In Alternative Advisors Investment Pte Ltd v Asidokona Mining Resources Pte Ltd & Anor [2024] SGCA 3, the Singapore Court of Appeal (comprising Sundaresh Menon CJ, Steven Chong JCA and Belinda Ang JCA) considered an “unusual” and “unique” case with “several layers of complexity” in relation to the doctrine of ratification. The Court of Appeal delved into anterior factual and legal questions on ratification such as: (i) whether a principal can ratify a contract when the alleged agent did not purport to act on its behalf; and (ii) whether the principal has to show that it performed the contract in order to ratify it.
The factual dispute involved a loan agreement with the 1st Respondent as the borrower and the putative principal (“SSI“) as the lender, purportedly executed by one Mr Wong. The broad questions in this case were (i) whether Mr Wong was authorised by SSI to enter into the agreement; and if not, (ii) whether SSI could validly ratify the agreement.
On the evidence, the Court of Appeal found that SSI had not authorised Mr Wong to enter into the agreement at the time it was executed. The Court of Appeal further held that the agreement could not be validly ratified by SSI as Mr Wong did not purport to be acting on SSI’s behalf in entering into the agreement.
In its analysis, the apex court also considered whether SSI needed to provide the loan funds for it to be able to ratify the loan agreement. The Court instructively clarified that a party need not show that it had provided funds for a loan as a precondition to ratify a loan contract. Nevertheless, based on a fact-specific analysis of this case, the purported ratification of the loan agreement here was found invalid as key conditions for ratification (i.e. Mr Wong purporting to act on SSI’s behalf) had not been fulfilled. The Court of Appeal held that for the ratification to be valid, there must be some form of nexus between the principal and the act or contract which the principal seeks to ratify. Such nexus is made out by an act of an agent who purported to act on its principal’s behalf.
The Court below (i.e. the Appellate Division) (“AD“) analysed an especially difficult question of law on whether ratification after litigation was permissible. On appeal, the apex court did not consider this issue and the related question of whether there was a valid cause of action at the start of litigation as it opined that the AD did not have the benefit of full arguments on this issue. Nor did the Court of Appeal elucidate on the question of whether ratification could retrospectively validate a cause of action that was void ab initio as it was unnecessary and, in any case, not pleaded.
Gregory Vijayendran, SC, assisted by Lester Chua and Tomoyuki Ban, from the Commercial Litigation Practice, was instructed Counsel for the successful respondents in this appeal.
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