MK (Project Management) Ltd v Baker Marine Energy Pte Ltd

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 12 November 1994
• Neutral Citation: [1994] SGCA 126
• Docket Number: Civil Appeal No 107 of 1993
• Date: 12 November 1994
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: Lawrence Hussein (Ng Thin Wah & Pnrs)
• Citation: [1994] SGCA 126
• Defendant Counsel: Goon Hoong Seng (Low Yeap & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: 'Award of a project',O 18 r 7(1) Rules of Supreme Court,Trial judge's findings not based on credibility of witness but on inferences from undisputed primary facts,Whether varied terms certain,Whether trial judge entitled to make such finding,Statement of claim,Variation,Contract,Words and Phrases,Pleadings,Whether there was sufficient consideration,Assessment of evidence by appellate court,Material facts pleaded,Trial,Finding of fact on defence not pleaded but relied upon at trial,Appeals,Whether terms of written agreement varied by subsequent oral agreement,Appellate court entitled to reach its own conclusion on the evidence,Contractual terms,Civil Procedure,Whether necessary to plead the legal result of such facts as well

The facts

The respondents are a company which was engaged in offering projects for the setting up of oil rigs. By a written agency agreement dated 16 June 1989 (the agency agreement), the appellants were appointed as the respondents` non-exclusive agents to market the respondents` projects in the People`s Republic of China. The following terms of the agency agreement, in which `BMEPL` stands for the respondents, were of consequence to our inquiry:

4.1 In consideration of the services herein to be performed by the agent, BMEPL shall pay to the agent such commissions as the parties shall mutually agree in writing, on a case by case basis, such commission shall be due and payable to the agent even when the order is placed directly with BMEPL and not through the agent. In any event, having regard to the non-exclusive nature of this agreement, commissions will only be due to the agent where the agent`s interest in any particular contract or order has been acknowledged in writing by BMEPL and commission rate agreed.

4.2 The said commission shall be paid in United States Dollars within fifteen (15) days after BMEPL`s receipt of payment from the buyers. Commission shall be paid in respect of only those invoices which have been paid in full by the buyers except that where payments for purchases are made in instalments the agent shall be paid a proportionate part of the commission on receipt by BMEPL of each such instalment.

...

4.4 No commission shall be payable to the agent in respect of any order received by BMEPL after the termination or expiry of this agreement howsoever caused notwithstanding that the agent may have been responsible for or concerned in the obtaining of that order and notwithstanding that quotations may have been submitted during the continuance in force of this agreement.

On 22 September 1989, the parties entered into another written agreement (the project agreement) which related to a specific project, namely, the Weizhou 11-4 and SZ 36-1 FPSU project. The relevant terms of that agreement were as follows:

It is hereby agreed that Baker shall pay the agent a commission upon successful execution of the project in accordance with cll 4.1, 4.2 and 4.3 of the agreement. The rate of commission shall be calculated in accordance with the formulae detailed below:

Contract Value Rate of Commission

Up to US$25m 2.00%

Up to US$50m 1.75%

Up to US$75m 1.50%

Above US$75m 1.25%

Baker shall pay the agent twenty (20) percentum of the agreed commission, thirty (30) days after being awarded the project. The balance shall be pro-rated in accordance with the agreement.

On 24 October 1989 the appellants sent the respondents a fax referring to the project agreement and stated that:

Should your quoted price need further reduction to maintain competitive we are willing to reduce the percentage on pro-data basic in accordance to your percentage reduced.

On 27 February 1990 the respondents signed two agreements with the China National Offshore Oil Corp (CNOC) which were called the Offshore Field Development Contract (OFD contract) and the Crude Oil Repayment Contract (CSR contract). It is clear that the project contemplated by these contracts was worth about US$100m. The recitals to both the OFD and CSR contracts set out the scheme of the project: the respondents were taking on the obligation of providing funds to prepay all the costs necessary for the Wei 11-4 Oil Field Development Project and CNOC would subsequently repay the funds prepaid by the respondents out of the income from crude oil sales under the terms of the two contracts. Importantly, the OFD contract also provided as follows:

21.1.1 Contractor hereby agrees to provide an irrevocable bank guarantee payable on first demand of company to guarantee the performance of contractor`s obligations under the contract.

...

21.1.4 ... Should contractor fail to provide such satisfactory bank guarantee within thirty (30) days from effective date, company shall have the right at any time without prior notification and without any liability whatsoever to suspend and/or terminate the contract under sub-art 23.2 and/or 24.3 respectively.

The appellants felt that the signing of the OFD and CSR contracts entitled them to their commission and they had a meeting with the respondents on 5 March 1990 which resulted in the following communication being sent to the respondents the next day:

Further to our meeting yesterday, we are pleased to accept your proposal in accepting the fix commission at US$750,000 for the above-captioned project.

Meanwhile, please forward to us by return fax/telex your confirmation of the 20% said commission - amount US$150,000 will be remitted to us 30 days after the official signing contract on 27 February 1990 as per our contract agreement.

There was no response from the respondents. On 27 April 1990, the appellants sent another letter which read as follows:

Further to our fax dated 6 March 1990, we would like to have your acknowledgement and confirmation the below:

(1) Fix commission at US$750,000 as agreed for the above-captioned project.

(2) The initial 20% of the commission payable after 30 days of the contract signing date. For which we have further extended 30 days is now due [sic].

Your immediate response to the above would be highly appreciated.

The respondents replied to this letter on the same day as follows:

Your fax 0531 dated 27 April 1990. We confirm that your commission for the above captioned project is US$750,000 of which 20% will be paid in due course.

As explained Baker will endeavour to expedite your payment. Presently due to the unexpected delay in our financing package, we will have to place our priority on financing the project kick-off ourselves.

We trust you will understand this and rest assured we will make appropriate transfer as soon as we could.

The appellants expressed their disappointment with this reply and wrote the following to the respondents on 10 May 1990:

We are fully perturbed and concerned about the delay in Baker`s finance package for captioned project.

As you are aware, we have taken our initiative in voluntarily reduce our commission from 1.25% to approximately 0.75%; which amounts to US$750,000. This big amount of savings for Baker clearly reflects our concern and contribution to reduce Baker`s burden.

To follow up in this project from our end, we have incurred big expenses for the last many months. As a result, it has gone beyond our budget for this job, hence, we sincerely hope that you could remit immediately the agreed 20% of US$750,000 to our account as it is now 45 days overdue.

Your prompt attention to the above request is greatly appreciated.

In the event, the respondents were unable to obtain the necessary financing for the project and CNOC sent a communication dated 19 July 1990 to the respondents stating:

According to the `Contract for Wei 11-4 Oilfield Development Project` ... Baker Marine Energy Pte Ltd is responsible for providing the bank guarantee within 30 days from the effective date of the OFD contract; but you fail to do so ... I regret to formally inform you that the above two contracts shall be terminated from the date of your receipt of this letter according to art 21 and 24.3 and other provisions stipulated in the OFD contract.

No commission was paid by the respondents to the appellants. On 30 November 1990, the appellants brought this action against the respondents for the payment of 20% of the US$750,000 commission (ie US$150,000) which they claimed had fallen due on the award of the contract. They did not claim for the other 80% of the commission, as it had not fallen due because of the termination of the contract.

The proceedings in the High Court

In the High Court, the appellants began their case by pleading and proving the agency and project agreements. In particular, they relied on the fact that the project agreement provided for 20% of the agreed commission to be paid 30 days after the respondents were awarded the project. They then contended that the total commission payable in respect of the project was subsequently fixed at US$750,000. To evidence this fact, they relied on the communications between the parties from 6 March 1990 to 10 May 1990. Finally, they claimed that 20% of this (ie US$150,000) was due 30 days after the respondents signed the OFD and CSR contracts with CNOC, that being sufficient to constitute an award of the project.

The respondents did not dispute the agency and project agreements. However, their pleaded defence was that the project agreement was subject to the agency agreement and the latter stipulated that commission was only payable after the respondents had been paid by CNOC. Perhaps realizing that the pleaded defence was a little beside the point in the fact of an express term in the subsequent project agreement granting the appellants...