PT Bayan Resources TBK v BCBC Singapore: Breach of Contract & Coal Supply Obligations in Joint Venture

In PT Bayan Resources TBK and another v BCBC Singapore Pte Ltd and another, the Court of Appeal of Singapore addressed an appeal concerning a failed joint venture between PT Bayan Resources TBK (BR) and BCBC Singapore Pte Ltd (BCBCS). The dispute arose from alleged breaches of contract and coal supply obligations. The Court of Appeal dismissed the appeal, except for remitting the question of BCBCS's ability to unilaterally fund the joint venture to the lower court for determination. The case involved a breach of contract claim and a counterclaim.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal dismissed in part; the question of whether BCBCS had the ability to fund KSC on its own is remitted to the Court for determination.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

PT Bayan Resources TBK v BCBC Singapore: Court of Appeal addresses breach of contract and coal supply obligations in a failed joint venture.

1.7 Decision Date

28 August 2018

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
BCBC Singapore Pte Ltd	Respondent, Plaintiff, Defendant in Counterclaim	Corporation	Appeal dismissed in part	Partial	Francis Xavier of Rajah & Tann Singapore LLP Tee Su Mien of Rajah & Tann Singapore LLP Alina Chia of Rajah & Tann Singapore LLP
Binderless Coal Briquetting Company Pty Limited	Respondent, Plaintiff	Corporation	Appeal dismissed in part	Partial	Francis Xavier of Rajah & Tann Singapore LLP Tee Su Mien of Rajah & Tann Singapore LLP Alina Chia of Rajah & Tann Singapore LLP
PT Bayan Resources TBK	Appellant, Plaintiff in Counterclaim, Defendant	Corporation	Appeal dismissed in part	Partial	Jaikanth Shankar of Drew & Napier LLC Davinder Singh of Drew & Napier LLC Teo Li Fang of Drew & Napier LLC Chan Yong Wei of Drew & Napier LLC Lydia Ni Man Chuo of Drew & Napier LLC Phang Hwee Guang of Drew & Napier LLC
Bayan International Pte Ltd	Appellant, Defendant	Corporation	Appeal dismissed in part	Partial	Jaikanth Shankar of Drew & Napier LLC Davinder Singh of Drew & Napier LLC Teo Li Fang of Drew & Napier LLC Chan Yong Wei of Drew & Napier LLC Lydia Ni Man Chuo of Drew & Napier LLC Phang Hwee Guang of Drew & Napier LLC
White Energy Company Limited	Defendant in Counterclaim	Corporation	Neutral	Neutral

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	Yes
Judith Prakash	Judge of Appeal	No
Dyson Heydon	International Judge	No

4. Counsels

Counsel Name	Organization
Francis Xavier	Rajah & Tann Singapore LLP
Tee Su Mien	Rajah & Tann Singapore LLP
Alina Chia	Rajah & Tann Singapore LLP
Jaikanth Shankar	Drew & Napier LLC
Davinder Singh	Drew & Napier LLC
Teo Li Fang	Drew & Napier LLC
Chan Yong Wei	Drew & Napier LLC
Lydia Ni Man Chuo	Drew & Napier LLC
Phang Hwee Guang	Drew & Napier LLC

4. Facts

In 2006, the parties entered into a joint venture to exploit a new technology to upgrade coal.
A joint venture deed (JV Deed) was executed between BCBC and BI in June 2006.
A deed of novation was executed in 2009, substituting BCBCS and BR for BCBC and BI respectively.
In 2007, the parties incorporated an Indonesian joint venture company, PT Kaltim Supacoal (KSC).
In October 2011, the Tabang Plant was shut down for modification works.
On 9 November 2011, BR instructed Bara and FSP to stop supplying coal to KSC.
On 21 February 2012, BR wrote to BCBCS purporting to terminate the JV Deed.

5. Formal Citations

PT Bayan Resources TBK and another v BCBC Singapore Pte Ltd and another, Civil Appeal No 154 of 2017, [2018] SGCA(I) 6

6. Timeline

Date	Event
2006-06-01	Joint Venture Deed signed between BCBC and BI.
2007-01-01	PT Kaltim Supacoal (KSC) incorporated.
2009-01-01	Deed of novation executed, substituting BCBCS and BR for BCBC and BI respectively.
2009-03-01	Funding MOU and Expansion MOU entered into.
2009-09-01	KSC entered into agreement with Standard Chartered Bank for a US$10m working capital loan facility.
2010-04-01	Priority Loan Funding Agreement (PLFA) entered into, backdated to April 2010.
2010-10-01	HBA Regulations came into force.
2010-10-01	Coal supply agreements (2010 CSAs) entered into between KSC and BR's coal mining subsidiaries.
2011-10-01	Tabang Plant shut down for modification works.
2011-10-28	WEC Parties sent an information package to the Appellants, revealing that KSC had exceeded its 2011 budget by nearly US$7m.
2011-11-02	KSC board meeting held.
2011-11-09	BR instructed Bara and FSP to stop supplying coal to KSC.
2011-11-17	Meeting held to discuss the impasse relating to KSC.
2011-11-21	BCBCS wrote to BR accusing it of breaching a number of clauses under the JV Deed.
2011-11-22	KSC ordered the short-term contractors working at the Tabang Plant to cease the modification works.
2011-11-24	BR replied to BCBCS’s notice of breach of 21 November 2011.
2011-11-29	The WEC Parties replied to BR.
2011-12-02	BR replied to the WEC Parties.
2011-12-06	Extraordinary general meeting of KSC’s shareholders held.
2011-12-06	Appellants instructed Bara and FSP to supply KSC with coal if KSC so requested.
2011-12-08	KSC e-mailed BCBCS and BR setting out the cost estimates in relation to the care and maintenance program.
2011-12-12	The WEC Parties sent a letter to BR stating that BR’s refusal to provide 49% of KSC’s funding requirements amounted to a breach of BR’s obligations.
2011-12-13	BR replied to the WEC Parties by way of a letter captioned “RE: DEFAULT NOTICE”.
2011-12-15	The Tabang Plant was put into care and maintenance.
2011-12-20	The WEC Parties sent another letter to BR.
2011-12-22	BR replied to the WEC Parties and again maintained that it had no funding obligations.
2011-12-23	The WEC Parties replied to BR.
2011-12-24	The WEC Parties sent another letter to BR asking it to withdraw its Default Notice.
2011-12-27	The Respondents initiated the Suit against the Appellants.
2012-02-20	BCBCS wrote to BR, reiterating that BR had breached its coal supply and funding obligations.
2012-02-21	BR wrote to BCBCS purporting to terminate the JV Deed.
2012-03-02	BCBCS replied, stating that BR’s purported termination constituted a wrongful repudiation of the JV Deed, which it accepted.
2016-01-01	Court rendered its decision in the first tranche.
2017-01-01	Court rendered its decision in the second tranche.
2018-02-07	Hearing of the appeal.
2018-08-29	Judgment reserved.

7. Legal Issues

Breach of Contract
- Outcome: The Court of Appeal found that BR breached its coal supply obligation and repudiated the JV Deed.
- Category: Substantive
- Sub-Issues:
  - Failure to supply coal
  - Imposition of buyout condition
  - Repudiation of JV Deed
Contractual Interpretation
- Outcome: The Court of Appeal interpreted the relevant clauses of the JV Deed, PLFA, and 2010 CSAs to determine the parties' obligations.
- Category: Substantive
- Sub-Issues:
  - Interpretation of JV Deed
  - Interpretation of PLFA
  - Interpretation of 2010 CSAs
Onus of Proof
- Outcome: The Court of Appeal addressed the issue of the burden of proof in relation to the Excess Debt argument.
- Category: Procedural
Repudiation
- Outcome: The Court of Appeal found that BR repudiated the JV Deed by issuing a termination notice without grounds.
- Category: Substantive
Causation
- Outcome: The Court of Appeal remitted the question of BCBCS's ability to fund KSC on its own to the lower court for determination.
- Category: Substantive

8. Remedies Sought

Damages for Breach of Contract

9. Cause of Actions

Breach of Contract
Repudiation of Contract

10. Practice Areas

Commercial Litigation
Contract Disputes

11. Industries

Energy
Mining

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another	Singapore International Commercial Court	Yes	[2016] 4 SLR 1	Singapore	Refers to the First Tranche Judgment, which primarily concerned the determination of the scope and content of the parties’ obligations under the joint venture.
BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another	Singapore International Commercial Court	Yes	[2017] 5 SLR 77	Singapore	Refers to the Second Tranche Judgment, which dealt largely with whether the parties had breached those obligations, and if so, what consequences flowed from such breaches. This appeal concerns this judgment.
Tan Jin Sin and another v Lim Quee Choo	Court of Appeal	Yes	[2009] 2 SLR(R) 938	Singapore	Cited for the principle that the issue of whether a contractual obligation was “dependent” or “independent” was “a question of construction”.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal	Court of Appeal	Yes	[2007] 4 SLR(R) 413	Singapore	Cited for the test for determining whether a contractual term is a condition.
CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appeal	Court of Appeal	Yes	[2018] 1 SLR 170	Singapore	Cited for the principles of contractual interpretation.
Travista Development Pte Ltd v Tan Kim Swee Augustine and others	Court of Appeal	Yes	[2008] 2 SLR(R) 474	Singapore	Cited for the presumption against redundant words in contractual interpretation.
Seldon v Davidson	English Court of Appeal	Yes	[1968] 1 WLR 1083	England and Wales	Discusses the principle that payment of money imports a prima facie obligation to repay.
Wee Kah Lee v Silverdale Investment Pte Ltd	High Court	Yes	[2000] 2 SLR(R) 838	Singapore	Cited for the principle that payment of money imports a prima facie obligation to repay.
Lai Meng v Harjantho Johnny	Court of Appeal	Yes	[1999] 2 SLR(R) 738	Singapore	Accepted Seldon v Davidson as having been correctly decided.
Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd & Anor	Hong Kong Court of Final Appeal	Yes	[2015] 6 HKC 527	Hong Kong	Criticized Seldon v Davidson.
SCT Technologies Pte Ltd v Western Copper Co Ltd	Court of Appeal	Yes	[2016] 1 SLR 1471	Singapore	Explained the nature of a confession and avoidance defence.
Morris v London Iron and Steel Co Ltd	English Court of Appeal	Yes	[1988] 1 QB 493	England and Wales	Cited for the principle that where the court is unable to prefer one side’s story over the other, the operation of the principle of the burden of proof comes into play and the plaintiff fails.
Rhesa Shipping Co SA v Edmunds	House of Lords	Yes	[1985] 1 WLR 948	England and Wales	Cited for the principle that the judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties.

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

Joint Venture Deed
Coal Supply Agreement
Priority Loan Funding Agreement
Tabang Plant
Coal Advance
HBA Price
Buyout Condition
Excess Expenditure
Excess Debt
Care and Maintenance Program

15.2 Keywords

Joint Venture
Breach of Contract
Coal Supply
Repudiation
Contractual Interpretation
Singapore Law

17. Areas of Law

Area Name	Relevance Score
Contract Law	90
Breach of Contract	90
Evidence	50
Damages	40
Commercial Disputes	40
International Commercial Arbitration	30
International Arbitration	30
Arbitration	30

16. Subjects

Contract Law
Joint Ventures
Coal Industry