Turms Advisors APAC Pte Ltd v Steppe Gold Ltd [2024] SGHC 174

Case Details

• Citation: [2024] SGHC 174
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 8 July 2024
• Coram: Wong Li Kok, Alex JC
• Case Number: Originating Claim No 77 of 2023; HC/SUM 1174/2023; HC/SUM 3746/2023; HC/SUM 3719/2023
• Hearing Date(s): 13–15 February, 26 April 2024
• Claimant: Turms Advisors APAC Pte Ltd
• Defendant: Steppe Gold Ltd
• Counsel for Claimant: Chew Kei-Jin, Samantha Ch’ng, Teo Jim Yang (Ascendant Legal LLC)
• Counsel for Defendant: Poon Kin Mun Kelvin SC, Devathas Satianathan, Timothy James Chong Wen An (Rajah & Tann Singapore LLP)
• Practice Areas: Contract; Contractual terms; Express terms; Penalty doctrine; Estoppel

Summary

The judgment in Turms Advisors APAC Pte Ltd v Steppe Gold Ltd [2024] SGHC 174 addresses a high-stakes dispute in the project finance advisory sector, specifically concerning the entitlement of a financial advisor to a multi-million dollar "Success Fee" following a debt financing transaction. The Claimant, Turms Advisors APAC Pte Ltd ("Turms"), a Singapore-based corporate finance boutique, sought to recover a Success Fee of approximately US$1.625m and various retainer fees from the Defendant, Steppe Gold Ltd ("Steppe Gold"), a Canadian mining firm listed on the Toronto Stock Exchange. The dispute centered on whether a US$65m debt facility secured by Steppe Gold from the Trade & Development Bank of Mongolia ("TDB") fell within the scope of a Mandate Letter executed between the parties on 24 October 2020.

The High Court, presided over by Wong Li Kok, Alex JC, was required to navigate complex issues of contractual interpretation, the implication of "effective cause" terms in advisory mandates, and the enforceability of "No Oral Modification" (NOM) clauses. A primary point of contention was whether the TDB Facility, which was partially funded under the Mongolian government's "Gold-2 Programme," was excluded from the Mandate Letter's scope by way of a subsequent oral agreement. The Defendant argued that the Claimant had failed to be the "effective cause" of the transaction and that the parties had expressly agreed to carve out the TDB financing from the Claimant's remit during the course of their engagement.

The Court's decision provides a significant application of the principles established in Charles Lim Teng Siang and another v Hong Choon Hau and another [2021] 2 SLR 153 regarding NOM clauses. While the Mandate Letter contained a clause requiring all modifications to be in writing, the Court found that the parties had effectively modified their agreement through oral communications and subsequent conduct. Specifically, the Court held that the Claimant was estopped from claiming the Success Fee because it had acquiesced to the Defendant's direct handling of the TDB Facility and had ceased providing advisory services in relation to that specific financing route.

Ultimately, the Court dismissed the Claimant's claim for the Success Fee but allowed its claim for a US$120,000 retainer fee under Clause 6(e) of the Mandate Letter. The Court rejected the Defendant's argument that the retainer fee and the 10% late payment interest rate constituted unenforceable penalties. The judgment serves as a critical reminder for practitioners of the risks associated with "exclusive" advisory mandates and the necessity of rigorous documentation when the scope of a commercial engagement shifts, notwithstanding the presence of formal NOM provisions.

Timeline of Events

1. 18 September 2020: Steppe Gold obtains an initial US$10.5m loan from TDB under the Mongolian government's "Gold-2 Programme."
2. 24 October 2020: The parties execute the Mandate Letter, appointing Turms as the "exclusive financial adviser" for a US$50–80m debt financing transaction.
3. 23 November 2020: Turms issues an invoice for the first installment of the Clause 6(a) Retainer Fee.
4. 21 December 2020: Steppe Gold pays the first installment of the Clause 6(a) Retainer Fee.
5. 16 May 2021: Turms sends a draft extension letter to Steppe Gold to extend the Mandate Letter's term.
6. 24 May 2021: Steppe Gold's representatives (Mr. South) and Turms' representatives (Mr. López) discuss the potential for a larger TDB facility.
7. 4 June 2021: Mr. South sends an email to Mr. López stating that Steppe Gold is handling the TDB facility "directly" and that it would be excluded from the Turms mandate.
8. 14 June 2021: The parties execute an extension of the Mandate Letter for an additional nine months.
9. 8 November 2021: Steppe Gold announces it has secured a US$65m debt facility from TDB (the "TDB Facility").
10. 10 November 2021: Turms issues an invoice for the Success Fee (US$1,625,000) and the Clause 6(e) Retainer Fee (US$120,000).
11. 6 January 2023: Turms commences legal proceedings via Originating Claim No 77 of 2023.
12. 13–15 February 2024: Substantive hearing of the Originating Claim.
13. 8 July 2024: The High Court delivers judgment, partly allowing the Claimant's claims.

What Were the Facts of This Case?

The Claimant, Turms Advisors APAC Pte Ltd, is a Singapore-incorporated company specializing in corporate finance advisory services, particularly in private credit and structured transactions within emerging Asian markets. The Defendant, Steppe Gold Ltd, is a Canadian mining entity listed on the Toronto Stock Exchange, focused on gold and precious metals projects in Mongolia, most notably the Altan Tsagaan Ovoo (ATO) gold mine. The dispute arose from the Defendant's efforts to secure significant debt financing for the expansion of the ATO mine.

In late 2020, the Defendant sought to raise between US$50m and US$80m in debt financing. On 24 October 2020, the parties entered into a contract (the "Mandate Letter") under which the Claimant was appointed as the Defendant's "exclusive financial adviser." The scope of the Claimant's services included identifying potential lenders, preparing financial models and information memoranda, and advising on the structure of the financing. In consideration for these services, the Mandate Letter provided for a multi-tiered fee structure:

• A Retainer Fee under Clause 6(a) of US$100,000, payable in installments.
• A Success Fee under Clause 6(b) equivalent to 2.50% of the "Transaction Value."
• A further Retainer Fee under Clause 6(e) of US$120,000, payable upon the earlier of the first drawdown of a Transaction or the termination of the Mandate Letter.

The Mandate Letter also included a "No Oral Modification" (NOM) clause and a contractual indemnity for costs and expenses (Clause 15 of the Standard Terms).

Prior to the Mandate Letter, in September 2020, the Defendant had already secured a US$10.5m loan from TDB under the Mongolian "Gold-2 Programme," a government initiative designed to support gold producers. During the term of the Mandate Letter, the Defendant continued to engage with TDB. In May 2021, discussions intensified regarding a larger facility from TDB. On 4 June 2021, Mr. South (of Steppe Gold) informed Mr. López (of Turms) via email that the Defendant was pursuing a US$65m facility from TDB "directly" and that this specific facility would not be subject to the Success Fee under the Mandate Letter. The Claimant did not provide a formal written objection to this assertion at the time.

On 14 June 2021, the parties signed a letter extending the Mandate Letter for nine months. Crucially, the extension did not explicitly mention the exclusion of the TDB Facility. In November 2021, the Defendant announced the successful closing of a US$65m debt facility with TDB, consisting of a US$59.7m loan under the Gold-2 Programme and a US$5m direct loan. The Claimant subsequently invoiced the Defendant for a Success Fee of US$1,625,000 (2.5% of US$65m) and the US$120,000 Retainer Fee under Clause 6(e). The Defendant refused to pay, leading to the litigation.

The Defendant's primary defense was that the TDB Facility was never intended to be part of the "Transaction" defined in the Mandate Letter, or alternatively, that it was excluded by a subsequent oral agreement reached in June 2021. The Defendant also argued that the Claimant was not the "effective cause" of the TDB Facility and that the Clause 6(e) Retainer Fee and the 10% late payment interest rate were unenforceable penalties. The Claimant maintained that as the "exclusive" adviser, it was entitled to the Success Fee regardless of its level of involvement in the specific TDB transaction, and that the NOM clause precluded any oral exclusion of the facility.

What Were the Key Legal Issues?

The Court identified several critical legal issues that required resolution to determine the Claimant's entitlement to the claimed fees:

• Entitlement to the Success Fee: Did the US$65m TDB Facility fall within the definition of a "Transaction" under the Mandate Letter? This involved a two-part inquiry:
  • Whether an "effective cause" requirement should be implied into the Mandate Letter as a matter of law or fact, requiring the Claimant to prove it was the primary driver of the financing.
  • Whether the parties had reached a valid subsequent oral agreement to exclude the TDB Facility from the scope of the Mandate Letter, notwithstanding the NOM clause.
• The Doctrine of Estoppel: Even if the oral agreement was technically deficient, was the Claimant estopped from claiming the Success Fee due to its conduct and representations between June and November 2021?
• Enforceability of Clause 6(e) Retainer Fee: Did the US$120,000 fee constitute an unenforceable penalty clause under the principles of Dunlop Pneumatic Tyre Co, Ltd v New Garage and Motor Co, Ltd [1915] AC 79?
• Late Payment Interest: Was the contractual interest rate of 10% per annum a penalty, particularly in light of the Moneylenders Act and the principles in Ethoz Capital Ltd v Im8ex Pte Ltd and others [2023] 1 SLR 922?
• Contractual Indemnity for Costs: To what extent was the Claimant entitled to recover its legal costs on an indemnity basis under Clause 15 of the Standard Terms?

How Did the Court Analyse the Issues?

1. The Success Fee and the "Effective Cause" Doctrine

The Court first addressed whether the Claimant was required to be the "effective cause" of the TDB Facility to earn the Success Fee. The Defendant relied on authorities such as Millar, Son & Co v Radford (1903) 19 TLR 575 and Goh Lay Khim and others v Isabel Redrup Agency Pte Ltd and another appeal [2017] 1 SLR 546 to argue that in agency contracts, a commission is only payable if the agent's actions were the effective cause of the transaction. The Court noted that while this is a common implication in real estate agency contracts, it is not an absolute rule of law for all advisory mandates.

The Court emphasized that the starting point is the text of the contract, citing Yap Son On v Ding Pei Zhen [2017] 1 SLR 219. In this case, the Mandate Letter appointed the Claimant as the "exclusive" financial adviser. The Court observed that "exclusive" mandates often imply that the adviser is entitled to a fee regardless of who introduces the counterparty, to prevent the principal from bypassing the agent. The Court distinguished the present case from estate agency cases, noting that in complex project finance, the advisor's role involves significant "heavy lifting" beyond mere introduction. Ultimately, the Court found that there was no express or implied "effective cause" term in the Mandate Letter that would automatically disqualify the Claimant.

2. Subsequent Oral Agreement and the NOM Clause

The most pivotal part of the analysis concerned the alleged oral agreement to exclude the TDB Facility. The Defendant pointed to the email of 4 June 2021 and subsequent conversations where Mr. South explicitly stated the TDB Facility was "off the table" for the Success Fee. The Claimant argued that the NOM clause in the Mandate Letter required any such modification to be in writing and signed by both parties.

The Court applied the Court of Appeal's decision in Charles Lim Teng Siang and another v Hong Choon Hau and another [2021] 2 SLR 153, which held that a NOM clause does not prevent parties from orally agreeing to modify a contract, provided there is clear evidence of their intention to do so. The Court found that the 4 June 2021 email, followed by the Claimant's silence and its subsequent conduct—specifically, the fact that the Claimant stopped including the TDB Facility in its financial models and progress reports—constituted "compelling evidence" of an oral agreement to exclude the facility. The Court stated at [110]:

"I find that there was an oral agreement to exclude the US$65m TDB Facility from the scope of the Mandate Letter."

3. Estoppel by Representation

The Court further held that even if the oral agreement was not binding, the Claimant was estopped from claiming the Success Fee. Applying Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317, the Court found that the Claimant had made an unequivocal representation (through its silence and conduct) that it accepted the exclusion of the TDB Facility. The Defendant had relied on this representation by continuing the relationship and eventually signing the extension letter. It would be inequitable to allow the Claimant to revert to the original terms after the TDB Facility had closed.

4. The Penalty Doctrine and Clause 6(e)

The Defendant challenged the US$120,000 retainer fee under Clause 6(e) as a penalty. The Court applied the test from Dunlop Pneumatic Tyre Co, Ltd v New Garage and Motor Co, Ltd [1915] AC 79, asking whether the sum was a "genuine covenanted pre-estimate of damage" or "extravagant and unconscionable." The Court found that Clause 6(e) was not a penalty for several reasons:

• It was a primary obligation to pay for services rendered, not a secondary obligation triggered by a breach.
• Even if it were a secondary obligation, US$120,000 was not extravagant compared to the potential Success Fee of US$1.625m that the Claimant was forgoing.
• The fee represented a reasonable estimate of the "opportunity cost" and work performed by the Claimant over the extended mandate period.

5. Late Payment Interest

Regarding the 10% interest rate, the Court referred to Ethoz Capital Ltd v Im8ex Pte Ltd and others [2023] 1 SLR 922. The Defendant argued the rate was usurious. However, the Court noted that the Moneylenders Act (Cap 188, 2010 Rev Ed) allows licensed moneylenders to charge up to 4% per month (48% per annum). In a commercial context between sophisticated parties, 10% per annum was well within the bounds of reasonableness and did not constitute a penalty.

What Was the Outcome?

The Court delivered a split decision, partially allowing the Claimant's claims while rejecting the most substantial portion of the monetary demand. The operative orders of the Court were as follows:

"My judgment is summarised below: (a) The claimant is not entitled to the Success Fee or any claim for quantum meruit. (b) The claimant is entitled to the Cl 6(e) Retainer Fee. (c) The claimant is entitled to late payment interest on both the Cl 6(b) Retainer Fee and Cl 6(e) Retainer Fee. (d) The claimant is entitled to contractual indemnity for costs and expenses incurred in connection with the Cl 6(e) Retainer Fee and late payment interest." (at [183])

Specifically, the Court awarded the Claimant the US$120,000 Retainer Fee under Clause 6(e). Additionally, the Court found that the Defendant had failed to timely pay the second installment of the Clause 6(a) Retainer Fee (which was US$50,000), and thus the Claimant was entitled to late payment interest on that sum as well as the Clause 6(e) sum. The interest was set at the contractual rate of 10% per annum.

The claim for the US$1,625,000 Success Fee was dismissed in its entirety. The Court also dismissed the alternative claim for quantum meruit, holding that where an express contract covers the subject matter (even if modified), there is no room for a restitutionary claim (citing Eng Chiet Shoong and others v Cheong Soh Chin and others and another appeal [2016] 4 SLR 728). On the issue of costs, the Court gave effect to the contractual indemnity in Clause 15, but limited its application to the costs "incurred in connection with" the successful portions of the claim. The parties were directed to make further submissions on the quantification of interest and costs if they could not reach an agreement.

Why Does This Case Matter?

The judgment in Turms Advisors v Steppe Gold is a significant contribution to Singapore's commercial jurisprudence for several reasons. First, it provides a robust application of the "No Oral Modification" (NOM) clause principles. For years, the legal status of NOM clauses was debated, with the UK Supreme Court taking a strict approach in Rock Advertising. However, Singapore has adopted a more flexible, party-autonomy-centric approach in Charles Lim Teng Siang. This case demonstrates that even in high-value transactions involving sophisticated international parties, the Court will prioritize the actual, evidenced intentions of the parties over formalistic "writing" requirements if the evidence of an oral modification is sufficiently "compelling."

Second, the case clarifies the "effective cause" doctrine in the context of financial advisory mandates. Practitioners often assume that an "exclusive" mandate guarantees a fee. This judgment confirms that while "effective cause" is not a default requirement for such mandates (unlike in estate agency), the scope of the "Transaction" is still subject to the parties' ongoing agreement and conduct. The Court’s refusal to imply an effective cause term as a matter of law protects advisors from being deprived of fees simply because a client takes a "hands-on" approach to a deal. However, the subsequent finding of an oral exclusion serves as a warning that advisors must actively protect their "exclusive" status when a client signals an intention to handle a specific deal "directly."

Third, the Court’s analysis of the penalty doctrine provides helpful guidance for drafting retainer and interest clauses. By upholding the US$120,000 retainer and the 10% interest rate, the Court reinforced the principle that Singapore courts are slow to interfere with the freedom of contract in a commercial setting. The distinction between a "primary obligation" (a fee for service) and a "secondary obligation" (a penalty for breach) remains a potent tool for defenders of contractual fees. The Court’s reference to the Moneylenders Act as a benchmark for "reasonableness" in interest rates provides a practical "safe harbor" for practitioners drafting late payment clauses.

Finally, the case highlights the power of "estoppel by silence." The Claimant’s failure to object to the 4 June 2021 email was fatal to its US$1.6m claim. In the fast-moving world of project finance, this judgment underscores the necessity for "active management" of legal rights. Silence in the face of a client's proposed exclusion of a deal from a mandate can be construed as acceptance, regardless of what the written contract says.

Practice Pointers

• Manage NOM Clauses Proactively: Do not rely on a "No Oral Modification" clause to shield you from the consequences of informal agreements or emails. If a client proposes a change to the scope of work via email, respond immediately and clearly in writing if you do not agree.
• Define "Transaction" with Precision: In advisory mandates, ensure the definition of "Transaction" explicitly includes or excludes government-backed facilities or "direct" deals if that is the intention. Avoid vague catch-all definitions that can be narrowed by subsequent conduct.
• The "Exclusive" Label is Not Absolute: Being an "exclusive" advisor does not automatically entitle you to a fee for every deal the client does. Conduct that suggests you have "abandoned" a particular deal flow can lead to an estoppel claim.
• Draft Retainers as Primary Obligations: To avoid the penalty doctrine, frame retainer fees as payments for the advisor's availability or for specific milestones (primary obligations), rather than as sums payable upon a "breach" or "termination" (secondary obligations).
• Document "Direct" Deal Carve-outs: If a client insists on handling a deal "directly," formalize the fee arrangement for that deal (e.g., a reduced "finder's fee" or a flat "consultancy fee") in a written addendum to avoid a total loss of the Success Fee.
• Interest Rates: A 10% per annum late payment interest rate is generally safe from being struck down as a penalty in Singapore commercial contracts, especially when compared to the much higher rates permitted under the Moneylenders Act.
• Indemnity Costs Clauses: Ensure that contractual indemnity clauses for legal costs are broad enough to cover "all costs and expenses incurred in connection with the enforcement of this agreement," as this can significantly shift the litigation risk in your favor.

Subsequent Treatment

As of the date of this article, Turms Advisors APAC Pte Ltd v Steppe Gold Ltd [2024] SGHC 174 stands as a significant recent application of the Charles Lim Teng Siang principles regarding oral modifications. It has been noted for its detailed treatment of the "effective cause" doctrine outside the residential property sector and its pragmatic approach to the penalty doctrine in commercial advisory contracts. The ratio regarding the exclusion of specific facilities from a broad mandate via conduct and estoppel is likely to be cited in future disputes involving "exclusive" financial advisory agreements.

Legislation Referenced

• Evidence Act 1893 (2020 Rev Ed), ss 93, 94
• Moneylenders Act (Cap 188, 2010 Rev Ed)

Cases Cited

• [2024] SGHC 174 (Applied)
• Charles Lim Teng Siang and another v Hong Choon Hau and another [2021] 2 SLR 153 (Followed)
• [2017] SGHC 22 (Referred to)
• [2022] SGHC 248 (Referred to)
• Yap Son On v Ding Pei Zhen [2017] 1 SLR 219 (Referred to)
• Goh Lay Khim and others v Isabel Redrup Agency Pte Ltd and another appeal [2017] 1 SLR 546 (Distinguished)
• Ethoz Capital Ltd v Im8ex Pte Ltd and others [2023] 1 SLR 922 (Considered)
• Dunlop Pneumatic Tyre Co, Ltd v New Garage and Motor Co, Ltd [1915] AC 79 (Applied)
• Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317 (Applied)
• Millar, Son & Co v Radford (1903) 19 TLR 575 (Referred to)
• Watersheds v Christopher Simms [2009] EWHC 713 (Referred to)
• Rothschild Securities (UK) Ltd v Exillon Energy plc [2014] EWHC 2165 (Referred to)

Source Documents

• Original judgment PDF: Download (PDF, hosted on Legal Wires CDN)
• Official eLitigation record: View on elitigation.sg