Three Documents and an Oral Agreement: Singapore Court of Appeal Determines if a Specific Term is Part of an Agreement

Disagreements as to the existence of contractual terms frequently occur between contracting parties. In Lim Siau Hing @ Lim Kim Hoe and another v Compass Consulting Pte Ltd and another appeal  [2023] SGCA 39, the Court of Appeal was required to determine two related appeals concerning whether a specific term formed part of the agreement between the parties. Unfortunately, the agreement was primarily contained in three different documents, which – on their face – did not appear to bear an obvious nexus with each other and were not drafted by lawyers.

Mr Lim Siau Hing @ Lim Kim Hoe and Mr Lim Vhe Kai  (collectively, “Lims“) had appointed Compass Consulting Pte Ltd (“Compass“) to structure a reverse takeover of a company (“RTO“). The Lims agreed to pay a success fee of S$1.1 million to Compass upon completion of the RTO. In addition, at a subsequent meeting, the parties agreed that Compass would be paid incentives in the form of bonus shares (“Bonus Shares“) and a cash fee (“Cash Fee“) for its services in respect of the RTO (“Agreement“) provided certain conditions were satisfied, namely that the Lims’ shares would be worth at least S$30 million and constitute at least 65% of the shares in the listed entity. The three material documents (“17 July Documents“), which contained the Agreement, were drafted by a representative of Compass and without any advice from lawyers. The parties agreed that the Agreement was partly written and partly oral. Following the completion of the RTO, the Lims duly paid the success fees of S$1.1 million. However, the Lims did not pay Compass the Bonus Shares and the Cash Fee, as the conditions had not been fulfilled.

When deciding the appeals, the Court of Appeal considered it imperative to consider the totality of the evidence surrounding the signing and preparation of the 17 July Documents and found that the 17 July Documents were meant to collectively evidence an oral agreement that was reached between the parties. The Court of Appeal agreed with the Lims and found that the Bonus Shares and the Cash Fee were not due to Compass as the agreed conditions relating to the RTO had not been fulfilled.

Kelvin Poon SC, Mark Cheng and Tan Tian Hui of Rajah & Tann Singapore LLP successfully represented the Lims, the Appellants in the appeal and Respondents in the cross-appeal.