What was Crédit Agricole v PPT Energy Trading [2024] SGCA(I) 3 about?

It was the Court of Appeal's third judgment in Civil Appeals Nos 2 and 3 of 2022, arising from SICC cases SIC/S 1/2021 and SIC/S 2/2021 between Crédit Agricole and PPT Energy Trading. This judgment addressed costs and damages and interest, and was delivered on 7 June 2024.

Which judges decided [2024] SGCA(I) 3?

The Court of Appeal coram in Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd comprised Judith Prakash SJ, Jonathan Hugh Mance IJ and Bernard Rix IJ. The reserved judgment was delivered on 7 June 2024 after a hearing on 4 December 2023.

[2024] SGCA(I) 3, Crédit Agricole Corporate & Investment Bank Singapore Branch v PPT Energy Trading Co. Ltd. - Judgment, Outcome & Holding

Court	Court of Appeal (International)
Decided	7 June 2024
Judges	Bernard Rix, Jonathan Hugh Mance, Judith Prakash
Charges / claim	Civil Procedure
Counsel	PK Wong & Nair LLC, Wee Swee Teow LLP, Alex Chia Yao Wei, Giam Chin Toon, Lee Wei Yuen Arvin (Li Weiyun), Nair Suresh Sukumaran, Tan Tse Hsien, Bryan (Chen Shixian), Wan Hui Ting Monique (Wen Huiting)

SUPREME COURT OF SINGAPORE

7 June 2024

Case Summary

Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd and another appeal [2024] SGCA(I) 3

Civil Appeal Nos 2 and 3 of 2022

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Decision of the Court of Appeal (delivered by Judith Prakash SJ, Jonathan Hugh Mance IJ and Bernard Rix IJ):

Outcome: The court finds that the appellant is entitled to costs and makes orders relating to interest and costs.

Introduction

1 CA/CAS 2/2022 and CA/CAS 3/2022 (the “Appeals”) arose out of two cases heard by the Singapore International Commercial Court (“SICC”), SIC/S 1/2021 (“SIC 1”) and SIC/S 2/2021 (“SIC 2”). Crédit Agricole Corporate & Investment Bank, Singapore Branch (“CACIB”) was the plaintiff in SIC 1 and the defendant in SIC 2. PPT Energy Trading Co Ltd (“PPT”) was the defendant in SIC 1 and the plaintiff in SIC 2.

2 References in this case summary to Zenrock, TOTSA and ING are to be understood as references to Zenrock Commodities Trading Pte Ltd which was the fraudster behind the whole transaction, Totsa Oil Trading SA which had agreed to buy a consignment of oil from Zenrock, and ING Bank NV, which, like CACIB, had provided financing to Zenrock and received an assignment of the sale contract with TOTSA and its receivables.

3 SIC 1 and SIC 2 involved two disputes. The first was whether PPT was entitled to payment under CACIB’s letter of credit dated 3 April 2020 in favour of PPT (the “Credit”) even though the issue of the Credit had been procured by the fraud of CACIB’s customer, Zenrock. This was the “Credit dispute”. Prior to the resolution of the Credit dispute, CACIB paid the sum of US$23,662,732.50 pursuant to the terms of the Credit (the “LC Sum”) into a bank account held by PPT in the Bank of China Limited (“BOC”). BOC issued a banker’s guarantee to CACIB as a form of security for the repayment of the LC Sum in the event that CACIB succeeded in its claim against PPT.

4 The second dispute was whether PPT had breached any of the warranties it had given to CACIB under the letter of indemnity presented to CACIB and dated 9 April 2020 (the “LOI”). This was the “LOI dispute”. While the SICC proceedings were ongoing, there was the question of whether CACIB or ING was entitled to the proceeds of Zenrock’s sale of the oil to TOTSA. This was a sum of US$16,517,443.06 (the “Receivables”). Under a settlement agreement dated 23 November 2020 (the “Settlement Agreement”), CACIB received US$6,197,532.75 from the Receivables.

5 The Judge in the SICC (the “Judge”) found that CACIB was liable under the Credit and also dismissed CACIB’s claim for breach of the warranties given in the LOI. Dissatisfied, CACIB filed the Appeals.

6 This is the third judgment issued in respect of the Appeals. The first was the court’s decision on liability issued on 24 October 2023 in Crédit Agricole Corporate & Investment Bank, Singapore Branch v PPT Energy Trading Co Ltd and another appeal [2023] SGCA(I) 7 (the “Liability Judgment”), where the Appeals were partially allowed. The court found that (a) in respect of the Credit dispute, CACIB was not entitled to rely on Zenrock’s fraud to set aside and avoid liability to pay the LC Sum to PPT; but (b) in respect of the LOI dispute, PPT had breached the warranty of marketable title given in the LOI, such that CACIB was entitled to damages. CACIB was entitled to claim under the LOI loss which it would have avoided if it had unquestionable security over the Receivables payable by TOTSA to Zenrock to which it was entitled under the LOI. The second judgment was issued on 10 May 2024 in respect of a post-appeal application for leave to serve interrogatories filed by PPT (the “Interrogatories Judgment”).

7 This third judgment deals with the question of interest payable on the sums awarded and dealt with in the Liability Judgment, as well as with the question of the costs of the SICC proceedings and the Appeals. At the time the costs submissions were filed, PPT had also raised a question of the quantum of damages payable under the Liability Judgment but that has since been dealt with in the Interrogatories Judgment.

The court’s decision

8 The quantum of damages that CACIB is entitled to be paid under the LOI is the sum of US$10,319,910.31 as stated in para 9 of the Interrogatories Judgment. This sum is the difference between the price payable by TOTSA to Zenrock, namely US$16,517,532.06, and the recovery of US$6,197,532.75 obtained by CACIB in the Settlement Agreement: at [26]–[28].

9 PPT is entitled to interest at the rate of 5.33% per annum and pro rata on:

a. The principal amount of US$23,662,732.50 from 5 June 2020 (being the date the LC Sum was due) to 17 June 2020 (being the date that PPT became liable in damages to CACIB for the sum of US$16,517,443.06 as TOTSA transferred the Receivables to CACIB’s solicitors as escrow agent on 17 June 2020), amounting to US$41,464.89; and

b. The principal amount of US$7,145,289.44 (ie, US$23,662,732.50 less US$16,517,443.06) from 17 June 2020 to 18 November 2020 (being the date the LC Sum was paid), amounting to US$160,684.84: at [29]–[30].

10 CACIB is entitled to interest at the rate of 5.33% per annum and pro rata on:

a. The principal amount of US$16,517,443.06 from 18 November 2020 (being the date the LC Sum was paid and thus the date when CACIB was entitled to the Receivables) to 9 December 2020 (being the date US$6,197,532.75 was paid to CACIB pursuant to the Settlement Agreement), amounting to US$50,651.98; and

b. The principal amount of US$10,319,910.31 from 9 December 2020 (being the date US$6,197,532.75 was paid to CACIB pursuant to the Settlement Agreement) to the date that such sum is paid to CACIB: at [32].

11 CACIB is also entitled to a refund of all costs, fees and interest paid to PPT, in the sum of US$1,983,971.30, with interest. CACIB should be awarded interest based on the principal amount of US$1,983,971.30, at a rate of 5.33% per annum and pro rata from 14 April 2022 (being the date that CACIB paid the sum of US$1,983,971.30 to PPT) to the date that such sum is repaid: at [33].

12 A single award of costs should be made in favour of CACIB as the successful party. This is because CACIB succeeded in obtaining judgment for a substantial amount of damages (viz, US$10,319,910.31) against PPT, which resisted CACIB’s claim vigorously. While PPT is a beneficiary under the whole transaction to the tune of US$13,342,822.19 having succeeded completely on the Credit dispute, this fact is to be accounted for by applying an overall discount to the quantum of costs to be awarded to CACIB: at [34]–[40].

13 The court will have regard to the indemnity clause in the LOI in assessing costs. However, in respect of legal costs incurred, the indemnity only extends to “reasonable legal fees”. What is reasonable falls to the court to decide: at [46].

14 Based on the amount of work done and the period of the same, the pre-transfer costs and disbursements should be awarded in the following amounts, prior to applying a general discount: at [49].

S/N	Item	Amount
1	PK Wong & Nair LLC’s (“PKWN”) Pre-transfer Costs	S$93,000
2	Mayer Brown’s Pre-transfer Costs (as disbursements)	US$250,000
3	Pre-transfer disbursements	S$10,367

15 The post-transfer costs and disbursements are to be awarded in the following amounts, prior to applying a general discount: at [52].

S/N	Item	Amount
1	PKWN’s Post-transfer Costs	S$441,139.50
2	Mayer Brown’s Post-transfer Costs	US$340,000
3	Ms Masters KC’s Costs	£112,540
4	Ms Catherine Jago’s expert costs	£75,132.50
5	Post-transfer disbursements	S$84,250.75

16 The costs of the Appeals are to be awarded in the following amounts, prior to applying a general discount: at [56].

S/N	Item	Amount
1	PKWN’s costs for the Appeals	S$149,417
2	Mr Joseph KC / Mr Mukherjee / Mr Onslow KC costs for the Appeals	£200,000
3	Mayer Brown’s costs for the Appeals	US$179,682.70
4	Disbursements for the Appeals	S$18,445.30
5	Costs of these submissions (PKWN)	S$13,000

17 An overall discount to the quantum of costs to be awarded to CACIB is necessary to account for the fact that CACIB was unsuccessful in respect of the Credit dispute, although it is the overall successful party. The Credit dispute and the LOI dispute were of similar complexity and covered overlapping factual ground, and thus it is assumed that the work done in relation to each dispute would result in similar costs incurred vis-à-vis each dispute for each party: at [57].

18 A two-third discount should be applied to the quantum of costs to be awarded to CACIB. Two parts correspond to the discount for the Credit dispute, for which CACIB ought to bear PPT’s and its own costs; and one part corresponds to the costs that CACIB is entitled to for being the overall successful party. This generous discount also takes into account the fact that CACIB only succeeded in its LOI damages claim by virtue of CACIB’s late amendment to its case during the hearing of the Appeals: at [58]–[59].

19 Applying the overall two-third discount to the quantum of costs to be awarded to CACIB, CACIB is entitled to costs and disbursements in the sum of S$269,873.18, US$256,560.90 and £129,224.17: at [60].

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

Crédit Agricole Corporate & Investment Bank Singapore Branch v PPT Energy Trading Co. Ltd.

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What was Crédit Agricole v PPT Energy Trading [2024] SGCA(I) 3 about?

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