Beckkett Pte Ltd v Deutsche Bank AG

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 24 September 2010
• Neutral Citation: [2010] SGHC 284
• Published date: 04 October 2010
• Date: 24 September 2010
• Year: 2010
• Hearing Date: 24 March 2010
• Plaintiff Counsel: Davinder Singh SC and Pradeep Singh (Drew & Napier LLC)
• Citation: [2010] SGHC 284
• Defendant Counsel: Ang Cheng Hock SC, William Ong, Loong Tse Chuan and Kenneth Lim (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Docket Number: Suit No 326 of 2004 (Registrar's Appeal No 99 of 2010)

Judith Prakash J:Introduction

This registrar’s appeal is another chapter in this epic piece of litigation which has occupied the courts in Singapore since 2004. The plaintiff, Beckkett Pte Ltd (“Beckkett”), wishes to be free of the Singapore proceedings in order to pursue remedies against the first defendant, Deutsche Bank AG (the “Bank”), in the courts in Indonesia. This might seem a rather odd course for Beckkett to take since it has been awarded judgment against the Bank by the Singapore courts but has yet to be equally successful in Indonesia. Yet when asked to elect between continuing the Singapore litigation (essentially by proceeding with the assessment of the damages payable by the Bank) and pursuing its Indonesian action, Beckkett chose the latter course.

The underlying application, Summons No 5313 of 2009, was filed by the Bank on 9 October 2009. By it, the Bank applied for the following orders:That Beckkett be ordered to withdraw forthwith, and be restrained from prosecuting or continuing to prosecute, the appeal which it had filed in Indonesia against the decision of the District Court of South Jakarta (the “District Court”) in Suit No 649/Pdt.G/2008/PN.JKT.SEL (the “Indonesian action”); andThat Beckkett be restrained from commencing or continuing any further or other proceedings of any nature in Indonesia or anywhere else in the world against the Bank, its agent and/or employees, in relation to the Bank’s sale in Indonesia of the Pledged Shares (see [7] below) on 21 November 2001.

The application was heard before Assistant Registrar David Lee (the “AR”) over several days. On 12 February 2010, the AR released a long and carefully considered judgment ([2010] SGHC 55) giving his reasons for the following findings (at [122] – [126]):That the legal proceedings in Singapore and Indonesia were duplicative.That in making the application, the Bank had come to the court with clean hands and was entitled to equitable relief.The parties were amenable to the jurisdiction of the Singapore courts and that Singapore is the natural forum of the litigation.The conduct of Beckkett in maintaining suits in both Indonesia and Singapore after the Singapore Court of Appeal rendered its judgment was vexatious and oppressive.The circumstances, however, were such that it would be unjust for an anti-suit injunction to be granted against Beckkett.It would not be tenable either to maintain the status quo by dismissing the Bank’s application and therefore Beckkett had to be ordered to make an election between proceeding in Singapore for an assessment of damages and pursuing its claim through further appeals in Indonesia. This election would be final and irrevocable.

Beckkett did not appeal from this decision. Subsequently it elected to pursue the Indonesian action. The Bank, however, lodged an appeal and maintained before me that the AR’s order giving Beckkett the option of an election should be set aside and, instead, the anti-suit injunction it had applied for should be granted.

BackgroundCourse of the litigation in Singapore

The facts giving rise to the original law suit are a matter of public record. They are set out at length in the judgment of the court of first instance, Beckkett Pte Ltd v Deutsche Bank AG and another[2008] 2 SLR(R) 189 and that of the Court of Appeal, Beckkett Pte Ltd v Deutsche Bank AG and another and another appeal[2009] 3 SLR(R) 452. I will summarise them as briefly as possible (relying a great deal on the AR’s account).

Beckkett is a Singapore company. It and its subsidiary, PT Swabara Mining and Energy (“SME”), owned shares in PT Asminco Bara Utama (“Asminco”) which in turn owned shares in PT Adaro Indonesia (“Adaro”) which owned a coal mine in Kalimantan. SME, Asminco and Adaro are Indonesian companies.

The Bank is incorporated in Germany and has a registered branch in Singapore. In 1997, the Bank extended a loan to Asminco. This loan was supported by a guarantee from Beckkett and pledges by Beckkett and Asminco of their respective shares in SME, Asminco and Adaro (collectively, the “Pledged Shares”). Asminco did not repay the loan and the Bank sold the Pledged Shares to an Indonesian company named PT Dianlia Setyamukti (“DSM”). The sale was completed on 15 February 2002.

In April 2004, Beckkett started this action against the Bank. DSM was joined as the second defendant in February 2005. Beckkett claimed the following reliefs:A declaration that the sale of the Pledged Shares was invalid, null and void and for an order to set it aside.A declaration that the equity of redemption over the Pledged Shares had thereby been restored to Beckkett, SME and Asminco.An order that the Bank and DSM return the Pledged Shares to Beckkett, SME and Asminco respectively.Alternatively, damages to be assessed.The Bank defended the claim and lodged a counterclaim for some US$98m against Beckkett as guarantor of the loan to Asminco.

The trial of the action occupied some 50 days in the High Court before Kan Ting Chiu J (“the Judge”). Judgment was reserved and delivered on 21 September 2007. The Judge dismissed Beckkett’s claim against DSM and the Bank’s counterclaim against Beckkett. He found (at [152]) that Beckkett had made out a claim that the Bank had failed to discharge its duties as pledgee when it sold the Pledged Shares but had failed to show that the Bank had sold those shares at an undervalue. The Judge therefore awarded Beckkett nominal damages of $1,000. Both Beckkett and the Bank appealed against this decision.

The appeals were heard on 23 April 2008 and judgment was reserved. On 27 April 2009, the Court of Appeal delivered judgment and allowed the Bank’s appeal in full and Beckkett’s appeal in part. The relevant findings of the Court of Appeal at [143] of its judgment are that:The Bank, in exercising its power of sale, did not take proper steps to sell the Pledged Shares at the best price and was therefore in breach of its duty as pledgee and Beckkett had proved that some of the Pledged Shares had been sold at an undervalue.It was not possible to determine whether the sale of the SME Shares had been at an undervalue until the values of other shares had been determined.Beckkett was entitled to have its loss, if any, determined at an inquiry for damages and it was further entitled, as guarantor of the loan, to prove any undervalue with respect to the Pledged Shares and to set the same off against the Bank’s counterclaim.Having regard to the subsequent developments relating to some of the Pledged Shares and the conduct of Beckkett, it would be wholly inequitable for the court to set aside the sale of the Pledged Shares.

The Court of Appeal made orders to the following effect:It dismissed Beckkett’s appeal against the Judge’s decision to dismiss its claims to set aside the sale of the Pledged Shares against the Bank and/or DSM.It allowed Beckkett’s appeal against the decision of the Judge dismissing Beckkett’s claim for damages against the Bank and ordered that such damages be assessed before the Registrar.It ordered that judgment on the Bank’s counterclaim against Beckkett be stayed pending the completion of the assessment of damages.

Course of litigation in Indonesia

On 2 May 2008, shortly after it had presented its appeal to the Court of Appeal, Beckkett filed the Indonesian action. Essentially its claim was that the sale of the SME shares by the Bank was unlawful under Indonesian law because:The sale of the SME shares was based on penetapans issued by the District Court pursuant to an ex parte application by the Bank.The penetapans were successfully challenged by Beckkett and subsequently set aside and revoked on 9 March 2005.Therefore, the sale of the SME shares was contrary to Indonesian law, being a violation of Articles 1155 and 1156 of the Indonesian Commercial Code.It should be noted that in his judgment at first instance, the Judge had found (at [125] to [127] of his judgment) that the sale of the Pledged Shares was carried out after the penetapans were obtained from the District Court but that the penetapans had been set aside by the Jakarta High Court and had not been reinstated. He further held that under Indonesian law, the position was that there were no valid approvals for the sale and that the sale was not carried out by lawful means. The issues of the legality of the sale and the status of the penetapans were integral parts of the case presented by Beckkett before Kan J.

The reliefs claimed by Beckkett in the Indonesian action concerned the return of the SME shares and a declaration that it was the owner of these shares that it had pledged to the Bank. Beckkett also wanted declarations that the sale of the SME shares effected by the Bank was illegal and legally defective and that two documents, the Deed of Sale and Purchase and the Deed of Minutes, were null and void and any other documents based on the same were similarly null and void.

The Bank responded to the Indonesian action on 30 October 2008 by filing an application known as an “Absolute Competency Exception” in the District Court. Basically, it sought a stay of the Indonesian proceedings on the ground that Singapore was the proper forum under the relevant loan documentation and that Beckkett had acted in bad faith by filing its claim in Indonesia. This application was rejected on 8 January 2009. The Bank did not appeal.

The Indonesian action then proceeded on its merits. On or about 8 April 2009, the District Court dismissed the suit. On 13 April 2009, Beckkett filed an appeal against that decision (the “First Indonesian Appeal”). This was some two weeks prior to the issue of judgment by the Court of Appeal.

Subsequent developments in Singapore and Indonesia

On 25 May 2009, Beckkett filed a summons for directions for the assessment of damages in the Singapore High Court. Some three months...