TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) and another

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 19 October 2018
• Neutral Citation: [2018] SGHC 228
• Court: High Court (Singapore)
• Docket Number: Suit No 580 of 2013 (Summonses Nos 2397 of 2018 and 2887 of 2018)
• Published date: 13 November 2019
• Year: 2018
• Hearing Date: 03 August 2018,29 August 2018,26 September 2018
• Plaintiff Counsel: Deborah Evaline Barker, SC and Hewage Ushan Saminda Premaratne (KhattarWong LLP)
• Defendant Counsel: Poon Kin Mun Kelvin, On Wee Chun Derek and Ang Tze Phern (Rajah & Tann Singapore LLP)
• Subject Matter: Civil Procedure,Striking out,Abuse of process
• Citation: [2018] SGHC 228

Woo Bih Li J: Introduction

On 29 August 2018, I struck out the claim of the plaintiff, TMT Asia Limited (“TMTA”) against the first defendant, BHP Billiton Marketing AG (Singapore Branch) (“D1”) and the second defendant, BHP Billiton Marketing Asia Pte Ltd (“D2”) on the ground that it was an abuse of the process of the court for TMTA to continue its claim against the defendants in the light of an open offer made by the defendants dated 25 January 2016. I understand that TMTA is appealing against my decision.

Background

TMTA is a company incorporated in the Marshall Islands. It claimed to be a diversified shipping company active in various parts of the shipping industry.

The BHP Billiton Group (“BHPB”) comprises a large group of companies engaged in the discovery, acquisition, development and marketing of natural resources including iron ore. It operates as a single economic enterprise. BHPB is the world’s largest diversified resources company, and is one of the world’s leading iron ore producers.

D1 is the Singapore branch of BHP Billiton Marketing AG, a company incorporated in Switzerland which is wholly owned by BHPB. At the material time, D1 was engaged in the marketing and sale of commodities, and in the purchase of freight in support of such activities.

D2 is a company incorporated in Singapore and is wholly owned by another company incorporated in the Netherlands which, the defendants say, is a subsidiary of BHPB. D2 is engaged in marketing support, management and administrative services, technical, scientific and operational advice.

TMTA alleged that between late September and November 2012, it had purchased various forward freight agreements (“FFAs”) based on the Baltic Capesize Index Time Charter Basket Average 4 Routes which were cleared on the Singapore Stock Exchange.¹

In summary, TMTA alleged that by virtue of BHPB’s dominance in the Capesize market, the defendants were capable of and did manipulate freight prices for Capesize vessels to manipulate iron ore prices. Consequently, TMTA suffered losses amounting to US$70,000 which was subsequently increased to US$81,500 (“the Principal Sum”)

TMTA also alleged a second cause of action based on the defendants’ fraudulent misrepresentation of iron ore prices and/or freight prices on certain Capesize routes. The misrepresentation was alleged to have arisen from the defendants’ manipulative conduct.

The defendants denied the claim and the loss.

The action was initially commenced on 22 February 2013 in the District Court. The defendants then filed Originating Summons No 366 of 2013 on 25 April 2013 to transfer the action to the High Court. The reasons given by defendants for the application to transfer were that it was a case of unusual complexity and/or it raised issues of public interest and/or important questions of law which ought to be decided by the High Court.² The issues of public interest and/or important questions of law involved an allegation by TMTA that FFAs were futures contracts dealt on a futures market in Singapore, and that the defendants’ manipulative conduct was a breach of s 208(a) of the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“the Act”). TMTA was not agreeable to the transfer. The claim then was for US$70,000 (later revised to US$81,500). On 12 June 2013, the High Court allowed the application to transfer the action to the High Court.

On 25 January 2016, Rajah & Tann Singapore LLP (“R&T”), the lawyers for the defendants, wrote to KhattarWong LLP (“KW”), the lawyers for TMTA, with an open offer (“the Open Offer”). In summary, the letter noted that BHPB had obtained an order dated 16 November 2012 in England which adjudged TMTA to owe BHPB an amount in excess of US$100 million (“the English Judgment”). This judgment had been registered as a judgment in the Singapore High Court in Originating Summons No 729 of 2015 (“OS 729/2015”). This order of registration was made on 11 August 2015.

The letter maintained that TMTA’s allegations in the Singapore action were baseless but made an open offer to settle TMTA’s claim on terms that the defendants would pay the Principal Sum with interest and costs. The payment would be made by way of set-off against the judgment sum under the English Judgment. The offer was open for acceptance till 4pm of 1 February 2016. Athough there was some correspondence from KW which I will elaborate on later, the fact was that the offer was not accepted by TMTA.

On 2 March 2016, the defendants filed Summons No 979 of 2016 (“SUM 979/2016) to strike out TMTA’s claim on account of the Open Offer. The application was heard on 26 May 2016 by Assistant Registrar Lim Sai Nei (“AR Lim”) who dismissed it. The defendants did not file an appeal against this decision.

Instead, parties proceeded to the discovery stage and engaged in various interlocutory steps including an application by TMTA for discovery of various electronic documents, which was not proceeded with. On the other hand, the defendants filed Summons No 2853 of 2017 on 22 June 2017 for an order that they need not disclose any of their emails at the general discovery stage. This application was dismissed by an Assistant Registrar but allowed on appeal to me, as I was of the view that such discovery was not necessary or appropriate in the light of discovery of other documents which the defendants would be making.

Subsequently, on 23 May 2018, TMTA filed Summons No 2397 of 2018 for discovery of various documents in eight categories from the defendants.

In turn, the defendants filed Summons No 2887 of 2018 on 25 June 2018 to strike out TMTA’s claim under O 18 r 19 of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“ROC”) or the inherent jurisdiction of the court, on the ground that the claim was frivolous or vexatious or an abuse of the process of the court.

Both applications were fixed for hearing before me on 3 August 2018. On that day, I directed that pursuant to O 14 r 12 and/or O 33 r 2 of the ROC, a preliminary point or issue be decided first. The preliminary point or issue was whether TMTA is entitled or should be permitted to continue with the action in the light of the Open Offer and, if not, what the appropriate order should be. I adjourned the hearing to a date to be fixed by the Registrar. The two applications were adjourned pending the outcome of the preliminary point or issue.

The date for hearing of the preliminary point or issue was fixed for 29 August 2018. At that hearing, I informed counsel that an alternative way of framing the issue was whether the continuance of the action was an abuse of the process of the court in the light of the Open Offer. After hearing submissions, I decided that TMTA was not entitled and should not be permitted to continue with the action in the light of the Open Offer. In other words, it was an abuse of process for TMTA to do so. I therefore struck out TMTA’s claim in the action. I allowed parties to try and agree on the issue of costs and the quantum thereof failing which they could submit on costs on a date which had already been reserved in the event that an additional hearing date after 29 August 2018 was necessary. I add that TMTA subsequently indicated that it intended to appeal against my decision. Accordingly, the parties agreed to defer the question of costs pending the outcome of TMTA’s appeal to the Court of Appeal.

The parties’ arguments and the court’s reasons Res judicata and issue estoppel

The first question to be considered was whether there was res judicata in view of the decision of AR Lim on 26 May 2016 (“AR Lim’s Decision”).

To recapitulate, the defendants had filed SUM 979/2016 to strike out TMTA’s claim pursuant to O 18 r 19 and/or the inherent jurisdiction of the court on the ground that the claim was frivolous and vexatious and/or an abuse of the process of the court. AR Lim dismissed the application, and the defendants did not appeal against that decision. The defendants had relied on the Open Offer to support their application.

AR Lim was aware that the defendants had made two earlier applications. One was for the determination of certain questions of law pertaining to the Act and the second was to strike out TMTA’s claim under O 18 r 19 and/or the inherent jurisdiction of the court. After certain decisions by an Assistant Registrar, appeals were filed and eventually heard by Prakash J. At that time, Prakash J declined to strike out the claim because the claim raised issues of public importance and ought not to be summarily determined. Secondly, there were a number of important factual findings that had to be made before certain questions raised could be answered (see TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) and another [2015] 2 SLR 540).

There was one critical difference between the application before Prakash J and that before AR Lim. At the time of the hearing before Prakash J, the defendants had not yet made the Open Offer. AR Lim was aware of this difference. However, she took into account the fact that the defendants had applied to transfer the case to the High Court on the basis that it raised issues of public interest and/or important questions of law. AR Lim did not think that the mere fact that TMTA wanted to negotiate a global settlement (of other matters) instead of accepting the Open Offer, made its claim obviously frivolous or vexatious. Hence, AR Lim dismissed SUM 979/2016.

TMTA did not suggest that the decision of Prakash J raised any issue of res judicata or issue estoppel since at that time the Open Offer had not yet been made. Its argument of res judicata or issue estoppel was based solely on the decision of AR Lim.

TMTA submitted that the elements of issue estoppel were set out by the Court of Appeal in Lee Tat Development Pte Ltd v MCST Plan No 301 [2005] 3 SLR (R) 157 (at [14]–[15]). They are: There must be a final and conclusive judgment on the merits; ...