Bahtera Offshore (M) Sdn Bhd v Sim Kok Beng

• Jurisdiction: Singapore
• Judgment Date: 03 August 2009
• Date: 03 August 2009
• Docket Number: Suit No 47 of 2009 (Summons Nos 1154 and 1328 of 2009)
• Court: High Court (Singapore)

Bahtera Offshore (M) Sdn Bhd

Plaintiff

and

Sim Kok Beng and another

Defendant

[2009] SGHC 171

Chan Seng Onn J

Suit No 47 of 2009 (Summons Nos 1154 and 1328 of 2009)

High Court

Civil Procedure–Mareva injunctions–Culpable material non-disclosure with intention to mislead court on material facts–Test to determine whether full and frank disclosure had been made

The plaintiff, Bahtera (“the Plaintiff”), and Intraline (“the Second Defendant”) were parties to several charterparties (“the Charterparties”) under which the Second Defendant chartered several vessels. A dispute arose under the Charterparties and the Plaintiff commenced, inter alia, an action based on the tort of conspiracy in Singapore. This action was brought on the basis that the Second Defendant's director, Sim Kok Beng (“the First Defendant”), conspired with the Second Defendant to evade payment of sums due under the Charterparties. Subsequently, an ex parte worldwide Mareva injunction was granted in support of the conspiracy action. The First and Second Defendants applied to set aside the Mareva injunction.

Held, discharging the Mareva injunction:

(1) For a Mareva injunction application to succeed, it must be shown, inter alia, that (a) the plaintiff had a “good arguable case”; (b) there was a real risk that the defendant's assets within or outside the jurisdiction might be disposed of or dissipated so that any judgment which the plaintiff might obtain could not be enforced; and (c) the plaintiff had made full and frank disclosure of all material facts at the time of application: at [13] and [14].

(2) The duty to disclose all material facts applied even where the material facts to be disclosed were prejudicial to the plaintiff's claim: at [20].

(3) Where the plaintiff had not made a full and frank disclosure, it did not necessarily follow that the court had to discharge the Mareva injunction. There was discretion in the matter. The court could continue the injunction notwithstanding non-disclosure. Whether or not this discretion would be exercised depended on factors such as the seriousness of the material non-disclosure: at [25] and [26].

(4) Where the information suppressed was sufficiently material, it had to be considered whether the material non-disclosure was innocent or intended to mislead the court into granting the injunction. Where the plaintiff did intend to suppress material facts from the court, the court would be more inclined towards exercising its discretion to discharge the injunction for abuse of process, unless there were very extenuating circumstances for which the court would be prepared to excuse the plaintiff: at [27] and [33].

(5) Ultimately, the court had to consider the all-important question of whether it would be “just and convenient” in the circumstances to lift the Mareva injunction, ie, the court had to determine whether the “punishment” imposed by way of the discharge would outweigh the “culpability” of the material non-disclosure and distortion: at [44].

(6) Not only was the court convinced that the Plaintiff had failed to make a full and frank disclosure of the material facts in its application, it was satisfied that the Plaintiff had intentionally and deliberately set out to mislead the court on the material facts. This went far beyond a failure to make full and frank disclosure. It called into question the Plaintiff's honesty, probity and integrity: at [45].

(7) The Plaintiff's conduct had to be weighed against the “punishment” by way of discharge so as to determine whether a discharge was disproportionate in the circumstance. On a balance, no grave injustice or inconvenience would be occasioned to the Plaintiff should the injunction be discharged. There was no reliable evidence of conspiracy between the First and Second Defendant and hence no “good arguable case” against the Defendants. The Plaintiff had also already obtained a worldwide Mareva injunction in Malaysia against the Second Defendant and hence there was no real risk of asset dissipation of the Second Defendant's assets: at [46].

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Asian Corporate Services (SEA) Pte Ltd v Eastwest Management Ltd (Singapore Branch) [2006] 1 SLR (R) 901; [2006] 1 SLR 901 (folld)

Bank Mellat v Nikpour [1985] FSR 87 (folld)

Barclay-Johnson v Yuill [1980] 1 WLR 1259; [1980] 3 All ER 190 (refd)

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Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350 (folld)

Castelli v Cook (1849) 7 Hare 89; 68 ER 36 (refd)

Chew Kong Huat v Ricwil (Singapore) Pte Ltd [1999] 3 SLR (R) 1167; [2000] 1 SLR 385 (folld)

Choy Chee Keen Collin v Public Utilities Board [1996] 3 SLR (R) 812; [1997] 1 SLR 604 (folld)

CHS CPO GmbH v Vikas Goel [2006] SGHC 49 (refd)

Dalglish v Jarvie (1850) 2 Mac & G 231; 42 ER 89 (refd)

Eastglen International Corp v Monpare SA (1986) 137 NLJ 56 (refd)

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Front Carriers Ltd v Atlantic & Orient Shipping Corp [2006] 3 SLR (R) 854; [2006] 3 SLR 854 (refd)

Guan Chong Cocoa Manufacturer Sdn Bhd v Pratiwi Shipping SA [2003] 1 SLR (R) 157; [2003] 1 SLR 157 (folld)

King, The v The General Commissioners for the Purposes of the Income Tax Acts for the District of Kensington;Ex parte Princess Edmond de Polignac [1917] 1 KB 486 (folld)

Lee Hung Khoon v Yeo Tang Mui [1990] 1 SLR (R) 459; [1990] SLR 509 (refd)

Lloyds Bowmaker Ltd v Britannia Arrow Holdings Plc [1988] 1 WLR 1337 (folld)

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Poon Kng Siang v Tan Ah Keng [1991] 2 SLR (R) 621; [1992] 1 SLR 562 (folld)

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R v Siracusa (1990) 90 Cr App R 340 (refd)

Seagate Technology (S) Pte Ltd v Heng Eng Li [1994] 1 SLR (R) 1; [1994] 1 SLR 534 (refd)

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Civil Law Act (Cap 43,1999 Rev Ed)s 4 (10)

Rules of Court (Cap 322, R 5, 2006Rev Ed)O 29r 1

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)s 18 (2), First Schedulepara 5 (c)

Liew Teck Huat and Wang Yingyu (Global Law Alliance LLC) for the plaintiff

Subramanian A Pillai (Acies Law Corporation) for the defendants.

Chan Seng Onn J

Introduction and brief facts

1 The plaintiff is a Malaysian company engaged in business as shipowners/charterers (“Plaintiff”). The second defendant is also a Malaysian company but engaged in business as marine contractors (“Second Defendant”). The first defendant is the shareholder/director of the Second Defendant (“First Defendant”). He is also a shareholder/director of Intraline Corporation Sdn Bhd (“ICSB”), which is wholly owned by the Second Defendant. Where appropriate, the First and Second Defendant will collectively be referred to as the “Defendants”.

2 Between July to November 2007, the Second Defendant chartered several vessels from the Plaintiff and by 28 January 2008, the former owed the latter RM3,728,052.40 and US$539,342.29 in charterhire. However, it did not pay these sums to the Plaintiff. In accordance with the Charterparties, which provided that disputes under it were to be arbitrated in Malaysia, the Plaintiff therefore initiated arbitration proceedings in Kuala Lumpur against the Second Defendant for payment of the outstanding charterhire.

3 In addition, the Plaintiff also commenced proceedings in Kuala Lumpur to obtain security for the arbitration (the “Security Action”). On 21 March 2008, the Plaintiff obtained a worldwide Mareva injunction on an ex parte basis (“the Malaysian injunction”) in the Security Action restraining the Second Defendant from disposing of and/or dealing with its assets up to RM7m. The Second Defendant then applied to set aside the Malaysian injunction on the ground that it was not liable to the Plaintiff under the Charterparties. It also applied to vary the Malaysian injunction to allow the payment of “operational expenses”. The variation was allowed.

4 While claims for “operational expenses” were made, the Second Defendant commenced separate proceedings in the Shah Alam High Court for the equivalent of Judicial Management (“Section 176 Action”) on 25 June 2008. There, it sought a moratorium on all proceedings commenced against it so that it could have the opportunity to restructure. The Second Defendant's case in the Section 176 Action was that it was undergoing short term financial difficulties but was capable of operating successfully in the long term should the stay sought be granted. The court subsequently made an order for a stay of all proceedings against the Second Defendant on 23 July 2008 (the “Section 176 Order”).

5 In response to the grant of the Section 176 Order, the Plaintiff applied to set aside this order on the basis that the Second Defendant had failed to put the full facts before the Shah Alam High Court. It alleged that the Second Defendant was denying the Plaintiff's claim for outstanding charterhire in one action whilst simultaneously seeking protection from the Plaintiff in respect of the same...