Brs v Brq
Jurisdiction | Singapore |
Judge | Judith Prakash JA,Steven Chong JA,Woo Bih Li J |
Judgment Date | 29 October 2020 |
Neutral Citation | [2020] SGCA 108 |
Year | 2020 |
Date | 29 October 2020 |
Published date | 03 November 2020 |
Hearing Date | 23 September 2020 |
Plaintiff Counsel | Nakul Dewan SA (instructed), Lin Weiqi Wendy, Goh Wei Wei and Teh Zi Ling, Stephanie (WongPartnership LLP) (instructing) |
Defendant Counsel | Dhillon Dinesh Singh, Toh Jia Yi and Chee Yi Wen, Serene (Allen & Gledhill LLP) |
Court | Court of Appeal (Singapore) |
Citation | [2020] SGCA 108 |
Docket Number | Civil Appeals Nos 34 and 35 of 2019 |
BRS (“the Seller”) was undertaking a project to build a hydroelectric power plant (“the Project”) through a special purpose vehicle company, BRR (“the SPV”). While the Project was underway, the SPV ran out of funds, and BRQ (“the Buyer”) entered the picture as an investor to inject fresh funds for the Project to continue. Under a Securities Purchase Agreement (“the SPA”), the Buyer contracted to buy all the shares in the SPV. In the SPA, it was envisaged that the Project would be completed or “wet commissioned” by 31 March 2013, and further that the Project cost would be about S$170m (“the Project Cost”).
The Project was not wet commissioned on 31 March 2013. For present purposes, the parties proceeded on the premise that the Project achieved wet commissioning more than two years later on 31 October 2015. As a result of delays in the Project, and as the actual costs of the Project exceeded the Project Cost, the Buyer and the SPV (collectively, “the Claimants”) initiated arbitration proceedings against the Seller, claiming payment for the additional costs above the Project Cost and damages that were incurred due to the delay in completion. The arbitral tribunal (“the Tribunal”) issued a final award that was in substance in favour of the Claimants (“the Award”). However, it limited the Seller’s liability with respect to certain time-dependent components to 30 June 2014 (the “Cut-off Date”). In the Tribunal’s view, the Project could have achieved wet commissioning on the Cut-off Date (rather than the eventual date of 31 October 2015) if the Claimants had undertaken the construction and commissioning of the Project in the most prudent and cost-effective manner after their takeover of the Project in early 2014.
Both the Seller and Claimants were dissatisfied with various aspects of the Award, and they each filed separate Originating Summonses to set aside portions of the Award, on the bases that the Tribunal had either acted in breach of natural justice and/or in excess of its jurisdiction. Both setting-aside applications were dismissed by the High Court judge (“the Judge”), giving rise to the present appeals.
Background facts The facts are largely undisputed, and both parties accept that the background to the dispute have been distilled at [5]–[25] of the Judge’s grounds of decision in
The Seller is a company engaged in the business of developing, constructing, operating and maintaining infrastructure and power projects. The Seller was awarded a government concession to build and operate a hydroelectric power plant (
The SPV carried on with the Project from 2007 to 2011. By the end of 2011, it had run out of funds. The Seller and its parent company, which collectively owned about 95% of the shares of the SPV at the time, were unable to inject more funds into the SPV to guide the Project to completion. Therefore, an external investor was sought, and the Buyer entered the picture as that external investor.
The SPA Following the completion of the Buyer’s due diligence, on or around 19 September 2012, the parties entered into the SPA,2 under which the Buyer agreed to purchase all the shares in the SPV for about S$70m (“the Purchase Consideration”).3 Under cl 9.1 of the SPA, it was acknowledged that the Purchase Consideration payable by the Buyer was based on a number of assumptions, key among which were:
Recognising these assumptions, and in order to support the calculation of the Purchase Consideration, the Seller undertook certain obligations:
There was a separate contract, the Bulk Power Transmission Agreement (“BPTA”), which is also relevant to the parties’ dispute. The SPV had entered into the BPTA with a grid company in 2009 (before the entry of the Buyer). Under the BPTA, the SPV agreed to pay transmission charges to the grid company in exchange for access to its power grid for 25 years. Access to this grid was necessary for the SPV to transmit electricity generated by the Project to consumers and to thereby earn revenue from the Project.
This BPTA obliged the SPV to begin paying transmission charges to the grid company
The Project failed to achieve wet commissioning on the contemplated date of 31 March 2013. A reason for the delay was the occurrence of multiple failures of a “penstock”, which is a pipe that transports water at high pressure to the turbines.
On 16 October 2013, the Buyer issued a Cost Overrun Notice to the Seller, informing the Seller that there was a Cost Overrun of about S$9.6m, and calling upon the Seller to pay the said amount to the SPV within 14 business days.9 The Seller acknowledged the Cost Overrun Notice in its reply dated 1 November 2013, but did not challenge the correctness or validity of the notice.10 The Seller did not pay the amount demanded in the Cost Overrun Notice by the stipulated 14 business days deadline, nor did it do so thereafter.
From November 2013, as was its entitlement under cl 9.11 of the SPA, the Buyer began to oversee the Project more closely. However, the Buyer did not formally exercise its right to take control of the Project until March 2014, when, in accordance with cl 9.10(a) of the SPA (see [8(a)(ii)] above), the Buyer issued a takeover notice, and took over full control of the Project. This included the taking of steps to address the penstock failure as well as to rectify defects in other areas of the Project, such as the transmission line.
The arbitrationOn 31 December 2014, while the Project was still under construction, the Buyer initiated arbitration proceedings against the Seller and its parent company (who is no longer a party to the present proceedings) pursuant to the arbitration agreement in cl 14 of the SPA.11
Relief sought In the arbitration, the Buyer sought a range of reliefs, the main ones being orders:12
Apart from denying liability,13 the Seller brought a counterclaim, seeking, among others, an order that the Buyer and the SPV pay about S$5.1m million, representing the portion of the SSL that was allegedly due to the Seller.14
For the purposes of the arbitration and the present applications, the parties have proceeded on the basis that the Project was wet commissioned on 31 October 2015, which was when the first discrete part of the Project was wet commissioned.
Tribunal’s AwardThe Award was...
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