Sembcorp Marine Ltd v PPL Holdings Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 25 July 2013
• Neutral Citation: [2013] SGCA 43
• Published date: 02 August 2013
• Date: 25 July 2013
• Year: 2013
• Hearing Date: 08 November 2012
• Plaintiff Counsel: Davinder Singh SC, Vanathi S, Jackson Eng and Isaac Lum (Drew & Napier LLC)
• Citation: [2013] SGCA 43
• Defendant Counsel: Alvin Yeo SC, Monica Chong, Koh Swee Yen and Toor Simran (WongPartnership LLP),Lee Eng Beng SC, Disa Sim, Jonathan Lee and Fu Qui Jun (Rajah & Tann LLP)
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 75 and 77 of 2012

Sundaresh Menon CJ (delivering the judgment of the court):Introduction

In this judgment, we give our decision on two related appeals, namely, Civil Appeal No 75 of 2012 (“CA 75”) and Civil Appeal No 77 of 2012 (“CA 77”) (collectively “the present appeals”). The present appeals arise out of Suit 351 of 2010 (“Suit 351”), which was an action commenced by Sembcorp Marine Ltd (“Sembcorp”) against PPL Holdings Pte Ltd (“PPL Holdings”) and E-Interface Holdings Limited (“E-Interface”) over the corporate affairs and management of their joint venture company, PPL Shipyard Pte Ltd (“PPL Shipyard”). In his judgment in Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another[2012] 3 SLR 801 (“the Judgment”), the High Court judge (“the Judge”) who heard the trial of the matter dismissed Sembcorp’s claims and allowed in part the counterclaim brought by PPL Holdings and E-Interface against Sembcorp and PPL Shipyard (which had also been named as a defendant in the counterclaim). CA 75 is Sembcorp’s appeal against the Judge’s dismissal of its claims, while CA 77 is the appeal of PPL Holdings and E-Interface against the Judge’s partial dismissal of their counterclaim.

The present appeals raise a number of issues of company law and contract law. In particular, lead counsel for Sembcorp, Mr Davinder Singh SC (“Mr Singh”), and lead counsel for both PPL Holdings and E-Interface, Mr Lee Eng Beng SC (“Mr Lee”), had much to say on the proper approach to the implication of terms as well as to the interpretation of contractual terms under our law. In this judgment, we address these points raised, as well as the construction of contracts in general.

Facts

Most of the relevant facts have been set out at [3] to [25] of the Judgment. We therefore only recite the facts to the extent necessary.

Parties

Sembcorp is engaged in the business of constructing oil rigs and ships. In or around late 2000, one of Sembcorp’s wholly-owned subsidiaries, Jurong Shipyard Pte Ltd, submitted a tender pursuant to an invitation issued by Santa Fe International Corporation for the construction of certain drilling rigs (“the Santa Fe Projects”). PPL Shipyard, which was also carrying on the business of designing and constructing offshore drilling rigs, had likewise put in bids for the Santa Fe Projects. At some point, the management teams of Sembcorp and PPL Shipyard came to learn about their mutual interest in the same Santa Fe Projects. The idea of an alliance was mooted, and a joint venture quickly materialised with the signing of a Sale and Purchase Agreement (“the SPA”) on 29 March 2001, and a joint venture agreement (“the JVA”) on 9 April 2001. Prior to the SPA, PPL Shipyard was effectively owned by PPL Holdings as 97% of PPL Shipyard’s issued share capital was held by PPL Holdings in its own right while the remaining 3% was held by E-Interface, a wholly-owned subsidiary of PPL Holdings.

The only two directors of PPL Holdings are Dr Benety Chang (“Chang”) and Mr Anthony Aurol (“Aurol”). In addition, Aurol was the Executive Director of PPL Shipyard, as well as the Chief Operating Officer and a director of Baker Technology Ltd (“Baker”), a public company listed on the Stock Exchange of Singapore. Baker owned 100% of the shares of PPL Holdings and as will become apparent, was an important player in the background to the present dispute. Chang is the Executive Deputy Chairman of PPL Shipyard as well as a director and the Chief Executive Officer of Baker. Between them, Chang and Aurol managed the day-to-day operations of PPL Shipyard.

BackgroundThe JVA

Under the SPA, Sembcorp purchased 50% of the issued share capital in PPL Shipyard from PPL Holdings. As a result, Sembcorp and PPL Holdings (together with E-Interface) each had an equal interest in PPL Shipyard. The terms on which the joint venture between Sembcorp and PPL Holdings was to be carried out were set out in the JVA.

The key terms of the JVA which are in dispute in the present appeals include the following:

SHARE CAPITAL…

4.2Unless otherwise agreed to in writing between the Parties hereto, the share capital of [PPL Shipyard] shall be held in the following proportions:

Name of Party	Percentage of shareholding
Sembcorp PPLH	50 per cent 50 per cent

4.3The percentage proportion of the Parties shall be maintained for the duration of this Agreement unless otherwise agreed in writing.BOARD OF DIRECTORS5.1Unless otherwise agreed, the Board of Directors of [PPL Shipyard] shall comprise of six (6) Directors who shall be appointed by the Parties as follows:

SembCorp	3 Directors
PPLH	3 Directors

so long as they shall hold such number of shares for the time being in the capital of [PPL Shipyard] as are not less than the proportions set out herein. Any member of the Board may appoint an alternate to attend Directors' meetings and otherwise act as a Director in his absence.

The Parties shall appoint directors to all the subsidiaries of [PPL Shipyard] on the same proportion and basis as set out above and these subsidiaries shall be operated on the same basis and in accordance with the terms as set out in this Agreement.

5.2Any vacancy in the Board will be filled by the Party that nominated the Director who is retiring or ceasing for whatever reason to be a Director. Each of the Parties agree that they shall cause their nominee members of the Board and their representative at a shareholders’ meeting to support and vote for the other Party’s nomination or removal upon receipt of advice in writing to such effect from the party nominating or removing such Director.5.3The quorum for the meeting of the Board of Directors shall be two (2) directors present in person or by the duly appointed alternatives provided that at any such meeting at least one director nominated by each of the Party [sic] shall be present as otherwise there shall be no quorum. At any meeting of the Board of Directors, provided a quorum is present, each party will have three (3) votes irrespective of the number of directors present ...5.4A resolution signed by all the Directors for the time being shall be valid and effectual as if it had been passed at a meeting of the Board duly convened and held. For the purpose of this Clause, “in writing” and “signed” include by telex, cable, telegram or telefax.5.5The Chairman of the Board of Directors shall be nominated by SembCorp. If the person nominated as Chairman is for any reason unable to attend a Board or shareholders meeting, he shall nominate a member of the Board to replace him and failing which, the Deputy Chairman shall act as Chairman. The Chairman shall not have a casting vote.5.6The Deputy Chairman shall be one of the Directors nominated by PPLH.5.7[PPL Shipyard]shall be managed by the Board but the day-to-day administration or management of [PPL Shipyard] shall be vested in the Managing Director for the time being of [PPL Shipyard] who shall at all times be subject to the control of the Board. The Managing Director shall be nominated by PPLH and approved and appointed by the Board. The authority and responsibility of the Managing Director shall be approved by the Board. A Deputy Managing Director of [PPL Shipyard] shall be nominated by SembCorp and approved and appointed by the Board. The authority and responsibility of the Deputy Managing Director shall be approved by the Board.5.8There shall be an Executive Committee of the Board comprising four members. Two of the members shall be nominated by SembCorp and the other two by PPLH. The Executive Committee will be responsible for the matters relating to the management of [PPL Shipyard] as delegated by the Board.SHAREHOLDERS’ MEETING6.1All general meetings of [PPL Shipyard] shall be held at such places as may be decided by the Board of Directors. Subject to the provision of the Act as to special resolutions, special notice and short notice, at least 14 days’ notice in writing of each general meeting of [PPL Shipyard] shall be given to all Shareholders. The contents of such notice of general meeting shall comply with the Articles of Association. The quorum necessary for meetings of Shareholders of [PPL Shipyard] shall be the two Shareholders. Each Shareholder shall only appoint one representative who shall have only one vote. The Chairman of the meeting will be a nominee of SembCorp. The Chairman will not have a casting vote.

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OPERATIONAL SUPPORT8.1The Parties agree that they will endeavour to provide reasonable assistance and support which a Party in its sole discretion deems fit and with the consent of the other Party for the operations and activities of [PPL Shipyard] including, but not limited to, arranging for the Parties and their affiliates, partners and agents to assist such operations where possible and appropriate.8.2The Parties agree that they will support [PPL Shipyard] in the expansion of its activities by providing [PPL Shipyard] on a reasonable basis with such goods, services and equipment as the Parties normally provide in the course of their business.

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11.TRANSFER OF SHARES

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11.10Upon the completion of the sale of the shares in accordance with the terms of this Clause 11, and unless otherwise agreed to by the Parties, the Directors nominated by the Party which has sold its shares shall immediately resign from the Board. If only a portion of the shares held by a Party are sold by a Party pursuant to this clause 11, the Parties shall agree on the Directors, if any, nominated by that Party which has sold a part of its shares, who shall continue to remain on the Board of [PPL Shipyard] and the terms of such tenure as Director on the Board of [PPL Shipyard].

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CONFIDENTI...