AKRO Group DMCC v Discovery Drilling Pte Ltd

• Jurisdiction: Singapore
• Judge: Patricia Bergin IJ
• Judgment Date: 31 May 2019
• Year: 2019
• Docket Number: Suit No 1 of 2017
• Court: International Commercial Court (Singapore)

AKRO Group DMCC

and

Discovery Drilling Pte Ltd

[2019] SGHC(I) 8

Patricia Bergin IJ

Suit No 1 of 2017

Singapore International Commercial Court

Civil Procedure — Rules of court — Singapore International Commercial Court — Offshore case — Application for decision that action was offshore case — Whether application should be allowed

Contract — Breach — Defendant-in-counterclaim agreed to provide specialised project management services to plaintiff-in-counterclaim regarding refurbishment of rig — Defendant-in-counterclaim delivered rig late — Defendant-in-counterclaim inflated labour charges — Plaintiff-in-counterclaim claiming damages for late delivery and inflated charges — Whether plaintiff-in-counterclaim entitled to damages

Equity — Fiduciary relationships — Breach of fiduciary duties — Plaintiff-in-counterclaim claiming defendants-in-counterclaim manipulated or fabricated or forged invoices — Plaintiff-in-counterclaim claiming defendants-in-counterclaim received secret profits — Whether defendants-in-counterclaim breached fiduciary duties — Whether plaintiff-in-counterclaim entitled to equitable compensation or account of profits

Tort — Misrepresentation — Fraud and deceit — Plaintiff-in-counterclaim claiming defendants-in- counterclaim manipulated or fabricated or forged invoices — Whether invoices were manipulated or fabricated or forged — Whether plaintiff-in-counterclaim entitled to damages

Held, allowing the counterclaim:

Offshore decision

(1) The application for an extension of time was granted. DDPL acted promptly and diligently when it became apparent that an application for an offshore decision was necessary. None of the Cross-Defendants had taken part in any of the proceedings since DDPL made its allegations of fraud and conspiracy. It was understandable that DDPL wished to have legal representation in circumstances where its claims were not free from complexity. Finally, it was also a matter of some importance from the court's perspective: at [45] to [47].

(2) This was an offshore case. The Rig was repaired and refurbished in Houston, Texas in the USA. The contract negotiations occurred in Houston and the Contract was executed in Delhi, India. The Contract was performed in Texas and then between Texas via Corpus Christi in the US Gulf of Mexico and Gujarat, India and Mumbai, India. Further, the majority of the conduct alleged in the claim and counterclaim occurred in the USA and partly en route to and in India. The payments that were made by DDPL to AKRO were made via its Singapore office. The fact that DDPL was a Singapore company was not of itself, nor combined with the fact that monies were paid via its office in Singapore, a basis for a conclusion that the action or the dispute had a substantial connection to Singapore: at [50] to [54].

Assessment of damages for judgments entered in DDPL's favour

(3) In relation to the late delivery of the Rig, it was DDPL's unchallenged evidence that DDPL was liable to pay JDIL US$1,123,470. In addition, loss suffered for charter hire from JDIL amounted to US$1,169,566. The total of the damages in respect of the late delivery of the Rig were therefore assessed at US$2,293,036: at [63] to [66].

(4) It was DDPL's unchallenged evidence that the charges for supply of labour for the Project were inflated and that by reason of such inflation DDPL suffered loss. The total damages in this respect were assessed at US$352,324.46: at [67] to [73].

DDPL's other claims

(5) In relation to the claims in fraud and conspiracy, there were numerous instances of quotes/invoices that had been manipulated or fabricated or forged. The Cross-Defendants had participated in the fabrication of invoices. The assessment of DDPL's expert witness that the charges were inflated by an average of 35.57% was accepted: at [86] to [134] and [145].

(6) DDPL also made claims in respect of a number of invoices in respect of which it was not able to obtain the original documentation from the suppliers. It was more probable than not that these invoices were also dealt with by the Cross-Defendants in the same manner as those that were fabricated. It was reasonable to assume in the circumstances that the charges in relation to these invoices were also inflated by 35.57%. Thus, DDPL's loss in relation to the invoices was US$5,743,155.14: at [144] to [148].

(7) AKRO owed (a) fiduciary duties to DDPL to ensure that it obtained quotes from third parties honestly; and (b) contractual duties to manage the Project. By creating false documents so that DDPL's records would show that its own quotes were to be preferred, AKRO had breached those duties: at [149] to [152].

(8) Mr Arora and Mr Kumar, as representatives of DDPL, owed duties of loyalty and fidelity to DDPL; to act in the best interests of DDPL; to inform DDPL of any activity which could damage its interests; not to act in a manner that conflicted with their duty to DDPL; and not to make any profit from transactions relating to the supply of goods and/or services for the Project without DDPL's consent. Mr Arora and Mr Kumar were in breach of their fiduciary obligations to DDPL in receiving secret profits in the form of payments of cash and the receipt of mobile phones: at [153] and [155].

(9) AKRO by itself and in concert with Mr Kandoth, Mr Fowler, Mr Arora and Mr Kumar created fabricated or falsified documents. This conduct was pursued with the intention of harming DDPL and obtaining a benefit for itself. Further, AYBI by itself and in concert with Mr Kandoth, Mr Fowler, Mr Arora and Mr Kumar created fabricated or falsified documents. This conduct was pursued with the intention of harming DDPL and obtaining a benefit for itself: at [156] and [157].

(10) Mr Arora and Mr Kumar were also involved with AKRO, Mr Kandoth and Mr Fowler in the conspiracy as pleaded, and that they acted with the intention of harming DDPL and made secret profits for themselves. Mr Arora and Mr Kumar were also involved with AYBI, Mr Kandoth and Mr Fowler in the conspiracy as pleaded, and that they acted with the intention of harming DDPL and made secret profits for themselves: at [158] and [159].

(11) In the circumstances, judgment was entered in favour of DDPL against each of AKRO, Mr Kumar, Mr Arora, Mr Kandoth and Mr Fowler in the amount of US$5,743,155.14. Since AYBI was party to the fabrication of its invoices only, judgment was entered in favour of DDPL against AYBI in respect of its invoices in the amount of US$3,270,505.65, 35.57% of which is US$1,163,318.86: at [147], [174] and [176].

(12) Judgment was also entered in favour of DDPL against Mr Kumar and Mr Arora in respect of the secret profits that they received in the amount of US$500,000: at [178].

Case(s) referred to

ACB v Thomson Medical Pte Ltd[2017] 1 SLR 918 (refd)

Hospital Products Ltd v United States Surgical Corp(1984) 156 CLR 41 (refd)

Tan Yok Koon v Tan Choo Suan[2017] 1 SLR 654 (refd)

Teras Offshore Pte Ltd v Teras Cargo Transport (America) LLC[2016] 4 SLR 75 (refd)

Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua[2018] 2 SLR 655 (refd)

Facts

In late 2015, the defendant (“DDPL”) purchased the rig “Rowan Louisiana” (“the Rig”) for the purposes of providing it to another company, Jindal Drilling and Industries Ltd (“JDIL”). The Rig required various works including refurbishment, repair and installation of equipment before delivery (“the Project”). On 4 November 2015, the plaintiff (“AKRO”) and DDPL executed an agreement (“the Contract”) pursuant to which AKRO agreed to provide DDPL specialised project management services for the Project.

In 2016, AKRO commenced these proceedings against DDPL, seeking payment of allegedly outstanding project management fees. DDPL denied its indebtedness on various bases including alleged breaches of contract by AKRO and counterclaimed for damages. In particular, DDPL alleged that the Rig was delivered late, resulting in DDPL being liable for damages to JDIL, which DDPL then in turn claimed for from AKRO. DDPL also counterclaimed against AKRO for inflating charges for the supply of goods and services for the Project.

Subsequently, DDPL was granted leave to amend its counterclaim to include claims in fraud and conspiracy against AKRO, two of AKRO's directors (“Mr Kandoth” and “Mr Fowler”), AYBI Energy FZE (“AYBI”), a company related to AKRO, and two former representatives of DDPL (“Mr Kumar” and “Mr Arora”) (collectively the “Cross-Defendants”). These claims were based on allegedly fraudulent and/or fabricated invoices purportedly from third-party suppliers created by AKRO and AYBI with the involvement and assistance of Mr Kumar and Mr Arora.

After DDPL filed its amended pleadings, AKRO took no further part in the proceedings. The other Cross-Defendants also took no part in these proceedings. On DDPL's application in reliance upon AKRO's failure to appear and to comply with the court's orders, judgment was entered in favour of DDPL on AKRO's claim against it and on its claim against AKRO, except for the claims in respect of the allegedly fraudulent and/or fabricated invoices.

Subsequently, DDPL's former solicitors withdrew from further acting for DDPL. A practitioner from India applied to become a registered foreign lawyer (“RFL”) with the Singapore International Commercial Court for the purpose of acting for DDPL at trial. The RFL application would have been allowed if a decision was made that the proceedings were an “offshore case”, ie, an action that had no substantial connection with Singapore (“the offshore decision”). DDPL also applied for an extension of time within which to bring an application for the offshore decision.

Legislation referred to

Legal Profession (Foreign Representation in Singapore International Commercial Court) Rules 2014 (S 851/2014) r 3(2)

Legal Profession Act (Cap 161, 2009 Rev Ed) s 36O

Misrepresentation Act (Cap 390, 1994 Rev Ed) s 2

Rules of Court (Cap 322, R 5,...