Arovin Ltd and another v Hadiran Sridjaja

CourtInternational Commercial Court (Singapore)
JudgeVivian Ramsey IJ
Judgment Date10 September 2019
Neutral Citation[2019] SGHC(I) 13
Citation[2019] SGHC(I) 13
Docket NumberSuit No 5 of 2018 (Summons No 47 of 2019)
Plaintiff CounselPaul Seah, Alcina Chew, Eugene Low and Pang Hui Min (Tan Kok Quan Partnership)
Defendant CounselAndy Leck, Kong Xie Shern and Lee Zhe Xu (Wong & Leow LLC)
Vivian Ramsey IJ: Introduction

This case concerns, relevantly to the present application (“the Application”), a claim by the Plaintiffs against the Defendant for 75% of various liabilities which have arisen when Jurong Aromatics Corporation Pte Ltd (“JAC”), a joint venture company, went into receivership. EDB Investments Pte Ltd (“EDBI”) is the corporate investment arm of the Singapore Economic Development Board and it had agreed to invest in JAC on terms that it could exit from the investment in JAC.

The Plaintiffs, the Defendant, Shefford and EDBI entered into a Put and Call Option Agreement in October 2010 (the “Initial PCOA”). Subsequently it was agreed under a Binding Term Sheet (“BTS”) in March 2011 that the 2nd Plaintiff, the Defendant and Shefford would be released from their obligations under the Initial PCOA and Vinmar Holdings LP (“Vinmar”) would provide a guarantee in favour of EDBI to cover certain liabilities. This led to an Amended and Restated Put and Call Option Agreement (the “Amended PCOA”) entered into on 18 April 2011 between the 1st Plaintiff, Vinmar and EDBI.

The Plaintiffs’ case is that the parties agreed that the Defendant and/or Shefford (a company owned and controlled by the Defendant and currently in liquidation) would take delivery and ownership of 75% of the EDBI Shares, while the Plaintiffs would take delivery and ownership of the remaining 25% and, in line with that 75/25 split, the parties agreed on 1 April 2011 by way of a Binding Side Letter Agreement (“BSLA”) to share all responsibility, costs and commitments in connection with the EDBI Shares in the same proportion.

The Plaintiffs contend that the Defendant and/or Shefford was to bear 75% of all responsibility, costs and commitments in relation to the EDBI Shares, while the Plaintiffs were to bear 25%. On a true construction of Clauses 2 and 3 of the BSLA, the Plaintiffs say that the Defendant and/or Shefford are liable for various payments pursuant to the BSLA but, in breach of the BSLA, the Defendant has failed to make such payments to the Plaintiffs. Those payments include liabilities which arose from the settlement in August 2017 of an arbitration by EDBI against the 1st Plaintiff and Vinmar (the “Settlement”).

The Defendant disputes any liability under the BSLA and, among other things, the Defendant has alleged that the Settlement is void for offending the public policy against: “upholding contracts affected by maintenance and/or champerty”, if it is found that EDBI is aiding the Plaintiffs in the prosecution of this action against the Defendant in return for a share in the fruits of this litigation; and/or “protecting the purity of justice and the interests of vulnerable litigants”, given that the amounts payable to EDBI represent a significant portion of what the Plaintiffs may recover from the Defendant if they were to succeed in this action, so “it is reasonably foreseeable that EDBI would be in a position to influence the outcome of this litigation, when it is not a party to this action and to the [BSLA].”

Accordingly, the Defendant says that the Plaintiffs are not entitled to claim against the Defendant based on the amounts payable to EDBI, as allowing the Plaintiffs' claims would be giving effect to a contract that should be made void for being contrary to public policy.

The Application

The Application is made under O 110 r 17(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) which generally provides for production of documents in the SICC in place of discovery under O 24 of the ROC.

Under O 110 r 17(2) of the ROC it is provided as follows, relevantly to the Application:

In an application under paragraph (1), the Court may order the production of documents objected to if – the request to produce was made in accordance with Rule 15(3); and none of the following objections apply: lack of sufficient relevance to the case or materiality to its outcome; legal impediment or privilege; loss or destruction of the document that has been shown with reasonable likelihood to have occurred; such considerations of procedural economy, proportionality, fairness or equality of the parties as the Court determines to be compelling.

The document production regime in O 110 rr 14 to 21A of the ROC imposes different obligations to those which apply to discovery under O 24 of the ROC. Instead of a party having to search for and give discovery of documents which could (a) adversely affect his own case; (b) adversely affect another party’s case; or (c) support another party’s case, the obligation of a party is to produce documents requested by the other party under O 110 r 17(2). That obligation is in addition to the obligation under O 110 r 14(1) to provide documents on which a party relies. There are important limitations on the obligation to produce documents. The Court, in considering whether to order production under O 110 r 17(2), has a discretion to decide whether to do so when none of the objections enumerated under r 17(2)(b) apply. It follows that the Court will not order production if any of the objections apply. It will not do so, in particular, under r 17(2)(b)(i) if the documents requested lack sufficient relevance to the case or materiality to its outcome, or under r 17(2)(b)(vii) if there are considerations of procedural economy, proportionality, fairness or equality of the parties as the Court determines to be compelling.

For instance, in considering whether there is sufficient relevance or materiality, there will be cases where on a broad test of relevance the documents might be said to have some relevance to the case or a degree of materiality but where the Court determines that there is not sufficient relevance to the case or materiality to the outcome.

Further, the requests must be properly focussed on the specific documents or a narrow category of documents. Broad categories, casting a wide net, will usually not be allowed unless, in specific circumstances, a narrower category within that broad category can easily be discerned by the Court.

With those observations in mind, I now turn to consider the Application.

The Application is made by the Defendant, who seeks the production of three categories of documents: Request 1: All documents (including, without limitation, internal documents, meeting minutes, and/or correspondence) relating to the circumstances in which the Defendant and/or Shefford's obligations under the Initial PCOA were finalised. Request 11: All documents (including, without limitation, correspondence, internal notes, and/or meeting notes) relating to the negotiation of Clauses 4 and 5 of the Settlement. Request 12: All documents identifying specific examples of cooperation by EDBI and/or relating to any purportedly "reasonable and lawful actions" taken by EDBI thus far in cooperation with the Plaintiffs in the prosecution of their claim against the Defendant, in accordance with Clause 4 of the Settlement or otherwise.

Request 1 Defendant’s submissions

This Request seeks production of all documents relating to the circumstances in which the Defendant and/or Shefford's obligations under Initial PCOA were finalised. The Plaintiffs have objected to the production of these documents on the basis that they are neither relevant nor material, as: (a) the Plaintiffs’ claims are under the BSLA, and not the Initial PCOA; (b) it would be the documents relating to the circumstances in which the BSLA was finalised that would be material to the dispute, and not those surrounding the Initial PCOA; and (c) the Initial PCOA has already been disclosed.

The Defendant does not dispute the points raised by the Plaintiffs, but submits that the circumstances in which the Initial PCOA were finalised remain relevant and material. The Plaintiffs’ case is that parties had specifically intended to share all liabilities arising out of the guarantee associated with EDBI’s investment in JAC and, given that the Defendant was later removed from his obligations under the Initial PCOA, the BSLA was meant to ensure that the Defendant continued to share a portion of these liabilities at the backend.

However, the Defendant contends that the question of who was meant to bear the liabilities arising out of EDBI’s investment in JAC is inextricably linked to the question of who was allocated certain offtake agreements in respect of the products to be manufactured by JAC's plant. The Defendant says that he is therefore disputing the Plaintiffs’ underlying assertion that parties had specifically intended to share fixed portions of liabilities arising out of the guarantee associated with EDBI’s investment in JAC.

The Defendant says that the Initial PCOA represents the first time parties had allocated responsibility arising out of the guarantee associated with EDBI’s investment in JAC, but the agreement itself is silent as to why and how parties had agreed to this arrangement. Accordingly, he submits that the negotiations leading up to the signing of the Initial PCOA would shed light as to the broader principles governing the allocation of responsibility for the guarantee associated with EDBI’s investment in JAC.

The Defendant also says that the Plaintiffs have not alleged that pre-contractual negotiations are inadmissible per se, which is in itself an acknowledgement that these documents may be probative towards the interpretation of a contract.

In the circumstances, the Defendant submits that these documents are both relevant and material for the purposes of this dispute.

Plaintiffs’ submissions

While the Plaintiffs do not dispute that pre-contractual negotiations may be admissible to assist the Court in contractual interpretation, they submit that the contract to be interpreted in the present case is the BSLA and the Plaintiffs have already disclosed, among other things: Documents evidencing that...

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