Virsagi Management (S) Pte Ltd v Welltech Construction Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 25 September 2013
• Neutral Citation: [2013] SGCA 50
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 90 and 91 of 2012
• Year: 2013
• Published date: 07 October 2013
• Hearing Date: 01 July 2013
• Plaintiff Counsel: Andrew J Hanam (Andrew LLC)
• Defendant Counsel: Ramalingam Kasi (Raj Kumar & Rama),Cheah Kok Lim (Cheah Associates LLC)
• Subject Matter: Conflict of Laws,Forum election,Lis alibi pendens,Natural forum,Stay of proceedings
• Citation: [2013] SGCA 50

Andrew Phang Boon Leong JA (delivering the grounds of decision of the court): Introduction

Civil Appeal No 90 of 2012 (“CA 90”) and Civil Appeal No 91 of 2012 (“CA 91”) were appeals against the decision by the judge (“the Judge”) in Virsagi Management (S) Pte Ltd v Welltech Construction Pte Ltd [2012] SGHC 207 (“the GD”).

We dismissed the appeals and now give the detailed grounds for our decision.

The facts Background to the dispute

In 2006, the Building and Construction Authority of Singapore (“BCA”) invited companies to set up authorised overseas training centres (“OTCs”) in India and Bangladesh. These OTCs trained, tested and certified workers for employment in the construction industry in Singapore. The companies which ran these OTCs had to meet certain criteria determined by the BCA. Welltech Construction Pte Ltd (“Welltech”) met these criteria but Virsagi Management (S) Pte Ltd (“Virsagi”) did not, even though it had the necessary expertise in operating OTCs. Accordingly, Mr Lee Siong Kee (“Victor”), the director and shareholder of Virsagi, approached Welltech with the following proposition: Welltech was to apply for the BCA licence pursuant to which Victor/Virsagi would run an OTC in Dhaka.

Welltech was successfully shortlisted in an initial ballot exercise conducted by the BCA in October 2006. Under the terms and conditions set out by the BCA for the setting-up and operation of OTCs, Welltech was required to set up a company in Bangladesh to manage the OTC as well as retain at least a 30% shareholding in that company.

Virsagi introduced a Bangladesh-registered company, Rupsha Overseas Ltd (“Rupsha”), to Welltech as their local partner for the joint venture. Welltech, Virsagi and Rupsha entered into an undated agreement (“the Rupsha Agreement”) under which the parties agreed to set up a joint venture company, Welltech Test Pvt Ltd (“WTPL”), for the purpose of operating the OTC.¹ The Rupsha Agreement was submitted to the BCA by Welltech by way of a letter dated 24 November 2006. We will return to the main narrative momentarily but we pause here to mention that the Rupsha Agreement was never carried out, as Rupsha was replaced by another Bangladesh incorporated company, GN International (“GNI”). GNI was eventually replaced by Mr Ferdous Ahmed Badel (who claims it should be spelt “Fardous Ahamad Badel”) trading as Gazipur Air Express International (“Badel” or “Gazipur”, as the case may be) in 2009 (see further at [9] below).

On 25 November 2006, the joint venture company, WTPL, was incorporated with 100 shares issued. Victor held 40 shares as a representative of Virsagi, Mr Woon Wee Phong (“Woon”), a director of Welltech, held 30 shares and Badel/Gazipur held or came to hold 30 shares.

On 6 December 2006, the BCA granted Welltech in-principle approval to set up an OTC in Dhaka, Bangladesh. This approval was valid for a period of three years with effect from 6 December 2006, and would be reviewed yearly thereafter.

In early 2007, Virsagi and Welltech entered into a written agreement (“the Principal Agreement”) under which they set out their respective roles in the establishment and operation of the OTC in Dhaka. Welltech was to obtain the BCA licence and also agreed to employ workers trained by the OTC for its own construction business in Singapore. Virsagi was to do everything else that was necessary for the running of the OTC including the operations in Bangladesh. This included the incorporation of a joint venture company in Bangladesh named WTPL. It is not disputed that the Principal Agreement was terminated on 31 December 2011.

Virsagi then entered into an agreement dated 26 April 2007 with GNI, to establish the OTC (“the GNI Agreement”). GNI was controlled by Mr Aminul Hossain Sarker (“Sarker”) and Badel. Subsequently, Badel and Sarker fell out, and this led to Virsagi entering into a fresh agreement with Gazipur, which was controlled by Badel, on 26 April 2009 (“the Gazipur Agreement”). Under the Gazipur Agreement, Gazipur was to obtain the necessary licences to set up and run the OTC in Bangladesh, while Virsagi was to handle the BCA testing of the workers and to mobilise them to work in Singapore as well as to obtain approval from the Ministry of Manpower for their employment in Singapore.

Events leading up to the dispute

According to Victor, Woon and Badel met in Singapore in 2010. At that meeting, they agreed to operate the OTC to the exclusion of Virsagi. It appears that Victor found out about that. He told the parties that he intended in any case to retire from the OTC business and invited them to buy him out instead.

The parties worked out a scheme pursuant to which Virsagi would provide the requisite training to Welltech to take over the business, and Victor would also sell his 40% share in WTPL to Badel. This arrangement was later abandoned, because Victor took issue with Gazipur working together with a person named Mr Taneem Hasan in the OTC business in Dhaka. While the buyout negotiations continued, the parties agreed to extend the Principal Agreement, which was due to expire on 31 December 2010, by another year, to 31 December 2011. It was not extended further thereafter.

In the event, the buyout negotiations failed. Virsagi wrote to Welltech on 14 December 2011 threatening legal action if it continued to be excluded from the OTC business.

The Bangladesh proceedings

Victor (since the shareholder in WTPL is Victor and not Virsagi) commenced legal action in Company Matter No 8 of 2012 (“CM 8/2012”) on 5 January 2012 in the Supreme Court of Bangladesh, High Court Division (Statutory Original Jurisdiction) in Dhaka (“Dhaka High Court”) seeking orders concerning WTPL. Victor claimed that the other majority shareholders were carrying out the business of an OTC and mobilising workers with other parties without the participation of WTPL and Victor/Virsagi. Victor made an application under s 233 of the Companies Act (Bangladesh) 1994 (Act No 18 of 1994) (“Bangladesh Companies Act”) and sought from the Dhaka High Court: a direction that the other shareholders of WTPL are “to continue their business as an [OTC] in Bangladesh through [WTPL] with the active participation of the petitioner”; and pending the disposal of CM 8/2012, an ad-interim order restraining Woon and Badel “from doing [OTC] business in Bangladesh for export of manpower to Singapore by themselves, or through any company in which they are an officer or a shareholder, except through the [OTC] operated by [WTPL] and with the active participation of the petitioner”.²

On 9 January 2012, Victor obtained the ad-interim order (see above at [13(b)]) from the Dhaka High Court restraining Welltech and Gazipur from conducting the OTC business in Bangladesh for export of manpower to Singapore by themselves or through any company except WTPL, and with the active participation of Victor (“the Dhaka Order”). The Dhaka Order was then stayed on 15 January 2012 pursuant to an application made by Badel in Bangladesh.

CM 8/2012 was heard by the Dhaka High Court on 15 and 16 April 2012, and a written judgment was delivered on 21 June 2012 dismissing Victor’s application. Victor appealed against the Dhaka High Court’s decision and that appeal was still pending at the time we heard the present appeals.

The proceedings in Singapore

On 26 January 2012, after the Dhaka Order was stayed but before CM 8/2012 was heard by the Dhaka High Court, Virsagi commenced Suit No 63 of 2012 (“Suit 63”) and Suit No 64 of 2012 (“Suit 64”) in the Singapore courts.

Suit 63 was an action by Virsagi against Welltech for inducing Badel to breach the Gazipur Agreement and for unlawful interference with the Gazipur Agreement. Virsagi sought, inter alia, an injunction to restrain Welltech from further interference with the Gazipur Agreement, an order that Virsagi be allowed to resume its scope of work under the Gazipur Agreement, damages, and an account of profits.

Suit 64 was an action by Virsagi against Badel for breach of contract seeking, inter alia, an injunction to restrain Badel from terminating the Gazipur Agreement, an order that Virsagi be allowed to resume its scope of work under the Gazipur Agreement, damages, and an account of profits.

The decision in the court below

The Judge stayed both Suit 63 and Suit 64 on the grounds of both lis alibi pendens (however, see below at [41] on the correct terminology to be used) as well as forum non conveniens.

The Judge found that although the causes of action of the various proceedings were different, the reliefs claimed against Welltech and Gazipur by Virsagi in both jurisdictions were substantially the same. In particular, Virsagi wanted to ensure that Welltech and Badel could only carry on the OTC business in Bangladesh with Virsagi’s involvement. On this basis, the Judge found that the proceedings in both jurisdictions concerned the same issues. The Judge also held that the issues arose from the same factual matrix. In addition, the Judge said (see the GD at [27]) that the common issues before both the Singapore and Dhaka courts, were as follows: whether Virsagi was “entitled to insist that Badel/Gazipur continue with the Gazipur Agreement when the Principal Agreement has been validly terminated”; and “in these circumstances, whether Welltech and Badel/Gazipur could carry on OTC business in Dhaka without involving Virsagi”.

The Judge added that even if the issue of lis alibi pendens had been the only issue before him, he would have been prepared to grant a stay of Suit 63 and Suit 64 on the facts as they appeared at that stage of the proceedings.

For completeness, the Judge also found that Bangladesh was clearly the more appropriate forum to determine the disputes after considering the principles of forum non conveniens set out in the leading House of Lords decision of Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“t...