Sembcorp Marine v PPL Holdings: Joint Venture Dispute over Share Transfer and Contractual Obligations

In 2001, Sembcorp Marine Ltd (Sembcorp) and PPL Holdings Pte Ltd (PPL Holdings) entered a joint venture with PPL Shipyard Pte Ltd (PPL Shipyard). Sembcorp alleged that PPL Holdings acted to replace itself in the joint venture with Yangzijiang Shipbuilding (Holdings) Limited (Yangzijiang), a competitor. Sembcorp claimed breach of contract and sought an order for PPL Holdings to transfer shares to Sembcorp and declarations to terminate the joint venture agreement. PPL Holdings counterclaimed for declaratory relief invalidating resolutions passed by Sembcorp-nominated directors. The High Court of Singapore, Tay Yong Kwang J, dismissed Sembcorp's claims and allowed the defendants' counterclaim in part.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Sembcorp's claim dismissed; defendants' counterclaim allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Sembcorp Marine sued PPL Holdings over a sour joint venture, alleging breach of contract and seeking share transfer. The court dismissed Sembcorp's claims.

1.7 Decision Date

29 May 2012

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Sembcorp Marine Ltd	Plaintiff	Corporation	Claim Dismissed	Lost	Davinder Singh of Drew & Napier LLC Eugene Quah Siew Ping of Drew & Napier LLC Bernette Colleen Meyer of Drew & Napier LLC Isaac Lum Wei Yuen of Drew & Napier LLC
PPL Shipyard Pte Ltd	Defendant	Corporation	Neutral	Neutral	Koh Swee Yen of WongPartnership LLP Alvin Yeo of WongPartnership LLP Monica Chong of WongPartnership LLP
PPL Holdings Pte Ltd	Defendant, Plaintiff	Corporation	Counterclaim Allowed in Part	Partial	Kenneth Tan of Straits Law Practice LLC Valerie Ang of Straits Law Practice LLC N Sreenivasan of Straits Law Practice LLC

3. Judges

Judge Name	Title	Delivered Judgment
Tay Yong Kwang	Judge	Yes

4. Counsels

Counsel Name	Organization
Davinder Singh	Drew & Napier LLC
Eugene Quah Siew Ping	Drew & Napier LLC
Bernette Colleen Meyer	Drew & Napier LLC
Isaac Lum Wei Yuen	Drew & Napier LLC
Koh Swee Yen	WongPartnership LLP
Alvin Yeo	WongPartnership LLP
Monica Chong	WongPartnership LLP
Kenneth Tan	Straits Law Practice LLC
Valerie Ang	Straits Law Practice LLC
N Sreenivasan	Straits Law Practice LLC

4. Facts

Sembcorp and PPL Holdings entered into a joint venture agreement in 2001 to capture a segment of the offshore oil rig construction market.
The joint venture company was PPL Shipyard, with Sembcorp and PPL Holdings each holding 50% of the shares.
Sembcorp contended that PPL Holdings acted to drop out of the joint venture arrangement, leaving Yangzijiang in its place.
Sembcorp alleged that PPL Holdings breached express and implied terms of the JVA and SA.
Baker made a public announcement that it had received a binding letter of offer from Yangzijiang to purchase all the issued and paid up share capital in PPL Holdings.
Sembcorp sought an order that PPL Holdings transfer to Sembcorp the shares in PPL Shipyard that PPL Holdings had agreed to transfer to Yangzijiang.
PPL Holdings counterclaimed for declaratory relief that certain resolutions passed by directors nominated by Sembcorp to the PPL Shipyard board of directors be invalidated.

5. Formal Citations

Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another, Suit No 351 of 2010/H, [2012] SGHC 118

6. Timeline

Date	Event
2001-04-09	Joint Venture Agreement signed between Sembcorp and PPL Holdings.
2001-09-26	PPL Shipyard's Articles of Association amended to incorporate the terms of the JVA.
2003-07-05	Supplemental Agreement signed, changing the proportions of ownership of PPL Shipyard.
2003-07-09	Completion of the sale and purchase of PPL Shipyard shares.
2010-04-16	Baker received a binding letter of offer from Yangzijiang to purchase all the issued and paid up share capital in PPL Holdings.
2010-04-17	Baker made a public announcement that it had received a binding letter of offer from Yangzijiang.
2010-04-22	Sembcorp's solicitors sent a letter to Baker seeking confirmation that Baker would not accept the Yangzijiang offer.
2010-04-23	Baker replied through its solicitors, stating that it had already accepted the offer.
2010-04-28	PPL Shipyard board meeting held.
2010-05-11	PPL Shipyard board meeting held.
2010-05-15	Sembcorp filed writ and Statement of Claim.
2010-06-03	PPL Shipyard board meeting held.
2010-06-08	Letter sent to Aurol by the six directors that Sembcorp had nominated to the PPL Shipyard board.
2010-06-11	Letter from Mr Tang Kin Fei terminating Aurol's service agreement as Executive Director of PPL Shipyard.
2010-06-14	PPL Shipyard board meeting held.
2010-06-21	PPL Shipyard board meeting held.
2010-07-26	Sembcorp applied to amend the Statement of Claim for the third time.

7. Legal Issues

Implied Terms
- Outcome: The court held that the implied terms could not be implied into the JVA or the SA.
- Category: Substantive
- Sub-Issues:
  - Business efficacy
  - Officious bystander test
- Related Cases:
  - [2006] 1 SLR(R) 927
  - [2009] 3 SLR(R) 518
  - [2009] 3 SLR(R) 724
  - [1939] 2 KB 206
  - (1889) 14 PD 64
  - [2009] 1 WLR 1988
  - [2011] SGHC 201
  - [2011] 1 SLR 150
  - (1977) 180 CLR 226
  - [1941] AC 108
  - [1998] 1 WLR 896
  - [2008] 3 SLR(R) 1029
  - [1995] EMLR 472
  - [1973] 1 WLR 601
Breach of Contract
- Outcome: The court held that there was no breach of contract.
- Category: Substantive
- Sub-Issues:
  - Confidentiality
  - Good faith
Interpretation of Articles of Association
- Outcome: The court interpreted the articles of association in relation to the removal of directors and the validity of board resolutions.
- Category: Substantive
Minority Shareholder Oppression
- Outcome: The court declined to grant relief under s 216 of the Companies Act.
- Category: Substantive

8. Remedies Sought

Order for transfer of shares
Declarations that the joint venture agreement has been terminated
Declaratory relief that certain resolutions passed by directors nominated by Sembcorp to the PPL Shipyard board of directors be invalidated
Injunctive relief

9. Cause of Actions

Breach of Contract
Breach of Fiduciary Duty

10. Practice Areas

Commercial Litigation
Corporate Law

11. Industries

Construction
Shipping
Oil and Gas

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd	Singapore High Court	Yes	[2006] 1 SLR(R) 927	Singapore	Cited for principles on terms implied in law and fact.
Ng Giap Hon v Westcomb Securities Pte Ltd	Singapore High Court	Yes	[2009] 3 SLR(R) 518	Singapore	Cited for principles on terms implied in fact.
Chua Choon Cheng and others v Allgreen Properties Ltd and another appeal	Singapore High Court	Yes	[2009] 3 SLR(R) 724	Singapore	Cited for principles on terms implied in fact.
Shirlaw v Southern Foundries (1926) Limited	English Court of Appeal	Yes	[1939] 2 KB 206	England and Wales	Cited for the officious bystander test for implying terms.
The Moorcock	English Court of Appeal	Yes	(1889) 14 PD 64	England and Wales	Cited for the business efficacy test for implying terms.
Attorney General of Belize and others v Belize Telecom & another	Privy Council	No	[2009] 1 WLR 1988	Belize	Cited for the test of implying terms in fact.
Kim Eng Securities Pte Ltd v Goh Teng Poh Karen	Singapore High Court	No	[2011] SGHC 201	Singapore	Cited as an instance where Attorney General of Belize and others v Belize Telecom & another was applied in Singapore law.
MFM Restaurants Pte Ltd and another v Fish & Co Restaurants Pte Ltd and another appeal	Singapore Court of Appeal	No	[2011] 1 SLR 150	Singapore	Cited for disapproving the Belize test because it did not provide normative guidance to the process of implication and would result in much practical uncertainty.
BP Refinery (Westernport) Pty Ltd v Shire of Hastings	High Court of Australia	Yes	(1977) 180 CLR 226	Australia	Cited for the conditions that must be satisfied for the implication of a term in a contract.
Luxor (Eastbourne), Limited v Cooper	House of Lords	Yes	[1941] AC 108	England and Wales	Cited for the principle that the implication of terms must arise inevitably to give effect to the intention of the parties.
Investors Compensation Scheme v West Bromwich Building Society	House of Lords	Yes	[1998] 1 WLR 896	England and Wales	Cited for the background knowledge which would reasonably be available to the audience to whom the instrument is addressed.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design Construction Pte Ltd	Singapore Court of Appeal	Yes	[2008] 3 SLR(R) 1029	Singapore	Cited for the admissibility of extrinsic evidence of pre-contractual negotiations and the subsequent conduct of the parties.
Philips Electronique Grand Publique SA v British Sky Broadcasting	English Court of Appeal	No	[1995] EMLR 472	England and Wales	Cited for the caution that the implication of contract terms involves the interpolation of terms to deal with matters for which the parties themselves have made no provision.
Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board	House of Lords	Yes	[1973] 1 WLR 601	England and Wales	Cited for the principle that an unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract.
Re Sedgefield Steeplechase Co (1927) Ltd, Scotto v Petch and others	English Court of Chancery	Yes	[2001] BCC 889	England and Wales	Cited for the law on what would constitute an “intention” to sell shares in the context of pre-emption rights.
Douglas v Hello! Ltd (No 3)	English Court of Appeal	Yes	[2006] QB 125	England and Wales	Cited for the test for confidentiality.
Tang Kin Fei v Chang Benety	Singapore High Court	No	[2011] 1 SLR 568	Singapore	Related to the validity of board resolutions passed at board meetings in May and June 2010.
Chang Benety v Tang Kin Fei	Singapore Court of Appeal	No	[2012] 1 SLR 274	Singapore	Related to the validity of board resolutions passed at board meetings in May and June 2010.
Foss v Harbottle	English Court of Chancery	Yes	(1843) 2 Hare 461	England and Wales	Cited for the principle that only the company would be the proper plaintiff to an action for breach of fiduciary duties.
Ng Heng Liat and ors. v Kiyue Co Ltd and anor	Singapore High Court	Yes	[2003] 4 SLR(R) 218	Singapore	Cited for the principle that only the company would be the proper plaintiff to an action for breach of fiduciary duties.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Joint Venture Agreement
Supplemental Agreement
Implied Terms
Confidentiality
Good Faith
Share Transfer
Board Resolutions
Quorum
Fiduciary Duties
Equality Provisions

15.2 Keywords

Joint Venture
Share Transfer
Breach of Contract
Implied Terms
Singapore Law
Commercial Litigation

17. Areas of Law

Area Name	Relevance Score
Joint Venture	80
Contract Law	75
Corporate Law	70
Commercial Disputes	65
Company Law	60
Shareholders Agreement	50
Arbitration	30
Estoppel	20

16. Subjects

Contract Law
Company Law
Joint Ventures
Commercial Disputes