Patsystems Pte Ltd v PT Bursa Komoditi Dan Derivatif Indonesia

• Jurisdiction: Singapore
• Judge: Mavis Chionh Sze Chyi JC
• Judgment Date: 22 May 2019
• Neutral Citation: [2019] SGHC 131
• Court: High Court (Singapore)
• Docket Number: Suit No 804 of 2016
• Year: 2019
• Published date: 23 January 2020
• Hearing Date: 04 September 2018,21 January 2019,06 September 2018,31 October 2018,05 September 2018
• Plaintiff Counsel: Low Chai Chong, Liong Wei Kiat, Alvin and Shaun Tho (Dentons Rodyk & Davidson LLP)
• Defendant Counsel: Ramesh Selvaraj, Tseng Zhi Cheng, Sean Douglas and Hiew E-wen, Joshua (Allen & Gledhill LLP)
• Subject Matter: Contracts,Breach,Contractual terms,Variation,Consideration,Promissory estoppel,Implied terms,Remedies,Damages,Claim for wasted expenditure
• Citation: [2019] SGHC 131

Mavis Chionh Sze Chyi JC: Introduction

The Plaintiff in this case is a company incorporated in Singapore which engages in the business inter alia of developing and marketing computerised financial trading systems for use in trading on the global derivatives markets. The Defendant is a company incorporated in the Republic of Indonesia which carries on business as a commodities- and derivatives-based exchange in Indonesia. The two parties entered into a written Software Licence & Support Agreement dated 9 September 2009 (“the Licence Agreement”) and a written Addendum to the said Licence Agreement dated 1 May 2010 (“the Addendum”). The Plaintiff sued the Defendant in the present proceedings for the total sum of US$604,340.68 in respect of 17 invoices issued by the Plaintiff to the Defendant between 28 March 2012 and 19 August 2014. The Defendant denied any liability to pay the sum claimed. The Defendant also filed a counter-claim against the Plaintiff alleging breaches by the Plaintiff of “the terms, whether express or implied, of the [Licence] Agreement and Addendum”,¹ in respect of which it sought the refund of the entire licence fee or, alternatively, damages.

On 31 October 2018, following a 3-day trial and the filing of written submissions, I allowed the Plaintiff’s claim and dismissed the Defendant’s counter-claim. The Defendant later applied for leave to file a notice of appeal out of time. I granted the Defendant’s application on 21 January 2019, and it filed the notice of appeal on 23 January 2019. I now set out below the reasons for my decision. I will start by setting out the more pertinent provisions of the Licence Agreement and the Addendum before summarising each party’s case and the evidence led in support of its case, and then setting out my factual findings and reasoning.

Background: The Licence Agreement and the Addendum

A copy of the Licence Agreement of 9 September 2009 is found at pp 28 to 73 of the affidavit of evidence-in-chief of the Plaintiff’s Chief Executive Officer (“CEO”) Mr Silvio Oliviero (“Mr Oliviero”). Pursuant to the Licence Agreement, the Defendant paid a one-time licence fee of US$1.5 million for a perpetual, non-exclusive, irrevocable and limited licence to use the Plaintiff’s software on the commodities and derivatives exchange operated by the Defendant (referred to as “ICDX” in the Licence Agreement). The software in question comprised, broadly, the Broker Software used for electronic execution and order management, and the Clearing and Matching Engine Software used for the clearing and matching of exchange-traded products.²

The Licence Agreement also provided for the payment of annual fees for System Support and Maintenance (“S&M fees”), at US$150,000 per year in respect of support and maintenance for the Matching Engine System and US$75,000 per year in respect of support and maintenance for the E-Broker Core System and Front-End.³

Finally, the Licence Agreement also provided for the Plaintiff to charge a usage fee (referred to as “Retail Lot Charges” in the invoices) for every lot traded by API⁴ retail users of certain front-end applications.⁵

For ease of reference, I reproduce below the more pertinent clauses in the Licence Agreement: 7. THE CHARGES 7.1 Customer agrees to pay to Patsystems the Charges as set out or calculated in accordance with the Purchase Order. Patsystems will invoice such Charges upon signature by both Parties of the relevant Purchase Order and Customer shall pay such Charges within 30 days such signature, unless otherwise stated in the Purchase Order or invoice. 7.2 If Customer does not pay the Charges on the due date for payment, Patsystems may notify Customer of the amount overdue and require its payment within the next fourteen (14) days. If Customer does not pay the outstanding amount notified within the fourteen (14)-day period, Patsystems may by 14 days’ notice to Customer forthwith suspend the Service or any part of it, or terminate this Agreement. 7.3 In the event that Customer in good faith disputes any portion of the Charges contained in an Invoice, the Customer will pay the undisputed portion of the invoice (provided such portion is independent and not co-dependent on the part of the Invoice disputed) on the due date in full and the Customer shall within 14 days’ from the date of receipt of the Invoice, send a notice of dispute to Patsystems setting out the reasons for the disputed amount shall set out the amount in dispute, the reason for such dispute and supporting evidence (“Notice of Dispute”). Pending the resolution of the disputed amount, there is suspension of payment for the Invoice in respect of the bona fide disputed amount. The Parties shall negotiate in good faith in an attempt to resolve the dispute, provided that if the dispute cannot be resolved within sixty (60) days of the date of the Invoice, matter shall be referred to for dispute resolution in accordance with the dispute resolution procedure set forth at Clause 18. If Customer does not submit Notice of Dispute within the stipulated period of 14 days’ from the date of receipt of the Invoice, Customer waives all rights to dispute the Invoice., nothing in this clause shall prevent or restrict Patsystems from instituting legal proceedings provided that Patsystems shall have complied with the mode of dispute resolution at set out in Clauses 18 and 19. 7.4 Customer shall pay to Patsystems interest on any overdue sum at the rate of four (4) per cent per annum over the base rate SIBOR in respect of the period between the due date for payment any undisputed portion and the date on which Patsystems receives the overdue amount. The Charges are exclusive of value added tax or any other sales or local tax duty or similar charge which shall be payable by Customer additionally. Provided always that no interest is payable on any overdue sum in the case of suspension of payment for disputed amounts and undisputed amounts (that are not independent from the disputed amounts) in accordance with Clause 7.3, if the delay in payment was caused by an error or omission from Patsystems.

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10. WARRANTIES 10.1 Patsystems warrants that the Software will comply with the Specifications set out in the Project Plan at the date of Acceptance and operate on the media on which they are supplied immediately on installation subject to their having been installed on the Equipment. Customer’s sole remedy in the event of the Software not so operating satisfactorily will be (at the option of Customer) either the supply and installation on the Equipment of replacement versions of the Software or the refund of any unused sums already paid by Customer to Patsystems on a pro rata basis. 10.2 Patsystems warrants that either it is the legal and beneficial owner of the Software or an Authorised Licensee thereof with full right to licence such Software to Customer as provided in this Agreement. Patsystems further warrants that to the best of its knowledge and belief the Software does not infringe the intellectual property infringement rights of any third party. As far as Patsystems is aware, there are no third party intellectual property infringement claims brought against Patsystems in respect of the software. 10.3 The limited express warranties set forth in this clause 10 are made to Customer exclusively and are in lieu of all other warranties and all conditions, warranties or other terms concerning the Software and System which might otherwise be implied into this Agreement or any collateral contract (whether by statute or otherwise) are hereby expressly excluded 10.3 Patsystems warrants that it has used its reasonable effort to scan the Software using up to date anti-virus software to check that the Software does not, upon delivery to Customer, contain any commonly known virus, worm or other code designed to disable, damage the Software. 10.4 PATSYSTEMS AND PATSYSTEMS PARTIES MAKE NO OTHER WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH REGARD TO ANY PRODUCTS AND SERVICES PROVIDED UNDER THIS AGREEMENT, AND/OR THE SOFTWARE, IN WHOLE OR IN PART. 10.4.1 WITHOUT LIMITING THE FOREGOING, PATSYSTEMS AND PATSYSTEMS PARTIES EXPLICITLY DISCLAIMS: 10.4.2 ALL WARRANTIES OF SUITABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE; 10.4.3 THAT THE SOFTWARE OR SYSTEM, IN WHOLE OR IN PART, WILL BE ERROR FREE OR WILL OPERATE WITHOUT INTERRUPTION; 10.4.4 THAT THE SOFTWARE WILL BE COMPATIBLE WITH ANY HARDWARE OR SOFTWARE OTHER THAN THE EQUIPMENT.

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16. ENTIRE AGREEMENT 16.1 This Agreement supersedes all prior agreements arrangements and understandings (whether express or implied, written or oral) between the Parties in relation to the subject matter of this Agreement and constitutes the entire agreement between the Parties to the exclusion of all other terms conditions and warranties express or implied, written or oral.

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22. GENERAL PROVISIONS 22.1 Variation Proposed modifications or amendments to this Agreement shall be enforceable only if they are in writing in accordance with the change order and are signed by Authorised representatives of both Parties. 22.2 No Waiver No term or provision of this Agreement shall be deemed waived and no breach excused unless such waiver or consent is in writing and signed by the Party claimed to have so waived or consented. No omission or delay on the part of any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver by it of any right to exercise it in future or of any other of its rights under this Agreement.

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Schedule 3: Project Plan

Acceptance Criteria – on a component by component basis

(a) The Customer agree to commence the Acceptance Testing (which shall be no later than 3 days from the date of completion of the...