PT Surya Citra Multimedia v Brightpoint Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 09 November 2018
• Neutral Citation: [2018] SGHC 245
• Plaintiff Counsel: S Selvam s/o Satanam, Jawharilal Balachandran, Choo Xiuhui Gladys and Daniel Li (Ramdas & Wong)
• Date: 09 November 2018
• Docket Number: Suit No 416 of 2015
• Hearing Date: 28 February 2018,31 October 2018,08 March 2018,06 March 2018,02 March 2018,24 April 2018,07 March 2018,27 February 2018,01 March 2018
• Subject Matter: Sale of goods,Civil Procedure,Pleadings,Breach of contract,Commercial Transactions,Damages for breach of contract
• Year: 2018
• Defendant Counsel: Jimmy Yim, Errol Joseph and Raeza Ibrahim (Drew & Napier LLC)
• Court: High Court (Singapore)
• Citation: [2018] SGHC 245
• Published date: 15 November 2018

Belinda Ang Saw Ean J: Introduction

The plaintiff, PT Surya Citra Multimedia (“SCM”) is suing the defendant, Brightpoint Singapore Pte Ltd (“BrightPoint”), for breaches of the price protection clause in a sub-distributor agreement dealing with the distribution of Blackberry mobile phones in Indonesia. SCM’s claims concern two instances of price protections that arose from the reduction of retail prices by the manufacturer of Blackberry mobile phones, Research in Motion Limited (now known as Blackberry Limited). It is not disputed that any reduction of retail prices would affect stocks already purchased by sub-distributors in Indonesia like SCM, and the purpose of the price protection clause is to compensate the sub-distributors for potential losses arising from any reduction in the retail prices.

Separately, BrightPoint has counterclaimed against SCM for its alleged failure to pick up certain Blackberry mobile phones according to its purchase orders.

Counsel for the SCM is Mr S Selvam (“Mr Selvam”) and BrightPoint is represented by Mr Jimmy Yim, SC (“Mr Yim”).

Overview of the disputes

BrightPoint, a subsidiary of Ingram Micro Asia Pacific Pte Ltd (“IMM”), is a wholesaler of technology products, including Blackberry products manufactured by Blackberry Limited, and provides services such as distribution and customer support. SCM is incorporated in Indonesia and is in the business of selling wireless communication devices and related accessories in Indonesia. PT Blackberry Indonesia (“Blackberry”) is the subsidiary of Blackberry Limited that was involved in the dealings between the parties.

On 7 November 2012, BrightPoint and SCM entered into the Sub-Distributor Agreement whereby BrightPoint appointed SCM as a sub-distributor of Blackberry products in Indonesia. Pursuant to the agreement, SCM purchased from BrightPoint and BrightPoint supplied to SCM Blackberry mobile phones and related accessories. In the course of this sub-distributorship arrangement, the parties had multiple disagreements that resulted in the present suit. As stated, SCM’s claims are in relation to two instances of price protections, which I will refer to as the May Price Protection and the November Price Protection. With regard to the May Price Protection, SCM claims that it is entitled to a higher sum than what BrightPoint had calculated. With regard to the November Price Protection, SCM claims that it is entitled to the price protection because it has fulfilled the condition precedent, while BrightPoint claims otherwise. The key clause in the Sub-Distributor Agreement in relation to SCM’s claims is paragraph 3 of Schedule A (“the Price Protection Clause”), reproduced as follows:

BrightPoint will from time to time provide such invoice price protection as is afforded by the manufacturers of the Products in the event of a price reduction by the relevant manufacturer. BrightPoint reserves the right to vary any such price protection at any time by notice in writing.

BrightPoint has counterclaimed that SCM refused to pick up all the units it had ordered via purchase orders in relation to two Blackberry mobile phone models. The key clause in the agreement in relation to BrightPoint’s counterclaims is clause 2 (the “Purchase Order Clause”), reproduced as follows: 2. Purchase Orders . A written purchase order (“Order”) from Distributor [ie, SCM] is required for all purchases of Products from BrightPoint. All Orders are subject to approval of credit by BrightPoint and acceptance in writing by BrightPoint in its sole discretion. The terms and conditions set forth herein shall control and prevail over any contrary terms in Orders. The individual contracts for the sale of Products formed by BrightPoint’s acceptance of Orders shall automatically incorporate, to the extent applicable, the terms and conditions of this Agreement. Unless otherwise expressly set forth to the contrary in BrightPoint’s invoice, these terms and conditions are for delivery to Distributor’s carrier, Ex Works (Incoterms 2010) BrightPoint’s warehouse or other point or points of delivery designated by BrightPoint. BrightPoint shall not be responsible for spotting, switching, demurrage or other transportation charges unless agreed to in writing signed by an authorized officer of BrightPoint. Distributor agrees to purchase a minimum quantity of five hundred (500) units per shipment from BrightPoint, or with respect to RIM [ie, Blackberry] Products such higher minimum quantities as may be advised from time to time (“Minimum Order Quantity”), unless a lower minimum amount is agreed in writing by the Parties. Any Purchase Order confirmed by Distributor shall not be changed, rescheduled, or cancelled by Distributor thirty (30) days prior to the scheduled shipping date unless otherwise agreed by the Parties and shall be subject to reasonable handling fees and actual expenses incurred by BrightPoint.

[emphasis added]

The facts in this case are largely contained in the extensive email correspondence between the parties and internal email correspondence within each party. The parties do not dispute the email correspondence, but take different positions as to the purport of some of these correspondence. To avoid unnecessary repetition of the relevant correspondence and events that occurred, I will address them in the decision proper.

Persons of importance acting for the parties

In SCM, in order of seniority, Alino Sugianto (“Sugianto”) was the director and Handani Sutrisna (“Sutrisna”) was the general manager at the material time.

In BrightPoint, in order of seniority, Felix Wong (“Wong”) was the senior vice president and managing director at the material time, Tim Birch (“Birch”) was the sales director until 22 October 2013 before Rajesh Sokhal (“Sokhal”) took over, Benjamin Williams (“Williams”) was the business development manager, and Ernawati Tan (“Tan”) was the senior product executive.

In Blackberry, Nicholas Mastroianni (“Mastroianni”) was the interim country head of Indonesia and senior business operations manager, Maspiyono Handoyo (“Handoyo”) was the managing director, and Andi Utomo (“Utomo”) was the sales or distribution director at the material time. Mastroianni made the decisions in relation to financial approvals, arrangements and calculations of price protection. Utomo did not have authority to decide price protection on his own accord and had to get permission from Mastroianni whenever he communicated any information on price protection to SCM or to BrightPoint.

Sugianto, Sutrisna and Utomo took the stand to testify on behalf of SCM, while Wong and Tan testified for BrightPoint.

Summary of the parties’ cases The May Price Protection

The May Price Protection concerns the price protection for Blackberry 9220, Blackberry 9320, Blackberry 9790 and Blackberry 9900, and the parties’ dispute centres on the method of calculation of the sum SCM is entitled to. The two email announcements on the May Price Protection stated that “[t]he calculation is based on the previous four weeks invoiced sales (pickup) from IMM; this is in alignment with previous communications from BlackBerry” and “the previous four weeks include weeks 16, 17, 18 and 19”.¹ On top of that, the first email announcement states that the sum of price protection for SCM was US$23,520, and the second email announcement stated that “the inventory support amounts per unit is: 9220 @ 14 per unit for the 1,680 units invoiced during WK16”, meaning that the price protection was US$14 for each of the 1680 units of Blackberry 9220 invoiced in week 16, amounting to a total price protection of US$23,520.

SCM’s position is that the price protection should be calculated based on the number of units picked up during weeks 16 to 19 as reflected under the data entry “Pick up order to Distributor” in the Compass Tool (“RCP”). The RCP was a data system created by Blackberry and used by Blackberry, BrightPoint and SCM to monitor, plan and manage sales, forecasts, orders, shipments and inventory. Using the number of units picked up as reflected in the RCP, the price protection should be US$544,720. Originally, SCM claimed for US$813,912.60, based on the number of units reflected in the RCP at a price protection per unit of US$15.51, but this claim was amended to US$544,720 after Sugianto conceded at trial that the price protection per unit was US$14, based on BrightPoint’s second email announcement on the May Price Protection.

In the alternative, SCM alleges that BrightPoint has received funding from Blackberry or by way of an accrual fund for the price protection in the sum of US$300,000 or alternatively US$250,000. The thrust of this alternative claim is unknown. Presumably, SCM wishes to claim the money received by BrightPoint, but it did not plead the basis for this entitlement. In the further alternative, SCM claims that there was an agreement made on or about 11 September 2013 that BrightPoint was to provide price protection in the sum of US$300,000 for the reductions in retail prices of Blackberry 9790 and Blackberry 9900 (collectively known as Blackberry Bold).

On the other hand, BrightPoint’s position is that SCM is only entitled to price protection in the amount of US$23,520 calculated based on 1680 units of Blackberry 9220 at a price protection of US$14 per unit, as communicated to SCM at the material time. The 1680 units were BrightPoint’s invoiced sales to SCM in weeks 16 to 19, and not based on the data in RCP. In relation to SCM’s pleading in the alternative, BrightPoint maintains that Blackberry did not provide any price protection by way of an accrual fund or transfer of funds for the four models of Blackberry mobile phones, and explains that the accrual funds were utilised for a number of purposes, of which price protection was only one. BrightPoint further denies the alleged agreement to provide price protection on or about 11 September...