BCBC Singapore Pte Ltd and another v PT Bayan Resources Tbk and another

BCBC Singapore Pte Ltd (BCBCS) and PT Bayan Resources TBK (BR), an Indonesian coal miner, were partners in a joint venture company, PT Kaltim Supacoal (KSC), which built a plant in Tabang to upgrade coal using a patented briquetting process licensed to the second appellant. BCBCS held 51% and BR 49%. Both lent money to KSC under shareholder loan agreements, and BCBCS also lent under a priority loan funding agreement under which BR supplied coal on deferred payment terms. A letter signed the same day set an order in which KSC would repay these loans.

The venture ran into delays and cost overruns, and on 21 February 2012 BR purported to terminate the joint venture deed. In earlier tranches of the proceedings in the Singapore International Commercial Court (SICC), BR was found to have breached its coal supply obligations and wrongfully repudiated the deed. In the third tranche, on damages, the appellants sought around US$91 million in wasted expenditure (their loans to KSC) and damages for a lost chance to expand the plant. The SICC found that, even without the breach, KSC would not have had positive cash flow until 2028, that BR would have wound KSC up as an unpaid creditor before then, and that the expenditure would not have been recouped. It awarded nothing. In Civil Appeal No 10 of 2022 the appellants pursued only the wasted expenditure claim.

1. Whether the respondents adequately pleaded and proved that BR would have wound up KSC as an unpaid creditor.
2. Whether the appellants would have gift-funded KSC enough to prevent its default to BR.
3. Whether the subordination letter or cl 7.1(x) of the joint venture deed prevented BR from winding up KSC.
4. Whether winding up KSC would have breached BR's duties of reasonable endeavours and good faith under cll 17.1 and 17.3.

Though the respondents' pleading was not a model of clarity, their expert's report and opening statement, together with the appellants' failure to object substantively, put the winding-up point in issue. Given the breakdown of the relationship and BR's statements in late 2011 that KSC would have to be liquidated absent an acceptable proposal, BR would more probably than not have tried to wind KSC up rather than wait many years for any repayment.

The appellants had led evidence only of funding the coal advance debt and US$20 million for operating needs, not the much larger sum needed to repay BR's shareholder loans. The subordination letter set an order of repayment but did not, with sufficient clarity, make full repayment of the priority facility a condition precedent to KSC's obligation to repay BR. Clause 7.1(x) governed KSC's internal decision-making, not BR's external rights as a creditor, and cl 8.2 did not oblige BR to maintain loans in default. Breach of cll 17.1 and 17.3 depended on intensely factual inquiries that the appellants had not explored at trial, so it was too late to rely on them. The second ground on recoupment by 2028 did not arise.

The Court of Appeal dismissed the appeal, so the appellants did not recover their wasted expenditure. Recognising that BR's liability for breach had been established, it awarded the appellants S$1,000 in nominal damages. Appeal costs were left to written submissions if not agreed, and no order was made on trial costs.