PMA Credit Opportunities Fund v Tantono Tiny

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 11 April 2011
• Neutral Citation: [2011] SGHC 89
• Published date: 18 April 2011
• Date: 11 April 2011
• Year: 2011
• Hearing Date: 02 March 2011
• Plaintiff Counsel: Christopher Anand Daniel and Ganga Avadiar (Advocatus Law LLP)
• Citation: [2011] SGHC 89
• Defendant Counsel: Danny Ong and Yam Wern Jhien (Rajah & Tann LLP)
• Court: High Court (Singapore)
• Docket Number: Suit No 671 of 2009 (Registrar's Appeal No 18 of 2011)

Woo Bih Li J: Introduction

The Respondents in this action applied in Summons No 4095 of 2010 for summary judgment against the Appellant, the estate of the late Susanto Lim (“Susanto”), for a total sum of S$133,478,558.52 (as at 15 July 2009) due to the Respondents under a Deed of Personal Guarantee No 284 dated 20 December 2006 (“the PG”). On 14 January 2011, an Assistant Registrar (“AR”) granted summary judgment in favour of the Respondents.

The Appellant then appealed to this Court in Registrar’s Appeal No 18 of 2011 (“RA 18/2011”) to set aside the order made by the AR for summary judgment or, alternatively, to give the Appellant unconditional leave to defend.

I heard the appeal on 2 March 2011 and dismissed it.

An appeal has been filed to the Court of Appeal by the Appellant against my decision. I shall state my reasons for my decision after recounting the salient facts.

Facts Parties

PMA Credit Opportunities Fund, PMA Temple Fund and Diversified Asian Strategies Fund are the First, Second and Third Respondents respectively. They are investment funds registered in the Cayman Islands.

The Fourth Respondent, Arch Advisory Limited, is a limited liability company incorporated in Labuan and in the business of providing securities, investment advisory and financial planning services. The Fifth Respondent, Goldman Sachs Foreign Exchange (Singapore) Pte, is a limited liability company incorporated in Singapore and in the business of providing financial advisory, securities brokerage and investment management services. The Sixth Respondent, Standard Chartered Bank, is a limited liability company incorporated in England and Wales and in the business of providing banking and other financial services. The Seventh Respondent, Intertrust (Singapore) Limited (formerly known as Fortis Intertrust (Singapore) Limited) is a limited liability company incorporated in Singapore and in the business of providing corporate, private wealth management and other specialised services.

The Appellant, Tiny Tantono (“Tiny”), is the widow of the late Susanto. Susanto passed away in Singapore on 15 October 2009. By an Order of Court dated 9 April 2010 (as varied by an Order of Court dated 27 May 2010), Tiny was joined as a Defendant (now Appellant) in this action as the representative and heir of the estate of the late Susanto. The order further stated that the proceedings in this action be carried on and maintained against Tiny as if she had been substituted for Susanto.

Susanto was an experienced and wealthy Indonesian businessman, reported by Forbes to be amongst the top 100 richest individuals in Indonesia in 2007. He was the indirect beneficial owner and chief executive officer of the Sawit Mas Group, a conglomerate specialising in oleochemicals and palm oil products.

Background

By an agreement dated 15 December 2006 (the “Facility Agreement”), the First Respondent extended a US$140 million syndicated loan facility (“the Facility”) to one Palm Optics Enterprise Pte Ltd (the “Borrower”). The Borrower is part of the Sawit Mas Group. The Sixth and Seventh Respondents were the Onshore and Offshore Security Agents respectively under the Facility Agreement. The First to Fifth Respondents are Lenders under the Facility Agreement.

In consideration for the Facility, Susanto furnished the PG in favour of the Sixth Respondent, acting as a Security Agent for the beneficiaries (defined by Art 1.1 of the PG to include the First to Fifth Respondents and the Seventh Respondent).

Article 2 of the PG states: 2.1 The Guarantor ... guarantees to the Security Agent for and on behalf of the Beneficiaries, the due and punctual payment by [the Borrower] of the Secured Obligations and absolutely, irrevocably and unconditionally undertakes to pay the Secured Obligations as his own debt to the Security Agent for and on behalf of the Beneficiaries forthwith upon first written demand by the Security Agent in the currency and in the manner required of the Borrower thereunder. 2.2 The Guarantor ... agrees as a primary obligation and not as sureties only... (b) to indemnify each of the Beneficiaries against any loss, cost or expense (including legal fees on a full indemnity basis) which they (or any one or more of them) may sustain or incur as a consequence of any default or whatsoever nature by [the Borrower] in the performance of the obligations expressed to be assumed by [the Borrower] under or in connection with any Finance Document... 2.4 Notwithstanding any provision of any of the Finance Documents, the Guarantor... as primary obligor, and not as sureties only, agrees that the Beneficiaries shall be entitled to recover from the Guarantor all amounts due from [the Borrower] to the Beneficiaries under or in connection with any Finance Document.

In addition, Art 18 of the PG provides that Susanto shall indemnify and hold harmless, on first demand, all of the Respondents against any and all actions, claims, demands, proceedings, judgments, causes of action, losses, liabilities, costs, charges and expenses (including without limitation all services, value added and other duties or taxes payable on such costs, charges and expenses) which may be suffered or incurred by any of them as a result of: any breach of warranties or undertakings made or assumed by Susanto under the PG; the existence or use of rights conferred on, amongst others, the Respondents under the PG; and the perfection, exercise, enforcement or the preservation of any rights under the PG, or any other matter arising out of or in connection with the PG.

Art 24 of the PG provides that the PG shall be governed by and construed in accordance with the laws of the Republic of Indonesia.

Tiny signed a Spousal Consent to the PG on the day that Susanto signed the PG.

Following the execution of the Facility Agreement, the Borrower drew down the following sums under the Facility Agreement: on or about 7 and 14 February 2007, the sums of US$56 million and US$2 million respectively under a facility; and on or about 7 February 2007, the sum of US$70 million under another facility.

On or about 7 November 2008, an amount of US$1,508,000 of principal and US$2,876,001.93 of interest fell due and payable under the Facility Agreement. The Borrower defaulted on its obligation under the Facility Agreement to pay the sums.

Despite demands made by the Seventh Respondent, as a Security Agent, on 19 November 2008 and 6 January 2009 to the Borrower (copied to Susanto), the Borrower failed to satisfy the outstanding amounts due. By Notices of Demand dated 5 May 2009 and 13 May 2009 issued by the Sixth Respondent, as a Security Agent, to Susanto, the Respondents demanded payment from Susanto of the sum of US$122,780,000 and interest of US$6,656,517.27 then due and outstanding under the Facility for which he was liable under the PG. Susanto did not respond to the Notices of Demand.

Consequently, on 3 August 2009, this action was formally commenced against Susanto. He entered an appearance through his then solicitors Drew & Napier LLC on 22 September 2009. However, on 15 October 2009, he passed away in Singapore.

On or about 8 December 2009, the Respondents received a letter from the Borrower signed by Ferry Tanudjaya, Susanto’s brother-in-law, requesting the Respondents’ consent to a proposed sale of shares in various companies and for the PG, including all antecedent breaches and accrued rights thereunder, to be absolutely and unconditionally discharged, waived and released.

Subsequently, following an Order of Court dated 9 April 2010 (as varied by an Order of Court dated 27 May 2010), Tiny was ordered to be substituted as Defendant (now Appellant) to this action in her capacity as representative of Susanto’s estate.

The Defence was filed on 18 June 2010.

Pleaded defences and show cause defences

In the Defence, the Appellant essentially denied liability under the PG on the following grounds: The PG is not binding on Susanto. He did not know how to read or understand English when he signed the PG and the terms of the PG were not fully and properly explained to him. Under Indonesian law (Art 24 of the PG), the PG is not enforceable against a person who could not read and understand the terms of the agreement that he had signed. The PG is not binding on the Appellant under Indonesian law as the Respondents have failed to fulfil their obligations under the Facility Agreement and instead, varied the Facility Agreement by way of a letter dated 5 February 2007 without the consent of the Appellant.

The Appellant did not provide any particulars in support of the above defences.

However, the Appellant later went on to file eight affidavits in response to the application for summary judgment, comprising six factual affidavits and two expert affidavits (“the show cause affidavits”).

In these affidavits, the Appellant alleged that: Under Indonesian law, the PG ought to have been explained or translated by the Notary Public (“the Notary”) (or a translator) to Susanto, and to Tiny also, before Susanto executed the PG and before Tiny executed the Spousal Consent. Susanto had only completed primary school education. He spoke primarily Hokkien and sometimes “pasar bahasa” (ie, informal Bahasa Indonesia). He did not speak or write formal Bahasa Indonesia, only “pasar bahasa”. He was not able to speak, read or write English beyond simple words and phrases like “yes”, “no”, “good morning” and “how are you”. The Notary before whom the PG and a Spousal Consent were signed, did not read or explain the terms of the PG to Susanto line by line in either Hokkien or Bahasa Indonesia. Susanto was unaware that the PG created a primary obligation on him in that the Lenders need not first make reasonable attempts to enforce the Facility Agreement against the Borrowers before the PG can be enforced. The contents of the PG and a Spousal...