Liberty Engineering Group Pte. Ltd. v Renault SAS
3 cases cited
(2 SG, 1 foreign)
Catchwords
Practice Areas
Counsel (13)
Alerion Avocats Firm Ascendant Legal LLC Firm Vivien & Associes AARPI Firm WongPartnership LLP Firm Chew Kei-Jin Counsel Appellant Chia Shi Mei Counsel Respondent Gilles Podeur Counsel Appellant Hannah Alysha Binte Mohamed Ashiq Counsel Appellant Laurent Assaya Counsel Respondent Lee Chia Ming Counsel Appellant Leo Zhen Wei Lionel Counsel Respondent Liu Zhao Xiang Counsel Respondent T Abirami Counsel Respondent
Case Significance
Liberty Engineering Group Pte Ltd v Renault SAS [2024] SGCA(I) 7 was decided by the Court of Appeal in Civil Appeal No 2 of 2024, with Belinda Ang Saw Ean JCA delivering the judgment of the court alongside Steven Chong JCA and Bernard Rix IJ, heard on 30 July 2024 and reserved to 8 October 2024. The appellant guarantor was Liberty Engineering Group Pte Ltd (LEG) and the respondent lender was Renault SAS (Renault). The appeal (CA/CAS 2/2024) challenged the decision of the judge of the Singapore International Commercial Court in SIC/OA 9/2023.
OA 9 proceeded on undisputed material facts set out in an agreed statement of facts, without factual witness evidence, and was determined on documents and legal submissions from both parties' Singaporean and French lawyers. Singapore law was submitted by Liu Zhao Xiang for Renault and Chew Kei-Jin for LEG, while French law was submitted by Laurent Assaya for Renault and Gilles Podeur for LEG; in the appeal Lionel Leo additionally submitted for Renault on Singapore law. The catchwords identify issues spanning Foreign Law (France), Civil Procedure (Pleadings), Contract (Contractual terms) and Credit and Security (Guarantees and indemnities). The appellant was represented by Alerion Avocats and Ascendant Legal LLC, and the respondent by Vivien & Associes AARPI and WongPartnership LLP.
Summary
SUPREME COURT OF SINGAPORE
8 October 2024
Case summary
Liberty Engineering Group Pte Ltd v Renault SAS [2024] SGCA(I) 7
Civil Appeal No 2 of 2024
Civil Appeal No 2 of 2024
--------------------------------------------------------------------------------------------------------------------------------------
Decision of the Court of Appeal (delivered by Justice Belinda Ang Saw Ean):
Outcome: The Court of Appeal dismissed an appeal against the decision of a Judge of the Singapore International Commercial Court albeit for different reasons relative to those adopted by the Judge and held that the appellant guarantor was obliged under a guarantee to reimburse the respondent lender moneys that the lender paid out to a debtor, which was the guarantor’s fully owned subsidiary.
Pertinent and significant points of the decision
• The respondent had provided financial support by way of a loan of €7m to the debtor in fulfilment of the respondent’s obligations under an agreement known as the Financial Support Agreement dated 28 May 2018 (the “FSA”). The original signatories to the FSA had, at the outset, consented to the possibility of an additional party to the FSA so that there would be four entities as parties to the FSA: at [8], [61] and [73].
• By the doctrine of adherence under French law, the debtor demonstrated consent to be added as a party to the FSA alongside the original parties to that contract. As such, the debtor became a party to the FSA and assumed rights and obligations under the FSA: at [54], [76], [84] and [87].
• As the debtor was a party to the FSA and was liable to repay the respondent, the obligations of the appellant as guarantor under the guarantee were valid and enforceable: at [88].
• The Court of Appeal disagreed with the Judge’s finding that a separate contract existed as between the debtor and the respondent. The respondent correctly conceded that it did not plead this separate contract, and thus it was not open to the Judge to find that the separate contract existed: at [90] and [92].
Background
1 The appellant and respondent are Liberty Engineering Group Pte Ltd (“LEG”) and Renault SAS (“Renault”) respectively.
2 In SIC/OA 9/2023 (“OA 9”), Renault claimed payment from LEG for the sum of €5,250,025.61 with interest under a deed of guarantee dated 5 July 2018 (the “Guarantee”). This Guarantee was furnished to Renault by LEG pursuant to Article 10 of an agreement known as the Financial Support Agreement dated 28 May 2018 (the “FSA”).
3 The underlying transaction in the FSA was the intended purchase of a French company known as “AR Industries” by the corporate group that LEG is a member of (the “Liberty Group”). AR Industries had been placed under judicial restructuring and its business operations and assets were to be sold by the Commercial Court of Orléans. Renault was willing to provide financial support in the event the purchase of AR Industries was approved by the Commercial Court of Orléans and, for this purpose, entered into the FSA on 28 May 2018 with LEG and Liberty House Group Pte Ltd (“LHG”). The FSA envisaged that the purchase of AR Industries was to be under a “Sale Plan”, and the opening paragraph of the FSA provides for the sale of AR Industries to “Liberty Engineering or to any entity of Liberty Engineering’s Group (‘Newco’) which might be substituted to Liberty Engineering in the benefit of the Sale Plan”. Renault agreed that it would (amongst other things) provide financial support by way of a loan of €7m to the “Purchaser” of AR Industries. The FSA is governed by French law.
4 Alvance Aluminium Wheels (“Alvance”), a wholly owned subsidiary of LEG, was incorporated on 11 June 2018. In the Commercial Court of Orléans’ 29 May 2018 decision, the court authorised the “full replacement” of LEG by Alvance (then in the process of being incorporated under its former name of Liberty Wheels France) in the takeover of AR Industries. On 13 July 2018, 30 October 2018, 31 May 2019 and 17 June 2020, Renault advanced sums totalling up to €7m to Alvance in accordance with the payment schedule specified in Article 5 of the FSA. Under Article 5 of the FSA, the “Purchaser” is obliged to totally reimburse the financial support provided by Renault over four years, from 2022 to 2025, in accordance with a payment schedule.
5 LEG is to act as a guarantor for the Purchaser’s liabilities under Article 10 of the FSA. To this end, under Article 10, LEG had to provide Renault with, amongst other things, a first demand guarantee. LEG thus executed the Guarantee on 5 July 2018, under which it undertook “that (i) whenever the Purchaser [defined in clause 1.1 as Liberty Wheels France] does not pay any amount when due under or in connection with the Financial Support Document [defined in clause 1.1 as the FSA] or (ii) upon the occurrence of a Bankruptcy Event, the Guarantor [defined in clause 1.1 as LEG] shall immediately on demand by the Financial Support Provider [defined in clause 1.1 as Renault] pay that amount to the Financial Support Provider as if it was the Purchaser”. Parties are agreed that the Guarantee is governed by Singapore law.
6 On 23 April 2021, before the first repayment instalment was due, Alvance was placed under redressement judiciaire (judicial restructuring) in France. On 1 June 2022, Renault received a sum of €1,749,974.39 from Liberty Finance Management (LIG) Ltd, a related company to LEG. Parties are agreed that the “Defendant [ie, LEG] has stated that the Claimant [ie, Renault] received this sum as payment of the first instalment due to be paid to the Claimant on 1 June 2022 under the Financial Support Agreement”. Renault did not receive payment of the second instalment in the sum of €1.75m due from Alvance on 1 June 2023. On 12 July 2023, Renault commenced OA 9 for immediate and full repayment from LEG under the Guarantee of outstanding sums that had been paid out by Renault to Alvance.
7 The Judge of the Singapore International Commercial Court (the “Judge”) found in favour of Renault in OA 9. Whilst the Judge held that Alvance did not become a party to the FSA, he held that there was an implicit offer and acceptance and demonstration of the will of Renault and Alvance to be bound to a separate contract on terms corresponding to those in the FSA (the “Separate Contract”) for the receipt and performance of the respective rights and obligations of Renault and the Purchaser as set out in the FSA, with liability to repay the financial support in accordance with its Article 5. The Judge held that the repayment obligation under the Separate Contract had a clear relationship with the provisions of the FSA or in connection with the FSA, and thus engaged the liability of LEG to repay Renault under the Guarantee.
8 LEG appealed, arguing that (a) Renault had failed to plead the Separate Contract or any separate contract at all; (b) the Judge erred, as a matter of French law, in inferring that Alvance and Renault intended to be bound by a separate contract as there was nothing that indicated the parties had in mind that they were to be bound by a separate contract; (c) Renault had not pleaded that the Guarantee extended to obligations arising out of a separate contract outside of the FSA; and (d) the Judge erred in taking an overly broad interpretation of the Guarantee which contradicted its express wording and was inconsistent with the context in which the Guarantee was given and inconsistent with the law on guarantees. In resisting the appeal, Renault’s primary case was that contrary to the Judge’s finding, Alvance was a party to the FSA. However, Renault also sought to defend the Judge’s finding of a Separate Contract as an alternative submission. Renault further contended that LEG’s previous pleadings in a related suit, SIC/S 1/2022 (“SIC 1”), amounted to admissions demonstrating LEG’s acceptance that Renault had advanced funds to Alvance pursuant to the terms of the FSA and that Alvance owes Renault the funds advanced.
Decision
9 Renault’s last-minute attempt to introduce Professor Julie Klein’s opinion on French law dated 15 May 2024 in the appeal was improper and the court did not consider her opinion. Professor Klein was not authorised to submit on French law. Her name did not appear in the Judge’s orders made under O 16 r 8(1) of the Singapore International Commercial Court Rules 2021 which specifically named Mr Laurent Assaya and Mr Gilles Podeur as the persons who may submit on behalf of Renault and LEG respectively on questions on French law: at [47].
10 Under French contract law, the formation of contracts generally requires no formalities; what is essential is a meeting of an offer and an acceptance between promisor and promisee, and acceptance can be manifested tacitly. Conduct that is needed to demonstrate a meeting of the wills of the contracting parties can be tacit, such as where the acceptor commences performance of the contract or requests for performance by the counterparty: at [50] and [51].
11 The French law doctrine of adherence allows for the acceptance of a third party to be a party to an existing contract. Acceptance can be tacit and inferred from the circumstances of the case, in particular conduct. Adherence of a third party to an existing contract may result from the performance of the contract by a third party if the contract provides for the possibility of a third party adhering to an existing contract or if the parties to the existing agreement do not object to the performance of the contract by the third party: at [53] and [59].
12 In the case of adherence, the adhering party is added as an additional party to the contract, alongside the original parties to that contract: at [54], [59] and [72].
13 Under French law, in order for Alvance to adhere to the FSA, two sets of consent must be shown: (a) the consent of the pre-existing parties to the FSA (ie, Renault, LEG and LHG) for Alvance to be added as a party; (b) the consent of Alvance to be added as a party to the FSA. In so doing, Alvance would become a party to the FSA and as a party owed contractual obligations to Renault to repay the loan advanced by Renault under the FSA: at [59] and [60].
14 The original signatories to the FSA – Renault, LEG and LHG – at the outset consented to the addition of Alvance as a party to the FSA at a later point in time: at [61] and [73].
15 The consent of Renault, LEG and LHG can and was given at the very beginning in the FSA itself, as borne out from an examination of the framework of the FSA and an analysis of the initial parties’ implementation of their respective commitments agreed to in the FSA for Alvance to become a party to the FSA: at [63] and [73].
16 Alvance demonstrated consent to be added as a party to the FSA. The evidence connected to Alvance’s request and receipt of financial support from Renault under the FSA shows that the latest date on which Alvance had first adhered to the FSA was 13 July 2018. All the conditions for the adherence of Alvance to the FSA are present, and Alvance is a party to the FSA and has assumed rights and obligations under the FSA: at [76], [84] and [87].
17 LEG had rightly conceded that if the court took the view that Alvance was a party to the FSA and was liable under French law to repay Renault, then the obligations of LEG as guarantor would kick in and be valid and enforceable. The wording of clause 2.1(b)(i) of the Guarantee was clear: at [88].
18 Renault correctly conceded that it did not plead the Separate Contract, and thus it was not open to the Judge to find that the Separate Contract existed: at [90] and [92].
19 LEG’s previous pleadings in SIC 1 cannot be a freestanding ground to find in favour of Renault: at [93], [97] and [98].
20 To the extent that LEG’s pleadings in SIC 1 were phrased in a manner that implicitly assumed that Alvance owed repayment obligations under the FSA as Purchaser, this did not bar LEG from contending otherwise based on a revised appreciation of the law at a later point in time. LEG should not be shut out from arguing points of law – in this case, points of contractual interpretation – which arise from the terms of the FSA and the Guarantee which have been clearly pleaded. LEG’s defence in OA 9 was clearly framed, and Renault has had full opportunity to address the merits of LEG’s defence: at [97].
21 The court dismissed the appeal, albeit for different reasons relative to those adopted by the Judge. The Judge’s decision on quantum and interest was to stand: at [99].
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.
What was Liberty Engineering Group Pte Ltd v Renault SAS about?
In [2024] SGCA(I) 7, the Court of Appeal heard Liberty Engineering Group Pte Ltd's appeal against the Singapore International Commercial Court's decision in SIC/OA 9/2023. LEG was the guarantor and Renault SAS the lender, with issues on contractual terms, guarantees and indemnities, pleadings and French law.
Which judges and counsel were involved in Liberty Engineering Group Pte Ltd v Renault SAS?
Belinda Ang Saw Ean JCA delivered the judgment, sitting with Steven Chong JCA and Bernard Rix IJ. Renault's Singapore and French law was submitted by Liu Zhao Xiang and Laurent Assaya; LEG's by Chew Kei-Jin and Gilles Podeur, with Lionel Leo also for Renault on appeal.
Cases Cited (3)
Referenced in
Legal concepts & references
Judgment
Read the full judgment on the official Singapore Courts portal.
Read on eLitigationSource: eLitigation ([2024] SGCA(I) 7)