BR Energy v KS Energy: Breach of Joint Venture Agreement for WPU Construction
In a suit before the High Court of Singapore, BR Energy (M) Sdn Bhd (BRE) claimed damages against KS Energy Services Limited (KSE) for breach of a joint venture agreement (JVA) concerning the construction of a Workover Pulling Unit (WPU) for Petronas Carigali Sdn Bhd (PCSB). BRE alleged KSE failed to procure the WPU's construction and delivery, leading to the loss of the PCSB contract. KSE counterclaimed for wrongful termination and failure to contribute a shareholder's loan. The court found KSE liable for breach of contract, determining that KSE did not use all reasonable endeavors to fulfill its obligations under the JVA. KSE's counterclaim was dismissed.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
BRE sues KSE for breach of contract over a joint venture to construct a Workover Pulling Unit (WPU). The court found KSE liable for failing to use reasonable endeavors.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| KS Energy Services Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | |
| BR Energy (M) Sdn Bhd | Plaintiff | Corporation | Judgment for Plaintiff on liability | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Belinda Ang Saw Ean | Judge | Yes |
4. Counsels
4. Facts
- BRE and KSE entered into a joint venture agreement (JVA) to construct a Workover Pulling Unit (WPU) for PCSB.
- KSE was responsible for procuring the construction and delivery of the WPU.
- KSE contracted with Oderco to custom-build the WPU.
- There were significant delays in the construction of the WPU.
- The WPU was not delivered to PCSB, and the charter arrangement was terminated.
- BRE terminated the JVA based on KSE's repudiatory breach.
- KSE argued it was only obliged to use reasonable endeavors, which it fulfilled.
5. Formal Citations
- BR Energy (M) Sdn Bhd v KS Energy Services Ltd, Suit No 900 of 2009, [2013] SGHC 64
6. Timeline
| Date | Event |
|---|---|
| BRE submitted a bid to PCSB for charter of a custom-built WPU. | |
| COSL and RG pulled out of their collaboration with BRE. | |
| BRE received unofficial news that its tender for the PCSB project was successful. | |
| BRE received PCSB’s official Letter of Award. | |
| BRE proposed Oderco as the replacement rig builder to PCSB. | |
| PCSB advised BRE that there was already a binding contract in place. | |
| BRE signed the Letter of Award with the delivery date of the WPU revised to 2006-05-21. | |
| BRE and KSE signed a Letter of Intent. | |
| BRE and KSE signed the JVA. | |
| KSE signed the rig building contract with Oderco. | |
| BRO was incorporated. | |
| BRO entered into a contract with KSE for BRO to buy the WPU from KSE. | |
| BRE entered into an agreement with BRO to lease the WPU from BRO. | |
| The JVA was amended by a supplemental agreement. | |
| PCSB first delivery date. | |
| KSE appointed Connolly to monitor the construction of the WPU on-site. | |
| PCSB last delivery date. | |
| PCSB terminated the PCSB Contract. | |
| BRE asked PCSB to reconsider its cancellation of the PCSB Contract. | |
| BRE’s appeal was rejected by PCSB. | |
| BRE terminated the JVA. | |
| Tan Lee Meng J ordered the trial to be bifurcated. | |
| Decision Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court held that KSE was in breach of clause 6.2 of the JVA for failing to use all reasonable endeavours to procure the construction and delivery of the WPU.
- Category: Substantive
- Sub-Issues:
- Failure to use all reasonable endeavours
- Repudiatory breach
- Related Cases:
- [2013] SGHC 64
- Wrongful Termination
- Outcome: The court held that BRE's termination of the JVA was not wrongful because KSE's breach of contract was repudiatory.
- Category: Substantive
- Interpretation of 'All Reasonable Endeavours'
- Outcome: The court held that in the context of this case, the obligation to use 'all reasonable endeavours' was as onerous as an obligation to use 'best endeavours'.
- Category: Substantive
- Related Cases:
- [2013] SGHC 64
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Wrongful Termination
10. Practice Areas
- Commercial Litigation
- Construction Disputes
11. Industries
- Oil and Gas
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Jolley v Carmel Ltd | English High Court | Yes | [2000] 2 EGLR 153 | England | Cited for the principle that an obligation requiring the use of 'best endeavours' denotes a higher standard than one requiring the use of 'reasonable endeavours'. |
| Jolley v Carmel Ltd | English appellate court | Yes | [2000] 3 EGLR 68 | England | Cited for the principle that an obligation requiring the use of 'best endeavours' denotes a higher standard than one requiring the use of 'reasonable endeavours'. |
| Rhodia International Holdings v Huntsman International | English High Court | Yes | [2007] 2 All ER (Comm) 577 | England | Cited for the principle that an obligation to use 'reasonable endeavours' only requires the obligor to take one reasonable course of action and not all of them, unlike in the case of an obligation to use 'all reasonable endeavours'. |
| Travista Development Pte Ltd v Tan Kim Swee Augustine and others | Court of Appeal | Yes | [2008] 2 SLR(R) 474 | Singapore | Cited for the principle that a best endeavours clause in a contract obliges the covenantor to take all those reasonable steps which a prudent and determined man, acting in his own interests and anxious to obtain planning permission, would have taken. |
| IBM United Kingdom Ltd v Rockware Glass Ltd | N/A | Yes | [1980] FSR 335 | United Kingdom | Cited for the principle that a best endeavours clause in a contract obliges the covenantor to take all those reasonable steps which a prudent and determined man, acting in his own interests and anxious to obtain planning permission, would have taken. |
| Justlogin Pte Ltd v Oversea-Chinese Banking Corp Ltd | N/A | Yes | [2004] 1 SLR(R) 118 | Singapore | Cited for the principle that a best endeavours clause in a contract obliges the covenantor to take all those reasonable steps which a prudent and determined man, acting in his own interests and anxious to obtain planning permission, would have taken. |
| Ong Khim Heng Daniel v Leonie Court Pte Ltd | N/A | Yes | [2000] 3 SLR(R) 670 | Singapore | Cited for the principle that a covenant to use best endeavours is not a warranty to produce the desired results. |
| Atmospheric Diving Systems Inc v International Hard Suits Inc and another | British Columbia Supreme Court | Yes | [1994] 5 WWR 719 | Canada | Cited for the principle that the meaning of 'best efforts' must be approached in the light of the particular contract, the parties to it and the contract’s overall purpose as reflected in its language. |
| Jet2.com Ltd v Blackpool Airport Ltd | N/A | Yes | [2012] 2 All ER (Comm) 1053 | England | Cited as a case where it was conceded by counsel on both sides that 'best' endeavours and 'all reasonable' endeavours meant the same thing. |
| CPC Group Ltd v Qatar Diar Real Estate Ltd | N/A | Yes | [2010] All ER (D) 222 | England | Cited for the principle that an obligation to use 'all reasonable endeavours' does not always require the obligor to sacrifice his commercial interests. |
| Centennial Coal Company Limited v Xstrata Coal Pty Ltd | N/A | Yes | (2009) 76 NSWLR 129 | Australia | Cited as an Australian case where the court treated both phrases (ie, 'best' endeavours and 'all reasonable' endeavours) identically. |
| Waters Lane & Another v Sweeney & Others | N/A | Yes | [2007] NSWCA 200 | Australia | Cited as an Australian case where the court treated both phrases (ie, 'best' endeavours and 'all reasonable' endeavours) identically. |
| Chan Ah Beng v Liang and Sons Holdings (S) Pte Ltd | Court of Appeal | Yes | [2012] 3 SLR 1088 | Singapore | Cited for the principle that the actual decision arrived at by the court as to whether or not the contracting party concerned had in fact satisfied the duty to use best endeavours depends, in the final analysis, upon the precise factual matrix in question. |
| Oversea-Chinese Banking Corp Ltd v Justlogin Pte Ltd | Singapore Court of Appeal | Yes | [2004] 2 SLR(R) 675 | Singapore | Cited for the principle that the actual decision arrived at by the court as to whether or not the contracting party concerned had in fact satisfied the duty to use best endeavours depends, in the final analysis, upon the precise factual matrix in question. |
| Macarthur Cook Property Investment Pte Ltd v Khai Wah Development Pte Ltd | Singapore High Court | Yes | [2007] SGHC 93 | Singapore | Cited for the principle that the actual decision arrived at by the court as to whether or not the contracting party concerned had in fact satisfied the duty to use best endeavours depends, in the final analysis, upon the precise factual matrix in question. |
| Indulge Food Pte Ltd v Torabi Marashi Bahram | Singapore High Court | Yes | [2010] 2 SLR 540 | Singapore | Cited for the principle that the actual decision arrived at by the court as to whether or not the contracting party concerned had in fact satisfied the duty to use best endeavours depends, in the final analysis, upon the precise factual matrix in question. |
| Universal Cargo Carriers Corporation v Citati | N/A | Yes | [1957] 2 QB 401 | N/A | Cited for the principle that the relevant test to apply in deciding whether a party’s delay in fulfilling contractual obligations is so serious as to entitle the aggrieved party to rescind the contract is whether the delay was such as to frustrate the commercial purpose of the venture. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Workover Pulling Unit
- Joint Venture Agreement
- All Reasonable Endeavours
- Repudiatory Breach
- PCSB Contract
- Oderco Contract
- Construction and Delivery
- Milestone Payments
15.2 Keywords
- breach of contract
- joint venture
- construction
- oil and gas
- workover pulling unit
- reasonable endeavours
17. Areas of Law
16. Subjects
- Contract Law
- Construction Law
- Commercial Litigation
- Joint Ventures