Max Media FZ LLC v Nimbus Media Pte Ltd

• Court: High Court (Singapore)
• Judge: Andrew Ang J
• Judgment Date: 26 January 2010
• Neutral Citation: [2010] SGHC 30
• Citation: [2010] SGHC 30
• Published date: 29 January 2010
• Docket Number: Suit No 804 of 2008
• Defendant Counsel: Chandra Mohan s/o Rethnam, Mabelle Tay Jiahui and Chong Li Lian(Rajah & Tann LLP)
• Subject Matter: Damages,Contract
• Hearing Date: 10 September 2009,09 September 2009,08 September 2009,11 September 2009,23 October 2009,07 September 2009
• Plaintiff Counsel: Fong Yeng Fatt Philip, Yang Ziliang and Sunil Nair(Harry Elias Partnership)

Andrew Ang J: Introduction

This is a claim by Max Media FZ LLC (“the plaintiff”) for the return of money paid out under a bank guarantee (“the 1st BG”) to Nimbus Media Pte Ltd (“the defendant”). The defendant resisted the claim on the ground that it was entitled to keep the money drawn under the 1st BG pursuant to the parties’ agreement and counterclaimed against the plaintiff for damages arising from the plaintiff’s breach of contract.

Background The parties

The plaintiff is a sales and management agency operating in the Middle East incorporated in the United Arab Emirates. It deals in television advertising and broadcast sponsorship and is part of the Emirates Neon Group LLC of companies. The defendant is a Singapore incorporated company in the business of television programme production. Through an arrangement with Neo Sports Broadcast Pvt Ltd (“Neo Sports”), an Indian company that broadcasts all cricket matches played under the aegis of the Board of Control for Cricket in India (“the BCCI”), the defendant acquired the rights to exhibit advertising material during the transmission of cricket matches in Neo Sport’s Middle Eastern television networks (“the advertising inventory”).

The following are the key persons involved in the present dispute: The plaintiff’s representatives – managing director, Muhammad Rehan Merchant (“Mr Merchant”); head of Strategic Business Planning from the Emirates Neon Group LLC, Akella Lakshminarayana (“Mr Akella”); and finance manager, George Thomas (“Mr Thomas”). The defendant’s representatives – chief financial officer, Shah Umeet Bharat (“Mr Shah”); the previous chief financial officer, Arvind Agrawal (“Mr Agrawal”); senior vice-president of International Sales & Syndication, Mr Vikram Das (“Mr Das”); and legal counsel, Mr Benedict Ball Laurence (“Mr Ball”).

The Agreement

Sometime in April 2007, the defendant issued an Invitation To Tender (“the ITT”) for the exclusive right to sell the advertising inventory it obtained pursuant to its arrangement with Neo Sports. The ITT covered both international and domestic cricket events. A schedule of specific international cricket events, the BCCI International Cricket Series, comprising 19 Test matches and 47 One Day International games that would be broadcast by Neo Sports up to 2010 was included. A “Minimum Guarantee” sum was attributable for each of these international events, although a pro rata addition or subtraction was applicable if any specific matches were added or taken off the schedule. Unlike the international events, no specific schedule was provided for the BCCI Domestic Cricket Series, although there was an “indicative listing of matches”. For the domestic events, a “Minimum Guarantee” sum was attributable to each financial year from 2007 to 2010. The ITT also stated that Neo Sports would be acquiring more properties for distribution and provided an “Additional Matches Matrix” for the calculation of the “Minimum Guarantee” applicable to new events acquired by Neo Sports which were not in the original list.

The plaintiff won the bid and commenced negotiations over the terms of the contract. Subsequently, the parties entered into an Advertising Sales Agency agreement dated 18 April 2007 (“the Agreement”) under which the plaintiff was appointed the exclusive sales agent for advertising inventory with respect to cricket matches broadcast by Neo Sports Pte Ltd in the Middle East region for a period of three years. In consideration, the defendant was promised the Minimum Guaranteed amount of US$6,675,000 (cl 6.1.1) and any “incremental Minimum Guarantee if applicable”. The ITT was included as Annexure 3 of the Agreement. The specific event listing, the “Minimum Guarantee” amounts and the “Additional Matches Matrix” were also separately included as Annexure 4 to the Agreement. Separate timelines were stipulated for payment of international and domestic events (see cl 6.1.1 below). The Agreement also provided for pro rata increases or reductions in the Minimum Guaranteed amount should events be cancelled or added (see cl 6.2). The Agreement was governed by English law although it provided for Singapore as the forum. Other salient terms of the Agreement were as follows: 6.1.1 … (a) In respect of payments for international Events (Tests and ODIs) payment shall be due within seventy five (75) days of issuing the invoices to clients. Invoices to the clients will be issued within 3 days from the date of receiving the Telecast Certificates from [the defendant]; (b) In respect of domestic matches and other programming, payment shall be due in twelve (12) Equal Monthly Instalments over the course of that contract year as per the payment schedule set out in Annexure 4; (c) In respect of all remaining payments, including for new or additional events, and including additional payments after deduction of Commission, as set out in Annexure 4, payment shall be due in accordance with [the defendant]’s standard invoice terms and conditions, as per 6.1.1(a);

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6.1.2 To secure [the plaintiff’s] obligations in respect of the Minimum Guaranteed amount, [the plaintiff] shall provide irrevocable and unconditional Bank guarantees [in accordance with cll 6.1.2.1, 6.1.2.2 and 6.1.2.3 of the Agreement]. 6.1.2.1 [The plaintiff] shall deliver to [the defendant], Bank Guarantee for the aggregate attributable values for BCCI International cricket series and other programming on the channel as set out in Annexure 4 for the 1st contract year for USD2,475,000 (United States Dollars Two Million Four Hundred and Seventy Five Thousand) on or before 23rd April 2007. This bank guarantee will be valid for 1 year with the claim period thereafter of 3 months. 6.1.2.2 [The plaintiff] shall deliver to [the defendant], Bank Guarantee for the aggregate attributable values for BCCI International cricket series and other programming on the channel as set out in Annexure 4 for the 2nd contract year for USD2,050,000 (United States Dollars Two Million fifty thousand only) on or before 15th March 2008. This bank guarantee will be valid for the period 1st April 2008 to 31st march [sic] 2009 with the claim period thereafter of 3 months.

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6.1.3 Time is of the essence in relation to [the plaintiff’s] payment obligations as hereunder. The bank guarantee in force from time to time (as mentioned in bank guarantee with payment schedule attached to Annexure 4) may be drawn upon by [the defendant] in accordance with its terms to make up the full amount of each and every instalment of the Minimum Guaranteed amount due from [the plaintiff] to [the defendant] which is not paid by the due date for payment, in respect of that instalment. [The defendant] shall be entitled to draw upon and retain the full amount of the bank guarantee in force from time to time in the event that [the plaintiff] misses three (3) payment dates over the entire contract period. In such event, [the defendant] may also terminate this Agreement forthwith upon written notice.

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6.3.4 Time is of the essence in relation to [the plaintiff]’s payment obligations hereunder.

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9. Termination 9.1 [The defendant] will be entitled to terminate this Agreement forthwith in the event that [the plaintiff]: 9.1.1 is materially or persistently in breach of its obligations hereunder, non-exhaustive illustrations of which are failure to make any payment by the due date (constituting a material breach) or 3 late payments beyond 15 days from due date in the contract period (constituting a persistent breach) or 9.1.2 does not comply with any of its obligations hereunder and fails to remedy the defect(s) within 5 days following receipt of written notice from [the defendant] specifying in what respect it has failed to comply or

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9.1.6 fails to provide a bank guarantee within the prescribed time;

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[emphasis added]

I should add two things. First, the term “Telecast Certificates” was not defined within the Agreement nor was its format specified. This is significant because there was contention as to whether “stamped” Telecast Certificates, ie, Telecast Certificates containing the defendant’s letterhead and stamp, were required (see below at [8]). Secondly, the draft version of cl 6.1.3 originally circulated to the plaintiff by the defendant did not contain the words “and retain”; they were included during the course of the negotiations over the terms by Mr Ball, the defendant’s legal counsel.

The events leading to the present dispute

Pursuant to cl 6.1.2.1 of the Agreement, the plaintiff’s parent company, Emirates Neon Group LLC, provided the defendant with bank guarantee PEB/GTY/0751888/B, ie, the 1st BG dated 25 April 2007 for the sum of US$2.5m to secure the plaintiff’s payment obligations in respect of the first contract year. However, during the course of the first contract year, the plaintiff was either late or had not made payment at all for the following invoices:

S/No	Invoice	Due date	Actual payment date	Amount due
1	NMPL/2007/DIS/018	31 Oct 2007	16 Nov 2007	US$105,000
2	NMPL/2007/DIS/048	31 Jan 2008	5 Feb 2008	US$25,000
3	NMPL/2007/DIS/056	28 Feb 2008	25 Mar 2008	US$25,000
4	NMPL/2007/DIS/057	28 Feb 2008	25 Mar 2008	US$500,000
5	NMPL/2007/DIS/074 (“Invoice No 74”)	31 Mar 2008	Partial payment on 13 April 2008; 24 April 2008; and 20 May 2008.	US$1,120,000
6	NMPL/2007/DIS/083	30 Apr 2008	Outstanding	US$25,000

Invoice No 74 was issued by the defendant on 13 December 2007 for the India v Pakistan event which...