Pacific Rim Palm Oil Ltd v PT Asiatic Persada and Others

JurisdictionSingapore
JudgeBelinda Ang Saw Ean J
Judgment Date17 October 2003
Neutral Citation[2003] SGHC 243
Docket NumberSuit No 770 of 2002
Date17 October 2003
Year2003
Published date22 October 2003
Plaintiff CounselAlvin Yeo, Chou Sean Yu, Linda Wee (Wong Partnership)
Citation[2003] SGHC 243
Defendant CounselCavinder Bull (Drew & Napier LLC),Chan Kok Chye, Kalaiselvi Singaram, Sim Kang Ho (Infinitus Law Corporation)
CourtHigh Court (Singapore)
Subject MatterBreach,Factors in support,Trusts,Whether Quistclose trust created in circumstances,Advance of money for discharge of debts,Whether repudiatory breach of loan agreement,Agreement to advance money for dischange of debts,Quistclose trusts,Contract

1 In this action, the Plaintiffs, Pacific Rim Palm Oil Limited, seek repayment of US$5 million advanced to the 1st Defendant, PT Asiatic Persada, pursuant to a Loan Agreement dated 26 January 2000. The Plaintiffs (formerly known as CDC Industries Holdings (Mauritius) Limited) are a company incorporated in Mauritius and whose principal business is in the production and sale of palm oil and other related products. CDC Group Plc, the holding company of the Plaintiffs, is the British Government’s development investment vehicle in pre-emerging and emerging markets. It has investments in diverse businesses around the world.

2 The 1st Defendant is a company incorporated in Indonesia. Its principal business is the operation of a palm oil plantation in Jambi, Indonesia. The 2nd to 5th Defendants are shareholders of the 1st Defendant. The 2nd, 3rd and 4th Defendants are brothers and the 5th Defendant is the wife of the 2nd Defendant. The 2nd to 5th Defendants are also parties to the Loan Agreement.

The Plaintiffs’ position

3 By a Share Sale and Purchase Agreement dated 26 January 2000 entered into between the Plaintiffs and the 1st to 5th Defendants, the 5th Defendant sold 224,400,000 shares in the 1st Defendant to the Plaintiffs. Consequently, the Plaintiffs hold 51% and the 2nd to 5th Defendants hold 49% of the issued share capital of the 1st Defendant. At the same time, the Plaintiffs also entered into a Management Agreement with the 1st Defendant. In connection with the Plaintiffs’ investment in the 1st Defendant, the Plaintiffs agreed to refinance the then existing indebtedness of the 1st Defendant in an aggregate sum of US$28 million. Accordingly, a Loan Agreement dated 26 January 2000 was entered into between the Plaintiffs and the 1st to 5th Defendants. The loan of US$28 million was for the express and sole purpose of repaying existing debts that were owed by the 1st Defendant and its wholly owned subsidiaries, PT Jammer Tulen and PT Maju Perkasa Sawit to Bank Mandiri, Indonesia and the Indonesian Bank Restructuring Agency (“IBRA”).

4 Of the total loan package of US$28 million, US$23 million was for the settlement of the debts owed by 1st Defendant and that of the wholly owned subsidiaries to Bank Mandiri Indonesia. The balance US$5 million, which is the subject matter of this action, was also for the express purpose of discharging certain debts owed by 1st Defendant and PT Jammer Tulen to IBRA (hereafter collectively referred to as the “IBRA Debt”). Pursuant to the Loan Agreement, the Plaintiffs duly remitted on 2 February 2000 the sum of US$28 million to the 1st Defendant’s bank account with Citibank N.A. Singapore (“the Asiatic Citibank account”). The Asiatic Citibank account was opened on 26 January 2000 specifically to receive the loan from the Plaintiffs. On 4 February 2000 and 17 March 2000, the sums of US$23 million and US$5 million were respectively transferred to another Singapore Citibank N.A. account in the names of 2nd and 3rd Defendants (“the Senangsyahs’ Citibank account”). The 2nd to 5th Defendants admit that the transfer and receipt of the US$5 million by the 2nd and 3rd Defendants was for and on behalf of themselves and the 4th and 5th Defendants. The US$5 million has remained all the while since the transfer in the Senangsyahs’ Citibank account. It is currently subject to an injunction order obtained against the 2nd to 5th Defendants on 4 July 2002.

5 The 2nd to 5th Defendants did not settle the IBRA Debt with IBRA. In May 2002, IBRA took steps to auction the IBRA Debt and that of PT Asiatic Mas Corporation. Batavia Financial Services Fund 1 (“Batavia”), a Cayman Island company, was the successful bidder. This happened on 1 August 2002. Consequently, so the argument ran, the sole purpose that the loan be applied for payment to IBRA is no longer capable of performance by each of the Defendants. The US$5 million must therefore be returned to the Plaintiffs since the Defendants have no legal right to continue to keep it.

6 The Plaintiffs’ claims are based on several alternative causes of actions. The first is that the transaction between the Plaintiffs and Defendants has given rise to a Quistclose trust of the US$5 million, enforceable in equity, in the Plaintiffs’ favour. Secondly, breach of the Loan Agreement. This is an alternative plea. The Plaintiffs contend that because of the 2nd to 5th Defendants’ failure to discharge the debt due to IBRA for over two years, the Defendants are in breach of Clause 3.1 of the Loan Agreement and the implied term that the Defendants would utilise the US$5 million to settle and repay the IBRA Debt as soon as practicable with the use of reasonable diligence, and within a reasonable time. The breaches are repudiatory in character and the Plaintiffs have accepted their repudiatory breaches as terminating the Loan Agreement by commencing this action.

7 The Plaintiffs have in the further alternative pleaded that each of the 2nd to 5th Defendants never had any intention of using the US$5 million to settle the IBRA Debt, but had in fact fraudulently misappropriated the money for their own benefit. Alternatively, the 2nd and 3rd Defendants had received the US$5 million knowing that the money was trust money to be used for the specific and sole purpose of settling the IBRA Debt, and had failed to apply the money for such purpose in breach of trust while the 4th and 5th Defendants had dishonestly assisted in the 2nd and 3rd Defendants’ breach of trust. In the circumstances, the 2nd to 5th Defendants became constructive trustees for the Plaintiffs of all monies received by them relating to the Plaintiffs’ sum of US$5 million. There is also a further alternative plea that the 2nd to 5th Defendants unlawfully conspired with each other and with one Wim Iskandar for the sole or predominant purpose of defrauding and/or injuring the Plaintiffs. The Plaintiffs contend that the transfer of the US$5 million to the Senangsyahs’ Citibank account was in breach of Clauses 4.1 and 7.1 of the Shareholders’ Agreement. The necessary consent or affirmative votes required by the clauses was not obtained for the transfer of the US$5 million. The Plaintiffs had also not approved the transfer or authorised Wim Iskandar to effect the transfer. As at 17 March 2000, he was no longer President Director of the 1st Defendant and the 3rd Defendant was at the material time not an authorised signatory of the Asiatic Citibank account.

1st Defendant’s position

8 The 1st Defendant’s position is clear. From the outset, it openly declared that it was not contesting the Plaintiffs’ claim against it and that the Plaintiffs are entitled to the US$5 million. It admitted in the Defence filed on 12 March 2003 that the loan of US$28 million was for the specific purpose of enabling the 1st Defendant to settle its existing debts as well as those of its wholly owned subsidiaries, PT Jammer Tulen and PT Maju Perkasa Sawit, which were then due and owing to PT Bank Mandiri and IBRA. The latter had taken over several separate debts owed by the 1st Defendant, PT Jammer Tulen and PT Maju Perkasa Sawit to several Indonesian banks. In its Defence, the 1st Defendant admitted that the US$5 million in the Senangsyahs’ Citibank account was intended to be used by the 2nd to 5th Defendants to settle with IBRA the debts of the 1st Defendant and that of its wholly owned subsidiary PT Jammer Tulen.

9 The 1st Defendant has also admitted in the Defence that the transfer of US$5 million on or about 17 March 2000 to the Senangsyahs’ Citibank account was effected without proper authorisation of the 1st Defendant and in breach of the Shareholders’ Agreement dated 26 January 2000. Prior to the transfer, a special consent of the 1st Defendant’s shareholders or board of commissioners was required by Clause 7 of the Shareholders’ Agreement. Wim Iskandar, who had caused the transfer of US$5 million to the Senangsyahs’ Citibank account, had acted without the proper authorisation of 1st Defendant.

10 The 1st Defendant agrees with the Plaintiffs that the 2nd to 5th Defendants should have used the US$5 million to repay the IBRA Debt within a reasonable time. It admitted that as at the date of the Writ of Summons filed on 3 July 2002, the 2nd to 5th Defendants had not settled the IBRA Debt with the application of the sum of US$5 million received by the 2nd to 5th Defendants on or about 17 March 2000. Counsel for the 1st Defendant, Mr. Cavinder Bull, submits that as the funds have not been dissipated and are available to satisfy any judgment against the 2nd to 5th Defendants, the Plaintiffs would have suffered no loss arising from the 1st Defendant’s breach of the Loan Agreement. To that extend, he submits that no order be made against the 1st Defendant.

2nd to 5th Defendants’ position

11 The 2nd to 5th Defendants deny they have breached the terms of the Loan Agreement. They further deny that the purpose for which the US$5 million is being held in the Senangsyahs’ Citibank account has failed.

12 The Loan Agreement was varied after the date of execution. The transfer of US$5 million to the Senangsyahs’ Citibank account was the result of a variation of the Loan Agreement. The Plaintiffs had agreed to allow the 2nd to 5th Defendants to negotiate the settlement terms and eventual repayment of the debts with IBRA as and when they deemed it appropriate. In addition, by the transfer of US$5 million to the Senangsyahs’ Citibank account, the 2nd to 5th Defendants would be personally responsible for the debt owing by the 1st Defendant and its subsidiaries to IBRA and for any shortfall should US$28 million be insufficient to pay IBRA and Bank Mandiri for the outstanding debts.

13 The IBRA Debts could not be settled because IBRA was insisting on treating as a composite debt (“the one obligor policy”), the debts of the entire Asiatic group of companies (which included companies other than 1st Defendant and PT Jammer Tulen) and IBRA was...

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6 cases
  • Singapore Tourism Board v Children's Media Ltd and Others
    • Singapore
    • High Court (Singapore)
    • 27 May 2008
    ...93 (refd) Ooi Ching Ling v Just Gems Inc [2003] 1 SLR (R) 14; [2003] 1 SLR 14 (refd) Pacific Rim Palm Oil Ltd v PT Asiatic Persada [2003] 4 SLR (R) 731; [2003] 4 SLR 731 (refd) Panatron Pte Ltd v Lee Cheow Lee [2001] 2 SLR (R) 435; [2001] 3 SLR 405 (folld) Rhodia International Holdings Ltd ......
  • Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd
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    ...Oriental Investments (SH) Pte Ltd v Catalla Investments Pte Ltd [2013] 1 SLR 1182 (refd) Pacific Rim Palm Oil Ltd v PT Asiatic Persada [2003] 4 SLR (R) 731; [2003] 4 SLR 731 (refd) Pacific Vigorous, The [2006] 3 SLR (R) 374; [2006] 3 SLR 374 (refd) Peregrine Systems Ltd v Steria Ltd [2005] ......
  • The Attorney-General v The Aljunied-Hougang-Punggol East Town Council
    • Singapore
    • High Court (Singapore)
    • 27 May 2015
    ...581–582), which in turn was cited with approval by Belinda Ang Saw Ean J in Pacific Rim Palm Oil Ltd v PT Asiatic Persada and others [2003] 4 SLR(R) 731 (at [17]): [W]hen the money is advanced, the lender acquires an equitable right to see that it is applied for the primary designated purpo......
  • Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd
    • Singapore
    • High Court (Singapore)
    • 31 July 2013
    ...2 AC 164 (“Twinsectra”) at [69] and the decision of Belinda Ang Saw Ean J in Pacific Rim Palm Oil Ltd v PT Asiatic Persada and others [2003] 4 SLR(R) 731 (“Pacific Rim”) at [16], which was cited with approval by Lai Siu Chiu J in Singapore Tourism Board v Children’s Media Ltd and others [20......
  • Request a trial to view additional results
3 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2003, December 2003
    • 1 December 2003
    ...had nevertheless been no breach of it). And, in the (also) Singapore High Court decision of Pacific Rim Palm Oil Ltd v PT Asiatic Persada[2003] 4 SLR 731; see also para 9.57 infra, with regard to ‘Discharge by performance and breach’), it was in fact admitted (at [33]) that ‘in the absence ......
  • RESULTING TRUSTS IN SINGAPORE
    • Singapore
    • Singapore Academy of Law Journal No. 2011, December 2011
    • 1 December 2011
    ...Obligations (New York: Oxford University Press, 5th Ed, 2010) at p 267. 56 Koh Cheong Heng v Ho Yee Fong [2011] 3 SLR 125 at [36]. 57 [2003] 4 SLR(R) 731. 58 Lee Kuan Yew v Tang Liang Hong [1999] 1 SLR(R) 533; Teo Siew Har v Lee Kuan Yew [1999] 3 SLR(R) 410; Low Gim Siah v Low Geok Khim [20......
  • Equity and Trust
    • Singapore
    • Singapore Academy of Law Annual Review No. 2003, December 2003
    • 1 December 2003
    ...by its failure to consider the relevant authorities. Nature of a Quistclose trust 12.31 In Pacific Rim Palm Oil Ltd v PT Asiatic Persada[2003] 4 SLR 731, the plaintiff, Pacific Rim, entered into a share sale and purchase agreement with the first defendant, PT Asiatic Persada, and the second......

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