RENAULT SAS v LIBERTY ENGINEERING GROUP PTE. LTD.

Facts

When the French wheel manufacturer AR Industries went into judicial restructuring in 2018, Liberty Engineering Group Pte Ltd (LEG) agreed to acquire its operations with financial support from Renault SAS, its main customer. Under a Financial Services Agreement dated 28 May 2018 (FSA), governed by French law, Renault agreed to provide €7m to the purchaser, repayable in four yearly instalments from 1 June 2022, with the whole sum becoming immediately repayable only if the purchaser failed to meet the repayment terms. The purchaser became Liberty Wheels France, a Liberty Group company, later known as Alvance. LEG gave a Deed of Guarantee dated 5 July 2018, governed by Singapore law. By cl 2.1(b), LEG undertook that whenever the purchaser did not pay any amount when due, or upon a Bankruptcy Event, it would immediately on demand pay that amount as if it were the purchaser.

On 23 April 2021 a Paris court opened judicial restructuring proceedings for Alvance. Renault demanded €7m from LEG on 20 May 2021 and sued in Suit No 1 of 2022, later transferred to the Singapore International Commercial Court. LEG said nothing was yet payable by the purchaser, so nothing was payable by it. The first instalment was later paid by a related company. Renault separately began SIC/OA 3/2023 on a different basis.

Issues

1. Whether, on a Bankruptcy Event, cl 2.1(b) obliged LEG to pay the full €7m regardless of whether any amount was then due from the purchaser
2. Whether the presumption against surplusage required 'that amount' to be read as the full outstanding financial support

Holding

The court dismissed Renault's claim, holding that the Bankruptcy Event did not make LEG liable to pay the €7m, and ordered Renault to pay LEG's costs of the proceedings, to be agreed or decided on written submissions.

Reasoning

The court preferred to ask what LEG promised rather than label its liability as primary or secondary. On a natural reading, 'that amount' refers back to an amount due from the purchaser that it has not paid, consistent with LEG paying 'as if it was the Purchaser'. As at 31 May 2021, nothing was payable by the purchaser, so nothing was payable by LEG.

Renault argued this made the Bankruptcy Event limb otiose and that it was uncommercial for the purchaser to keep the money after insolvency. The court noted the FSA itself provided that repayment after bankruptcy proceedings would follow the instalment timetable, so the result was not absurd and appeared to be an informed choice. The Bankruptcy Event limb still had some effect, making LEG a co-obligor earlier. The presumption against surplusage, as stated in Travista Development Pte Ltd v Tan Kim Swee Augustine and others [2008] 2 SLR(R) 474, was material but cannot give words a meaning they will not bear. Renault's reading did not fit the trigger of failure to pay 'any' amount, which covers amounts such as damages, and the parties could easily have said 'the' full amount if that was intended. The overlap between the two limbs had to be accepted. Whether Alvance was itself bound under the FSA was left open for the other proceedings.

From the judgment