Trisuryo Garuda Nusa Pte Ltd v SKP Pradiksi (North) Sdn Bhd and another and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 18 August 2017
• Neutral Citation: [2017] SGCA 49
• Date: 18 August 2017
• Docket Number: Civil Appeals Nos 112 and 124 of 2016
• Published date: 25 August 2017
• Plaintiff Counsel: Chew Ming Hsien Rebecca and Chew Xiang (Rajah & Tann Singapore LLP),and Molly Lim SC and Joel Wee Tze Sing (Tan Peng Chin LLC)
• Defendant Counsel: Ling Daw Hoang Philip and Chua Cheng Yew (Wong Tan & Molly Lim LLC)
• Court: Court of Appeal (Singapore)
• Hearing Date: 27 March 2017
• Subject Matter: Choice of jurisdiction,Stay of proceedings,Exclusive,Conflict of Laws,Natural forum

Judith Prakash JA (delivering the grounds of decision of the court): Introduction

Earlier this year, we heard two appeals centring on the issue of whether two law suits, which at their root involve the same Singapore company, Trisuryo Garuda Nusa Pte Ltd (“TGN”), should be heard in Singapore or in Indonesia. The two High Court Judges who heard the applications came to opposite conclusions: one action was stayed in favour of Indonesia while the other was allowed to proceed here. Appeals were lodged against both decisions.

TGN was the defendant in the first law suit, S 252 of 2016 (“S 252”), it being claimed that TGN held certain shares in two Indonesian companies on trust for the plaintiffs in the action. This was the action in which the application to move the proceedings to Indonesia was unsuccessful. In the second case, S 349 of 2016 (“S 349”), while TGN was not itself a party, it was the focus of the litigation as the question was whether its issued shareholding belonged both legally and beneficially to the defendants who were the registered holders of the same or whether they were holding the TGN shares on trust for the plaintiffs. This was the action that had been stayed in favour of Indonesia.

After hearing the parties, we decided that both actions should be allowed to proceed in Singapore. This meant we dismissed the appeal against the decision to dismiss the stay application in S 252 and allowed the appeal against the decision to stay proceedings in S 349.

Although the parties in the two actions were connected and although the underlying facts were in many respects the same, the two stay applications involved different legal approaches and this difference carried over into the appeals. One appeal raised questions regarding the relevance of foreign public policy and illegality under the laws of the place of performance to the court’s decision on whether to grant a stay of proceedings on the ground that Singapore was forum non conveniens or inappropriate for the proceedings. The other appeal, though requiring some forum non conveniens discussion, had as its central focus the effect of what appeared to be exclusive jurisdiction agreements in favour of the foreign forum, Indonesia, and what amounted to strong cause to displace such agreements.

The parties

The two law suits involve parties from Malaysia and Singapore who are competing over the ownership of companies in Indonesia which are in the oil palm business. The complexity in the facts leading to the actions is due to certain difficulties experienced by Malaysian parties who seek to participate in the oil palm industry in Indonesia. These difficulties led the parties here to corporate re-structuring in an effort to resolve the problem.

Southern Realty (Malaya) Sdn Bhd (“Southern Realty”) is a Malaysian company engaged in the business of palm oil milling, real property and investment holding. Southern Realty is the plaintiff in S 349 and was the appellant in Civil Appeal No 124 of 2016 (“CA 124”), which was its appeal against the High Court’s decision to grant a stay of proceedings in S 349. Southern Realty’s claim in S 349 is to be declared the beneficial owner of the issued share capital of TGN.

TGN is an exempt private company which was incorporated in Singapore to carry on the business of holding investments. It has 100 issued shares.

Darren Chen Jia Fu @ Suryo Tan (“Suryo Tan”) is a Singaporean who is primarily based in Jakarta due to his extensive business interests there. Christina Suryo (“Mrs Suryo”) is his wife and Hendra Ade Putra (“Mr Hendra”) is his wife’s cousin. Suryo Tan, Mr Hendra and Mrs Suryo are respectively the first, second and third defendants in S 349 and the respondents in CA 124. Presently, Suryo Tan and his wife are the registered holders of all issued shares in TGN. They deny that they are holding these shares on trust for Southern Realty.

Southern Realty has an indirect equity stake in SKP Pradiksi (North) Sdn Bhd (“SKPP”) and SKP Senabangun (South) Sdn Bhd (“SKPS”), which are also Malaysian companies. We will refer to SKPP and SKPS collectively as “the SKP Companies”. The SKP Companies are the plaintiffs in S 252 and were the respondents in Civil Appeal No 112 of 2016 (“CA 112”), which was an appeal against the High Court’s refusal to grant a stay of proceedings in S 252. TGN is the defendant in S 252 and the appellant in CA 112. The dispute in S 252 is over whether TGN is holding shares in the Indonesian companies named below on trust for the SKP Companies.

The SKP Companies are investment holding companies. They have business interests in Indonesia through their investment in two Indonesian companies namely PT Pradiksi Gunatama (“PTPG”) and PT Senabangun Anekapertiwi (“PTSA”). We will refer to PTPG and PTSA collectively as “the PT Companies”. The PT Companies are engaged in the business of oil palm plantation development in Indonesia. Prior to November 2012, SKPP was the registered shareholder of 13,000 shares in PTPG, representing 80% of PTPG’s paid up share capital, and SKPS was the registered shareholder of 8,000 shares in PTSA, representing 80% of PTSA’s paid-up share capital.

The facts The parties’ relationship

As the law suits are in their preliminary stages, no facts have yet been established. Our recital of the facts is based on the parties’ affidavits and some “facts” must be understood to be allegations only. We begin with Suryo Tan’s account.

According to Suryo Tan, in or around November or December 2011 he was approached in Indonesia by two gentlemen, Nick Low and Raymond Wong. They informed him that the PT Companies had been experiencing difficulties with the Indonesian authorities since September 2011. Their fear was that certain land titles held by the PT Companies would be revoked, such that the PT Companies would lose their only assets which were two palm oil plantations located in the Paser Regency of East Kalimantan. The PT Companies had already received warning letters threatening revocation of the land titles. Suryo Tan asserted that Nick Low and Raymond Wong had approached him because he had extensive business interests in various parts of Indonesia and these had given him the necessary expertise and connections to assist them in protecting the land titles. At that time, however, Suryo Tan declined to assist the PT Companies.

Sometime around the middle of February 2012, Suryo Tan was approached by one Low Boon Lai (“Bill Low”) in Kuala Lumpur. Bill Low is Nick Low’s uncle, and he introduced himself as the Chairman of the Board of Southern Keratong Plantations Sdn Bhd (“SKP”). He too sought Suryo Tan’s assistance with the problems faced by the PT Companies. Suryo Tan met Bill Low and the Board of Directors of SKP in early April 2012 for discussions. According to Suryo Tan, he was subsequently appointed chairman of an Emergency Action Committee with responsibility for running the PT Companies and for sorting out the issues regarding their land titles. He came up with a strategy to deal with those difficulties and liaised with local government authorities and other interest groups in Indonesia. His efforts to protect the land titles came, in his words, “at the risk of [his] own life”. Suryo Tan described an understanding between the parties that he was to be “a partner in the enterprise by way of shareholding and management control”, the details of which were to be discussed.

According to one Low Kock Ching, a director of Southern Realty who filed an affidavit in S 349, the PT Companies’ problems with their land titles began sometime later than Suryo Tan had suggested, around the first half of 2012. Aside from these difficulties, the PT Companies also faced “a perceived anti-Malaysian sentiment against Malaysian-owned businesses operating in Indonesia”. At or around that time, Suryo Tan represented to the SKP Companies and/or Southern Realty that he could assist the PT Companies with regard to their operational and licensing difficulties and could mitigate the effect of the anti-Malaysian sentiment.

The parties’ oral agreement

It is undisputed that sometime in the third quarter of 2012, there was an oral agreement to which Suryo Tan was a party. The nature and terms of this oral agreement are, however, heavily contested and indeed these are matters that lie at the heart of the actions.

According to Suryo Tan, he met Bill Low in Jakarta on 25 October 2012. Bill Low told him that in return for his assistance, arrangements would be made for SKP or its subsidiaries to sell substantial minority shareholdings in the PT Companies to Suryo Tan. In order to facilitate dealings with the authorities in Indonesia and other local interests, Suryo Tan would also be appointed Commissioner of the PT Companies. The parties agreed that Suryo Tan’s direct equity stake and appointment were necessary to bring his assistance “to the next level”, because beyond a certain point the local authorities and villagers would only deal with a person who could demonstrate his official capacity to act for the PT Companies. Suryo Tan was to purchase 32% of the shares in each of the two PT Companies. Suryo Tan agreed to the proposal as he was satisfied that there was “considerable potential” in the PT Companies.

Bill and Nick Low further suggested that Suryo Tan incorporate a Singapore special purpose vehicle to hold the shares of the PT Companies. According to Suryo Tan, the choice of a Singapore special purpose vehicle was made because there were certain advantages, including tax efficiencies, that could be had given that Suryo Tan is Singaporean. They also suggested that Suryo Tan use a Singapore corporate secretarial firm, Corporate Finedge Pte Ltd (“Corporate Finedge”), to act as local administrator while he carried out his tasks in Indonesia. In addition, a director of Corporate Finedge, one Florence Tan (“Ms Tan”), should be appointed director of the...