EFT Holdings, Inc. v Marinteknik Shipbuilders (S) Pte Ltd

CourtCourt of Three Judges (Singapore)
Date29 November 2013
Docket NumberCivil Appeal No 3 of 2013 and Summons No 3558 of 2013

Court of Appeal

Sundaresh Menon CJ


Andrew Phang Boon Leong JA


Judith Prakash J

Civil Appeal No 3 of 2013 and Summons No 3558 of 2013

EFT Holdings, Inc and another
Marinteknik Shipbuilders (S) Pte Ltd and another

Alvin Yeo SC, Chen Xinping and Debra Lam (Wong Partnership LLP) for theappellants

Haridass Ajaib and Mohammad Haireez (Haridass Ho & Partners) for therespondents.

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Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 (refd)

DCThomson & Co Ld v Deakin [1952] Ch 646 (refd)

Dolphina, The [2012] 1 SLR 992 (refd)

Douglas v Hello! Ltd (No 3) [2006] QB 125 (refd)

Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169 (refd)

Goh Chok Tong v Tang Liang Hong [1997] 1 SLR (R) 811; [1997] 2 SLR 641 (folld)

GWK Ltd v Dunlop Rubber Co Ltd (1926) 42 TLR 376 (refd)

JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391 (refd)

Kuwait Oil Tanker Co SAK v Al Bader [2000] 2 All ER (Comm) 271 (refd)

Lonrho Ltd v Shell Petroleum Co Ltd The Times (7 March 1981) (Transcript No 51 of 1981) (refd)

Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 (refd)

Lonrho plc v Fayed [1990] 2 QB 479 (not folld)

Lonrho plc v Fayed [1992] 1 AC 448 (refd)

Lumley v Gye [1853] EWHC QB J 73; 118 ER 749 (refd)

M'Alister (or Donoghue) (Pauper) v Stevenson [1932] AC 562 (refd)

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Mogul Steamship Co Ltd, The v Mc Gregor, Gow, & Co (1889) 23 QBD 598 (refd)

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Quinn v Leathem [1901] AC 495 (refd)

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Evidence Act (Cap 97, 1997 Rev Ed) s 59

Conflict of Laws—Choice of law—Tort—Double actionability rule—Tort arising in foreign jurisdiction—Parties not pleading or raising issue of foreign law—Whether claimant's action should be dismissed for failure to plead actionability under Taiwan law

Tort—Conspiracy—Unlawful means conspiracy—Shipbuilder participating in plan with potential buyer of vessel to deceive banks into financing purchase of vessel through creation and use of documents containing false statements—Potential buyer using documents to procure investment from equity investor—Shipbuilder not knowing of equity investor's existence or that equity investor would be approached—Whether there was an agreement or combination between parties to mislead equity investor into making investment

Tort—Conspiracy—Unlawful means conspiracy—Intention—Class of persons contemplated by alleged co-conspirator—Whether mental element satisfied if the shipbuilder knew or ought to have known that potential buyer would use documents containing false statements to deceive equity investor

The first respondent (‘Marinteknik’) was a company incorporated in Singapore. The second respondent (‘Ms Lim’) is a director of Marinteknik. In November 2005, Marinteknik began building two catamarans, Hull 189 and Hull 190 (‘the Hulls’). Excalibur International Marine Corporation (‘EIMC’), a company which had a licence to operate a ferry service across the Straits of Taiwan, wanted to purchase the Hulls. On 15 November 2005, Marinteknik and a Mr Lu Tso-Chun (‘Mr Lu’) entered into two contracts for the sale and purchase of the Hulls (‘the 2005 Shipbuilding Contracts’). Mr Lu was not yet a shareholder of EIMC although the impression conveyed was that he was somehow connected with it. In late April or early May 2006, Mr Lu told Ms Lim that the 2005 Shipbuilding Contracts would be novated to EIMC and that EIMC was in the process of securing bank financing for this purpose.

In the meantime, EIMC and Mr Lu signed an investment agreement (‘the Investment Agreement’) which provided that Mr Lu had paid US$15 m to Marinteknik for the Hulls and would novate the 2005 Shipbuilding Contracts to EIMC in exchange for shares in EIMC. He had not in fact paid US$15 m to Marinteknik. Marinteknik, Mr Lu and EIMC also signed a tripartite agreement (‘the Tripartite Agreement’) which stated that EIMC had paid US$100,000 to Marinteknik and that this was part of the ‘final balance money’ paid by Mr Lu to Marinteknik. EIMC would thereafter take on Mr Lu's liability under the 2005 Shipbuilding Contracts.

On 30 August 2006, Marinteknik issued a letter rescinding the 2005 Shipbuilding Contracts as EIMC had not met its payment obligations. However, Marinteknik continued to hope that a resolution could be found on the basis of the terms on which the contracts were entered into. When payment for the Hulls had still not been made by 9 April 2007, Marinteknik informed EIMC that the 2005 Shipbuilding Contracts had been ‘officially rescinded’.

Despite this, on 24 April 2007, Marinteknik, EIMC and Mr Lu signed two affidavits (‘the Transfer Affidavits’) stating that EIMC and Mr Lu had paid for the Hulls in full. Ms Lim was given to understand that EIMC needed to show the banks in Taiwan that it had title to the Hulls by producing affidavits that stated this before the banks would provide a letter of credit or a telegraphic transfer of moneys for the Hulls. EIMC promised to provide evidence that moneys would be remitted for the Hulls by 24 April 2007, but when this was not done, Marinteknik, EIMC and Mr Lu signed two addenda (‘the Transfer Affidavits Addenda’) which stated that Mr Lu had never paid for the Hulls and title to the Hulls had not been transferred to EIMC. Despite this, EIMC continued to provide Marinteknik with evidence of its attempts to obtain bank financing. On 15 January 2008, the Hulls were sold to another buyer as EIMC had not paid for the Hulls.

In April 2008, EIMC approached Marinteknik with a view to purchasing a Marinteknik-built vessel, the Ocean Lala, which was then trading in Spain. As Marinteknik was not in the business of purchasing secondhand vessels and as the registered owner of the Ocean Lala(‘Eurolineas’) was not interested in dealing with EIMC directly, it was agreed that Ezone Capital Limited (‘Ezone’), a company of which Ms Lim was director and shareholder, would purchase the Ocean Lala from Eurolineas and sell it to EIMC at a profit.

EIMC apparently remained keen to purchase two vessels from Marinteknik, and told Ms Lim that it could lose its ferry licence unless it could show that it had a contract to buy vessels which bore the same hull numbers and specifications as the Hulls. Marinteknik and EIMC agreed to execute two documents dated 30 April 2008 (‘April MOUs’) which stated that the sum of US$15 m paid for the Hulls would be transferred to pay for Hull 189 A and Hull 190 A. In fact, no such sum of US$15 m had been paid at any time. Marinteknik was promised that funds for the vessels would come in on 15 May 2008, but when that did not happen, Marinteknik, EIMC and Mr Lu executed two addenda (‘April MOUs Addenda’) to state that the US$15 m had never been paid to Marinteknik and the April MOUs would be treated as null and void if the first instalment for Hull 189 A and Hull 190 A was not paid by 9 June 2008. On 9 June 2008, Ms Lim wrote to EIMC stating that the contracts for building Hull 190 A and Hull 190 A would be rescinded.

On 20 June 2008, Mr Jack Jie Qin (‘Mr Qin’), the first appellant's chairman and chief executive officer, visited Taiwan and was introduced to Mr Jen-Ho Chiao (‘Mr Chiao’), a director of EIMC, for the first time on 23 June 2008. During a business presentation on 24 June 2008, Mr Qin was shown a number of documents (‘the Documents’) including the 2005 Shipbuilding Contracts, the Investment Agreement, the Tripartite Agreement, the Transfer Affidavits and EIMC's audited financial statements for the financial years ended 31 December 2006 and 31 December 2007 (‘2006/2007 Financial Statements’). Mr Qin claimed that he was persuaded that EIMC was a financially robust company. The first appellant decided to invest in EIMC, with its subsidiary, the second appellant, holding the shares acquired in EIMC. With the investment, EIMC purchased the Ocean Lala.The first appellant took over the management of EIMC in November 2008 and the ferry services started in June 2009. However, after one year of operation, the Ocean Lala sustained severe weather damage and was declared a constructive total loss.

On 2 August 2010, the appellants sued the respondents, Mr Hsiao Zhong-Xing (‘Mr Hsiao’), a director of EIMC, and Mr Lu for engaging in an unlawful means...

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