Hai Jiao 1306 Ltd v Yaw Chee Siew

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeKannan Ramesh J,Patricia Bergin IJ,Sir Henry Bernard Eder IJ
Judgment Date13 July 2020
Date13 July 2020
Docket NumberSuit No 7 of 2018 (consolidated with Suits Nos 8 and 9 of 2018)

[2020] SGHC(I) 16

Singapore International Commercial Court

Kannan Ramesh J, Patricia Bergin IJ and Sir Henry Bernard Eder IJ

Suit No 7 of 2018 (consolidated with Suits Nos 8 and 9 of 2018)

Hai Jiao 1306 Ltd and others
and
Yaw Chee Siew

Toh Kian Sing SC, Ting Yong Hong, Davis Tan Yong Chuan, Lau Chuan Ying, Rebekah, Wang Yufei, Yu Qianqian, Bhieman Anandakumar (Rajah & Tann Singapore LLP) for the plaintiffs;

Clarence Lun Yaodong, Tan Yingxian, Selwyn, Giam Zhen Kai, Lim Jia Ying, Alicia Puah, Samuel Lim Jie Bin, Lin Yu Mei, Leng Ting Kun, Ammani Mathivanan (Foxwood LLC) for the defendant.

Case(s) referred to

Astor Management AG v Atalaya Mining plc [2017] EWHC 425 (Comm) (folld)

Broadley Construction Pte Ltd v Alacran Design Pte Ltd [2018] 2 SLR 110 (refd)

Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101; [2009] 3 WLR 267 (refd)

Cheong Ghim Fah v Murugian s/o Rangasamy [2004] 1 SLR(R) 628; [2004] 1 SLR 628 (refd)

Dany Lions Ltd v Bristol Cars Ltd [2014] EWHC 817 (QB) (folld)

Derry v Peek (1889) 14 App Cas 337 (refd)

Desert Palace Inc v Poh Soon Kiat [2009] 1 SLR(R) 71; [2009] 1 SLR 71 (refd)

EDI Central Ltd v National Car Parks Ltd [2011] SLT 75 (folld)

Gaia Ventures Ltd v Abbeygate Helical (Leisure Plaza) Ltd [2019] EWCA Civ 823 (refd)

Gimpex Ltd v Unity Holdings Business Ltd [2015] 2 SLR 686 (refd)

Hai Jiao 1306 Ltd v Yaw Chee Siew [2020] 3 SLR 142 (refd)

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (refd)

IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335 (refd)

IM Skaugen SE v MAN Diesel & Turbo SE [2018] SGHC 123 (refd)

Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] 3 SLR(R) 769; [2006] 3 SLR 769 (refd)

Jet2.com v Blackpool Airport Ltd [2012] EWCA Civ 417 (folld)

JSI Shipping (S) Pte Ltd v Teofoongwonglcloong [2007] 4 SLR(R) 460; [2007] 4 SLR 460 (refd)

KS Energy Services Ltd v BR Energy (M) Sdn Bhd [2014] 2 SLR 905 (folld)

Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd [2018] 1 Lloyd's Rep 654 (folld)

Management Corporation Strata Title Plan No 1933 v Liang Huat Aluminium Ltd [2001] 2 SLR(R) 91; [2001] 3 SLR 253 (refd)

Marme Inversiones 2007 SL v Natwest Markets plc [2019] EWHC 366 (Comm) (refd)

Midland Land Reclamation Ltd v Warren Energy Ltd [1997] EWHC (Technology) 375 (refd)

Pacific Recreation Pte Ltd v SY Technology Inc [2008] 2 SLR(R) 491; [2008] 2 SLR 491 (refd)

Panatron Pte Ltd v Lee Cheow Lee [2001] 2 SLR(R) 435; [2001] 3 SLR 405 (refd)

Phillips Petroleum Co (UK) Ltd v Enron (Europe) Ltd [1997] CLC 329 (refd)

Playboy Club London Ltd v Banca Nazionale del Lavoro SpA [2018] 1 WLR 4041 (refd)

R v Inland Revenue Commissioners, ex parte T C Coombs & Co [1991] 2 AC 283 (refd)

R&D Construction Group Ltd v Hallam Land Management Ltd [2010] CSIH 96 (refd)

RBC Properties Pte Ltd v Defu Furniture Pte Ltd [2015] 1 SLR 997 (refd)

Rhodia International Holdings Ltd v Huntsman International LLC [2007] EWHC 292 (Comm) (refd)

Saeng-Un Udom v PP [2001] 2 SLR(R) 1; [2001] 3 SLR 1 (refd)

Sheffield District Railway Co v Great Central Railway Co (1911) 27 TLR 451 (refd)

Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1 (refd)

Singapore Tourism Board v Children's Media Ltd [2008] 3 SLR(R) 981; [2008] 3 SLR 981 (refd)

Sudha Natrajan v The Bank of East Asia Ltd [2017] 1 SLR 141 (refd)

Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric [2007] 1 SLR(R) 853; [2007] 1 SLR 853 (refd)

Terrell v Mabie Todd & Co Ltd (1952) 69 RPC 234 (refd)

Tiger Airways Pte Ltd v Swissport Singapore Pte Ltd [2009] 4 SLR(R) 992; [2009] 4 SLR 992 (refd)

Travista Development Pte Ltd v Tan Kim Swee Augustine [2008] 2 SLR(R) 474; [2008] 2 SLR 474 (folld)

Tudor Grange Holdings Ltd v Citibank NA [1992] Ch 53 (refd)

Vita Health Laboratories Pte Ltd v Pang Seng Meng [2004] 4 SLR(R) 162; [2004] 4 SLR 162 (refd)

WPP Group plc v Reichmann [2000] All ER (D) 1409 (refd)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029; [2008] 3 SLR 1029 (folld)

Legislation referred to

Companies Act (Cap 50, 2006 Rev Ed)

Evidence Act (Cap 97, 1997 Rev Ed) ss 47(1), 47(4), 63–67, 116 illus (g)

Misrepresentation Act (Cap 390, 1994 Rev Ed) s 2(1)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 40A, O 40A r 2, O 40A r 3(2)(e)

Contract — Breach — Breach of best endeavours obligations — Non-performance of obligations under charterparties — Failing to procure related entities to use available funds and earnings to perform obligations under charterparties — Failing to procure for related entities sufficient funds to perform obligations under charterparties — Failing to use personal wealth to aid related entities — Whether best endeavours obligations breached by failing to procure related entities to use available funds and earnings to perform obligations under charterparties — Whether best endeavours obligations breached by failing to procure for related entities sufficient funds to perform obligations under charterparties — Whether best endeavours obligations breached by failing to use personal wealth to aid related entities

Contract — Contractual terms — Express terms — Best endeavours — Promisor executing letters of support containing best endeavours obligations — Obligation to use best endeavours to procure related entities to perform obligations under charterparties and related guarantees — Obligation to use best endeavours to procure solvency of related entities — Obligation to use best endeavours to procure for related entities sufficient funds to perform obligations under charterparties — Whether best endeavours obligations in letters of support binding — How multiple best endeavours obligations in same contract to be interpreted — Whether promisor required to use personal wealth to perform best endeavours obligations — Whether best endeavours obligations survived insolvency of relevant related entities

Contract — Misrepresentation — Representations that promisor would financially support third party in performing obligations under charterparties — Whether representations sufficiently clear — Whether representees reasonably relied on representations — Whether representees suffered loss due to representations

Facts

The plaintiffs, Hai Jiao 1306 Ltd, Hai Jiao 1207 Ltd and Hai Jiao 1307 Ltd, were three special purpose vehicles (“SPVs”) incorporated by ICBC Financial Leasing Co Ltd (“ICBCL”). ICBCL was a state-owned company in the People's Republic of China, and was a wholly-owned subsidiary of Industrial and Commercial Bank of China (ie, ICBC). The defendant, Mr Yaw Chee Siew, was the sole director and executive chairman of Otto Marine Limited (“OML”). OML was a Singapore-incorporated company originally listed on the main board of the Singapore Stock Exchange until its delisting on 6 October 2016. Before the onset of financial difficulties, OML controlled a large fleet of offshore vessels through its group of companies, the Otto Marine Group (“OM Group”).

Between 2013 and 2014, ICBCL provided substantial financing to OML, up to the value of US$255m, in relation to three super-large anchor handling tugs: the Go Phoenix, Go Pegasus and Go Perseus (“the vessels”). This financing took the form of what was in effect a sale-and-leaseback of each of the vessels. Each of the plaintiffs became registered owners of one of the vessels and chartered them back to companies in the OM Group under separate bareboat charterparties.

The Go Phoenix was chartered by the second plaintiff, Hai Jiao 1207 Ltd, to Otto Fleet Pte Ltd (“Otto Fleet”), a subsidiary of OML, under a bareboat charterparty (“the Go Phoenix BBC”). The Go Pegasus was chartered by the third plaintiff, Hai Jiao 1307 Ltd, to Otto Fleet under a separate bareboat charterparty (“the Go Pegasus BBC”). OML issued a corporate guarantee in favour of the second and third plaintiffs, guaranteeing as primary obligor the due and punctual performance by Otto Fleet of its obligations under the two BBCs. The Go Perseus was chartered by the first plaintiff, Hai Jiao 1306 Ltd, to Go Offshore (L) Pte Ltd (“Go Offshore”) under a bareboat charterparty (“the Go Perseus BBC”). Go Offshore's parent company, Go Marine Group Pty Ltd (“Go Marine”), was a wholly owned subsidiary of OML. Go Marine and OML issued a corporate guarantee jointly and severally in favour of the first plaintiff, guaranteeing as primary obligors the due and punctual performance by Go Offshore of its obligations under the Go Perseus BBC.

Go Offshore and Otto Fleet were referred to as “the Charterers”. OML and Go Marine were referred to as “the Guarantors”. The three bareboat charterparties were referred to as “the BBCs”. The guarantees issued by OML and/or Go Marine, as the case might be, were referred to as “the guarantees”.

The BBCs were in substantially similar terms. The relevant provisions were as follows: (a) each BBC was for a period of 96 months; (b) charter hire was payable in advance at regular quarterly intervals (falling on 2 February, 2 May, 2 August and 2 November) throughout the year; (c) as the BBCs were, in effect, financial leasing arrangements, payments of charter hire were on a “hell or high water” basis; (d) the Charterers were obliged to pay all earnings obtained through the employment of the vessels into a specified earnings account (“Earnings Account”), over which the plaintiffs had a charge, which was duly registered; and (e) upon the occurrence of any event of default (including, inter alia, the failure to pay charter hire, the declaration of insolvency by the Charterers/the Guarantors or the delisting of OML), the plaintiffs were entitled to terminate the relevant BBC. Upon such termination, the Charterers would be obliged to pay all unpaid charter hire as well as all other sums due and payable but which had been unpaid. Further, the Charterers would be liable to pay all charter hire which was to become due and payable until the end of the charter period (“the Termination Amounts”).

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