OCBC Capital Investment Asia Ltd v Wong Hua Choon

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 04 August 2010
• Neutral Citation: [2010] SGHC 219
• Plaintiff Counsel: Edwin Tong and Tay Wei Wen Joseph (Allen & Gledhill LLP)
• Docket Number: Suit No 63 of 2010 (Registrar’s Appeal No 151 of 2009)
• Date: 04 August 2010
• Hearing Date: 17 May 2010
• Subject Matter: Conflict of Laws
• Published date: 10 August 2010
• Citation: [2010] SGHC 219
• Defendant Counsel: K Muralitherapany and Pey Jin Jie (Joseph Tan Jude Benny LLP)
• Court: High Court (Singapore)
• Year: 2010

Andrew Ang J: Introduction

This is an appeal by Wong Hua Choon (“the defendant”) against the decision of the learned assistant registrar (“AR”) in Summons No 749 of 2010, in which the latter declined to order a stay of the present proceedings commenced by OCBC Capital Investment Asia Ltd (“OCIA”) against the defendant in favour of the courts of Malaysia.

Background

OCIA is an investment company incorporated in Hong Kong. It is part of the Oversea-Chinese Banking Corporation group of companies (“the OCBC Group”) and has business operations in Singapore and Malaysia, inter alia.

The defendant is a Singapore permanent resident and was, at all material times, a substantial shareholder, president and chief executive officer of Frontken Corporation Berhad (“Frontken”). Frontken is a public company incorporated in Malaysia and its shares are listed on the Main Board of Bursa Malaysia Securities Berhad.

In June 2007, the defendant approached OCIA to participate in a placement exercise in respect of new shares in Frontken. To induce OCIA to do so, the defendant entered into a Risk Participation Agreement (“RPA”) in his personal capacity with OCIA whereby he undertook to underwrite the downside risk of any fluctuation in the value of the Frontken shares placed out to OCIA.

The effect of the RPA was that if OCIA sold any of its shares in Frontken within a stipulated six-month period (“the Risk Participation Period”) at a price that was below a stipulated “floor price”, the defendant would be liable to OCIA in respect of such shortfall (“the Risk Participation”).

OCIA invested approximately RM15m in the placement exercise and received a total of 27,630 shares in Frontken. The original Risk Participation Period was to be from 10 February 2009 to 10 August 2009.

In or around February 2009 (long before the RPA was due to expire), OCIA decided to dispose of all its Frontken shares and to look to the defendant for Risk Participation pursuant to the terms of the RPA. This intention was verbally communicated to the defendant during a meeting on 10 February 2009. OCIA also asked the defendant whether he would buy the shares since he had a right of first refusal to the same under the RPA.

The parties discussed a proposed purchase by the defendant of part of the Frontken shares held by OCIA, coupled with an extension of the Risk Participation Period in respect of any remaining shares that were not sold to the defendant.

On 16 June 2009, OCIA forwarded a term sheet setting out those proposals to the defendant and arranged for a meeting in Singapore on 23 June 2009 to discuss the same. At the meeting with the defendant, which was also attended by the defendant’s assistant Nicholas Ng, the defendant gave his verbal acceptance of the terms thereof and his acceptance was further confirmed in an e-mail sent out the following day by the said Nicholas Ng.

In reliance on the defendant’s acceptance of the term sheet, OCIA refrained from selling its shares in Frontken within the original Risk Participation Period and claiming the resulting Risk Participation from the defendant. This was because the term sheet placed a moratorium on OCIA claiming any Risk Participation before 1 July 2010 whilst extending the Risk Participation Period indefinitely for as long as OCIA held any of the placement shares.

However, after all the relevant formal documentation had been prepared, the defendant refused to follow through with signing of the agreement. Repeated requests to the defendant to execute the agreement were futile. OCIA therefore instituted Suit No 63 of 2010 (“Suit No 63”) against the defendant on 29 January 2010.

OCIA’s claim

By its action in Suit No 63, OCIA asserted: that a binding oral agreement on the terms of the term sheet had been reached between the parties pursuant to the meeting held on 23 June 2009 in Singapore; and alternatively, that the parties had a common understanding that the Risk Participation Period would be extended until the formal documentation in respect of the term sheet was executed, and that the defendant was estopped from asserting otherwise. OCIA therefore sought declaratory relief to that effect and further consequential orders.

Defendant’s stay application

On 19 February 2010, the defendant filed Summons No 749 of 2010 applying for a stay of the present action in favour of the courts of Malaysia. This was heard by the AR on 7 April 2010 and the stay of proceedings was subsequently refused. The defendant’s appeal against the AR’s decision then came before me.

The applicable clause of the RPA in relation to the substantive dispute

Clause 9.5 of the RPA provides as follows: (a) This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of Malaysia and in relation to any legal action or proceedings arising out of or in connection with this Agreement (‘Proceedings’), the parties irrevocably submits [sic] to the non-exclusive jurisdiction of the courts of Malaysia, and waive any objections to Proceedings in any court on the grounds that the Proceedings have been brought in an inconvenient forum. (b) Such submission shall however not affect the right of OCIA to take Proceedings in any other jurisdiction nor shall the taking of Proceedings in any jurisdiction preclude OCIA from taking Proceedings in any other jurisdiction and OCIA shall be at liberty to initiate and take actions or Proceedings or otherwise against [the defendant] in Malaysia and/or elsewhere as OCIA may deem fit.

The defendant submits that a stay ought to be granted in the circumstances of this case in favour of the courts of Malaysia on the ground that the Singapore court is forum non conveniens.

The interpretation of cl 9.5

On behalf of OCIA, it was argued that, although under cl 9.5(a) the parties submitted to the non-exclusive jurisdiction of the courts of Malaysia, under cl 9.5(b) OCIA had the right to commence proceedings in any other jurisdiction. On a plain reading, this much was indisputable.

Counsel for OCIA then further argued that the waiver of objection in cl 9.5(a) was not limited to the Malaysian courts’ jurisdiction but applied with respect to the jurisdiction of any court in which proceedings were brought by either party. On that basis OCIA applied the reasoning of the Court of Appeal in Bambang Sutrisno v Bali International Finance Ltd [1999] 2 SLR(R) 632 (“Bambang”).

In Bambang, the parties had entered into an agreement to submit to the non-exclusive jurisdiction of the Indonesian courts and the agreement further contained a waiver of objection on the ground of venue or forum non conveniens. The waiver of objection clause was interpreted widely to cover objections on the ground of forum non conveniens with respect to any court, and not just those of Indonesia. Accordingly, the Court of Appeal held that the appellant was in breach of that agreement by having applied for a stay of proceedings on the ground of forum non conveniens and that, therefore, the court would refuse a stay and give effect to the agreement between the parties unless exceptional circumstances amounting to strong cause was shown by the defendant for a stay.

Counsel for OCIA contended that similarly in the present circumstances, the defendant was required to show exceptional circumstances amounting to “strong cause” why the stay of the Singapore proceedings ought to be granted.

On the other hand, the defendant’s contention was that the waiver of objection in cl 9.5(a) applied only with respect to the jurisdiction of the Malaysian courts. It followed that there was no agreement precluding the defendant from objecting to OCIA’s choice of Singapore jurisdiction on the ground of forum non conveniens.

I favour the latter interpretation for the following reasons: The juxtaposition of the waiver of objection in the very sentence in cl 9.5(a) by which the parties agree to the non-exclusive jurisdiction of the courts of Malaysia strongly suggests that it applies only to cl 9.5(a) and not to cl9.5(b). Although OCIA argued that the phrase “Proceedings in any court” in cl 9.5(a) meant that the waiver could apply to proceedings in any jurisdiction, the phrase more likely means “Proceedings in any court” in Malaysia. Had the parties intended the waiver to apply to Proceedings in any “jurisdiction”, they would have used that word instead of “court”. Significantly, in cl 9.5(b) the expression employed is “Proceedings in any other jurisdiction” lending support to the view that the word “court” was used advisedly in cl 9.5(a). It follows that although OCIA had the right under cl 9.5(b) to take proceedings in Singapore, the defendant did not waive the right to object to the...