Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Judith Prakash SJ
• Judgment Date: 07 June 2024
• Neutral Citation: [2024] SGCA(I) 3
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal Nos 2 and 3 of 2022
• Hearing Date: 04 December 2023
• Citation: [2024] SGCA(I) 3
• Year: 2024
• Plaintiff Counsel: Nair Suresh Sukumaran, Tan Tse Hsien Bryan (Chen Shixian) and Alex Chia Yao Wei (PK Wong & Nair LLC)
• Defendant Counsel: Giam Chin Toon SC, Lee Wei Yuen Arvin (Li Weiyun) and Wan Hui Ting Monique (Wen Huiting) (Wee Swee Teow LLP)
• Published date: 10 June 2024

Judith Prakash SJ, Jonathan Hugh Mance IJ and Bernard Rix IJ: Introduction

CA/CAS 2/2022 and CA/CAS 3/2022 (the “Appeals”) arose out of two cases heard by the Singapore International Commercial Court (“SICC”), SIC/S 1/2021 (“SIC 1”) and SIC/S 2/2021 (“SIC 2”). Crédit Agricole Corporate & Investment Bank, Singapore Branch (“CACIB”) was the plaintiff in SIC 1 and the defendant in SIC 2. PPT Energy Trading Co Ltd (“PPT”) was the defendant in SIC 1 and the plaintiff in SIC 2. The Judge in the SICC (the “Judge”) dismissed CACIB’s claim in SIC 1 and allowed PPT’s claim in SIC 2. Dissatisfied, CACIB filed the Appeals.

This is the third judgment issued in respect of the Appeals. The first was our decision on liability issued on 24 October 2023 in Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd and another appeal [2023] SGCA(I) 7 (the “Liability Judgment”). The second was our judgment issued on 10 May 2024 in respect of a post-appeal application for leave to serve interrogatories filed by PPT (the “Interrogatories Judgment”). This third judgment deals with the question of interest payable on the sums awarded and dealt with in the Liability Judgment, as well as with the question of the costs of the SICC proceedings and the Appeals. At the time the costs submissions were filed, PPT had also raised a question of the quantum of damages payable under the Liability Judgment but that has since been dealt with in the Interrogatories Judgment.

The underlying facts that led to the SICC proceedings and the Appeals are complex and are set out in detail in the Liability Judgment and summarised in the Interrogatories Judgment. We will not repeat them here save as may be necessary to understand the arguments made by the parties with regard to the issues of costs and interest and the reasons for our decision. References in this judgment to Zenrock, TOTSA and ING are to be understood as references to Zenrock Commodities Trading Pte Ltd which was the fraudster behind the whole transaction, Totsa Oil Trading SA which had agreed to buy a consignment of oil from Zenrock, and ING Bank NV, which, like CACIB, had provided financing to Zenrock and received an assignment of the sale contract with TOTSA and its receivables.

The court proceedings

On 28 May 2020, CACIB commenced HC/S 451/2020 (“Suit 451”) in the General Division of the High Court (“GDHC”) against PPT seeking, essentially, a permanent injunction to restrain payment under or pursuant to CACIB’s letter of credit dated 3 April 2020 in favour of PPT (the “Credit”). Concurrently, CACIB filed and obtained, ex parte, an interim injunction to the same effect.

PPT commenced HC/S 555/2020 in the GDHC (“Suit 555”) on 24 June 2020, claiming against CACIB the sum of US$23,662,732.50 pursuant to the terms of the Credit (the “LC Sum”). On 21 July 2020, Suit 451 and Suit 555 were ordered to be heard together. The prayers sought in Suit 555 mirrored those in PPT’s counterclaim in its Defence and Counterclaim in Suit 451 filed on 14 August 2020.

Following a series of hearings in regard to the interim injunction, the parties came to an agreement on 9 November 2020 that the interim injunction to restrain payment under the Credit was to be discharged and CACIB was to pay the LC Sum into a bank account held by PPT in the Bank of China Limited (“BOC”). The arrangement was for BOC to issue a banker’s guarantee to CACIB as a form of security (the “BOC Guarantee”) for the repayment of the LC Sum in the event that CACIB succeeded in its claim against PPT. CACIB paid US$23,662,732.50 into the designated BOC bank account on 18 November 2020.

In the meantime, there was a dispute as to whether CACIB or ING was entitled to the proceeds of Zenrock’s sale of the oil to TOTSA. This was a sum of US$16,517,443.06 (the “Receivables”). Interpleader proceedings were started by CACIB to resolve this question. Pending resolution of the interpleader, TOTSA remitted the Receivables to CACIB’s solicitors to hold as escrow agent. On 23 November 2020, a settlement agreement was entered into between CACIB, ING and the escrow agent (the “Settlement Agreement”). Under the settlement, CACIB received US$6,197,532.75 from the Receivables.

On 19 November 2020, CACIB filed its Defence and Counterclaim (Amendment No. 1) to Suit 555, adding an alternative counterclaim for the sum of US$23,662,732.50 under the letter of indemnity issued by PPT to CACIB dated 9 April 2020 (the “LOI”).

Suits 451 and 555 were transferred to the SICC pursuant to an Order of Court dated 9 February 2021 and renumbered as SIC 1 and SIC 2 respectively. The order also provided that: (a) the costs scale in the GDHC and O 59 of the Rules of Court (Cap 322, 2014 Rev Ed) (“ROC 2014”) were to continue to apply to the assessment of costs incurred in respect of all proceedings in Suits 451 and 555 before their transfer to the SICC; and (b) O 110 r 46 of the ROC 2014 would apply to the assessment of costs incurred in respect of all proceedings in Suits 451 and 555 after their transfer to the SICC.

The trial of SIC 1 and SIC 2 took place before the Judge over eight working days in December 2021. There were two main disputes before the SICC. The first was whether PPT was entitled to payment under the Credit even though the issue of the Credit had been procured by the fraud of CACIB’s customer, Zenrock. This was the “Credit dispute”. The second dispute was whether PPT had breached any of the warranties it had given to CACIB under the LOI. This was the “LOI dispute”. On 13 January 2022, the Judge delivered his decision in Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd [2022] SGHC(I) 1. He found that CACIB’s claims for an injunction, declaration and an order for reimbursement of the LC Sum paid to PPT all failed, that CACIB was liable under the Credit and, therefore, that PPT was entitled to retain the LC Sum. The Judge also dismissed CACIB’s claim for breach of the warranties given in the LOI, finding that (a) the obligation by PPT to give the warranties therein only arose if CACIB first made payment by the due date provided in the sale contract between PPT and Zenrock, which CACIB had failed to do; (b) in any event, none of the warranties set out in the LOI had been breached; (c) the indemnity provided in the LOI by PPT consequent upon any breach of warranty also did not operate since CACIB had not made payment under the Credit by the due date; and (d) if the express indemnity in the LOI had operated independently of any breach of warranty, CACIB had not discharged its burden of proof in establishing any loss for which PPT would be liable to indemnify it. The Judge then reserved for future determination all questions of further relief, including damages, interest and costs.

The Judge dealt with the reserved issues on 30 March 2022. He then ordered that: PPT was entitled to payment of US$23,662,732.50, representing the sum due under the Credit, on 5 June 2020 from CACIB and was entitled to interest at the rate of 5.33% per annum and pro rata on the said sum of US$23,662,732.50 from 5 June 2020 to 18 November 2020 (the “Interest”); CACIB was to pay PPT the Interest forthwith; CACIB was to pay PPT the Recoverable Costs, as defined in para 14 of the court’s Minute Sheet dated 30 March 2022 and in the amounts set out below, forthwith;

Item	Amount awarded
Pre-transfer costs	S$61,000.00
Work done by PPT’s lawyers post-transfer	US$780,000.00
Mr Collett KC’s fees	£170,000.00
Costs of the BOC Guarantee	US$237,061.34 up to November 2022 but to be prorated at US$324.15 per day if the litigation terminates earlier
Travel expenses for PPT’s witnesses	S$40,714.23 and ¥136,400
Travel expenses for Mr Collett KC	£11,242.98
Wang Jing & Co’s fees	US$12,639.32
Mr Driscoll’s fees	US$50,000
Miscellaneous expenditure	US$29,182.01, S$45,946.55 and ¥2,423,720

CACIB was to pay interest on each of the total sums ordered at the judgment rate of 5.33% per annum and pro rata until full payment.

The Appeals were heard on 19 and 20 October 2022. By the Liability Judgment, we allowed the Appeals in part, finding that (a) in respect of the Credit dispute, CACIB was not entitled to rely on Zenrock’s fraud to set aside and avoid liability to pay the LC Sum to PPT; but (b) in respect of the LOI dispute, PPT had breached the warranty of marketable title given in the LOI, such that CACIB was entitled to damages. Crucially, we found that what CACIB was entitled to claim under the LOI was loss which it would have avoided if it had unquestionable security over the Receivables payable by TOTSA to Zenrock to which it was entitled under the LOI, and which it would have had in the absence of fraud, in return for making payment under the Credit.

Accordingly, we also set aside the orders on interest and costs made by the Judge on 30 March 2022 and ordered that parties file written submissions on: (a) the principal amounts and periods for which interest would be payable to either party, if any, and the rate applicable thereto; and (b) the costs to be awarded for the Appeals and the trial. At that stage, there also remained some uncertainty on PPT’s part as to the amount of CACIB’s recovery in the settlement of the interpleader proceedings. We gave the parties leave to refer any outstanding dispute on this matter to us. This issue has now been resolved and we explain the resolution below. As stated in [9] of the Interrogatories Judgment, the amount of damages which PPT has to pay CACIB for breach of warranty is US$10,319,910.31. This was derived by deducting from the Receivables of US$16,517,443.06 the sum of US$6,197,532.75 received by CACIB under the Settlement Agreement with ING and the escrow agent.

The parties’ cases

It should be noted in relation to the claims for...