PT Tenar Indoam Oil Services v Third Wave Group Ltd

CourtHigh Court (Singapore)
JudgeAndrew Ang J
Judgment Date01 February 2008
Neutral Citation[2008] SGHC 18
Citation[2008] SGHC 18
Published date05 February 2008
Plaintiff CounselPrakash Mulani and Bhaskaran Sivasamy (M&A Law Corporation)
Defendant CounselLisa Chong (Lisa Chong & Partners)

1 February 2008

Andrew Ang J:

1 By an Agency Agreement dated 1 December 1996 (“1st Agency Agreement”), the defendant appointed the plaintiff as its exclusive agent (“the Agent”) in Indonesia for the sale and rental of “Products” (as defined in the 1st Agency Agreement).

2 The plaintiff and defendant entered into a second Agency Agreement (“2nd Agency Agreement”) exactly one year later on 1 December 1997.

3 The 1st and 2nd Agency Agreements (together “the Agency Agreements”) were similar except that in the 2nd Agency Agreement:

(a) the Appendix D thereto was amended to include new products;

(b) Appendix B was expanded to provide for “territorial commission” payable to the plaintiff in respect of the sale and rental of products covered thereunder which were concluded outside of Indonesia but for use within Indonesia;

(c) it was specifically provided that territorial commission would be based on ex-Singapore prices;

(d) clause 6.2 was amended to provide alternative payment terms to the effect that payments by customers to the Agent would be paid into a joint bank account in Indonesia from which the defendant would pay the plaintiff its commission and reimburse the plaintiff the Value Added Tax (“VAT”) (among other unspecified reimbursements) in relation to invoices and payments; and

(e) the definition of “Business” in the 1st Agency Agreement was expanded in the 2nd Agency Agreement to the business of “principals”.

4 On or about 31 October 1997, a US dollar account had been started with the Hongkong and Shanghai Banking Corporation (“HSBC”) in the name of the plaintiff (“HSBC account”). This HSBC account was intended to be the dedicated account later referred to in cl 6.2 of the 2nd Agency Agreement.

5 Initially, the HSBC account was operated jointly by representatives of the plaintiff and defendant. On or about 26 November 1997 and 12 August 2003, the plaintiff gave instructions to HSBC to allow the defendant’s representative(s) to operate the HSBC account either solely or jointly with the plaintiff’s representative(s).

6 The principal-agent relationship lasted for six years from 1 December 1996 to 1 December 2002 when it was terminated pursuant to notice served by the defendant on 1 November 2002.

7 During the 6-year period, numerous transactions took place. The transactions were carried out “back-to-back” in that the defendant would issue its invoice to the plaintiff and the plaintiff would issue its invoice to the customers in Indonesia. “Territorial transactions” (ie, transactions carried out in Singapore for use by customers in Indonesia) were carried out from 1997 to 2002.

8 In 2004, long after the termination of the principal-agency relationship on 1 December 2002, the plaintiff instructed solicitors to write to the defendant alleging, inter alia, short payment of commission. Of the claims made under the action which followed, the following remained at the hearing:

(a) Ordinary Commission in the sum of US$221,618.97;

(b) Territorial Commission in the sum of US$94,306.22;

(c) Penalty for VAT in the sum of IDR 340,265,077;

(d) Employee Tax in the sum of IDR 219,697,125 and penalty in the sum of IDR 10,253,411; and

(e) Claim in respect of CNOOC Contract in the sum of US$291,474.86.

9 The defendant’s two counterclaims were:

(a) for repayment of loans by the defendant to the plaintiff totalling US$132,035.82; and

(b) for an account to be taken of the HSBC account and/or in respect of wrongful remittances totalling US$207,427.12 by the plaintiff out of the HSBC account.

At this juncture I should perhaps observe that although the defendant’s adoption of the expression “Commission Agreement” might have given the erroneous impression that the terms thereof were all agreed at the same time, as pleaded, it was clear that they were not since they were agreed partly orally, partly in writing and partly by conduct.

Ordinary commission

10 In respect of their claim for Ordinary Commission, the plaintiff referred to the Commission Schedule at Appendix B of the Agency Agreements. This was pleaded at para 6(a) [erroneously numbered as 5(a)] of the Statement of claim read with Annex A thereto. A summary of the plaintiff’s claim for Ordinary Commission was set out as follows:

Commission due (Annex A)

No.

Year

Amount (US$)

1

1997

16,253.80

2

1998

29,527.43

3

1999 (estimated)

16,222.28

4

2000

2,355.48

5

2001

45,034.19

6

2002

46,825.68

7

2003

25,400.11

Total:

221,618.97

11 The Statement of Claim itself did not explain expressly why the plaintiff was claiming discrepancies in Ordinary Commission. Annex A thereto merely set out the particulars of the invoices, commission as computed by the plaintiff, commission paid and the discrepancies.

12 An examination of the invoices and related documents, however, showed that the plaintiff claimed for shortfall in the payment of Ordinary Commission because, according to the plaintiff, it was entitled to:

(a) commission based on the value of the plaintiff’s invoice (ex-Jakarta Price) and not the value of the defendant’s invoice (ex-Singapore Price);

(b) commission on products lost in hole as if they were sale transactions;

(c) commission on invoices which, the defendant said, customers had not paid, ie, bad debts (this item of claim was dropped at the trial);

(d) commission for inspection services rendered to customers;

(e) commission for “redressing” (see definition in [46] below) of PBL tools;

(f) commission for new products introduced after the date of the 1st Agency Agreement on the same basis as in Appendix B; and

(g) commission based on Appendix B for specially negotiated transactions.

13 In summary, at para 9(a) of their Defence and Counterclaim, the defendant pleaded that apart from the Agency Agreements there was another agreement (“Commission Agreement”) made partly orally, partly in writing and partly by conduct whereunder it was agreed:

(a) that all commission payable under the Agency Agreements were to be computed on the basis of ex-Singapore Price;

(b) no commission was payable with respect to inspection of tools, redressing of PBL tools, the products and/or the replacement of any parts or consumables.

(c) commission was payable with effect from 1 December 2001 in respect of charges billed to customers as a result of a product being lost in hole at specific rates (depending on brands) based on the replacement cost for such lost product. (It was the defendant’s case that prior thereto, no commission was payable for lost products except for Redback Roller Reamers.)

14 The defendant further pleaded in para 9(a) that from time to time during the term of the 2nd Agency Agreement, when new products were included for purposes of the agency, the Commission Agreement was varied in that the plaintiff and defendant would agree on special rates of commission for such products. (It is curious that the defendant pleaded a variation of the Commission Agreement rather than the 2nd Agency Agreement. That could have been because the defendant was seeking to circumvent what was thought to be an obstacle in cl 11.4 of the 2nd Agency Agreement which required any amendment to be in writing signed by both parties.)

15 In reply, the plaintiff insisted that the only agreements entered into by the parties were the Agency Agreements and denied the existence of the Commission Agreement, citing cll 11.3 (which stated that, if there was any conflict or inconsistency between the terms of the Agency Agreement and any other agreement between the parties, the Agency Agreement would prevail) and 11.4 (see [14] above) of the Agency Agreements.

16 The defendant submitted that if indeed there was no Commission Agreement then, on the defendant’s view as to the products and the type of transactions covered by the Agency Agreements, the plaintiff would have no basis to claim commission in respect of new products and transactions which were neither sale nor rental transactions. The defendant added, however, that as the transactions had undeniably taken place with the full involvement of the plaintiff who had entered into contracts with customers, issued invoices to customers and accepted commission payments in respect of the same, the plaintiff would be estopped from denying the existence of the Commission Agreement.

17 The starting point is to establish what exactly the plaintiff was authorised to do under the Agency Agreements and what commission was agreed to be paid by the defendant to the plaintiff.

18 The defendant submitted that the transactions which the plaintiff was authorised to enter into and for which it would be entitled to commission under the Agency Agreements were sale and rental of the “Products” therein defined. The defendant argued that it followed that unless the parties separately agreed, commission would be paid only for sale and rental transactions in respect of the “Products” and nothing else.

19 The defendant further argued that the “Products” were limited to products referred to in Appendix D to the respective Agency Agreements. Appendix D to the 1st Agency Agreement was as follows:

Third Wave Group Ltd., Associated Companies, and Principals

• Third Wave Group Ltd.

• TW Engineering Services Ltd.

• TW Gearhart Ltd. (Redback Roller Reamers, Stabilizers and PDC Backream Cutters

• Well-Flow Technologies (Wellbore Cleanup Chemicals and Casing Brushes)

• HE Drilling and Fishing Tools (S) Pte Ltd. (Hydra Jars, Accelerators, Shock Tools, and Fishing tools).

Appendix D to the 2nd Agency Agreement was wider and provided as follows:

“Companies, Associated Companies and Principals”

Third Wave Group Ltd – Associated Companies and Principals covered under this agreement, as follows:

• Third Wave Group Ltd.

• TW Engineering Services Ltd. (petroleum engineering services, consultants, etc.)

• TW Gearhart Ltd. (Redback Roller Reamers, PDC back ream cutters, Replaceable Blade IB stabilizers and all other Redback products)

• HE...

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2 cases
  • Auston International Group Ltd and Another v Ng Swee Hua
    • Singapore
    • Court of Three Judges (Singapore)
    • 5 August 2009
    ...2 SLR 698. Counsel for the respondent, on the other hand, relied on cases such as PT Tenar Indoam Oil Services v Third Wave Group Ltd [2008] SGHC 18 in support of the contention that there is no absolute rule prohibiting a court from making findings of fact outside of the What was the respo......
  • Auston International Group Ltd and Another v Ng Swee Hua
    • Singapore
    • Court of Three Judges (Singapore)
    • 5 August 2009
    ...2 SLR 698. Counsel for the respondent, on the other hand, relied on cases such as PT Tenar Indoam Oil Services v Third Wave Group Ltd [2008] SGHC 18 in support of the contention that there is no absolute rule prohibiting a court from making findings of fact outside of the What was the respo......

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