BW Umuroa Pte Ltd v Tamarind Resources Pte Ltd

JudgeChoo Han Teck J
Judgment Date06 April 2020
Neutral Citation[2020] SGHC 71
Citation[2020] SGHC 71
Defendant CounselLee Wei Yuen Arvin (Wee Swee Teow LLP)
Published date09 April 2020
Hearing Date28 February 2020,06 March 2020
Plaintiff CounselSim Kwan Kiat and Ho Zi Wei (Rajah & Tann Singapore LLP)
Date06 April 2020
CourtHigh Court (Singapore)
Docket NumberCompanies Winding Up No 34 of 2020
Subject MatterCompanies,Agreement,Winding up,Arbitration
Choo Han Teck J:

This is the plaintiff’s application to wind up the defendant on the basis of an unsatisfied statutory demand arising from two unpaid invoices. The plaintiff is a Singapore-incorporated company which is part of a group of companies known as the “BW Group”. The group owns and charters shipping vessels to oil and gas extraction companies. The defendant is a Singapore-incorporated company engaged in the business of oil and gas extraction, and is part of a group of companies known as the “Tamarind Group”.

On 16 September 2019, the defendant chartered a Floating and Production Storage and Offloading vessel (“Vessel”) from the plaintiff under a charter contract (“Bareboat Charter”). On the same day, a company related to the plaintiff named BW Offshore Singapore Pte Ltd (“BWO Singapore”) entered into a separate Operations and Maintenance Agreement (“O&M Agreement”) with a New Zealand based company related to the defendant named Tamarind Taranaki Ltd (“TTL”) for the maintenance of the Vessel. Neither BWO Singapore nor TTL are parties to the present application, but their involvement will be explained in the narrative below. According to the plaintiff, the Bareboat Charter and O&M Agreement together were intended to replace an even earlier charter contract (“Original FPSO Charter Contract”) for the Vessel between BWO Singapore and TTL dated 18 November 2005.

On 30 September 2019, the plaintiff issued an invoice to the defendant under the Bareboat Charter for US$819,375 in respect of the hire of the Vessel for the period from 16 to 30 September 2019. On 31 October 2019, the plaintiff issued another invoice for US$1,683,761 in respect of the hire for the month of October 2019. These two sums comprise the alleged unpaid debt (“Alleged Unpaid Debt”) of US$2,503,136 which forms the basis of the plaintiff’s present winding up application. According to the plaintiff, the Bareboat Charter and O&M Agreement were both subsequently terminated sometime between October and November 2019.

On 27 December 2019, the plaintiff, through its solicitors, served a statutory demand for the Alleged Unpaid Debt on the defendant. The defendant did not apply to set aside the same, allegedly due to some miscommunication on its end. Subsequent correspondence between the counsel for both sides failed to yield any resolution, and nothing was done to satisfy the statutory demand.

On 29 January 2020, the plaintiff filed the present winding up application. On 31 January 2020, the defendant issued a notice of arbitration against the plaintiff pursuant to an arbitration clause in the Bareboat Charter, apparently to obtain declarations that the plaintiff was not entitled to the Alleged Unpaid Debt and was in breach of the Bareboat Charter. The defendant concurrently applied before an emergency arbitrator for an injunction to restrain the plaintiff from filing a winding up application. This application was dismissed pursuant to an interim order issued by the emergency arbitrator dated 13 February 2020.

In the present winding up application, counsel for the defendant, Mr Arvin Lee, submitted, inter alia, that the application should be stayed, if not dismissed, on the following grounds: First, the Alleged Unpaid Debt is disputed, and the dispute should be referred to arbitration as agreed by the parties under the Bareboat Charter. Further, where such an arbitration agreement exists, the law on the standard of proof, which the defendant must meet to show that there is a dispute over the debt which should be referred to arbitration, is in a state of flux. Second, the defendant has substantial cross-claims against the plaintiff, which should also be referred to arbitration as agreed by the parties under the Bareboat Charter. Third, the defendant is solvent.

The plaintiff, represented by Mr Sim Kwan Kiat, disputed all the above grounds. Mr Sim submitted that the defendant should be wound up on the ground set out in s 254(1)(e) read with s 254(2)(a) of the Companies Act (Cap 50, 2006 Rev Ed) – namely, that the defendant is presumed insolvent and unable to pay its debts on the basis of an unsatisfied statutory demand. Alternatively, Mr Sim submitted that the defendant be given a maximum of seven days to make full payment of the Alleged Unpaid Debt, or to secure or compound the same to the satisfaction of the plaintiff.

Whether the winding up application should be stayed or dismissed is the main issue before me, and is an issue that must obviously be determined by Singapore law, regardless of whether the arbitration court might be applying another law for the substantive dispute over the debt and cross-claim, if any. In other words, Singapore law governs whether the defendant has rebutted any presumption that it is unable to pay its debts, or met the requisite standard of proof in showing that there is a “dispute” over the debt or that it has a “cross-claim”, so as to justify a stay or dismissal of the present application.

On the other hand, the “dispute” and “cross-claims” which form the defendant’s case arise from one of the three agreements referred to in [2] above (in particular, the Bareboat Charter). All three agreements contain a clause stating that English law governs the agreement. No submissions were made before me as to why these clauses would not be operative. That being the case, the defendant has to show that it has raised a “dispute” over the debt or a “cross-claim” under the relevant agreement, which has a sufficient basis in English law to meet the requisite standard of proof under Singapore law for staying or dismissing a winding up application. There is a fine but appreciable difference between the law applicable to the agreements which form the basis of the defendant’s dispute and cross-claims, and the law applicable to the granting, staying or dismissal of a winding up application.

The defendant incorrectly claimed that there is a “dispute” over the debt as well as “cross-claims” under the relevant agreements in Singapore law. In respect of the “dispute” over the debt, Mr Lee acknowledged that the Bareboat Charter is in fact governed by English law. He went on, however, to submit that “English law [would still] reach the same result as to whether the debt is ‘disputed’ ” for the purpose of granting a stay on winding up proceedings. Mr Lee fails to appreciate the distinction mentioned in [9] above. For his part, Mr Sim also appeared to assume that...

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1 books & journal articles
  • Insolvency Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2020, December 2020
    • 1 December 2020
    ...11 [2007] 2 SLR(R) 268. 12 Ley Choon Constructions and Engineering Pte Ltd v Yew San Construction Pte Ltd [2020] SGHC 108 at [9]. 13 [2020] 4 SLR 1294. 14 See para 18.1 above. 15 [2020] 1 SLR 1296. 16 See para 18.1 above. 17 [2021] 3 SLR 546. 18 [2014] 2 SLR 485. 19 [2019] 5 SLR 709. 20 Cap......

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