Nava Bharat (Singapore) Pte Ltd v Straits Law Practice LLC and another and another suit

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 28 May 2015
• Neutral Citation: [2015] SGHC 146
• Court: High Court (Singapore)
• Docket Number: Suit Nos 846 and 847 of 2011
• Published date: 17 August 2016
• Year: 2015
• Hearing Date: 26 September 2013,29 May 2014,23 April 2013,23 May 2014,07 May 2013,27 September 2013,30 April 2014,06 May 2014,24 April 2013,22 April 2013,02 October 2013,10 May 2013,30 April 2013,16 May 2014,24 October 2013,12 September 2013,25 September 2013,17 September 2013,25 April 2013,27 May 2014,02 May 2013,13 September 2013,03 May 2013,11 September 2013,18 October 2013,08 May 2014,29 April 2013,24 September 2013,07 May 2014,15 May 2014,19 September 2014,21 May 2014,14 May 2014,22 May 2014,28 May 2014,16 October 2013,01 October 2013,29 April 2014,26 April 2013,03 October 2013,18 September 2013,23 October 2013
• Plaintiff Counsel: Niru Pillai and Liew Teck Huat (Global Law Alliance LLC)
• Defendant Counsel: Cavinder Bull SC, Chia Voon Jiet, Simon Huang and Darryl Ho (Drew & Napier LLC),Ang Cheng Hock SC, Ramesh Selvaraj, Tan Kai Liang and Seow Wan Jun (Allen & Gledhill LLP)
• Citation: [2015] SGHC 146

Lee Seiu Kin J: Introduction

These suits concern the plaintiff’s attempt to acquire an interest in a coal mine (“the Mine”) located in Sungai Cuka in Kalimantan, Indonesia (“the Transaction”). The Transaction was beset with difficulties and it eventually failed despite the plaintiff having paid out more than US$3m. In Suit No 847 of 2011 (“S 847/2011”), the plaintiff is suing the counterparty to the Transaction and his solicitor. In Suit No 846 of 2011 (“S 846/2011”), the plaintiff is suing the solicitor and the firm that had acted for it in the Transaction. In a nutshell, the plaintiff’s case is that it was defrauded by the counterparty and his lawyer, and its own lawyers had failed to safeguard its interest.

The trial for both suits, which were heard together, spanned a period of slightly over a year, with three tranches and a total of 41 hearing days. It was a deeply contentious matter with not only many disputes of facts but also a number of legal issues, some of which have not been addressed by the Singapore courts. At the end of the hearing, I reserved judgment. Having considered the matter, I conclude that the plaintiff’s claims in both S 846/2011 and S 847/2011 should be dismissed in their entirety. I will set out the factual background and issues before I give the reasons for my decision. The table of contents that follows would hopefully aid the reader in traversing this lengthy judgment:

FACTUAL BACKGROUND
The Parties	[3]−[6]
The Chronology of Events	[7]−[125]
Nava Bharat’s search for coal	[7]−[15]
Appointment of Rajaram and ABNR	[16]−[19]
The Heads of Agreement	[20]−[23]
Due diligence and change in Indonesian mining laws	[24]−[37]
Changes to the structure for the Transaction	[38]−[46]
Indonesian leg of the initial completion	[47]−[50]
Singapore leg of the initial completion	[51]−[53]
After initial completion	[54]−[55]
Delay in obtaining the Forestry Licence	[56]−[78]
First Notice of Default	[79]−[82]
Addendum Agreement and Supplemental Master Agreement	[83]−[86]
Concerns over Dicky Tan’s mining contractors	[87]−[89]
Delays in obtaining AIP	[90]−[95]
Second Notice of Default	[96]−[97]
The “without prejudice” proposal and draft Tripartite Agreement	[98]−[107]
The Settlement Agreement	[108]−[116]
Third Notice of Default and exercise of the share pledges	[117]−[123]
Loss of the PTIC shares	[124]−[125]
Other Transactions Involving the Mine	[126]−[134]
The Lanna Transaction	[126]−[131]
The Belfield Loan	[132]
The STX Transaction	[133]−[134]
Nava Bharat’s Claims	[135]−[141]
Claim against Dicky Tan and Jason Tan in Indonesia	[135]−[136]
Claim against SLP and Rajaram in Singapore	[137]−[138]
Claim against Dicky Tan and Chandra in Singapore	[139]−[140]
Claim against STX in Singapore	[141]
THE WITNESSES	[142]−[207]
Factual Witnesses	[143]−[158]
Ashwin	[143]−[146]
Bob Sundaram	[147]−[150]
Rajaram	[152]−[153]
Sreenivasan	[154]
Chandra	[155]−[158]
Expert Witnesses	[159]−[207]
Michael Scott Carl	[159]−[160]
(1) Role of an expert witness	[161]−[170]
(2) Qualification as expert witness	[171]−[180]
(3) Matters not pleaded	[181]−[187]
(4) Standards expected of expert witness	[188]−[202]
Dipesh Kumar Dipu	[203]−[206]
Ken Pendergast	[207]
ISSUES	[208]−[210]
CLAIM AGAINST SLP AND RAJARAM FOR BREACH OF CONTRACT AND NEGLIGENCE	[211]−[389]
Duties in Contract and in Tort	[211]−[254]
Concurrent duties in contract and in tort	[211]−[212]
Scope of the duties	[213]−[222]
(1) Advice on Indonesian law	[223]−[247]
(2) Commercial advice	[248]−[253]
(3) Summary on the scope of the duties	[254]
Alleged Breaches	[255]−[365]
Alleged breaches relating to the Forestry Licence	[260]−[312]
(1) Failure to advise on implications of not having Forestry Licence	[260]−[270]
(2) Failure to advise against completion without Forestry Licence	[271]−[306]
(3) Failure to advise for the loan of US$3 million to be held in escrow	[307]−[312]
Alleged breaches relating to the new mining law	[313]−[338]
(1) Restructuring the Transaction as a Loan to Dicky Tan	[313]−[321]
(2) Failure to provide for an effective mechanism to convert the loan into shares in PTIC	[322]−[330]
(3) Failure to advise on the implications of the new mining law on the Mine Operating Service Agreement	[331]−[338]
Alleged breaches relating to share pledges	[339]−[348]
Alleged breaches relating to exit option	[349]−[363]
Summary on the alleged breaches by Rajaram	[364]−[365]
Causation in Contract and in Tort	[366]−[389]
Burden of proof	[367]−[373]
Alleged breaches by Rajaram	[374]−[381]
(1) Forestry Licence	[378]
(2) New mining law	[379]−[380]
(3) Escrow arrangement	[381]
Commercial decisions and alleged fraud	[382]−[387]
Summary on causation in contract and in tort	[388]−[389]
CLAIM AGAINST SLP AND RAJARAM FOR BREACH OF FIDUCIARY DUTY	[390]−[413]
Duty of Loyalty	[390]−[409]
Two categories of conflict rules	[392]−[401]
No personal interest in the Transaction	[402]−[409]
Duty to Disclose	[410]−[413]
CLAIM AGAINST CHANDRA FOR UNLAWFUL MEANS CONSPIRACY	[414]−[508]
Conspiracy to Defraud	[418]−[505]
Law on unlawful means conspiracy	[418]−[425]
(1) Combination	[419]−[420]
(2) Unlawful acts	[421]−[422]
(3) Standard of proof	[423]−[425]
Application to the facts	[426]−[505]
(1) Appointment of Rajaram	[427]−[429]
(2) Lanna Transaction and Belfield Loan	[430]−[448]
(3) Completion without Forestry Licence	[449]−[476]
(4) Loan to Dcky Tan instead of PTIC	[477]−[479]
(5) Indonesian legal proceedings	[480]−[500]
(6) Privileged communications between Chandra, Dicky Tan and Jason Tan	[501]−[504]
(7) Summary on Nava Bharat’s claim in unlawful means conspiracy	[505]
Causation	[506]−[508]
CLAIM AGAINST CHANDRA FOR NEGLIGENCE	[509]−[567]
Solicitor’s Duty of Care Owed to a Counterparty in a Transaction	[511]−[557]
Proximity	[512]−[546]
Policy	[547]−[557]
Causation	[558]−[567]
FAMILIAL RELATIONSHIP	[568]−[572]
CONCLUSION	[573]

Factual background The parties

The plaintiff in both suits is Nava Bharat (Singapore) Pte Limited (“Nava Bharat”), a company incorporated in Singapore. It is in the business of power generation, ferro alloys, mining and agri-business, among others.¹ It is a wholly-owned subsidiary of Nava Bharat Ventures Limited (“NBVL”), a company incorporated in India² and listed on the Indian stock exchanges. Ashwin Devineni (“Ashwin”) is the managing director of Nava Bharat and he was the main representative for Nava Bharat in the Transaction.³

The first defendant in S 846/2011 is Straits Law Practice LLC (“SLP”), a limited liability law corporation carrying on the practice as advocates and solicitors in Singapore.⁴ The second defendant in S 846/2011 is M Rajaram (“Rajaram”), an advocate and solicitor of the Supreme Court of Singapore and a senior director of SLP.⁵ Rajaram was appointed as Nava Bharat’s lawyer for the Transaction.⁶

The first defendant in S 847/2011 is Tan Beng Phiau Dicky (“Dicky Tan”), an Indonesian businessman.⁷ At the time of the Transaction, Dicky Tan was the president director and majority shareholder of PT Indoasia Cemerlang (“PTIC”), which was the Indonesian company with the requisite mining concessions to mine coal in the Mine.⁸ A mining concession is called “Kuasa Pertambangan” in Indonesia and I shall refer to Dicky Tan’s mining concessions in the Mine as the “KP Concessions”. Dicky Tan was served the writ of summons on 8 March 2012,⁹ but he did not enter into appearance. The plaintiff obtained default judgment against him on 26 August 2013. The second defendant in S 847/2011 is Chidambaram Chandrasegar (“Chandra”), an advocate and solicitor of the Supreme Court of Singapore and a senior director of Tan Peng Chin LLC (“TPC”).¹⁰ Chandra was appointed by Dicky Tan to act as his lawyer in respect of the Transaction.¹¹

Given the large number of persons and entities involved in this case, I have, for convenience, compiled a list of the names of the key persons and entities as well as the abbreviations (if any) used in this judgment. The list is annexed hereto as Annex A.

The chronology of events Nava Bharat’s search for coal

In 2008, Nava Bharat was actively seeking to secure a regular supply of coal for NBVL’s power generation business in India. This was because the the power generation business in India of NBVL was expanding and there was a need to source for coal from other countries.¹²

Shortly prior to the Transaction, Nava Bharat had sought to acquire an interest in another coal mine from a different party. On or about 27 September 2008, Nava Bharat entered into a memorandum of understanding for the participatory interest in a coal mine in Central Kalimantan, Indonesia (“the Multi Guna Transaction”).¹³ A sum of US$2m was paid. However the Multi Guna Transaction was eventually called off as a result of a dispute between the parties.¹⁴

Ashwin then found out about the Mine from Bhushan Rao (“Bhushan”).¹⁵ Bhushan was...