Hayate Investment v ManagementPlus: Legal and Equitable Set-Off Dispute

Hayate Investment Co Ltd sued ManagementPlus (Singapore) Pte Ltd in the High Court of Singapore for ¥46,869,291 for failure to pay for advisory services. ManagementPlus sought to set off various sums, including quantum meruit claims and an alleged compromise agreement. The court, presided over by Assistant Registrar Paul Chan, allowed ManagementPlus leave to defend the sum of US$120,000 based on the compromise agreement, granting Hayate judgment on the remaining amount. The decision was made on 9 May 2012.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment varied; ManagementPlus granted leave to defend the sum of US$120,000; Hayate granted judgment on the residue.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Hayate Investment sued ManagementPlus for unpaid advisory services. ManagementPlus sought to set off various claims, including a compromise agreement. The court allowed set-off for the compromise agreement only.

1.7 Decision Date

8 May 2012

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Hayate Investment Co Ltd	Plaintiff	Corporation	Judgment for Plaintiff in part	Partial	Chia Swee Chye Kelvin of Samuel Seow Law Corporation
ManagementPlus (Singapore) Pte Ltd	Defendant	Corporation	Leave to defend granted in part	Partial	Gregory Vijayendran of Rajah & Tann LLP Zheng Sicong of Rajah & Tann LLP

3. Judges

Judge Name	Title	Delivered Judgment
Chan Wei Sern Paul	Assistant Registrar	Yes

4. Counsels

Counsel Name	Organization
Chia Swee Chye Kelvin	Samuel Seow Law Corporation
Gregory Vijayendran	Rajah & Tann LLP
Zheng Sicong	Rajah & Tann LLP

4. Facts

Hayate sued ManagementPlus for ¥46,869,291 for unpaid advisory services.
ManagementPlus sought to set off claims for work done for Bianco and Nero.
ManagementPlus claimed set-off for expenses in winding up the Master Fund.
ManagementPlus claimed set-off for Bloomberg services.
ManagementPlus alleged Hayate acted in bad faith, seeking indemnity.
ManagementPlus alleged unlawful conspiracy by Hayate to injure it.
ManagementPlus claimed a compromise agreement for US$120,000 existed.

5. Formal Citations

Hayate Investment Co Ltd v ManagementPlus (Singapore) Pte Ltd, Suit No 929 of 2011(Summons No 222 of 2012), [2012] SGHCR 3

6. Timeline

Date	Event
2006-01-01	Funds established by Duet Research and Trading Pte. Limited
2006-09-01	ManagementPlus took over from Duet as manager of the funds
2006-09-01	Hayate appointed to provide investment advice in respect of the Master Fund
2008-07-16	William Jones of ManagementPlus acted as the director of Bianco Capital Ltd
2008-07-09	Nigel Stead acted as the director of Nero Partners Pte Ltd
2009-10-01	Start date for advisory services rendered by Hayate for which payment was not made
2010-05-01	Hayate requested that Mr. Daisuke be seconded to ManagementPlus for training
2010-08-01	Hayate asked ManagementPlus to resign as manager of the Funds
2010-10-13	ManagementPlus resigned as manager of the Feeder Fund
2010-10-15	End date for advisory services rendered by Hayate for which payment was not made
2011-12-22	Writ of Summons served on ManagementPlus
2011-12-30	Deadline for ManagementPlus to enter an appearance
2011-12-31	Hayate filed for judgment
2012-01-03	ManagementPlus attempted to file an appearance but was rejected
2012-03-19	Date of hearing
2012-05-09	Judgment Date

7. Legal Issues

Legal Set-Off
- Outcome: The court found that the compromise agreement for US$120,000 satisfied the requirements for legal set-off, allowing ManagementPlus leave to defend on that basis.
- Category: Substantive
- Sub-Issues:
  - Liquidated Claims
  - Maturity
  - Mutuality
- Related Cases:
  - [2008] 4 SLR(R) 907
  - [1937] AC 473
  - [1999] SLR(R) 880
  - [2011] 1 SLR 681
  - [2009] SGHC 89
  - (1884) 3 Hare 568
  - [1996] AC 243
  - [1974] AC 689
  - [2011] 2 SLR 63
  - [1978] 1 QB 927
  - [1995] 2 SLR(R) 643
  - (1880) 5 QBD 569
  - [1994] 1 WLR 1634
  - [1909] 1 KB 41
  - [2004] 2 AC 506
  - [2007] 2 SLR(R) 856
  - [1980] 1 QB 137
  - [2001] 2 Lloyd’s Rep 93
  - (1839) 1 Cr & Ph 161
  - [1998] 3 SLR(R) 888
Equitable Set-Off
- Outcome: The court found that none of the claims, except for the compromise agreement, were sufficiently connected to qualify for equitable set-off.
- Category: Substantive
- Sub-Issues:
  - Close Connection Between Claims
  - Fairness and Justice
- Related Cases:
  - [2008] 4 SLR(R) 907
  - [1937] AC 473
  - [1999] SLR(R) 880
  - [2011] 1 SLR 681
  - [2009] SGHC 89
  - (1884) 3 Hare 568
  - [1996] AC 243
  - [1974] AC 689
  - [2011] 2 SLR 63
  - [1978] 1 QB 927
  - [1995] 2 SLR(R) 643
  - (1880) 5 QBD 569
  - [1994] 1 WLR 1634
  - [1909] 1 KB 41
  - [2004] 2 AC 506
  - [2007] 2 SLR(R) 856
  - [1980] 1 QB 137
  - [2001] 2 Lloyd’s Rep 93
  - (1839) 1 Cr & Ph 161
  - [1998] 3 SLR(R) 888
Setting Aside Default Judgment
- Outcome: The court granted ManagementPlus leave to defend in part, setting aside the default judgment to the extent of the US$120,000 compromise agreement.
- Category: Procedural
- Sub-Issues:
  - Triable Issues
  - Bona Fide Defence
- Related Cases:
  - [2008] 4 SLR(R) 907
  - [1937] AC 473
  - [1999] SLR(R) 880

8. Remedies Sought

Monetary Damages
Set-off

9. Cause of Actions

Breach of Contract
Quantum Meruit
Indemnity
Unlawful Conspiracy

10. Practice Areas

Commercial Litigation

11. Industries

Finance
Investment Management

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Mercurine Pte Ltd v Canberra Development Pte Ltd	Court of Appeal	Yes	[2008] 4 SLR(R) 907	Singapore	Cited for the test to set aside a regular default judgment, establishing that the defendant must show triable or arguable issues.
Evans v Bartlam	N/A	Yes	[1937] AC 473	England and Wales	Cited to explain the triable issue test, stating the defendant must have merits to which the Court should pay heed.
Habibullah Mohamed Yousuff v Indian Bank	N/A	Yes	[1999] SLR(R) 880	Singapore	Cited to further explain the triable issue test, stating the test is satisfied if the defendant shows a fair case for defence or reasonable grounds for setting up a defence.
Engineering Construction Pte Ltd v Sanchoon Builders Pte Ltd	N/A	Yes	[2011] 1 SLR 681	Singapore	Cited for the definition of set-off as the taking of two competing money cross-claims, setting off one against the other and producing a single balance.
American International Assurance Co Ltd v Wong Cherng Yaw and Others	High Court	Yes	[2009] SGHC 89	Singapore	Cited to clarify the terminology of set-offs, counterclaims, and cross-claims, emphasizing that set-off has a narrower meaning than cross-claim.
Jones v Mossop	N/A	Yes	(1884) 3 Hare 568	England and Wales	Cited for the principle of mutuality, stating that one man’s money shall not be applied to pay another man’s debt.
Stein v Blake	N/A	Yes	[1996] AC 243	England and Wales	Cited for the requirement that debts must be liquidated or in sums capable of ascertainment without valuation or estimation for legal set-off.
Gilbert Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd	N/A	Yes	[1974] AC 689	England and Wales	Cited to show that the doctrine of abatement is confined to contracts for sale of goods and for the performance of work and labour.
Cooperatieve Centrale Raiffesisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd	N/A	Yes	[2011] 2 SLR 63	Singapore	Cited to show that different strands of equitable set-offs became discernible.
Federal Commerce & Navigation Co Ltd v Molena Alpha Inc	N/A	Yes	[1978] 1 QB 927	England and Wales	Cited to explain the circumstances which would give rise to a substantive equitable set-off, requiring claims to arise out of the same transaction or be closely connected.
Pacific Rim Investments Pte Ltd v Lam Seng Tiong & Anor	Court of Appeal	Yes	[1995] 2 SLR(R) 643	Singapore	Cited to show that the doctrine of equitable set-off has been accepted by the Singapore Court of Appeal.
Stooke v Taylor	N/A	Yes	(1880) 5 QBD 569	England and Wales	Cited for the requirement of liquidity in legal set-off, where claims must be in respect of liquidated debts or money demands which can be readily and without difficulty ascertained.
Aectra Refining and Manufacturing v Exmar NV	N/A	Yes	[1994] 1 WLR 1634	England and Wales	Cited to show that the ascertainment of the quantum of the demand, not the amount ultimately recoverable after defenses, is what matters for liquidated claims.
Lagos v Grunwaldt	N/A	Yes	[1909] 1 KB 41	England and Wales	Cited to show that a quantum meruit claim for a specified sum can be a liquidated claim, especially when the claim is not disputed.
Secretary of State for Trade and Industry v Frid	N/A	Yes	[2004] 2 AC 506	England and Wales	Cited for the mutuality requirement, stating that each party should be debtor and creditor in the same capacity, focusing on beneficial ownership.
Abdul Salam Asanaru Pillai (trading as South Kerala Caashew Exporters) v Nomanbhoy & Sons Pte Ltd	N/A	Yes	[2007] 2 SLR(R) 856	Singapore	Cited for the relevant propositions in the area of equitable set-off, including the need for a close relationship between dealings and transactions.
British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd	N/A	Yes	[1980] 1 QB 137	England and Wales	Cited as authority for the proposition that an equitable set-off may arise out of cross-claims that are not grounded in the same contract.
Bim Kemi AB v Blackburn Chemicals Ltd	N/A	Yes	[2001] 2 Lloyd’s Rep 93	England and Wales	Cited to show that set-off could be applied to two claims based on different contracts when the two agreements are inseparably connected within the continuum of the parties’ trading relationship.
Rawson v Samuel	N/A	No	(1839) 1 Cr & Ph 161	England and Wales	Cited to establish the outer parameters of what would constitute a sufficiently close connection to qualify for an equitable set-off, from which the impeachment test originated.
OCWS Logistics Pte Ltd v Soon Meng Construction Pte Ltd	N/A	No	[1998] 3 SLR(R) 888	Singapore	Cited to show that the Singapore courts have registered dissatisfaction with the law of set-off.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed)
Order 13, rule 8 of the ROC
Order 18, rule 17 of the ROC
Order 12, rule 4 of the ROC

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Set-off
Legal Set-off
Equitable Set-off
Quantum Meruit
Compromise Agreement
Mutuality
Liquidated Claims
Master Fund
Feeder Fund
Indemnity

15.2 Keywords

set off
legal set off
equitable set off
default judgement
compromise agreement
investment advisory
fund management

17. Areas of Law

Area Name	Relevance Score
Set-off	90
Contract Law	75
Compromise Agreement	65
Civil Procedure	60
Quantum meruit	50
Estoppel	40

16. Subjects

Contract Law
Civil Procedure
Financial Law
Investment Law