BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another

• Jurisdiction: Singapore
• Judge: Quentin Loh JAD
• Judgment Date: 19 December 2022
• Neutral Citation: [2022] SGHC(I) 17
• Court: International Commercial Court (Singapore)
• Docket Number: Suit No 1 of 2015
• Published date: 22 December 2022
• Year: 2022
• Hearing Date: 28 April 2022
• Plaintiff Counsel: Francis Xavier s/o Subramaniam Xavier Augustine SC, Chia Xin Ran Alina and Gani Hui Ying Tracy (Rajah & Tann Singapore LLP)
• Defendant Counsel: Davinder Singh s/o Amar Singh SC, Jaikanth Shankar, Tan Ruo Yu, Rajvinder Singh Chahal and Amarpall Singh (Davinder Singh Chambers LLC)
• Citation: [2022] SGHC(I) 17

Quentin Loh JAD, Vivian Ramsey IJ and Anselmo Reyes IJ:Introduction

This judgment deals with the costs of a drawn-out litigation arising from a joint venture between Australian and Indonesian companies to exploit a new technology to upgrade coal for commercial sale that ended in a series of disputes. The assessment of costs raises the question of how costs should be awarded in a complex commercial dispute that was heard in the Singapore International Commercial Court (“SICC”) in three tranches, in which the plaintiffs succeeded on issues of liability that took up the first two tranches, only to fail on issues of causation of loss and quantum in the third tranche. The main question is therefore how (if at all) the assessment of costs should reflect the fact that the plaintiffs won substantial battles in this litigation but ultimately lost the war and obtained nothing.

Background

The facts of this case have been comprehensively set out in our earlier judgments: see BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another[2016] 4 SLR 1 (“First Judgment”); BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another[2017] 5 SLR 77 (“Second Judgment”) and BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another[2022] SGHC(I) 2 (“Third Judgment”). We will not rehearse them except to highlight salient points. Unless otherwise specified, the abbreviations defined in our earlier judgments have also been used here.

The parties

The second plaintiff, Binderless Coal Briquetting Company Pty Ltd (BCBC), is an Australian company that holds the exclusive worldwide licence of a technology for upgrading sub-bituminous coal into briquettes, known as the Binderless Coal Briquetting Process (the BCB Process). The first plaintiff, BCBC Singapore Pte Ltd (BCBCS), is a Singapore company. BCBC and BCBCS are indirect wholly-owned subsidiaries of White Energy Company Ltd (WEC), a public-listed company in Australia.

The first defendant, PT Bayan Resources TBK (BR), is a public-listed company in Indonesia that owns subsidiaries operating sub-bituminous coal mines in Tabang, Indonesia. The second defendant, Bayan International Pte Ltd (BI), is a Singapore company associated with BR.

The parties’ cases in SIC 1

In June 2006, BCBC and BI executed a joint venture deed (referred to in the First Judgment (at [16]) as “the JV Deed”). Pursuant to the JV Deed, the parties agreed to construct and commission a coal briquette processing plant in Tabang (referred to in the First Judgment (at [17]) as “the Tabang Plant”) to exploit the BCB Process and upgrade sub-bituminous coal into briquettes for commercial sale. The joint venture company, PT Kaltim Supacoal (KSC), was incorporated in Indonesia in January 2007, with BCBCS and BI holding 51% and 49% of its shares respectively. In October 2008, BI sold its shares in KSC to BR, as part of BR’s corporate restructuring. Then, in 2009, by way of a Deed of Novation, BCBCS and BR were substituted for BCBC and BI as the parties to the JV Deed. The identities of the parties to the JV Deed were thereafter aligned with the identities of the shareholders of KSC.

By November 2011, disagreements had arisen between BCBCS and BR in relation to the joint venture. In December 2011, the plaintiffs commenced an action in the High Court against the defendants for breach of their contractual obligations under the joint venture. On 4 March 2015, the action was transferred to the SICC and renumbered SIC/S 1/2015 (“SIC 1”).

The gist of the plaintiffs’ pleaded case was that BR was under an obligation to: (a) provide funding to KSC; and (b) procure the supply of coal by its Indonesian subsidiaries to KSC until the Tabang Plant was in a position to exploit the BCB Process on a commercial basis. The Tabang Plant would be in that position when it could produce approximately 1 million metric tonnes per annum (“MTPA”) of upgraded coal briquettes. The parties referred to this benchmark production capacity as “nameplate capacity”. BR acted in breach of those obligations and thereby wrongfully repudiated the JV Deed. The plaintiffs’ case was that but for BR’s breaches, the Tabang Plant would have achieved nameplate capacity by end-January 2012 or June 2012 at the latest. The plaintiffs sought to recover from the defendants the wasted expenditure that they had incurred as a result of the joint venture as well as damages for the loss of a chance to expand the production capacity of the Tabang Plant to 3 MTPA.

The defendants denied that BR was under any obligation to provide funding or procure the supply of coal to KSC and, in any event, the performance of the coal supply obligation had been rendered illegal by legislation passed by the Indonesian government which put in place benchmark prices for the sale of minerals and coals in Indonesia (referred to in the Third Judgment (at [8(d)]) as “the HBA Regulations”), relieving BR of any performance obligations. The defendants further denied that the Tabang Plant could have achieved nameplate capacity by end-January 2012 or June 2012, or at all, and so the joint venture would not have made any profits enabling the plaintiffs to recoup its alleged wasted expenditure. The defendants pleaded that the plaintiffs’ claim for damages for loss of a chance was flawed because there had never been an agreement between BR and BCBCS to expand the Tabang Plant’s capacity to 3 MTPA.

The defendants also contended that KSC would have been starved of the funding needed for the Tabang Plant to achieve nameplate capacity or expand production capacity to 3 MTPA. The defendants pleaded that, by November 2011, BR had informed BCBCS that it wished to liquidate KSC. BR would thus not have consented to further funding being provided to KSC by BCBCS and/or WEC. The defendants also denied that BCBCS or WEC were financially able to provide gift funding to KSC and, even if they could, such funding would have amounted to breach of duties owed by BCBCS’s and WEC’s directors under the Companies Act (Cap 50, 2006 Rev Ed) and/or the Australian Corporations Act 2001 (Cth). The defendants additionally argued that the plaintiffs’ claims were barred by the rule against reflective loss as its alleged loss simply mirrored any loss or damage suffered by the joint venture company, KSC. Finally, the defendants counterclaimed that BCBCS had acted in breach of its implied obligations to use reasonable care and skill in providing technical assistance to KSC and procure that the Tabang Plant reach nameplate capacity within a reasonable period of time.

The proceedings

We will refer in this judgment to the three tranches of the litigation in SIC 1 as “Tranche 1”, “Tranche 2” and “Tranche 3”.

By agreement, the parties asked the court to decide in Tranche 1 issues concerning the parties’ contractual obligations without going into whether or not those obligations had been breached, leaving those and further issues to be decided in later tranches. In Tranche 1 (as set out in the First Judgment ([2] above)) we held, inter alia, that: (a) BR did not owe the funding obligations alleged by the plaintiffs; and (b) BCBCS was not under any of the implied obligations pleaded by the defendants. We therefore dismissed the defendants’ counterclaim. We found that there was insufficient evidence before the court to determine if BR owed the alleged coal supply obligation, but held that BR had not established that any such coal supply obligation had been made illegal by the HBA Regulations. There was no appeal against our decision in Tranche 1.

The extent of BR’s coal supply obligation, whether BR had breached that obligation and the other alleged breaches of the parties’ contractual obligations under the joint venture, were determined in Tranche 2. As set out in the Second Judgment ([2] above), we held that BR had breached its coal supply obligations and further, that this was a repudiation of the JV Deed. However, as it is not disputed that BCBCS did not purport to accept the breaches, BR’s repudiatory conduct in this regard had no legal effect. We also held that BR had wrongfully repudiated the JV Deed by issuing a notice to terminate the joint venture (referred to in the Second Judgment (at [64]) as “BR’s Termination Notice”) in February 2012. We found that BCBCS had, by way of a letter dated 2 March 2012, validly accepted the latter aspect of BR’s repudiatory conduct and so that brought the joint venture to an end on that date.

Although it was agreed that questions of damages and quantum following from a finding of breach would be left to Tranche 3, we granted leave to the defendants to argue in Tranche 2 that even if BR had breached the JV Deed, BCBCS would only be entitled to nominal damages for a limited period because KSC would have not received the requisite funding. We considered it likely that BCBCS would have been prepared to fund KSC unilaterally and BR would not have objected to BCBCS funding KSC in that manner. But we were of the view that there was insufficient evidence before us as to whether, as a matter of fact, BCBCS was in a financial position to fund KSC unilaterally until June 2012, or whether BR would have objected to that funding and, if so, what the effect of that objection would have been. The defendants appealed against our decision in Tranche 2. The Court of Appeal dismissed the defendants’ appeal but held that we ought to have determined the issue of BCBCS’s ability to fund KSC unilaterally until June 2012 as part of Tranche 2. This issue was remitted to us for determination. After considering the parties’ written submissions (see BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another[2019] 3 SLR 1), we found that BCBCS could have so funded KSC. The defendants’ appeal against that decision was dismissed.

In Tranche 3, we dealt with damages and quantum. As set out in the Third Judgment ([2] above), we...