PT. OKI Pulp & Paper Mills v Sunrise Industries: Breach of Contract & Bank Guarantee Dispute

PT. OKI Pulp & Paper Mills and Sunrise Industries (India) Ltd were involved in cross-appeals before the Appellate Division of the High Court of Singapore, concerning a breach of contract claim and a counterclaim related to the supply and installation of goods. The court, presided over by Justices Woo Bih Li, Kannan Ramesh, and Andre Maniam, partially allowed both appeals. The court addressed issues regarding the interpretation of contract clauses, the validity of a bank guarantee call, and entitlement to damages and pre-judgment interest. The court ordered OKI to refund Sunrise the sum of US$832,413.20 paid under the Bank Guarantee, and Sunrise to pay OKI liquidated damages of US$144,154.50 under the Installation Contract.

1. Case Overview

1.1 Court

Appellate Division of the High Court

1.2 Outcome

Appeal Allowed in Part

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Cross-appeals concerning breach of contract for goods supply and installation. The court partially allowed both appeals, addressing issues of contract interpretation and damages.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
PT OKI Pulp & Paper MillsAppellant, RespondentCorporationPartial Appeal AllowedPartial
Sunrise Industries (India) LtdRespondent, AppellantCorporationPartial Appeal AllowedPartial
Dena Bank LimitedDefendantCorporationNeutralNeutral

3. Judges

Judge NameTitleDelivered Judgment
Woo Bih LiJudge of the Appellate DivisionNo
Kannan RameshJudge of the Appellate DivisionYes
Andre ManiamJudge of the High CourtNo

4. Counsels

Counsel NameOrganization
Kirpalani Rakesh GopalDrew & Napier LLC
Oen Weng Yew TimothyDrew & Napier LLC
Lin Jian En ShawnDrew & Napier LLC
Christopher Anand s/o DanielAdvocatus Law LLP
Yeo Yi Ling EileenAdvocatus Law LLP
Saadhvika JayanthAdvocatus Law LLP
Ganga d/o AvadiarAdvocatus Law LLP

4. Facts

  1. Sunrise was to supply and install goods at OKI's pump mill in Indonesia.
  2. Two agreements were signed: a Supply Contract and an Installation Contract, both dated 10 July 2015.
  3. The Supply Contract's price was initially US$6,647,625, later increased to US$8,324,132 via amendments.
  4. Sunrise was to procure a bank guarantee, initially for US$692,583.90, later increased to US$832,413.20.
  5. The Installation Contract's price was initially US$1,291,935, later increased to US$1,441,545 via amendments.
  6. OKI paid the first 90% of the Supply Contract price to Sunrise.
  7. The last shipment date in the letters of credit was amended to 29 February 2016, after the Supply Contract Delivery Deadline.

5. Formal Citations

  1. PT OKI Pulp & Paper Mills v Sunrise Industries (India) Ltd and another appeal, Civil Appeal Nos 10 and 15 of 2023, [2023] SGHC(A) 38

6. Timeline

DateEvent
Supply Contract and Installation Contract signed
Supply Contract A1 and Installation Contract A1 signed
Sunrise procured Bank Guarantee from Dena Bank
DBS Bank Ltd issued letter of credit for US$5,318,100 to Sunrise
Supply Contract A2 and Installation Contract A2 signed
LC1 amended and re-issued as LC1 A1
Last shipment date in LC1 A1 amended to 29 February 2016 (LC1 A2)
OKI received revised Bank Guarantee
DBS Bank Ltd issued LC2 for US$1,118,634.40
Supply Contract Delivery Deadline
Sunrise deployed personnel to the Project Site
Sunrise’s General Manager, Mr Pradeep, arrived at the Project Site
Sunrise demobilised its installation team
OKI asked for advance payment for accommodation
Goods arrived at the Port of Discharge
Sunrise informed OKI it would not continue the Installation Contract
OKI informed Sunrise it did not wish to continue business
OKI engaged PT Piping Systems Indonesia to complete installation
OKI made a demand on the Bank Guarantee
Suit 8 commenced
OKI issued formal notices of termination of both contracts
OKI’s application to set aside interim injunctions was allowed
Dena Bank paid OKI the sum demanded
Sunrise sought leave to amend its Reply and Defence to Counterclaim
Amended pleading filed
Judgment reserved
Judgment delivered

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that Sunrise was not in delay in the delivery of the Goods. The question of breach of the Supply Contract therefore does not arise.
    • Category: Substantive
    • Sub-Issues:
      • Late delivery of goods
      • Repudiation of contract
      • Failure to perform obligations
  2. Interpretation of Contract Clauses
    • Outcome: The court interpreted clauses related to delivery deadlines, payment terms, and termination rights to determine the parties' obligations.
    • Category: Substantive
    • Sub-Issues:
      • Delivery deadlines
      • Payment terms
      • Termination rights
      • Bank Guarantee terms
  3. Validity of Bank Guarantee Call
    • Outcome: The court found that OKI was not entitled to call on the Bank Guarantee and receive the sum of US$832,413.20.
    • Category: Substantive
    • Sub-Issues:
      • Entitlement to call on guarantee
      • Satisfaction of conditions for call
      • Damages for wrongful call
  4. Entitlement to Damages
    • Outcome: The court awarded OKI liquidated damages of US$144,154.50 under the Installation Contract.
    • Category: Substantive
    • Sub-Issues:
      • Liquidated damages
      • Repudiatory breach
      • Mitigation of damages
  5. Pre-Judgment Interest
    • Outcome: The court awarded Sunrise pre-judgment interest on its claim for the return of US$832,413.20 from OKI at 5.33% per annum from 23 May 2019 until the date of judgment. The court awarded OKI pre-judgment interest on the sum of US$144,154.50 at 5.33% per annum from 14 March 2016 to the date of judgment.
    • Category: Procedural
    • Sub-Issues:
      • Date of accrual of loss
      • Discretion of court
      • Contractual exclusion of interest
  6. Amendment of Pleadings
    • Outcome: The court held that it did not have jurisdiction to hear Sunrise’s appeal on SUM 3368 as Sunrise did not obtain permission to appeal.
    • Category: Procedural
    • Sub-Issues:
      • Leave to amend
      • Prejudice to other party
      • Final order

8. Remedies Sought

  1. Monetary Damages
  2. Refund of Payments
  3. Liquidated Damages
  4. Pre-judgment Interest

9. Cause of Actions

  • Breach of Contract
  • Wrongful Termination
  • Repudiation of Contract

10. Practice Areas

  • Commercial Litigation
  • Contract Disputes
  • Appellate Practice

11. Industries

  • Pulp and Paper
  • Manufacturing

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Sunrise Industries (India) Ltd v PT OKI Pulp & Paper Mills and anotherHigh CourtYes[2023] SGHC 3SingaporeThe Judge’s judgment in HC/S 8/2017, against which the cross-appeals were made.
Sunrise Industries (India) Ltd v PT OKI Pulp & Paper Mills and anotherHigh CourtYes[2018] SGHC 145SingaporeCited for the Injunction Judgment.
Grassland Express & Tours Pte Ltd and another v M Priyatharsini and othersHigh Court (Appellate Division)Yes[2022] SGHC(A) 28SingaporeCited for the principle that an appellate court is only seised of the jurisdiction statutorily conferred upon it.
PricewaterhouseCoopers LLP and others v Celestial Nutrifoods Ltd (in compulsory liquidation)Court of AppealYes[2015] 3 SLR 665SingaporeCited for the principle that an appellate court is only seised of the jurisdiction statutorily conferred upon it.
Laird v BriggsChancery DivisionYes(1881) 16 ChD 663England and WalesSunrise relied on this case to argue that permission to appeal is not required, as the Judge’s refusal to allow the application was a final order and an appeal against the Judgment includes an appeal against the Judge’s interlocutory decisions.
Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd and another appealCourt of AppealYes[2023] SGCA(I) 7SingaporeCited for the principle that a letter of credit is autonomous and operates independently of the underlying contract between the buyer and seller.
Kuvera Resources Pte Ltd v JPMorgan Chase Bank, N.A.Court of AppealYes[2023] SGCA 28SingaporeCited for the principle that a letter of credit is autonomous and operates independently of the underlying contract between the buyer and seller.
Lim Zhipeng v Seow Suat Thin and another matterCourt of AppealYes[2020] 2 SLR 1151SingaporeThe Judge relied on this case for the reading that a defendant’s failure to plead a lack of consideration did not preclude it from arguing that the variation of the Supply Contract was invalid on that basis.
Bumi Geo Engineering Pte Ltd v Civil Tech Pte LtdHigh CourtYes[2015] 5 SLR 1322SingaporeCited for the principle that the court is free to depart from the pleaded interpretations of a contract.
Quainoo v NZ Breweries LtdHigh CourtYes[1991] 1 NZLR 161New ZealandCited for the principle that the court is free to depart from the pleaded interpretations of a contract.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the principles governing the implication of terms.
iVenture Card Ltd and others v Big Bus Singapore City Sightseeing Pte Ltd and othersCourt of AppealYes[2022] 1 SLR 302SingaporeCited for the principle that a party renounces a contract where, by words or conduct, it evinces an intention not to perform or expressly declares that he is or will be unable to perform his obligations in some material respect.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte LtdCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for the principle that where a party has renounced a contract, the innocent party would be entitled to terminate the contract.
Grains and Industrial Products Trading Pte Ltd v Bank of India and anotherHigh CourtYes[2016] 3 SLR 1308SingaporeCited for the principle that pre-judgment interest generally runs from the date of accrual of the claimant’s loss.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and anotherHigh CourtYes[2008] 2 SLR 623SingaporeCited for the principle that pre-judgment interest generally runs from the date of accrual of the claimant’s loss.
Ng Koon Yee Mickey v Mah Sau CheongHigh CourtYes[2022] 2 SLR 1296SingaporeCited for the principle that where a claim and a counterclaim involve losses accruing at different times, the date on which pre-judgment interest should run with respect to each claim would likewise be different.
Riches v Westminster Bank LtdKing's Bench DivisionYes[1943] 2 All ER 725England and WalesCited for the principle that a party need not plead a claim for pre-judgment interest in its writ or statement of claim.
Abani Trading Pte Ltd v BNP Paribas and another appealHigh CourtYes[2014] 3 SLR 909SingaporeCited for the principle that it would be prudent for a party to plead the term of the contract relied upon in order to avoid any arguments that the other party was taken by surprise or was prejudiced as a result of the lack of notice.

13. Applicable Rules

Rule Name
Rules of Court 2021

14. Applicable Statutes

Statute NameJurisdiction
Supreme Court of Judicature Act 1969Singapore
Civil Law Act 1909Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Supply Contract
  • Installation Contract
  • Bank Guarantee
  • Letter of Credit
  • Delivery Deadline
  • Acceptance Certificate
  • Liquidated Damages
  • Repudiation
  • Down Payment
  • Final 10%
  • Shipment Date
  • Performance Guarantees
  • Force Majeure

15.2 Keywords

  • breach of contract
  • bank guarantee
  • letter of credit
  • supply contract
  • installation contract
  • delivery deadline
  • liquidated damages
  • Singapore
  • commercial dispute

17. Areas of Law

Area NameRelevance Score
Contract Law90
Breach of Contract90
Sale of Goods80
Performance of Contract70
Commercial Law70
Civil Procedure60
Termination60
Variation60
Damages50
Interest40
Arbitration30

16. Subjects

  • Contract Law
  • Commercial Law
  • Civil Procedure
  • Appeals
  • Sale of Goods
  • Banking Law