneys in respect of salaries/management fees, these moneys, if payable, were due from another entity. There was no proper basis for saying that such non-payment affected TIL’s claims in the present action whether by way of the unclean hands doctrine or otherwise: at [153(d)(ii)].

30 There was no proper basis for the assertion that TIL “foisted” the entire Contingent Foodstar Tax Claim on TIH. In any event, there was no longer any risk of the PRC tax authorities seeking to recover any tax: at [153(d)(iii)].

31 While certain of the statements made by or on behalf of TIL in relation to the tax advice it had received were, in part, inaccurate, this did not constitute unconscionable conduct on its part or otherwise was such as to attract the unclean hands doctrine: at [153(d)(iv)].

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

What was the dispute in Transpac Investments Ltd v TIH Ltd [2024] SGHC(I) 23?

It concerned a sum of US$10 million deposited by Transpac Investments Limited into a Bond Account at Bank Pictet & Cie (Asia) Ltd under a Deed of Agreement dated 30 December 2013 with TIH Limited. Issues included estoppel, the duty to speak, contractual terms and limitation.

What was the relationship between Transpac Investments Limited and TIH Limited ([2024] SGHC(I) 23)?

Transpac Investments Limited, a British Virgin Islands investment holding company, owned a 10.17% stake in TIH Limited, an investment fund company listed on the Singapore Exchange. Fund management services were previously provided to TIH by Transpac Capital Pte Ltd, which was dissolved on 18 January 2024.

Statutes Cited

Limitation Act (Cap 163) Cases on this Act →

s 6(1)(a)

Cases Cited (18)

SG (2)

[2011] SGHC 30 [2023] SGHC 292

SLR (11)

[2000] 3 SLR(R) 530 [2007] 1 SLR(R) 132 [2008] 2 SLR(R) 108 [2012] 4 SLR 738 [2014] 2 SLR 318 [2014] 3 SLR 1048 [2015] 5 SLR 1422 [2016] 2 SLR 1114 [2018] 1 SLR 317 [2018] 2 SLR 333 [2022] 3 SLR 625

UK (5)

[1973] 1 WLR 1126 [1977] AC 890 [1994] 1 AC 340 [1998] Ch 1 [2019] 1 WLR 4481