Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd: Corporate Governance Dispute

In Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd, the High Court of Singapore addressed a dispute between the Independent State of Papua New Guinea (the State) and PNG Sustainable Development Program Ltd (PNGSDP) regarding the corporate governance of PNGSDP. The State sought to establish rights of control and oversight over PNGSDP's operations and assets, claiming an oral agreement existed alongside written contracts. The court found no such agreement and ruled in favor of PNGSDP, rejecting the State's claims of breach of contract or trust. The court also declined to make the declarations sought in PNGSDP's counterclaim.

1. Case Overview

1.1 Court

High Court of Singapore

1.2 Outcome

Judgment for Defendant

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court addresses a dispute over corporate governance of PNG Sustainable Development Program Ltd, concerning control and oversight rights.

1.7 Decision Date

1 April 2019

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
PNG Sustainable Development Program Ltd	Defendant	Corporation	Judgment for Defendant	Won	See Kwang Guan of Dentons Rodyk & Davidson LLP Mark Seah of Dentons Rodyk & Davidson LLP Shobna Chandran of Dentons Rodyk & Davidson LLP Andrea Gan of Dentons Rodyk & Davidson LLP Philip Jeyaretnam of Dentons Rodyk & Davidson LLP Ashwin Nair of Dentons Rodyk & Davidson LLP Chua Weilin of Dentons Rodyk & Davidson LLP
Independent State of Papua New Guinea	Plaintiff	Government Agency	Claim Dismissed	Lost	Koh Swee Yen of WongPartnership LLP Joel Quek of WongPartnership LLP Alvin Yeo of WongPartnership LLP Wendy Lin of WongPartnership LLP Sean Poh of WongPartnership LLP

3. Judges

Judge Name	Title	Delivered Judgment
Vinodh Coomaraswamy	Judge	Yes

4. Counsels

Counsel Name	Organization
See Kwang Guan	Dentons Rodyk & Davidson LLP
Mark Seah	Dentons Rodyk & Davidson LLP
Shobna Chandran	Dentons Rodyk & Davidson LLP
Andrea Gan	Dentons Rodyk & Davidson LLP
Philip Jeyaretnam	Dentons Rodyk & Davidson LLP
Ashwin Nair	Dentons Rodyk & Davidson LLP
Chua Weilin	Dentons Rodyk & Davidson LLP
Koh Swee Yen	WongPartnership LLP
Joel Quek	WongPartnership LLP
Alvin Yeo	WongPartnership LLP
Wendy Lin	WongPartnership LLP
Sean Poh	WongPartnership LLP

4. Facts

The Independent State of Papua New Guinea (the State) and BHP Minerals Holdings Pty Ltd (BHP) incorporated PNGSDP in Singapore in October 2001.
PNGSDP was intended to be the vehicle to which BHP would divest its shares in Ok Tedi Mining Limited (OTML).
The parties intended PNGSDP to hold BHP’s shares in OTML and to apply the income derived from those shares to advance a programme of sustainable development in Papua New Guinea.
In 2012 and 2013, PNGSDP made several material changes to its corporate governance framework, diluting the State’s powers of control and oversight.
The State claimed an oral agreement existed alongside written contracts, granting it certain rights of control and oversight over PNGSDP that could not be altered without its consent.
BHP divested its shares in OTML as part of a complex transaction documented in a suite of interlocking and interdependent written contracts.
The State sought declarations that the Agreed Oversight Structure cannot be amended without its consent and that PNGSDP breached the Agreement or Trust.

5. Formal Citations

Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd, Suit No 795 of 2014; Originating Summons No 234 of 2015, [2019] SGHC 68

6. Timeline

Date	Event
1976-01-01	Contract to develop the Ok Tedi mine entered into between the State and BHP.
2000-01-01	BHP expressed its intention to shut down the Ok Tedi mine early.
2001-06-01	BHP entered into a merger with Billiton plc.
2001-06-29	Heads of Agreement reached.
2001-09-13	A deal was struck at a meeting at BHP’s headquarters.
2001-10-20	PNGSDP was incorporated in Singapore.
2001-12-11	Master Agreement signed.
2001-12-20	The State passed the Ok Tedi Mine Continuation (Ninth Supplement) Agreement Act 2001 (PNG).
2002-02-07	BHP transferred its entire 52% shareholding in OTML to PNGSDP.
2012-01-01	PNGSDP made several material changes to its corporate governance framework.
2012-07-01	General election was held in Papua New Guinea.
2012-08-01	Mr Peter O’Neill was sworn in as Prime Minister of Papua New Guinea.
2012-10-01	Directors of PNGSDP made the first set of changes to its corporate constitution.
2013-03-01	Prime Minister O’Neill wrote to Sir Mekere informing him of the State’s intention to commence negotiations to purchase PNGSDP’s shares in OTML.
2013-09-19	The Papua New Guinea Parliament passed the Mining (Ok Tedi Tenth Supplemental Agreement) Bill 2013 and the Mining (Ok Tedi Mine Continuation) (Ninth Supplemental Agreement) (Amendment) Bill 2013.
2013-10-01	The directors of PNGSDP appointed Sir Mekere as a member of PNGSDP.
2013-10-01	The members of PNGSDP resolved to delete Article 24(B) of the Articles.
2013-10-01	The State attempted to appoint a transitional management team to take charge of PNGSDP.
2014-03-01	Article 24(B) was further amended to give the members of PNGSDP the right to appoint, replace and remove “B” directors.
2014-04-01	The State sought an injunction against PNGSDP.
2014-07-01	Prakash J converted OS 1036 into a writ action with the State as plaintiff.
2014-10-01	The State filed an application in Summons No 5440 of 2014 seeking to compel PNGSDP to allow the State to inspect PNGSDP’s accounts, books of account, and other records.
2015-03-01	The State filed Originating Summons 234 of 2015 seeking essentially the same relief as it had sought by Summons 5440.
2016-02-01	Prakash J gave her decision on the State’s application in OS 234.
2018-04-01	Trial began.
2019-04-02	Judgment reserved.

7. Legal Issues

Breach of Contract
- Outcome: The court found that no contract existed in the form alleged by the plaintiff, therefore there was no breach.
- Category: Substantive
Charitable Trust
- Outcome: The court found that no charitable trust existed.
- Category: Substantive
Interpretation of Contractual Terms
- Outcome: The court interpreted the contractual terms and found that they did not support the plaintiff's claims.
- Category: Substantive
Admissibility of Evidence
- Outcome: The court ruled on the admissibility of affidavit evidence and the drawing of adverse inferences.
- Category: Procedural

8. Remedies Sought

Declarations regarding the Agreed Oversight Structure
Orders directing management of PNGSDP's operations and assets
An order that the State be entitled to appoint three directors of PNGSDP
An order that PNGSDP provide the State with a full account of its dealings with its assets

9. Cause of Actions

Breach of Contract
Breach of Trust

10. Practice Areas

Commercial Litigation

11. Industries

Mining

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Karahas Bodas Co LLC v Pertamina Energy Trading Ltd	Court of Appeal	Yes	[2006] 1 SLR(R) 112	Singapore	Cited as authority that the court may not order declaratory relief unless all parties whose interests would be affected by it are present before the court.
Catlin v Cyprus Finance Corporation (London) Ltd	English High Court	Yes	[1983] 1 QB 759	England and Wales	Cited to support the argument that PNGSDP's obligations were owed severally to the State and BHP.
OCBC Capital Investment Asia Ltd v Wong Hua Choon	Court of Appeal	Yes	[2012] 4 SLR 1206	Singapore	Cited regarding the court's approach to determining the existence of an alleged contract and the reliability of contemporaneous written records.
Sudha Natrajan v The Bank of East Asia Ltd	Court of Appeal	Yes	[2017] 1 SLR 141	Singapore	Cited for the principles governing the drawing of an adverse inference from the absence or silence of a witness.
Projection Pte Ltd v The Tai Ping Insurance Co Ltd	Court of Appeal	Yes	[2001] 1 SLR(R) 798	Singapore	Cited for the principle that courts do not take a technical and pedantic approach when ascertaining the existence of an oral agreement.
Tribune Investment Trust Inc v Soosan Trading Co Ltd	Court of Appeal	Yes	[2000] 2 SLR(R) 407	Singapore	Cited for the principle that the function of the court is to ensure that the reasonable expectations of honest men are not disappointed.
First Asia Capital Investments Ltd v Société Générale Bank & Trust	High Court	Yes	[2017] SGHC 78	Singapore	Cited for the requirement that an oral agreement must be pleaded with a degree of specificity.
Likpin International Ltd v Swiber Holdings Ltd	High Court	Yes	[2015] 5 SLR 962	Singapore	Cited for the principle that the inability to identify specifically when an oral agreement was concluded points against the existence of the agreement.
Papas Olio JSC v Fourrages SA	English Court of Appeal	Yes	[2009] EWCA Civ 1401	England and Wales	Cited for the argument that a written document supersedes an oral agreement.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd	Court of Appeal	Yes	[2013] 4 SLR 193	Singapore	Cited for the three-step process for implying a term into a contract.
Koh Lau Keow and others v Attorney-General	Court of Appeal	Yes	[2014] 2 SLR 1165	Singapore	Cited for the requirements of a valid purpose trust and the test for determining if a trust is exclusively charitable.
The Commissioners for Special Purposes of the Income Tax v John Frederick Pemsel	House of Lords	Yes	[1891] AC 531	United Kingdom	Cited for the four heads of charitable purposes.
Sea-Land Service Inc v Cheong Fook Chee Vincent	Court of Appeal	Yes	[1994] 3 SLR(R) 250	Singapore	Cited for the principle that promissory estoppel can only be used as a shield and not as a sword.
Mansource Interior Pte Ltd v CSG Group Pte Ltd	High Court	Yes	[2017] 5 SLR 203	Singapore	Cited for the principle that no kind of estoppel can be used as a sword.
Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd	High Court	Yes	[2013] 4 SLR 1023	Singapore	Cited for the principle that estoppel cannot be used to subvert the established rules of contract formation.
Nippon Menkwa Kabushiki Kaisha v Dawsons Bank Ltd	Unknown	Yes	51 Lloyd’s Rep 147	Unknown	Cited for the principle that a plaintiff can be assisted in enforcing a cause of action by preventing a defendant from denying the existence of some fact essential to establish the cause of action.
Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others v BP Singapore Pte Ltd and another matter	High Court	Yes	[2018] SGHC 215	Singapore	Cited for the nature of a charge.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Ok Tedi Mine Continuation (Ninth Supplement) Agreement Act 2001 (PNG)	Papua New Guinea
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

PNGSDP
OTML
Agreed Oversight Structure
Consent Term
Direct Enforceability Term
Program Rules
Memorandum of Association
Articles of Association
Charitable Trust
Corporate Governance

15.2 Keywords

corporate governance
contract law
trust law
company law
Singapore
PNGSDP
OTML

17. Areas of Law

Area Name	Relevance Score
Company Law	80
Contract Law	75
Charitable Giving	70
Trust Law	70
Chancery and Equity	65

16. Subjects

Corporate Governance
Contract Law
Trust Law
Company Law