Lim Siau Hing @ Lim Kim Hoe and another v Compass Consulting Pte Ltd

Mr Lim Siau Hing and his son Mr Lim Vhe Kai (the Lims) controlled a Malaysian textile group, KTM, which they listed on the Catalist board in February 2019 through a reverse takeover (RTO) of Lereno Bio-Chem Ltd. Compass Consulting Pte Ltd, run by Mr Kelvin Chin, was engaged as project manager; a May 2017 addendum estimated its fee at $1.1m, adjustable by mutual agreement if the scope or structure changed. At a meeting on 17 July 2017 attended by the Lims, Mr Chin, his wife and Lereno's chief executive Mr Ong, it was agreed that Compass would receive further incentives on completion: $500,000 worth of bonus shares and a $480,000 cash fee. The Lims signed three documents drafted by Mr Chin without legal input. Document 1 referred to the Lims holding no less than 65% of the listed company, Document 2 to a corporate advisory service agreement, and Document 3 to a sale of KTM for S$30 Million.

The RTO completed with Lereno paying $26.4m in shares, the Lims holding 77.79%, and Compass receiving its $1.1m fee in shares. Compass sued in Suit No 433 of 2021 for the bonus shares and cash fee. The Lims said both were conditional on their shares being worth at least $30m. The High Court judge held that the agreement was wholly in Documents 1 and 2, excluded Document 3, awarded Compass $500,000 for the bonus shares with interest, and rejected the cash fee. The Lims appealed (CA 23) and Compass cross-appealed on the cash fee and costs (CA 24).

1. Whether the agreement was wholly written or partly written and partly oral.
2. Whether the payment of the bonus shares and cash fee was subject to a $30m valuation condition.
3. Whether the parties' subsequent conduct showed that no $30m condition had been agreed.
4. Whether Compass was entitled to the cash fee.

The court held that the judge erred in treating the agreement as wholly written. The three documents did not, singly or together, state when the incentives became payable; a spreadsheet annexed to Document 1 was a set of figures meaningless without oral explanation. By the end of trial both sides had accepted that the agreement was partly oral, and Compass's counsel conceded on appeal that the documents could not be understood alone. Since the dispute concerned whether a term existed rather than how to interpret one, there was no restriction on the evidence the court could consider.

On the terms, the 65% target had been discussed since May 2017, before the $1.1m fee was agreed. It made no commercial sense for the Lims to nearly double Compass's fee for the same result, and Compass's own witnesses described the incentives differently, as part of a $2.08m completion fee that the judge had already rejected. The Lims' account that Mr Chin promised to achieve a $30m valuation in exchange for the incentives was corroborated by Mr Ong, whom the judge had found neutral. Mr Chin's claim that Document 3 was a sham to let Mr Ong appear to negotiate the price down was bare and uncorroborated. All three documents were prepared by the same person, titled the same and signed together, so they should be read together, with Document 3 evidencing the $30m condition.

The court left open whether subsequent conduct may be used to interpret contracts, as the issue did not arise. In any case, the point about an independent valuation was never put to the Lims at trial, and silence in communications almost two years later proved little. On the cash fee, Mr Ong's evidence and the wording of Document 2 showed it was tied to an advisory agreement that was never made. The court added that interest under s 12 of the Civil Law Act runs to judgment, not payment, and would have started from the end of the share moratorium.

The Court of Appeal allowed the Lims' appeal in CA 23 and dismissed Compass's appeal in CA 24. The $30m condition was a term of the agreement and, since it was not met, Compass was entitled to neither the bonus shares nor the cash fee. The judge's costs order and interest order were set aside, and the parties were directed to file submissions on costs of the trial and the appeals.