In Asia-Euro Capital SPV I LLP v Regulus Advisors Pte Ltd [2024] SGHC 279, the Singapore High Court was faced with the scenario of an aggrieved investor who had suffered investment losses in a private equity investment, and subsequently raised numerous issues as to how the investment had been marketed to him. The Court considered claims for misrepresentation and conspiracy, and had to determine where the losses pursuant to the failed investment should lie.
The plaintiff was a special purpose vehicle incorporated by one Mr Choo for the purpose of investing in a company, AVIVO. Conflict arose when the dividend payments from the investment were lower than Mr Choo expected, and were allegedly not paid. The plaintiff commenced proceedings against the first and second defendants (being the fund management company and its employee which had introduced the investment to Mr Choo) for fraudulent and/or negligent misrepresentation. The plaintiff also commenced proceedings against the defendants (including the third defendant, a former CEO of the first defendant and former director of AVIVO) for unlawful means conspiracy.
The crux of the plaintiff’s claim lay in a series of Alleged Misrepresentations made by the second defendant to Mr Choo, relating to, among others, the expected dividend yield of the AVIVO Shares, the calculation basis of the dividend payouts, the transparency of the first defendant’s fees, and the third defendant’s appointments in AVIVO.
The Court dismissed the plaintiff’s claims. On the issue of misrepresentation, the Court found that:
- On the balance of probabilities, the Alleged Representations were not made by the second defendant in the manner suggested by the plaintiff.
- Even assumingthat the Alleged Representations were made in the manner suggested, or that there was puffery and marketing talk by the second defendant, Mr Choo or the plaintiff did not place any reliance on them; any remotely savvy investor would have viewed them as nothing more than preliminary discussions.
- The Alleged Representations were in any event not actionable, being either statements of future fact or true statements.
- There was no contractual duty of care owed to the plaintiff as there was no corroboration of the alleged oral agreement between the plaintiff and the first and second defendants.
On the issue of unlawful means conspiracy, the Court held that the claim was entirely unsustainable. In order to make out a claim of unlawful conspiracy, it would first be necessary to find that there were misrepresentations made to the plaintiff. However, the Court was of the view that there were no such misrepresentations advanced by the first and/or second defendant as alleged by the plaintiff. The Court further held that there was no combination of the defendants to do the acts of conspiracy as alleged by the plaintiff.
Moreover, on both claims, the Court found that the plaintiff failed to provide evidence of the current value of the AVIVO shares, a key element for establishing damages.
This case highlights the need for investors to independently verify claims and representations, especially in private equity investments, where risks are inherently higher and regulatory protections are limited. It is also a reminder that private equity firms should ensure that their clients are aware of the risks of investment and the need to exercise independent judgment, and that marketing representations, if made, are supportable.
The first and second defendants were successfully represented by Vikram Nair, Torsten Cheong and Jodi Siah from the Commercial Litigation Practice and the Appellate Advocacy Practice.
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