Pegaso v DP Offshore: Misrepresentation, Collateral Contracts & Unjust Enrichment in Rig Purchase Dispute

Pegaso Servicios Administrativos S.A. de C.V. and Tendedora de Empresas, S.A. de C.V. (Plaintiffs), Mexican companies, sued DP Offshore Engineering Pte Ltd and PACC Offshore Services Holdings Limited (Defendants), Singaporean companies, in the High Court of Singapore, seeking the return of a US$2 million deposit. The deposit was initially paid under a Rig Purchase Agreement, but the subsequent Shipbuilding Contracts were never executed. The US$2 million was then intended for an investment in Mexican companies owned by the second defendant, but this also failed. Mavis Chionh JC ruled in favor of the plaintiffs, ordering the return of the US$2 million with interest.

1. Case Overview

1.1 Court

High Court of Singapore

1.2 Outcome

Judgment for Plaintiffs

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Mexican firm sues Singaporean company for US$2m deposit after rig purchase and investment deals fail. Court rules in favor of Pegaso.

1.7 Decision Date

27 February 2019

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Pegaso Servicios Administrativos S.A. de C.V.	Plaintiff	Corporation	Judgment for Plaintiff	Won	Samuel Richard Sharpe of Selvam LLC Zheng Shengyang Harry of Selvam LLC
Tendedora de Empresas, S.A. de C.V.	Plaintiff	Corporation	Judgment for Plaintiff	Won	Samuel Richard Sharpe of Selvam LLC Zheng Shengyang Harry of Selvam LLC
DP Offshore Engineering Pte Ltd	Defendant	Corporation	Claim Dismissed	Lost	Chan Tai-Hui Jason of Allen & Gledhill LLP Oh Jialing Evangeline of Allen & Gledhill LLP
PACC Offshore Services Holdings Limited	Defendant	Corporation	Claim Dismissed	Neutral	Chan Tai-Hui Jason of Allen & Gledhill LLP Oh Jialing Evangeline of Allen & Gledhill LLP

3. Judges

Judge Name	Title	Delivered Judgment
Mavis Chionh	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Samuel Richard Sharpe	Selvam LLC
Zheng Shengyang Harry	Selvam LLC
Chan Tai-Hui Jason	Allen & Gledhill LLP
Oh Jialing Evangeline	Allen & Gledhill LLP

4. Facts

Plaintiffs paid US$2m deposit to Defendants under a Rig Purchase Agreement.
Shipbuilding Contracts were never executed.
US$2m was intended for investment in Mexican companies owned by the second defendant.
The investment did not materialize.
Plaintiffs sought return of US$2m deposit.
The non-execution of the Shipbuilding Contracts was not attributable to the plaintiffs.
The parties shifted their focus to the plaintiffs’ proposed investment in one of the defendants’ Mexican companies.

5. Formal Citations

Pegaso Servicios Administrativos SA de CV and another v DP Offshore Engineering Pte Ltd and another, Suit No 151 of 2017, [2019] SGHC 47

6. Timeline

Date	Event
2013-05-01	Grupo Pegaso invited to meeting by Mexican governmental agency.
2013-08-01	Mr. Orvañanos met with Capt Seow in Singapore.
2013-08-29	Mr Tang sent Mr Orvañanos the basic technical specifications of a CJ-46 Jack-Up Rig.
2013-08-30	Capt Seow sent comments about the specifications of the rigs.
2013-08-30	Rig Purchase Agreement signed.
2013-09-03	Capt Seow sent the draft Shipbuilding Contracts to Mr Orvañanos.
2013-09-10	Actual specifications of the rigs sent to Mr Orvañanos.
2013-09-24	Representatives from CP Latina visited the shipyard.
2013-09-26	Capt Seow agreed to extend the deadline for the execution of the Shipbuilding Contracts from 16 October 2013 to 30 October 2013.
2013-10-17	Noble Denton issued its report.
2013-11-07	Mr Orvañanos met Pepe to discuss the progress towards the Shipbuilding Contracts.
2013-11-13	Mr Orvañanos wrote directly to Capt Seow by email, proposing conditions.
2013-12-27	Mr Orvañanos emailed Capt Seow, suggesting that they meet to find a way to move forward with the negotiations.
2013-12-30	Capt Seow replied to Mr Orvañanos' email.
2013-12-31	Deadline for the execution of the Shipbuilding Contracts.
2014-01-24	Mr Orvañanos and Capt Seow met.
2014-04-01	Mr Orvañanos and Mr Jeffrey Phang began discussing the details pertaining to a term sheet.
2014-07-09	Mr Orvañanos and Capt Seow had an oral conversation about the detailed terms of the investment.
2014-07-10	Mr. Phang replied to Mr. Ramirez's email.
2014-07-11	Capt Seow sent an email to Mr Orvañanos, expressing the defendants’ position.
2014-07-14	The term sheet relating to the second plaintiff’s investment was signed.
2014-08-27	Mr Orvañanos had separate telephone conversations with both Pepe and Capt Seow.
2014-08-29	Mr Orvañanos, on behalf of the plaintiffs, made a proposal for the purchase of 35% interest in GOSH.
2014-10-02	Mr Orvañanos sent a draft refund agreement to Capt Seow.
2014-10-02	Capt Seow replied refusing to sign the draft refund agreement.
2015-05-14	Mr Orvañanos emailed Capt Seow to ask about the return of the US$2m deposit.
2017-02-17	Plaintiffs filed the present suit.
2018-08-21	Trial began.
2018-11-12	Trial concluded.
2019-01-14	Further hearing date.
2019-02-28	Judgment date.

7. Legal Issues

Misrepresentation
- Outcome: The court ruled against the plaintiffs, finding insufficient evidence of misrepresentation.
- Category: Substantive
Breach of Contract
- Outcome: The court ruled that the first defendant was not entitled to forfeit the deposit under the terms of the Rig Purchase Agreement.
- Category: Substantive
Total Failure of Consideration
- Outcome: The court ruled in favor of the plaintiffs, finding that the basis for the payment failed when the Shipbuilding Contracts were not entered into.
- Category: Substantive
Collateral Contract
- Outcome: The court ruled against the plaintiffs, finding insufficient evidence of a collateral contract.
- Category: Substantive
Acknowledgement of Debt
- Outcome: The court ruled against the plaintiffs, finding insufficient evidence of acknowledgement of debt.
- Category: Substantive

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract
Misrepresentation
Unjust Enrichment

10. Practice Areas

Commercial Litigation

11. Industries

Oil and Gas

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal	Singapore Court of Appeal	Yes	[2008] 2 SLR(R) 491	Singapore	Cited for the three-stage choice of law test.
Las Vegas Hilton Corp (trading as Las Vegas Hilton) v Khoo Teng Hock Sunny	Singapore High Court	Yes	[1996] 2 SLR(R) 549	Singapore	Cited regarding the proper law of a contract.
Overseas Union Insurance Ltd v Turegum Insurance Co	Singapore Court of Appeal	Yes	[2001] 2 SLR(R) 285	Singapore	Cited regarding the three-stage test for determining governing law.
Oceanic Sun Line Special Shipping Co Inc v Fay	High Court of Australia	Yes	[1988] 79 ALR 9	Australia	Cited regarding lex fori.
The Parouth	English High Court	Yes	[1982] 2 Lloyd’s Rep 351	England and Wales	Cited regarding the putative proper law test.
Chuan & Company Pte Ltd v Ong Soon Huat	Singapore Court of Appeal	Yes	[2003] 2 SLR(R) 215	Singapore	Cited regarding the need for a clear and plain acknowledgement of debt.
Dungate v Dungate	English Court of Appeal	Yes	[1965] 3 All ER 818	England and Wales	Cited regarding acknowledgement of debt.
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 regarding the contra proferentem rule.
Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon	Singapore Court of Appeal	Yes	[2019] SGCA 7	Singapore	Cited regarding legal principles applicable to total failure of consideration.
Benzline Auto Pte Ltd v Supercars Lorinser Pte Ltd and another	Singapore Court of Appeal	Yes	[2018] 1 SLR 239	Singapore	Cited regarding the unjust factor of failure of consideration.
Lee Chee Wei v Tan Chor Peow Victor and others	Singapore Court of Appeal	Yes	[2007] 3 SLR(R) 537	Singapore	Cited regarding the return of a deposit when an agreement falls through.
Howe v Smith	English Court of Appeal	Yes	(1884) 27 Ch. D. 89	England and Wales	Cited regarding the right to return of deposit money depending on contract conditions.
United Artists Singapore Theatres Pte Ltd v Parkway Parade Pte Ltd	Singapore High Court	Yes	[2003] 1 SLR(R) 791	Singapore	Cited regarding the difference between pre-contract and contract deposits.
KS Energy Services Ltd v BR Energy (M) Sdn Bhd	Singapore Court of Appeal	Yes	[2014] 2 SLR 905	Singapore	Cited regarding the level of responsibility imposed by different clauses.
Triangle Auto Pte Ltd v Zheng Zi Construction Pte Ltd	Singapore High Court	Yes	[2000] 3 SLR(R) 594	Singapore	Cited regarding the judicial definition of earnest money.

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

Rig Purchase Agreement
Shipbuilding Contracts
Deposit
Total Failure of Consideration
Collateral Contract
Misrepresentation
Mexican Companies
Grupo Pegaso
PEMEX
Vessel Deposit

15.2 Keywords

Rig Purchase Agreement
Shipbuilding Contracts
Deposit
Misrepresentation
Unjust Enrichment
Singapore
Commercial Litigation

17. Areas of Law

Area Name	Relevance Score
Total failure of consideration	90
Failure of consideration	85
Collateral Contracts	80
Misrepresentation	80
Contract Law	75
Breach of Contract	70
Unjust Enrichment	65
Contracts	60

16. Subjects

Contract Law
Restitution
Commercial Dispute