Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Judith Prakash JA
• Judgment Date: 22 July 2020
• Neutral Citation: [2020] SGCA 73
• Date: 22 July 2020
• Docket Number: Civil Appeals Nos 172 and 173 of 2018
• Published date: 28 July 2020
• Plaintiff Counsel: Navinder Singh and Farah Nazura bte Zainudin (KSCGP Juris LLP)
• Defendant Counsel: Tanabalan Ramasamy and Selvarajoo Mageswari (in person)
• Court: Court of Appeal (Singapore)
• Hearing Date: 17 September 2019
• Subject Matter: Contempt of Court,Sentencing,Civil contempt

Judith Prakash JA (delivering the judgment of the court): Introduction

The appellant in this case, Aero-Gate Pte Ltd, provides engineering services to the oil and gas industry. In this connection it did business with Engen Marine Engineering Pte Ltd (“the Company”). In 2012, the appellant started legal proceedings against the Company and obtained a Mareva injunction restraining the disposal of its assets. Somewhat later the appellant alleged that Mdm Selvarajoo Mageswari (“Mdm Mageswari”) and Mr Ramasamy Tanabalan (“Mr Tanabalan”) (collectively “the contemnors”), who were running the Company at all material times had acted in contempt of court by disobeying the injunction. Mdm Mageswari was the sole director of the Company and managed its administrative and financial matters, whereas Mr Tanabalan while not holding office managed the operations behind the business. Mdm Mageswari and Mr Tanabalan are husband and wife.

In the committal proceedings stemming from allegations of breach of the Mareva injunction binding the Company, the High Court Judge (“the Judge”) found Mdm Mageswari to be in contempt of court on three of the seven charges brought against her, and Mr Tanabalan to be in contempt on one of the seven charges brought against him. The Judge sentenced Mdm Mageswari to pay a fine of $25,000 (one month’s imprisonment in default) and Mr Tanabalan to pay a fine of $50,000 (two months’ imprisonment in default). In the current appeals against the decisions in relation to Mdm Mageswari (CA/CA 172/2018) and Mr Tanabalan (CA/CA 173/2018), the appellant argues that (a) Mdm Mageswari and Mr Tanabalan ought each to have been convicted on six out of the seven charges; and (b) Mdm Mageswari and Mr Tanabalan ought to have been sentenced to a term of imprisonment of at least six months for their contempt.

Background facts The legal proceedings against the Company

The appellant commenced legal proceedings against the Company in HC/S 373/2012 (“Suit 373”) on 8 May 2012, in relation to disputes arising out of two purchase orders under which the Company agreed to manufacture diesel generators for the appellant. On 6 August 2012, the appellant filed an ex parte summons for a Mareva injunction against the Company. The injunction was granted on 8 August 2012 and it was ordered that: The Company must not remove from Singapore in any way dispose of or deal with or diminish the value of any of its assets which were then in Singapore whether in its own name or not and whether solely or jointly owned up to the value of $1.5m. The prohibition included the following assets in particular: Properties and assets of its business known as Engen Marine Engineering Pte Ltd (or carried on at 13 Tuas Avenue 11) or the sale money if any of the same had been sold. Any money in the Company’s Singapore dollar account with Standard Chartered Bank (“the SCB SGD account”). The eight engines in the possession of the Company at its premises at 13 Tuas Avenue 11 or wherever the same were situated be detained and/or placed in custody and/or preserved, and disposal of these engines was prohibited until after the trial of Suit 373 or any appeal therefrom. If the total unencumbered value of the Company’s assets in Singapore exceeded $1.5m, the Company may remove any of those assets from Singapore or may dispose of or deal with them so long as the total unencumbered value of its assets still in Singapore was not less than $1.5m. The Company must inform the appellant in writing at once of all its assets whether in Singapore whether in its own name or not and whether solely or jointly owned, giving the value, location and details of all such assets. The information must be confirmed in an affidavit which must be served on the appellant’s solicitors within 21 days after service of the order. The Company may spend $1,500 a week towards ordinary living expenses and $2,000 a week on legal advice and representation, but must tell the appellant’s solicitors where the money was to come from before spending any money. The Company may deal with or dispose of any of its assets in the ordinary and proper course of business and shall account to the appellant monthly for the amount of money spent in this regard.

Pursuant to the Mareva order, Mdm Mageswari affirmed an affidavit on 28 August 2012 setting out a list of 70 assets wholly owned by the Company allegedly amounting to $3,256,637.75 in value and, additionally, listing trade receivables of $1,114,288.95 and cash and bank balances of $44,183.24. Thus, the total value of the assets disclosed in the affidavit of 28 August 2012 amounted to approximately $4.4m. It is undisputed that the Company did not engage the services of an independent valuer to value the physical assets, but rather valued these itself according to what it believed to be the market price of these assets, as the Company was “one of the few companies … in this line of business dealing with the sales of new and used engines, generators and reconditioned parts” and was thus “familiar with current market prices”. It was the evidence of Mdm Mageswari that the values were given by Mr Tanabalan, and that her involvement in the preparation of the affidavit was simply to read and sign the affidavit given that she was the Company’s sole director. Mr Tanabalan’s evidence corroborates this, and he was not contradicted on this point. Mr Tanabalan explained during cross-examination that the values were arrived at based on his own personal knowledge or the knowledge of friends in the same line of business.

Mdm Mageswari further affirmed in the same affidavit that of the 70 assets listed, two were located at the premises of Transvictory Winch System Pte Ltd at 20 Third Chin Bee Road (“the Transvictory premises”), one at Tuas South whereas the remaining assets were at the Company’s own premises at 13 Tuas Avenue 11.

On 28 March 2013, having heard evidence and submissions in Suit 373, the Judge found in favour of the appellant, allowing the appellant’s claim and dismissing the Company’s counterclaim. The company was ordered to deliver up the eight engines (or the sale proceeds thereof) mentioned in the Mareva order at [3(c)] above, pay the appellant a sum of US$252,000 and pay the appellant damages for breach of contract to be assessed. The eight engines which were delivered to the appellant appear to be among the 70 items listed in the affidavit of 28 August 2012.

The Company’s appeal against the findings in Suit 373 was heard on 26 November 2013. The Court of Appeal upheld the Judge’s findings in relation to the appellant’s claims but allowed the appeal in respect of the Company’s counterclaim in the sum of US$96,000. The damages payable to the appellant were subsequently assessed on 5 January 2016 at $606,418.27, with interest thereon at the usual rate of 5.33% per annum from 15 August 2014 to 30 November 2015. Apart from the damages, the Company was also ordered to pay the appellant a total of $53,000 in costs arising from Suit 373 and the appeal. Given the appellant’s unsuccessful attempts to levy execution (see below at [15]), the appellant remains a substantial creditor of the Company.

The circumstances leading to the contempt charges The movement of assets

As stated above, the majority of the 70 assets listed in the affidavit of 28 August 2012 were located at the Company’s premises at 13 Tuas Avenue 11. In March 2014, the Company vacated these premises. On 25 March 2014, in a letter signed by Mdm Mageswari, the Company informed the appellant (“the March 2014 Letter”) as follows:

Dear Sirs,

We have discontinued our operations at 13 Tuas Avenue 11 Singapore 639079 but our registered address still remains the same as accounts have not been settled with the landlord against our deposit. We are in the midst of finding another premises for operation upon which we will inform ACRA to effect the changes.

The assets set aside in the Mareva Injunction are in Singapore and at No. 20 Third Chin Bee Road and Tuas Private Shipyard (Singatec). The list of each individual item’s location is attached to this e/mail.

Please let us know a day in advance before the Sheriff is engaged as both the premises do not belong to us and they do not operate on Sundays. All other items stored at these yards do not belong to [the Company] or its director in any way whatsoever.

The March 2014 Letter appended a list of 36 assets allegedly valued at a total of $1,505,574.92. The values given for these 36 assets were identical to the values for the corresponding assets listed in the affidavit of 28 August 2012. The Company was apparently advised that it was not obliged to disclose the location of the remaining 34 assets since the 36 assets in the March 2014 Letter were valued in excess of the limit of $1.5m in the Mareva order. During cross-examination, Mr Tanabalan testified that the remaining 34 items were either sold, given away or left in the premises of Singatec Engineering Pte Ltd at 21 Tuas Basin Lane (“the Singatac premises”).

The premises in which the 36 assets were allegedly stored belonged to companies which were owned or controlled by Mr Tanabalan’s business associates or friends. Of these 36 assets, one was further split into units stored in two separate locations. Treating these split units separately and as distinctive assets (as the Judge did in his Grounds of Decision reported as Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd [2018] SGHC 267 (“the GD”)), a total of 37 assets were disclosed in the March 2014 Letter. These 37 assets were said to be at the following locations:

Location	Number of assets	Value
The Transvictory premises	5	$630,000.00
The Singatec premises	20 (including part of asset split into two)	$635,500.00
Premises of Engen Spares Pte Ltd (“Engen Spares”) and Engen Offshore Pte Ltd (“Engen Offshore”) at 1 Soon Lee Street (“

...