Arris Solutions, Inc and others v Asian Broadcasting Network (M) Sdn Bhd

• Jurisdiction: Singapore
• Court: International Commercial Court (Singapore)
• Judge: Quentin Loh J
• Judgment Date: 08 February 2017
• Neutral Citation: [2017] SGHC(I) 1
• Citation: [2017] SGHC(I) 1
• Published date: 10 February 2017
• Plaintiff Counsel: Ramesh Kumar s/o Ramasamy and Mak Sushan, Melissa (Allen & Gledhill LLP)
• Defendant Counsel: Choy Wing Kin Montague (Clifford Law LLP)
• Docket Number: Suit No 4 of 2016 (HC Summons No 2940 of 2016 and SIC Summons No 4 of 2017)
• Hearing Date: 09 January 2017
• Date: 08 February 2017
• Subject Matter: Recognition of foreign insolvency proceedings,Breach,Contract,Cross-border insolvency,Insolvency law

Simon Thorley IJ (delivering the grounds of decision of the court): Introduction and the Parties

The Plaintiffs applied for summary judgment for sums alleged to be due to the Plaintiffs from the Defendant for equipment and services provided pursuant to a number of different but related contracts.

After hearing counsel on 9 January 2017, this court unanimously granted judgment to the Second and Third Plaintiffs on terms set out below and dismissed the First Plaintiff’s claims. We now give our reasons.

Between 2011 and 2013, the Defendant, a company incorporated in Malaysia, entered into seven agreements with General Instrument Corporation (“GIC”), a company incorporated in the state of Delaware in the United States of America (“USA”), and one with a subsidiary of GIC, Motorola Mobility General Instrument Malaysia Sdn Bhd (“Motorola Malaysia”), a company incorporated in Malaysia (collectively “the Agreements”).¹

The Agreements, short details of which are set out in the Annex hereto, all relate to the supply and service of media entertainment and digital communications equipment. It is common ground that the specified equipment and services were provided pursuant to these Agreements. There is no contention that the goods were not fit for purpose nor is it alleged that the services were in any way inadequate. Moreover, there is no dispute that the sums involved are owed by the Defendant; the dispute is whether the Plaintiffs are entitled to claim those sums.

It is not therefore necessary to consider the terms of each contract in any detail. Each contained two material clauses which are in identical terms. First, an applicable law clause which provided that:²

“This Agreement shall be governed by and interpreted in accordance with the Laws of the Republic of Singapore for every purpose. …”

Secondly, there was an assignment clause (“the Assignment Clause”) which provided that:³

“Neither party shall be entitled to assign, transfer, and/or subcontract any of its rights and obligations under this Agreement without the prior written consent of the other Party, such consent not to be unnecessarily withheld or delayed.”

In its evidence and submissions, it was made clear that the Defendant attached great weight to the Assignment Clause as it had carried out extensive pre-contractual enquiries of a number of potential suppliers, and had satisfied itself that GIC and Motorola Malaysia were the companies best able to supply the equipment and services.

It is not necessary to consider the history of the demands for payment made by the Plaintiffs, since they were not met in full and resulted in the issue of a writ in the High Court on 11 February 2016 and, by order of the High Court dated 29 June 2016, the action was transferred to the Singapore International Commercial Court (“SICC”).

In the Statement of Claim as originally served on 11 February 2016 it was averred that the First, Second and Third Plaintiffs were affiliates of Arris Group Inc, a company incorporated in the state of Delaware, USA and on 17 April 2013, the Third Plaintiff was acquired by Arris Group Inc.⁴ It was further pleaded that in January 2014, as part of an internal reorganisation, all debts owed by the Defendant to the Third Plaintiff were assigned to the First Plaintiff.

As a result, it was claimed that the First Plaintiff was owed the sum of RM48,133,369.76 and that the Second Plaintiff was owed RM549,574.50.⁵ There was also a claim for interest. No relief was sought by the Third Plaintiff.

By the Defence as originally filed on 4 May 2016, the sums in question were not disputed but the Plaintiffs were put to proof that they were the parties entitled to be paid.⁶

By a summons dated 15 June 2016, the Plaintiffs sought summary judgment under O 14 of the Rules of Court (Cap 332, R 5, 2014 Rev Ed) (“the Rules of Court”).⁷ The Defendant countered with a summons for Further and Better Particulars (“F&BP”) dated 21 June 2016.⁸

The Order 14 Proceedings

The principles relating to an application for summary judgment are well settled and not disputed. The Defendant’s case was that the Plaintiffs had not established a prima facie case that they were entitled to stand in the shoes of the contracting parties so as to be entitled to payment.

At a Case Management Conference on 15 July 2016, the Plaintiffs were directed to file further evidence dealing, in effect, with certain aspects of the Defendant’s request for F&BP so as to clarify the process by which it was claimed that the various Plaintiffs had become entitled to claim the sums due.⁹

So far as concerns the Second Plaintiff, the Plaintiffs had already filed, as exhibit “MC-1” to an affidavit of Marc Stephen Geraci (“Mr Geraci”), the Treasurer and Senior Vice President of the parent company of the Plaintiffs, dated 15 June 2016, two Certificates of Change of Name of Company issued by the Companies Commission of Malaysia.¹⁰ However, they were in the Malay language and had not been translated into English as required by O 92 r 1 of the Rules of Court. These lapses were subsequently rectified, and the translations demonstrate that Motorola Malaysia had first changed its name to GIC Home Sdn Bhd, on 25 March 2013 and then to that of the Second Plaintiff on 17 March 2015.¹¹

The Defendant did not challenge the authority of these certificates and it is therefore plain that the Plaintiffs have established the necessary prima facie case that the Second Plaintiff is the same entity as Motorola Malaysia and that the sums claimed are owed to it by the Defendant. The Assignment Clause does not relate to a mere change of name, so that the Defendant could not (and did not) raise any objection based on the fact that it had no notice of the change of name.

The position of the Third Plaintiff is less straightforward. GIC was a company incorporated under the laws of the state of Delaware, USA and the Plaintiffs filed an affidavit of Eric Klinger-Wilensky (“Mr Klinger-Wilensky”) dated 29 July 2016 to deal with this. Mr Klinger-Wilensky is a partner in the Delaware law firm Morris, Nicholls, Aright & Tunnell LLP, who is admitted to practice (inter alia) in Delaware. Mr Klinger-Wilensky exhibited to his affidavit an Opinion dated 28 July 2016 which he had provided to the Plaintiffs’ solicitors, Allen & Gledhill LLP.¹² This Opinion leads to the following conclusions: On 18 December 2014, a process of merger (“the Merger”) took place under s 253 of the General Corporation Law of the State of Delaware (“the DGCL”), whereby a wholly-owned subsidiary of GIC, General Instrument Wireline Networks Inc (“Wireline”), was merged into GIC; Pursuant to s 259 of the DGCL, upon the Merger, the separate existence of Wireline ceased and all its property and debts became vested in GIC; Immediately after the Merger, GIC changed its name to that of the Third Plaintiff; Neither the Merger nor the change of name had any effect on the separate existence of GIC as a legal entity.

The Defendant did not file any evidence in answer to that of Mr Klinger-Wilensky and, in consequence, the Court accepts his Opinion on Delaware law and is satisfied that the Plaintiffs have established the necessary prima facie case that the Third Plaintiff is the same entity as GIC. Again, the Defendant could not (and did not) seek to rely on the Assignment Clause as requiring that it give prior written consent to either the Merger (which did not affect the existence of GIC) or to the change of name.

As for the First Plaintiff, Mr Geraci has given evidence that all debts owed or owing from the Defendant to the Third Plaintiff were assigned to the First Plaintiff on or about 15 January 2014.¹³ He asserts that the Defendant was notified of this assignment by way of a letter dated 17 October 2014, subsequent to the assignment, but has given no evidence to suggest that the prior written consent of the Defendant was sought, far less obtained, for this assignment.

Conscious that this might present a difficulty in satisfying the Court that the assignment rendered the Defendant liable to the First Plaintiff, at the resumed hearing on 19 September 2016, the Plaintiffs sought judgment in favour of the First, or, in the alternative, the Third Plaintiff.¹⁴

So far as concerns the First Plaintiff, it was argued that, although the assignment might not be effective in law to make the Defendant liable, since its prior consent to the assignment had not been sought, it could be effective in equity. The Plaintiffs’ attention was then drawn to the English House of Lords decision in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 (“Linden Gardens”), a decision which has subsequently been applied in Singapore in Total English Learning Global Pte Ltd v Kids Counsel Pte Ltd [2014] SGHC 258 (“Total English”). Linden Gardens stands for the rule that where there is a contractual prohibition on assignment without prior consent, a purported assignment executed without obtaining such consent will be only effective as between the assignor and assignee, but will not bind the other contracting party, whose rights and obligations will remain to the assignor.

It was also pointed out that the Statement of Claim sought no relief on the part of the Third Plaintiff. The Plaintiffs therefore sought the indulgence of an adjournment to consider their position with regard to the First Plaintiff and to seek to amend the pleadings with regard to the Third Plaintiff.¹⁵

At a Case Management Conference (“CMC”) on 21 November 2016, the Defendant did not object to the Plaintiffs’ application and the Plaintiffs were consequently given leave to amend to add a claim to relief by the Third Plaintiff in alternative to that made by the First Plaintiff. The claim made by the First Plaintiff was however maintained. The Defendant was given leave to make consequential amendments and a further hearing of the...