PT Jaya v Kristle: Guarantee, Indemnity & Limitation Act Dispute

In PT Jaya Sumpiles Indonesia and Another v Kristle Trading Ltd and Another, the Court of Appeal of Singapore heard appeals regarding a High Court decision on Suit No 12 of 2005. PT Jaya Sumpiles Indonesia and Low Tuck Kwong sought a declaration that they were not liable to Kristle Trading Ltd under a guarantee. Kristle counterclaimed for US$3.5m, accrued interest, and other sums awarded in arbitration. The court dismissed the Guarantors’ action and gave judgment to Kristle on its counterclaim for the Outstanding Sum and the Accrued Interest, but not for the Remaining Sums. Both appeals were dismissed, with a variation to the Judge’s order regarding the principal judgment sum payable by the Guarantors and costs awarded against them on an indemnity basis.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal on guarantee liability. Court held guarantors liable for outstanding debt, not arbitration award, under Limitation Act. Appeal dismissed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Low Tuck KwongAppellant, RespondentIndividualAppeal DismissedLost
PT Jaya Sumpiles IndonesiaAppellant, RespondentCorporationAppeal DismissedLost
Kristle Trading LtdRespondent, AppellantCorporationAppeal DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeYes
Andrew Phang Boon LeongJustice of the Court of AppealNo
V K RajahJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
Rozalynne AsmaliDrew & Napier LLC
Yeo Soo Mong TonyDrew & Napier LLC
Samuel ChackoLegis Point LLC
Angeline Soh Ean LengLegis Point LLC

4. Facts

  1. PTBA granted GBPC rights to develop coal reserves in Kalimantan.
  2. GBPC entered into agreements with JOC to set up a joint venture.
  3. JOC novated rights to Kristle, who novated to ICP.
  4. ICP agreed to pay Kristle US$4.5m in installments.
  5. Guarantors gave a Guarantee to Kristle to secure ICP’s obligations.
  6. ICP made first two installment payments but defaulted on the third.
  7. Disputes arose, leading to arbitration and an award in Kristle's favor.

5. Formal Citations

  1. PT Jaya Sumpiles Indonesia and Another v Kristle Trading Ltd and Another Appeal, CA 185/2008, 189/2008, SUM 452/2009, [2009] SGCA 20

6. Timeline

DateEvent
PTBA granted GBPC right to develop coal reserves.
GBPC entered into three agreements with JOC.
First Novation Agreement signed.
Second Novation Agreement signed.
Guarantee dated.
First installment payment due.
Second installment payment due.
Sale of GBPC completed.
Third installment payment due; ICP defaulted.
Fourth installment payment due.
Fifth installment payment due.
Disputes referred to SIAC arbitration.
Arbitration Award issued.
Kristle requested payment under the Award.
ICP requested payment plan.
Kristle demanded payment from Guarantors.
Low proposed settlement.
Kristle counter-proposed settlement.
Low stated ICP unable to make payment.
Meeting held in Tokyo.
ICP Letter issued.
ICP reminded Kristle to send draft settlement agreement.
Kristle stated draft settlement agreement being prepared.
Kristle's last letter demanding payment.
ICP commenced S 11/2005 against Kristle and KT.
Guarantors and ICP commenced S 12/2005 against Kristle and KT.
Kristle applied ex parte to enforce Award.
Leave to enforce granted.
ICP applied to set aside order granting leave to enforce.
Application to set aside order dismissed.
ICP's appeal dismissed.
Judgment entered against ICP.
High Court judge's decision in Suit No 12 of 2005.
Guarantors filed notice of appeal for CA 185/2008.
Guarantors applied for leave to amend original Notice of Appeal.
Court of Appeal dismissed both appeals.

7. Legal Issues

  1. Limitation of Actions
    • Outcome: The court held that the claim was not time-barred because the Guarantee was a guarantee payable on demand and time did not start to run until demand was made.
    • Category: Substantive
    • Sub-Issues:
      • Acknowledgment of liability
      • Extension of limitation period
  2. Guarantee vs. Indemnity
    • Outcome: The court held that the Guarantee was a guarantee, not an indemnity, despite the presence of a 'primary obligor' clause.
    • Category: Substantive
  3. Liability for Arbitration Award
    • Outcome: The court held that the Guarantors were not liable for the sums awarded in arbitration between Kristle and ICP.
    • Category: Substantive

8. Remedies Sought

  1. Declaration that Guarantors are not liable under the Guarantee
  2. Monetary damages for breach of guarantee

9. Cause of Actions

  • Breach of Guarantee

10. Practice Areas

  • Commercial Litigation
  • Appeals

11. Industries

  • Mining

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
International Coal Pte Ltd v Kristle Trading LtdHigh CourtYes[2009] 1 SLR 945SingaporeCited to show that ICP did not appeal against the decision in S 11/2005.
Ex parte Young; In re KitchinEnglish Court of AppealYes(1881) 17 Ch D 668England and WalesCited for the principle that a judgment or an award against a principal debtor is not binding on the guarantor and is not evidence against the guarantor in an action by the creditor against the guarantor based on the judgment or the award.
Blay v Pollard and MorrisCourt of AppealYes[1930] 1 KB 628England and WalesCited for the principle that cases must be decided on the issues on the record.
The Ohm MarianaCourt of AppealYes[1993] 2 SLR 698SingaporeCited for the principle that cases must be decided on the issues on the record.
Yap Chwee Khim v American Home Assurance CoCourt of AppealYes[2001] 2 SLR 421SingaporeCited for the principle that cases must be decided on the issues on the record.
Murakami Takako v Wiryadi Louise MariaCourt of AppealYes[2007] 4 SLR 565SingaporeCited for the principle that an admission does not have to be direct or explicit to operate as an acknowledgement.
KEP Mohamed Ali v KEP Mohamed IsmailHigh CourtYes[1981] 2 MLJ 10MalaysiaCited for the principle that material facts of and the circumstances relating to the alleged acknowledgment of liability should have been pleaded.
Oversea-Chinese Banking Corporation Ltd v Philip Wee Kee PuanPrivy CouncilYes[1984] 2 MLJ 1MalaysiaCited for the principle that the only time when objection could have been taken to the admission in evidence of the respondent’s letter of 14 January, 1974, on the ground that the acknowledgement had not been pleaded, was when the evidence was tendered.
The VassoCourtYes[1979] 2 Lloyd’s Rep 412England and WalesCited for the principle that general words in a guarantee guaranteeing the due performance of all the obligations of the principal debtor do not of themselves have the effect that the surety is bound by an arbitration award in an arbitration between the principal debtor and the creditor.
Sabah Shipyard (Pakistan) Ltd v Government of PakistanEnglish High CourtYes[2008] 1 Lloyd’s Rep 210England and WalesCited as affirming the Re Kitchin principle.
Re Meridian Construction IncSupreme Court of Nova ScotiaYes[2006] NSSC 17CanadaCited as affirming the Re Kitchin principle.
Robert Louden Begley v The Attorney-General of New South WalesHigh Court of AustraliaYes(1910) 11 CLR 432AustraliaCited as affirming the Re Kitchin principle.
Weltime Hong Kong Limited v Cosmic Insurance Corporation LimitedHigh Court of Hong KongYes[2003] HKCFI 163Hong KongCited as affirming the Re Kitchin principle.
Oversea-Chinese Banking Corp Ltd v Ang Thian SooHigh CourtYes[2006] 4 SLR 156SingaporeCited for accepting the Re Kitchin principle as good law.
Nana Ofori Atta II Omanhene of Akyem Abuakwa v Nana Abu Bonsra IIPrivy CouncilYes[1958] AC 95United KingdomCited for the general rule of law that no person is to be adversely affected by a judgment in an action to which he was not a party.
The RosarinoCourtYes[1973] 1 Lloyd’s Rep 21England and WalesCited as an argument by Kristle that this court should adopt the position taken in lieu of the Re Kitchin principle.
Ards Borough Council v Northern Bank LtdCourtYes[1994] NI 121Northern IrelandCited for rejecting Mocatta J’s decision in The Rosarino.
Moschi v Lep Air Services LtdHouse of LordsYes[1973] AC 331United KingdomCited for the distinction between a performance guarantee and a payment guarantee.
Heald v O’ConnorCourtYes[1971] 1 WLR 497England and WalesCited for the principle that the phrase “as a primary obligor and not merely as a surety” is merely part of the common form of provision to avoid the consequences of giving time or indulgence to the principal debtor and cannot convert what is in reality a guarantee into an indemnity.
Habibullah Mohamed Yousuff v Indian BankCourt of AppealYes[1999] 3 SLR 650SingaporeCited for endorsing the Dominant View that a ‘principal debtor’ clause does not convert a contract of guarantee into a contract of indemnity.
The Fletcher Organisation Pty Ltd v Crocus Investments Pty LtdCourtYes[1988] 2 Qd R 517AustraliaCited as an argument by Indian Bank that defences available to a defendant qua guarantor would not avail the defendant if he had also contracted to be liable as a principal debtor.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed)

14. Applicable Statutes

Statute NameJurisdiction
Limitation Act (Cap 163, 1996 Rev Ed)Singapore
Section 26 Limitation Act (Cap 163, 1996 Rev Ed)Singapore
Section 6(3) Limitation Act (Cap 163, 1996 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Guarantee
  • Indemnity
  • Limitation Act
  • Novation Agreement
  • Arbitration Award
  • Primary Obligor
  • Principal Debtor
  • Co-extensiveness
  • Performance Guarantee
  • Payment Guarantee

15.2 Keywords

  • guarantee
  • indemnity
  • limitation
  • arbitration
  • contract

17. Areas of Law

Area NameRelevance Score
Guarantees and indemnities95
Guarantee90
Limitation80
Civil Procedure70
Contract Law60
Banking and Finance60
Arbitration40

16. Subjects

  • Contract Law
  • Guarantee Law
  • Limitation of Actions
  • Civil Procedure