Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd: Contract Formation & Corporate Governance

The Independent State of Papua New Guinea appealed the High Court's decision to dismiss its claims against PNG Sustainable Development Program Ltd, a Singapore-incorporated company. The appellant argued the existence of a partly oral and partly written agreement granting it significant oversight and control over the respondent, which the respondent had allegedly breached. The Court of Appeal dismissed the appeal, upholding the High Court's finding that the alleged agreement was not supported by evidence and that the trust, predicated on the agreement, did not exist.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding corporate governance of PNG Sustainable Development Program Ltd. Court dismissed claims, finding no agreement granting oversight rights to the appellant.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
PNG Sustainable Development Program LtdRespondentCorporationAppeal DismissedWon
Independent State of Papua New GuineaAppellantGovernment AgencyAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeYes
Andrew Phang Boon LeongJudge of AppealNo
Chao Hick TinSenior JudgeNo

4. Counsels

Counsel NameOrganization
Philip Antony JeyaretnamDentons Rodyk & Davidson LLP
Alvin YeoWongPartnership LLP

4. Facts

  1. The Independent State of Papua New Guinea and BHP Minerals Holdings Pty Ltd agreed to develop the Ok Tedi gold and copper mine.
  2. Ok Tedi Mining Limited (OTML) was incorporated with the appellant, BHP, Inmet Mining Corporation, and Mineral Resources Ok Tedi No 2 Limited as shareholders.
  3. BHP decided to exit OTML due to environmental damage caused by the mine.
  4. PNG Sustainable Development Program Ltd was incorporated in Singapore as a company limited by guarantee to receive BHP's shares.
  5. The appellant claimed an agreement existed granting it oversight and control over the respondent.
  6. The High Court dismissed the appellant's claims, finding no evidence of the alleged agreement.

5. Formal Citations

  1. Independent State of Papua New Guinea v PNG Sustainable Development Program Ltd, Civil Appeal No 78 of 2019, [2020] SGCA 44
  2. Independent State of Papua New Guinea v PNG Sustainable Development Program Limited, Suit No 795 of 2014, [2019] SGHC 68

6. Timeline

DateEvent
BHP expressed its intention to shut down the Ok Tedi mine prematurely.
Terms of agreement captured in a letter from OTML to the Controller of Foreign Exchange of the Bank of PNG.
PNG Sustainable Development Program Ltd incorporated in Singapore.
Transfer of BHP’s shareholding in OTML to the respondent was effected.
Proceedings commenced in the High Court by way of Suit No 795 of 2014.
The High Court judge dismissed the appellant’s claims.
Judgment reserved.
Judgment delivered.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the appellant failed to prove the existence of a legally binding agreement.
    • Category: Substantive
    • Sub-Issues:
      • Failure to prove existence of agreement
      • Absence of intention to create legal relations
  2. Existence of Trust
    • Outcome: The court held that the trust did not exist because its existence was predicated on the existence of the agreement, which was not proven.
    • Category: Substantive
    • Sub-Issues:
      • Lack of intention to create a trust
      • Trust not properly constituted
  3. Estoppel by Convention
    • Outcome: The court rejected the argument of estoppel by convention due to the absence of a shared assumption and uncertainty of the agreement.
    • Category: Substantive
    • Sub-Issues:
      • Absence of shared assumption
      • Uncertainty of agreement

8. Remedies Sought

  1. Enforcement of Agreement
  2. Account of Dealings and Assets
  3. Compliance with Memorandum and Program Rules

9. Cause of Actions

  • Breach of Contract
  • Breach of Trust
  • Estoppel by Convention

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Mining

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Independent State of Papua New Guinea v PNG Sustainable Development Program LimitedHigh CourtYes[2019] SGHC 68SingaporeThe current appeal challenges the entirety of the Judge’s findings in this case.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the principle that a court will only imply a term where it is “necessary” to give effect to what the parties have agreed.
Chan Siew Lee v TYC Investment Pte Ltd and others and another appealCourt of AppealYes[2015] 5 SLR 409SingaporeIllustrates that the circumstances in which the general meeting is required to exercise the company’s powers are fairly limited.
Travista Development Pte Ltd v Tan Kim Swee Augustine and othersCourt of AppealYes[2008] 2 SLR(R) 474SingaporeCited for the elements of estoppel by convention.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Sustainable Development Purposes
  • Program Rules
  • Agreed Oversight Structure
  • Direct Enforceability Term
  • Consent Term
  • Company Limited by Guarantee
  • Constitutional Documents
  • Master Agreement
  • Security Trust Deed
  • OTML
  • Objects Clause

15.2 Keywords

  • Contract
  • Corporate Governance
  • Singapore
  • Papua New Guinea
  • Mining
  • Agreement
  • Trust
  • Company Law

17. Areas of Law

Area NameRelevance Score
Contract Law90
Company Law80
Trust Law50

16. Subjects

  • Contract Law
  • Corporate Law
  • Corporate Governance
  • Trust Law