3N Investments Group Limited and another v Lim Boon Chye Victor and others

Mr Chia Kuan Wee, Mr Lim Boon Chye Victor and Mr Murugesan Srinivasan were directors and, through BVI companies, equal shareholders of Rotating Offshore Solutions Pte Ltd (ROS). After relations broke down and Mr Chia brought a minority oppression suit, the parties settled on 15 November 2019. Under two materially identical sale and purchase agreements, Mr Chia's company, 3N Investments Group Ltd, sold its ROS shares to Mr Lim and Mr Srinivasan. Each buyer was to pay S$1,012,500 in cash and a further S$1,524,072 satisfied by transferring 5,000,000 shares in Uzma Berhad, a Malaysian listed company, to Mr Chia. Clause 4.4(b) required the parties to take all necessary steps to effect the transfer, "time being of the essence, by 31 December 2019", and under cl 7 each buyer and ROS undertook to procure the other's performance.

Mr Chia performed and the cash was paid, but the share transfer slipped. An application through the Malaysian central depository, made on the advice of Maybank Investment Bank, was submitted on 30 December 2019 and rejected the same day. A later transfer was delayed for months, including by a decision to wait for a face-to-face meeting with the exchange during Malaysia's COVID-19 movement control orders. The shares reached Mr Chia on 29 July 2020, by which time their price had fallen. 3N and Mr Chia sued Mr Lim, Mr Srinivasan and ROS in Suit No 419 of 2020.

1. Whether the defendants breached the agreements by failing to transfer the Uzma shares by 31 December 2019
2. Whether the plaintiffs could claim damages for the fall in value of the shares despite eventually receiving them
3. Whether causation, remoteness or a failure to mitigate limited the damages

The court rejected the argument that the transaction structure, which the defendants claimed Mr Chia had insisted on, caused the delay; the evidence suggested the defendants proposed it, and in any case they agreed to it. A case that cl 4.4(b) imposed only reasonable endeavours had not been pleaded and was wrong anyway. Its wording, time being of the essence, the hostile context and legal drafting showed an absolute obligation to transfer by 31 December 2019, which was breached. Even on a reasonable endeavours standard, the defendants fell short: after the same-day rejection they should have obtained further advice instead of relying wholly on Maybank IB, and the exchange was operating normally and did not require physical meetings during the movement control orders. Mr Chia's queries were not obstruction, and each extension he granted reserved his right to claim, so there was no waiver.

The normal measure for late delivery of shares is the difference in market value between the due date and actual delivery. The plaintiffs had not obtained specific performance by court order; the defendants simply delivered late, so cases limiting recovery to interim dividends did not apply. The value in the agreements was not notional, and Mr Chia had wanted to sell the shares.

But-for causation was made out, as the plaintiffs received the shares when they were worth less, and the loss arose naturally from the breach under the first limb of Hadley v Baxendale. Refusing offers to sell the shares and pay over cash was not a failure to mitigate, because that would have changed the bargain and the offers were not shown to be feasible. Nor did Mr Chia have to hold the shares until prices rose. Using the agreed value against the market value on 29 July 2020, as the plaintiffs' alternative case proposed, the damages came to S$1,167,204.

S Mohan J allowed the claim and entered judgment for the plaintiffs against the defendants jointly and severally for S$1,167,204, with interest at 5.33% per annum from the date of the writ of summons to the date of judgment. Costs, including whether they should be on a full indemnity basis, were reserved for later.