Herbst Ehud v Sampoerna Putera and Another

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 18 October 2004
• Neutral Citation: [2004] SGHC 236
• Citation: [2004] SGHC 236
• Defendant Counsel: Andrew Ong (Rajah and Tann)
• Published date: 20 October 2004
• Plaintiff Counsel: Tan Yah Piang and Alvin Tan (Wong Thomas and Leong)
• Date: 18 October 2004
• Docket Number: Suit No 255 of 2004 (Registrar's
• Court: High Court (Singapore)
• Subject Matter: Whether defendants discharged burden of showing that Indonesia clearly or distinctly more appropriate forum for trying dispute,Defendants appealing against dismissal of stay application by assistant registrar,Defendants applying for stay of proceedings in favour of Indonesia on grounds of forum non conveniens,Stay of proceedings,Civil Procedure

18 October 2004

Tay Yong Kwang J:

1 This is an appeal by the defendants against the decision of Assistant Registrar Vincent Leow dismissing their application for a stay of all further proceedings in this action. The defendants had applied for the stay on the ground that the courts of the Republic of Indonesia would be the more appropriate forum than the Singapore courts to hear and adjudicate the claims in this action. I dismissed the appeal with costs fixed at $2,600 to be paid by the defendants to the plaintiff. At the conclusion of the appeal, I also certified, upon the request of counsel for the defendants, that no further arguments were required.

The plaintiff’s claim

2 The plaintiff’s claim against the first defendant is for the amount of US$250,000 pursuant to a refund agreement allegedly made by the second defendant as agent on behalf of the first defendant. Further or alternatively, he claims from the second defendant US$250,000 as damages for the second defendant’s breach of warranty of authority or pursuant to an alleged undertaking given by him. The plaintiff also claims an account of the sale of certain shares and, if appropriate, payment of any sum payable to him upon such sale and/or damages for breach of trust.

3 The first defendant is a prominent Indonesian businessman with controlling interests in the Sampoerna group of companies. The second defendant is said to be a member of the first defendant’s inner circle of advisors. At all material times, the first defendant held out the second defendant as his agent.

4 In 1998, the first defendant was asked by the Indonesian government to help improve the country’s agricultural sector. The plaintiff was then engaged by the Sampoerna group as a consultant in that matter. Through the plaintiff, who is an Israeli, an Israeli entity (“the Hovev group”) was identified and its business plan was presented to and approved by the first defendant in or about 1999.

5 The business plan envisaged that the first defendant, the Hovev group and the plaintiff would participate in a joint venture to establish and operate a farm business and a decorations business involving the manufacture of botanical decorations and handicrafts. Two separate companies would be established to operate these two businesses, with the plaintiff taking a 5% stake in one company and a 10% stake in the other. It was contemplated that the joint venture agreement (“JVA”) would be finalised by September 1999.

6 However, the JVA was not signed at all although several drafts of the JVA were prepared by the first defendant’s solicitors and circulated among the parties. This was because certain terms could not be agreed among the parties.

7 Pursuant to the business plan, two Indonesian companies, PT Sampoerna Agro (“PTSA”) and PT Indo Nature (“PTIN”) were established in December 1999 to operate the said businesses. For tax purposes, PTSA was held by two Mauritian offshore companies whose shares were in turn held by the second defendant in trust for the parties’ respective nominee companies. PTIN was structured and held in a similar manner.

8 In an e-mail dated 16 October 2001, the second defendant asked the plaintiff for US$250,000 as his capital contribution because the funds expected from the first defendant were delayed. Although the money was meant for PTSA and PTIN, the second defendant requested the plaintiff to make payment into a bank account with UBS AG, Singapore, in the name of Lexim Trading Ltd. The plaintiff refused to do so as the JVA had not yet been finalised and signed.

9 Since the second defendant kept pressing the plaintiff for payment, in November 2001, the plaintiff and the second defendant, acting as agent for the first defendant, agreed that the plaintiff would pay the US$250,000 (less certain agreed deductions) on condition that the whole amount would be refunded on demand if the JVA was not concluded (“the refund agreement”). The second defendant impliedly warranted to the plaintiff that he had been authorised by the first defendant to enter into the refund agreement. Accordingly, on 12 November 2001, the plaintiff e-mailed the second defendant to inform him that he would be remitting to the nominated account the amount of US$176,743 (being US$250,000 less US$73,257 then owing to the plaintiff) and that such remittance would be subject to the refund agreement. The remittance was then made. Both defendants did not refute the existence of the refund agreement.

10 The plaintiff was employed by PTSA as its marketing director from the date of the establishment of PTSA to 26 October 2002 when, for purely economic reasons, his employment was terminated. The notice of termination of service was given by the second defendant to the plaintiff personally at a meeting held in Lombok, Indonesia, on 26 October 2002. During that meeting, the plaintiff demanded the return of the US$250,000 but was told by the second defendant to withhold demanding for such refund while solutions for turning around the farm business were being considered. The second defendant also told the plaintiff that he had not disclosed the refund agreement to the first defendant as he feared he might otherwise lose his job. The second defendant undertook that if the first defendant refused to refund the said amount to the plaintiff, he would do so himself.

11 In consideration of that undertaking, the plaintiff agreed to withhold demanding for the refund of the said amount while solutions for turning around the farm business were being considered. When the plaintiff was asked in February 2003 about his ideas for turning the farm business around, he e-mailed the second defendant to confirm that his views given as a consultant would not prejudice his right to the refund. The second defendant confirmed this over the telephone.

12 The plaintiff then sent an e-mail containing his views to the second defendant. He emphasised in the e-mail that he was sending the document in reliance on the confirmation that his right to the refund would not be prejudiced. Following this, a Dutch company was engaged to do a feasibility study of the farm business for the purpose of attracting external investors. That study was completed in July 2003.

13 On 26 April 2003, in repudiation of the refund agreement and/or in breach of the undertaking given by the second defendant, the second defendant informed the plaintiff over the telephone that he was not entitled to a refund of the US$250,000.

14 Around the end of June or the beginning of July 2003, the second defendant sold the shares in PTSA and/or the farm business without the knowledge or consent of the plaintiff. To date, the plaintiff has not been paid the US$250,000 by the first or the second defendant despite his demands for payment.

15 The defendants reside in Singapore. The writ of summons was served on them here.

The defendants’ case and grounds for asking for a stay of proceedings

16 The joint venture was established exclusively in Indonesia from its inception in 1999. The plaintiff owned a beneficial stake in the joint venture through his indirect shareholding in PTSA and PTIN. To finance the joint venture’s businesses, the partners agreed to make financial contributions towards the initial capital outlay of PTSA and PTIN in return for their ownership interests. They also agreed to provide shareholders’ loans. The amount of capital that the plaintiff had to provide was agreed upon since August 1999. The joint venture started operations since 2000. In November...