Guan Chong Cocoa Manufacturer Sdn Bhd v Pratiwi Shipping SA

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 25 October 2002
• Neutral Citation: [2002] SGCA 45
• Docket Number: Civil Appeal No 80 of 2002
• Date: 25 October 2002
• Year: 2002
• Published date: 19 September 2003
• Plaintiff Counsel: Lawrence Lee Mun Kong and Lisa Theng Siew Lian (Chui Sim Goh & Lim)
• Citation: [2002] SGCA 45
• Defendant Counsel: Joseph Tan Wee Kong (Kenneth Tan Partnership)
• Court: Court of Appeal (Singapore)
• Subject Matter: Mareva injunctions,Appeals,Requirements to be satisfied,Civil Procedure,Appellate court's review of trial judge's discretion,Factors indicating real risk of dissipation of assets

would involve a real risk that a judgment or award in favour of the plaintiffs would remain unsatisfied. Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft Gmb H [1983] 1 WLR 1412 (refd). (See [17])

[3]

The test is objective and the court is not concerned with motive or purpose as opposed to effect and there is no need to show an intention to dissipate assets. Felixstowe Dock & Rly Co v United States Lines Ltd [1989] QB 360 (refd) Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft Gmb H [1983] 1 WLR 1412 (refd) (See [17])

[4]

A mere assertion that there is a risk of dissipation is not good enough. There must be some solid evidence to substantiate the alleged risk. The evidence must reasonably have a bearing on the risk factor. The Niedersachsen [1984] 1 All ER 398 (refd). (See [18] – [19])

[5]

Where the defendant starts to put his property up for sale or where a company just ceases business, then unless an explanation is offered, it would prima facie be an act of dissipation. (See [19] – [20], [23] – [24], [26])

[6]

Another indicative factor is where the proceeds when paid to the defendants are in cash and can be easily disposed of or dissipated. (See [25])

[7]

The fact per se that the defendant is a foreign company cannot be a ground to allege that there would be a real risk of dissipation. This may however be different when taken into account along with other factors. (See [22])

[8]

The cross-undertaking in damages furnished by the appellants provided an adequate safeguard against the possibility that the injunction might be wrongly granted. (See [28])

[9]

This injunction granted is not of a world wide nature However, even if the injunction could be considered to be of a world wide nature, the injunction should still be granted as it did not appear that the respondents had other assets within the jurisdiction. Derby & Co Ltd v Weldon (Nos 3 & 4) [[1990] 1 Ch 65 (refd). (See [29])

Case(s) referred to

Hadmor Productions Ltd v Hamilton [1982] 2 WLR 322 (flld)

Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft Gmb H [1983] 1 WLR 1412 (refd)

Felixstowe Dock & Rly Co v United States Lines Ltd [1989] QB 360 (refd)

The Niedersachsen [1984] 1 All ER 398 (refd)

Derby & Co Ltd v Weldon (Nos 3 & 4) [1990] 1 Ch 65 (refd)

[Delivered by Chao Hick Tin JA]

Judgment

GROUNDS OF DECISION

1 This was an appeal against a decision of the High Court refusing the plaintiff-appellants’ application for a Mareva injunction. The action related to a claim for the loss suffered by the appellants on account of damage to cargo due to a fire on board a vessel of the respondents. We heard the appeal on 12 September 2002 and allowed it. We granted a Mareva injunction in respect of the proceeds from the sale of a specific asset. We now give our reasons.

The facts

2 The appellants were the lawful holders of two bills of lading, No. 01/PRT/PL/VII/01 and No. 02/PRT/PL/VII/01, dated 13 July 2001. The bills related to the carriage of a cargo of cocoa beans of a total weight of 609 m/t on board the vessel "PRATIWI" from Palu, Indonesia to Pasir Gudang, Johore. The appellants were the buyers of the cargo. The defendant-respondents were the owners of the vessel "PRATIWI".

3 Foong Sun Shipping (Pte) Ltd (Foong Sun) were the respondents’ agents and managers of the vessel. The bills of lading for this cargo were in Foong Sun’s standard form. The appellants had business dealings with Foong Sun from early 2001.

4 On 17 July 2001 a fire occurred on board the vessel. It started at the engine room. After the fire was put out, the vessel was towed to Banjarmasin, Indonesia. The fire so badly damaged the vessel that eventually it was declared a constructive total loss and had to be sold for scrap for only S$50,000. No insurance had been taken out in respect of its hull and machinery though there was a policy with China Insurance for third party liability for up to $500,000.

5 The cargo of cocoa beans was then transferred to another vessel "SUN RAY" which carried it to Pasir Gudang. Unfortunately, the cargo was found on arrival to have also been damaged by the fire. It was eventually disposed of in a salvage sale, causing the appellants a loss that was subsequently quantified at $904,164.22. In October 2001, the appellants had made a claim against the respondents for the loss, without stating a specific sum. On 31 October 2001, the respondents denied liability.

6 The appellants had insured the cargo with Malaysian Assurance Alliance Bhd (MAA). The appellants notified Foong Sun that they would be submitting their claim for the loss to MAA. But on 10 April 2002, MAA informed the appellants that MAA would be repudiating liability because there was a breach of the policy. The appellants informed Foong Sun of this development and thereafter, the appellants’ Finance and Trading Manager, Mr Hia Cheng, discussed the situation with the Manager of Foong Sun, Ms Elaine Quek. Both expressed a wish to resolve the matter amicably.

7 On 16 May 2002 the appellants’ solicitors made a claim of RM1,948,253 against China Insurance under their third party policy issued to the respondents. This communication was copied to Foong Sun.

8 On 18 June 2002, China Insurance denied liability through its solicitors, M/s Kenneth Tan Partnership (KTP), on the ground that the fire started without the fault of the owners. On the same day, the appellants’ solicitors directed the claim of the appellants to the respondents. The appellants also asked Foong Sun’s solicitors, KTP, for details of the owners of the PRATIWI, including its country of incorporation, registered address and assets. The details were not furnished.

9 The appellants instituted this action on 12 July 2002. Their claim was based on breach of contract and, in the alternative, on negligence. At the time, the searches carried out by the appellants indicated that the "PRATIWI" was owned by the respondents who had the same address as Foong Sun did and that the vessel’s previous name was "TAKATORI". Neither the respondents, nor Foong Sun, informed the appellants that the respondents also owned another vessel, the "LANGSA".

10 In the meantime, on 22 June 2002, unbeknown to the appellants, the respondents had sold the "LANGSA". On 17 July 2002 the appellants learned, from discreet enquiries with the staff of Foong Sun, that the "LANGSA" had changed her name to "SRI BAHARI". However, subsequent searches on the "SRI BAHARI" carried out by Lloyds’ Marine Intelligence Unit in England, Harper Wira Insurance Surveyors & Adjusters in Malaysia and Seabird Consultants of Singapore, on behalf of the appellants did not bring forth consistent results. Harper Wira reported that the vessel’s owner was Foong Sun, whereas Seabird Consultants learned that it was PT Pelayaran Fajar Sribahari SAK. Furthermore, both Seabird Consultants and Lloyds Marine Intelligence Unit could not confirm whether the "LANGSA" had changed its name to "SRI BAHARI"

11 On 26 July 2002 the appellants’ solicitors wrote to the respondents’ solicitors, KTP, seeking confirmation that the respondents were still trading. There was no response.

12 On 29 July 2002, the appellants sought a world-wide Mareva injunction against the assets of the respondents, including the LANGSA and the sale proceeds of the "PRATIWI". The application came before the judge-in-chambers on 2 August 2002 who refused it. Thereafter, the appellants asked for further arguments and confined their application to only the vessel "LANGSA" or its proceeds. On 8 August 2002, the judge certified that she would not require further arguments.

13 In the court below, the respondents raised only one ground to resist the application, i.e., that the appellants had not shown that there was any real risk of dissipation of assets. The judge held that there was no "solid evidence" of any risk of dissipation to satisfy the court that a Mareva injunction should be granted over assets in Singapore, much less to pounce on the respondents’ assets worldwide. The fact that the respondents were a Panamanian company and only owned the vessel "LANGSA" and no others, did not necessarily mean that an injunction should be granted. Before us, the main issue was again whether the real risk of dissipation test had been satisfied.

Real risk of dissipation

14 There was a suggestion that as the appellants had shipped cargoes on board the LANGSA previously, they would have known that it belonged to the respondents. We were unable to follow the logic of this contention. The appellants did not deal with the respondents but with Foong Sun who managed the LANGSA and issued its own form of bill of lading. A ship’s manager cum agent could be handling the vessels of many owners. The appellants said that they did not know who the owners of the LANGSA were. There was no evidence that the shippers of goods would normally check on the ownership of a vessel. It was only after the fire had occurred on the PRATIWI and when further searches on the Lloyds’ Register of Ships Supplement & New Entries July/August 2001 and May/June 2002 were made, that it was discovered that the respondents also owned the LANGSA. Upon this discovery, the writ issued earlier was, on 16 July 2002, amended to include the LANGSA.

15 The appellants relied in the main upon the following facts and circumstances to contend that there was a real risk of dissipation:-

(i) The timing of the sale of the LANGSA. In assessing the significance of this timing, the following two dates must be kept in mind. In April 2002 the...