Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 17 December 2018
• Neutral Citation: [2018] SGHC 267
• Court: High Court (Singapore)
• Docket Number: Suit No 373 of 2012, Summons No 2151 of 2016, Summons Nos 235 and 236 of 2017
• Published date: 06 August 2020
• Year: 2018
• Hearing Date: 19 February 2018,12 July 2016,10 August 2016,09 July 2018,05 July 2018,15 November 2016,22 August 2016,30 April 2018,01 August 2017,05 March 2018,21 August 2018,09 April 2018,01 August 2016,10 April 2017
• Plaintiff Counsel: Navinder Singh and Jaspreet Kaur Purba (KSCGP Juris LLP)
• Defendant Counsel: Simon Tan and Grace Seng (Attorneys Inc LLC)
• Subject Matter: Contempt of Court,Civil contempt,Sentencing
• Citation: [2018] SGHC 267

Vinodh Coomaraswamy J: Introduction

In the three committal applications before me, the plaintiff seeks to commit two individuals to prison for contempt of court. The plaintiff’s case is that the corporate defendant in this action has, in several material respects, breached a mareva injunction granted against it. But the plaintiff does not pursue the defendant for those alleged breaches. Instead, it pursues two representatives of the defendant for their involvement in its alleged breaches.

The two respondents to the committal applications are: (i) Mdm Selvarajoo Mageswari, the sole director of the defendant;¹ and (ii) Mr Ramasamy Tanabalan, the general manager of the defendant.² Mdm Mageswari and Mr Tanabalan are husband and wife.³

The plaintiff alleges that each respondent has committed seven separate contempts of court. I have found Mdm Mageswari to be in contempt of court on three of the seven contempts alleged against her. I have found Mr Tanabalan to be in contempt of court on only one of the seven contempts alleged against him. For these contempts, the plaintiff submits that each respondent should be committed to prison for a term of three years.⁴ I have declined to commit either respondent to prison at all. Instead, I have ordered that: (i) Mdm Mageswari pay a fine of $25,000, in lieu of which she is to be sentenced to a term of imprisonment of one month; and (ii) Mr Tanabalan pay a fine of $50,000, failing which he is to be sentenced to a term of imprisonment of two months.

The plaintiff has been represented throughout this action, including in these contempt proceedings, by Mr Navinder Singh of KSCGP Juris LLP. The respondents were represented at the trial of this action and on appeal by Mr Palaniappan Sundararaj of Straits Law Practice LLC. In these committal applications, Mr Simon Tan of Attorneys Inc LLC appeared for the defendant once in the early stages of these committal applications. Thereafter, on various occasions, he appeared for the respondents. Most critically, he presented closing submissions of law for the respondents on both liability and sentencing. However, it is fair to say that the respondents have appeared for the most part in person in these committal proceedings.

The plaintiff has appealed against my decision on liability and sentencing in respect of both respondents. The respondents have not appealed against any aspect of my decision. I now set out the grounds for my decision.

Background facts The writ and the injunction

The plaintiff provides engineering services to the oil and gas industry.⁵ The defendant fabricates, assembles, modifies and installs marine engines and generators.⁶

In 2011, the plaintiff entered into a contract with the defendant under which the defendant was to manufacture ten diesel generators customised for an Iranian client of the plaintiff.⁷ Disputes arose under that contract. As a result, in May 2012, the plaintiff issued the writ in this action against the defendant.

Three months after issuing the writ, in August 2012, the plaintiff applied⁸ex parte for and obtained⁹ a mareva injunction against the defendant. The injunction is largely in the standard form prescribed by the Supreme Court Practice Directions, adapted to the facts of this case.

In September 2012, on the plaintiff’s application, the mareva injunction was amended. The amendments describe with more accuracy certain specific assets which the plaintiff wished to bring expressly within the ambit of the injunction.¹⁰ Nothing turns on the amendments or on the period that elapsed between original injunction and the amendments. I therefore draw no distinction between the original injunction and the amended injunction.

The mareva injunction restrained the defendant from disposing of its assets in Singapore up to $1.5m¹¹ until trial or further order.¹² As a separate obligation, the injunction also ordered the defendant to preserve until the trial of this action eight specific items of machinery which were then in the defendant’s possession but for which the plaintiff claimed to have paid and therefore to own.¹³ These eight assets formed part of the subject-matter of the plaintiff’s claim in this action.¹⁴ Soon after commencing this action, the plaintiff made an unsuccessful application for a mandatory injunction requiring the defendant to deliver up these eight assets.¹⁵

The mareva injunction contains the following express provisions which are of relevance to the applications before me: Paragraph 1(a) prohibits the defendant from removing from Singapore, disposing of, dealing with or diminishing the value of any of its assets in Singapore up to the value of $1.5m.¹⁶ Paragraph 1(b) specifies that the prohibition in paragraph 1(a) includes two specific groups of assets: (i) the property and assets of the defendant’s business and the proceeds of sale of any of those assets; and (ii) a specific Singapore dollar bank account which the defendant held with Standard Chartered Bank, identified in the injunction by its account number (“the SCB SGD account”).¹⁷ Paragraph 1(c) permits the defendant to deal with its assets or to remove them from Singapore so long as the total unencumbered value of its assets which are still in Singapore remains not less than $1.5m.¹⁸ Paragraph 2 of the mareva injunction obliges the defendant to inform the plaintiff “in writing at once” of all of its assets worldwide, “giving the value, location and details of all such assets”, and to confirm this information in an affidavit to be filed within 21 days after service of the order on the defendant.¹⁹ Paragraph 3 permits the defendant to spend “S$1,500 a week towards their [sic] ordinary living expenses” and also “$2,000 a week on legal advice and representation”. However, the paragraph obliges the defendant, before spending any money in this way, to tell the plaintiff’s solicitors where the money is to come from.²⁰ The reference in the plural to “living expenses” is, of course, wholly inapposite for a single corporate defendant. But again, nothing turns on that. Paragraph 4 provides that the injunction does not prohibit the defendant from dealing with or disposing of its assets “in the ordinary and proper course of business” provided that the defendant accounts to the plaintiff “monthly for the amount of money spent in this regard”.²¹ The account of “money spent” in the ordinary course of business is no doubt intended to include an account of assets disposed of in the ordinary course of business. Paragraph 7 provides that the defendant cannot do anything prohibited by the injunction whether “itself or by its directors, officers, employees or agents or in any other way”.²² Paragraph 8 puts third parties on notice that the effect of the injunction is to make it a contempt of court “for any person notified of [the injunction] knowingly to assist in or permit a breach” of the injunction and that any third party doing so may be sent to prison or fined.²³

The mareva injunction was endorsed with a penal notice addressed to Mdm Mageswari as required by O 45 r 7(4)(b).²⁴

The trial and judgment

The plaintiff’s action was tried before me in 2012 and 2013. In March 2013, I entered judgment²⁵ for the plaintiff on its claim and dismissed the defendant’s counterclaim for $96,000 (see Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd [2013] 4 SLR 409). After judgment was entered against the defendant at first instance, the mareva injunction continued in force as a post-judgment mareva injunction in aid of execution.

Although the defendant appealed against my decision, the Court of Appeal reversed only my decision to dismiss the defendant’s counterclaim. The judgment on the claim substantially in favour of the plaintiff was not disturbed on appeal.²⁶ The mareva injunction continued in force after the appeal.

The upshot is that plaintiff is a substantial judgment creditor of the defendant. That is so even after taking into account the defendant’s counterclaim for $96,000 allowed on appeal.

The judgment in this action at first instance required the defendant to: (i) deliver up the eight assets specifically identified in the mareva injunction or account to the plaintiff for the proceeds of their sale (see [10] above); (ii) to pay a liquidated sum of US$252,000 to the plaintiff; and (iii) to pay damages to the plaintiff to be assessed.²⁷ Those damages were assessed in November 2015 at just over US$606,000.²⁸ In addition, the defendant still owes the plaintiff a balance sum of just over $53,000 arising under a number of costs orders in this action and the appeal.²⁹ Interest continues to accrue at the usual rate on the principal judgment debt as well as on the costs ordered.

The plaintiff has made several attempts to levy execution upon the defendant. Further, and in parallel with these committal applications, the plaintiff has used the examination of judgment debtor procedure in an attempt to obtain information from Mdm Mageswari in aid of execution.³⁰ Both avenues ultimately proved fruitless. The result is that the plaintiff has recovered only a small fraction of the judgment debt which the defendant owes. That recovery is probably insufficient even to cover its legal costs. The more frustrated the plaintiff became with the progress and results of the execution and examination of judgment debtor proceedings, the stronger its resolve became in these committal applications to have each respondent sentenced to imprisonment for a lengthy term of years.

The defendant files an affidavit of assets in 2012

As I have mentioned, paragraph 2 of the mareva injunction required the defendant to file an affidavit disclosing all of its assets. Pursuant to this obligation, on 28 August 2012, the defendant filed an affidavit of assets³¹ affirmed by Mdm Mageswari as its sole director.

The defendant’s affidavit of assets disclosed total assets said to be worth $4.4m comprising...