Hai Jiang 1401 Pte Ltd v Singapore Technologies Marine Ltd

• Judge: Quentin Loh J
• Judgment Date: 24 January 2020
• Neutral Citation: [2020] SGHC 20
• Citation: [2020] SGHC 20
• Defendant Counsel: Yap Yin Soon, Dorcas Seah Yi Hui and Vivian Ang (Allen & Gledhill LLP)
• Published date: 01 February 2020
• Hearing Date: 08 August 2018,12 February 2018,07 August 2018,25 April 2018,15 November 2018,25 October 2019,30 January 2018
• Plaintiff Counsel: Toh Kian Sing SC, Vellayappan Balasubramaniyam, Jonathan Tan and Wu Junneng (Rajah & Tann LLP)
• Date: 24 January 2020
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 83 of 2018
• Subject Matter: Civil Procedure,Anti-Suit Injunction

Quentin Loh J:

This judgement was given on 25 October 2019 as an oral judgement after hearing full arguments from the parties at the inter partes stage of an application for an anti-suit injunction to restrain the Defendant from continuing with its proceedings in Sharjah, United Arab Emirates, against the vessel MV “SEVEN CHAMPION” (formerly MV “LEWEK CHAMPION”) (“the Vessel”), the Plaintiff owner of the Vessel and the bareboat charterer Lewek Champion Shipping Pte Ltd (“LCS”). I have been asked by counsel to consider issuing a written judgement, (which I now do), as this is the first case in Singapore to adopt what has come to be known as the Sea Premium line of cases, emanating from Steel J’s decision in Sea Premium Shipping Ltd v Sea Consortium Pte Ltd [2001] EWHC 540 (Admlty) (“The Sea Premium”). Save for editorial changes, my oral judgement handed down on 25 October 2019 comprised [2] to [85] herein.

Facts

Through a sale and lease back arrangement, the Plaintiff, as purchaser and owner of the Vessel, bareboat chartered (“BCP”) the Vessel to LCS. The BCP, dated 19 February 2014, was for a period of 120 months, at a daily rate of US$56,500 per day and LCS took delivery of the Vessel on 26 February 2014. Under the BCP, LCS undertook to the Plaintiff (as owner) to, inter alia, remove the existing crane on the Vessel, strengthen the Vessel’s structure and install a new higher capacity crane. Under the BCP, LCS had the option to purchase the Vessel. LCS sub-bareboat chartered (“SBCP”) the Vessel to EMAS-AMC Pte Ltd (“EMAC”), a company within the same group, the Ezra group of companies, on a back-to-back basis. EMAC gave identical undertakings to LCS in the SBCP as LCS had given to the Plaintiff in the BCP. The SBCP was signed on 17 February 2014 and the charter hire was US$63,000 per day. The SBCP defined the Plaintiff as the “Ultimate Owner”.

The Plaintiff, LCS and EMAC entered into a General Assignment (“GA”) dated 26 February 2014 under which LCS assigned its various rights and interests to the Plaintiff: 3.1 General. Each of the Security Interests created by this Deed is a continuing security for the due and punctual payment by [LCS] and [EMAC] of the Secured Liabilities and the observation and performance by [LCS] of all its obligations under Clause 2.1(b) and by [EMAC] of all its obligations under Clause 2.2(b). 3.2 Charterer’s Assignment [LCS], with full title guarantee, assigns to [the Plaintiff] absolutely subject to a proviso for re-assignment on redemption all rights and interests which now or at any later time it has to, in or in connection with, [LCS’] Assigned Property. “Security Interest”, whilst not defined in the GA, was defined in cl 53.1 of the BCP as meaning, inter alia, a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind and the security rights of a plaintiff under an action in rem or any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned.

Pursuant to the GA, LCS, as chargor, filed a ‘Registration of New Charge’ at ACRA in favour of the Plaintiff, as chargee, on 26 February 2014, describing the instrument creating or evidencing the charge as “GENERAL ASSIGNMENT”. The Charge lodged at ACRA contained three Appendices, (marked A, B and C), and two pages of salient provisions and definitions taken from the GA. Appendix B set out the negative pledge and prohibition of disposal of assets contained in the GA: “There are important restrictions and prohibitions in the Charge which may affect the rights of any person dealing with the Chargor. Full reference should be made to the Charge which is available for inspection as described below.”

As noted above, there was an undertaking, both under the BCP and the SBCP, to remove the old crane, strengthen the Vessel’s structure and install a new crane; this was to be carried out in two phases: The first phase involved removal of the existing crane and the reinforcement, conversion and upgrading of the Vessel’s structure supporting and/or associated with the new crane. The second phase involved the installation of the new crane on the Vessel. Installation of the new crane was to be carried out by Huisman Equipment BV at a yard in Xiamen, China.

The first phase works (“the Crane Upgrading Works”) was carried out by the Defendant in its yard in Singapore pursuant to a Crane Upgrade Agreement dated 23 November 2015 (“CUA”), entered into between LCS and the Defendant for an estimated price of $8,700,000. The Defendant completed these works on the Vessel and it was re-delivered on 11 April 2016. It appears that there were still substantial sums outstanding to the Defendant in respect of these works when the Vessel left the Defendant’s shipyard.

Clause 13.9 of the CUA provided, inter alia, that the CUA was governed by Singapore law and “[a]ny dispute arising out of or in connection with [the CUA], including any question regarding its existence, validity or termination shall be submitted exclusively to and finally resolved and amicably settled by arbitration in accordance with the rules of The Singapore Chamber of Maritime Arbitration”.

There were delays for the second phase, the installation of the new crane, which was extended twice, first from 30 June 2015 to 31 March 2016 and subsequently to 31 December 2016.

The Plaintiff alleged numerous defaults by LCS, including being behind on its payments of charterhire under the BCP and payments under the CUA, which amounted to events of default under the BCP; in or around 9 March 2017, the Plaintiff terminated the BCP and demanded payment of US$194,499,500. LCS failed to make payment and the Plaintiff applied to wind up LCS on 5 May 2017. LCS was wound up on 14 July 2017 and liquidators were appointed.

Prior to the termination of the BCP and the winding up of LCS, the Defendant issued an In Rem writ (HC/ADM 27/2017) for a claim of $5.8 million on 14 February 2017. The defendant named on the writ was “Demise Charterer of the Vessel”; it did not include the Plaintiff owner as a defendant.

On 21 August 2017, the Defendant filed a proof of debt of $4,971,098.65 in the liquidation of LCS for outstanding sums under the CUA.

The Plaintiff subsequently entered into a bareboat charter party with Subsea 7 International Contracting Ltd (“Subsea 7”) for the Vessel on 29 June 2017 for a period of 36 months at a hire rate of about US$35,000 per day.

On or about 8 January 2018, the Defendant applied to and obtained an order from the Sharjah Federal Court of First Instance (“Sharjah Court”) for a precautionary attachment against the Vessel and other attachment orders. It is important that I set out my findings here, (at [13] and [14]) on the nature and characterisation of the claim brought in Dubai. From the English translation of this document, the precautionary attachment proceedings named both the Plaintiff and LCS as the 1st and 2nd respondents respectively. The Vessel was arrested and detained from leaving Port Khalid, Sharjah, UAE (where she was lying). The Defendant’s claim in the precautionary attachment papers is a claim for work done on the Vessel pursuant to a contract entered into between the Defendant and LCS dated 23 November 2015 and an outstanding balance of S$5,572,358. That claim was clearly one in contract against LCS. There was no claim articulated against the Plaintiff except reciting that the Plaintiff was the owner of the Vessel. The precautionary attachment was requested against the Vessel for a maritime debt, LCS was the charterer of the Vessel and the Defendant was entitled to effect a precautionary attachment to “fulfil the Petitioner’s debts.” I take this to be some translational or typing error but the purport is clear, ie, to satisfy the amounts owing by LCS to the Defendant petitioner for the works carried out to the Vessel under the contract. I pause to note that these precautionary attachment papers aver that the Defendant petitioner issued a number of commercial invoices on 14 April 2016 to LCS “with the total amount of the works, which is 9,254,198 Singapore Dollars”. LCS paid S$3,681,839 and the outstanding balance was S$5,572,358.

On or about 15 January 2018, the Defendant commenced a substantive suit (case reference ‘275-2018 commercial’) in the Sharjah Court against the Plaintiff and LCS (“the Sharjah Proceedings”) and evinced an intention to have the substantive dispute under the CUA heard there, (see [18] below). The Amended Statement of Claim, besides revising the figure claimed downwards to S$4,971,098.65, follows, fairly consistently, the precautionary attachment stating that it was a claim for an outstanding balance for works done to the Vessel, pursuant to a contract with LCS. However, there was a very material change in the claim. It now stated that the outstanding debt was owed “by the Defendants”, ie, LCS and the Plaintiff. The order prayed for was that “the Defendants to jointly and severally pay the Claimant the amount of SGD 4,971,098.65 … together with legal interest at the rate of 12% from the due date up to full payment.” (emphasis in bold and underlined). There was a similar prayer for “the Defendants to pay charges, costs and attorney’s fees.” There is no explanation or statement in the Amended Statement of Claim as to why the Plaintiff owners were jointly and severally liable together with LCS for LCS’s outstanding debt to the Defendant under a contract entered into between LCS and the Defendant, other than the averment that the Plaintiff was the owner of the Vessel.

The Plaintiff’s solicitors, R&T, issued a Notice of Assignment (under the GA) to put the Defendant on notice of the Plaintiff’s rights under the CUA. The Plaintiff’s solicitors also commenced negotiations to...