Hai Jiao 1306 Ltd and others v Yaw Chee Siew

• Jurisdiction: Singapore
• Judge: Kannan Ramesh J
• Judgment Date: 21 February 2020
• Neutral Citation: [2020] SGHC(I) 03
• Court: International Commercial Court (Singapore)
• Hearing Date: 10 October 2019,30 September 2019
• Docket Number: Suit Nos 7 to 9 of 2018 (Summons No 49 of 2019)
• Plaintiff Counsel: Toh Kian Sing SC, Ting Yong Hong, Davis Tan Yong Chuan, Lim Zhi Kang and Wang Yufei (Rajah & Tann Singapore LLP)
• Defendant Counsel: Clarence Lun Yao Dong, Samuel Lim Jie Bin, Giam Zhen Kai and Lin Yu Mei (Foxwood LLC)
• Subject Matter: Civil Procedure,Discovery of documents,Adverse inference
• Published date: 22 February 2020

Kannan Ramesh J:

Summons No 49 of 2019 (“Sum 49/2019”) was an application by the plaintiffs for a peremptory order arising from the defendant’s failure to comply with the Order of Court dated 18 July 2019 (“ORC 38/2019”). ORC 38/2019 was made in Summons No 34 of 2019 (“Sum 34/2019”), which was similarly an application by the plaintiffs for a peremptory order against the defendant, again arising from the latter’s non-compliance with his discovery obligations, specifically, to give eDiscovery pursuant to the Order of Court dated 17 April 2019 (“the eDiscovery Order”) made in Summons No 13 of 2019 (“Sum 13/2019”) and to comply with the directions the court made at a case management conference on 8 May 2019 (see [22] below). Sum 13/2019 and Sum 34/2019 were heard by the full coram, comprising Patricia Bergin IJ, Bernard Eder IJ and me, while Sum 49/2019 was heard by me as a single judge.

Sum 49/2019 was heard over three separate hearings, two of which, on 30 September 2019 and 10 October 2019, are relevant to these grounds. On 30 September 2019, after hearing parties, I was persuaded that the defendant had not complied with the eDiscovery Order and ORC 38/2019. I ordered that he do so within a week from 30 September 2019 (“ORC 51/2019”), and stated that the consequences of non-compliance were to be considered subsequently. At the further hearing on 10 October 2019, I ordered (“the 10 October Order”) that the defendant comply with ORC 51/2019, with non-compliance in respect of four specified repositories to result in an adverse inference being drawn to the effect that: (a) the defendant failed to exercise his best endeavours to procure a mortgage of the Parkcity Everly Hotel in Bintulu, East Malaysia (“the Hotel”) in favour of the plaintiffs; and, (b) but for such failure the mortgage would have been procured in favour of the plaintiffs. Dissatisfied with my decision, the defendant appealed on 11 November 2019 against the 10 October Order.

At the third hearing on 11 November 2019, the first day of trial, the full coram found that the adverse inferences that were directed on 10 October 2019 could be drawn by reason of the defendant’s non-compliance with the 10 October Order. The defendant has not appealed against the decision we made on 11 November 2019.

As noted earlier, Sum 49/2019 was an application to enforce ORC 38/2019, which in turn sought to enforce the eDiscovery Order and the directions made at the case management conference on 8 May 2019 – (collectively, “the eDiscovery obligations” and as regards the latter, the “8 May directions”). Thus, the orders that were made in Sum 49/2019 – ORC 51/2019 and the 10 October Order – flowed from the eDiscovery obligations and ORC 38/2019 and were premised on them. This context is important in understanding the reasons for the specific orders that were made in Sum 49/2019 in relation to three repositories, namely, the defendant’s email accounts at Perdana, csyaw@ppcity.com.my and csyaw.om@ppcity.com.my, as well as to what the defendant later claimed was an “Apple Mac Desktop” computer in his Perdana office (see [28], [42(d)], [49] and [52] below).

I now set out the reasons for my decision in Sum 49/2019.

Background facts

The defendant is the majority shareholder, sole director and executive chairman of Otto Marine Limited (“OML”), as well as the Executive Chairman of Perdana. The Chief Executive Officer of Perdana, Joseph Lau, is the defendant’s cousin. Perdana’s ultimate holding company is Yaw Holding Sdn Bhd (“Yaw Holding”), which is substantially owned by the defendant’s father and brother.

The first to third plaintiffs are the registered owners of three vessels: “GO PERSEUS”, “GO PHOENIX” and “GO PEGASUS” respectively. Each of these vessels was chartered under a bareboat charter agreement (collectively, “the Agreements”). “GO PHOENIX” and “GO PEGASUS” were chartered by Otto Fleet Pte Ltd (“OFPL”). “GO PERSEUS” was chartered by Go Offshore (L) Pte Ltd (“GOPL”). OML is the ultimate holding company of OFPL and GOPL (collectively, “the Charterers”).

A corporate guarantee was issued by OML in favour of the second and third plaintiffs, guaranteeing as primary obligor the due and punctual performance by OFPL of all its obligations under the two bareboat charterparties, including the payment of charter hire. OML and GOPL’s immediate parent, Go Marine Group Pty Ltd (“GOML”), issued guarantees in favour of the first plaintiff similarly guaranteeing, as primary obligors, the due and punctual performance by GOPL of all its obligations under its bareboat charterparty.

Financial difficulties hit the Charterers as well as OML and its related entities. As result, the defendant was desirous of delisting OML so that it would be easier for him to personally fund the Charterers and OML in order to enable performance of the payment obligations under the Agreements and the guarantees issued by OML. However, delisting OML would be a breach of a term in each of the Agreements and therefore the plaintiffs’ consent was required. The plaintiffs consented in consideration for the defendant agreeing to issue Letters of Support in relation to each Agreement and the guarantees issued by OML. These Letters of Support were to be in identical form. The relevant portion, for present purposes, reads:

In consideration of your consent to the restructuring and potential delisting arrangement in relation to [the Guarantor] and [the respective Charterer], I, Yaw Chee Siew, hereby issue to [the relevant plaintiff] this Letter of Support that I will use best endeavours to support the Charterer and the Guarantor in meeting all obligations under or in relation to the Bareboat Charter Agreement between [the relevant plaintiff] and the Charterer, and the relevant Guarantee issued by the Guarantor.

…

2. At all times during the term of this Letter, I shall use best endeavours to: (a) procure the Guarantor and Charterers to have sufficient liquidity to make timely payment of any amounts payable by the Guarantor and Charterers under or in respect of the Bareboat Charter Agreement and the Guarantee; and (b) procure the Guarantor and Charterers to remain solvent and a going concern at all times under the laws of its jurisdiction of incorporation or applicable accounting standards so long as any Charter Hire and/or any other obligations under or in respect of the Bareboat Charter Agreement and the Guarantee is outstanding. 3. If the Guarantor and Charterers at any time have insufficient liquidity or cashflow to meet any obligations under or in respect of the Bareboat Charter Agreement and the Guarantee as they fall due, I shall use best endeavours to procure for the Charterer, before the relevant due date of the relevant obligations, sufficient funds by means permitted by applicable laws and regulations so as to enable the Guarantor and Charterers to meet such obligations as they fall due.

…

[emphasis added]

OML delisted but the Letters of Support were not issued despite the fact that the defendant claimed to have executed them. It is common ground, however, that the Letters of Support are binding on the defendant. Post-delisting, the Charterers and OML continued to default on their payment obligations under the Agreements and the related guarantees respectively.

This resulted in further negotiations between the plaintiffs and the defendant. The result was two-fold. First, on 26 September 2017, a second set of Letters of Support between the defendant and each of the plaintiffs was agreed and executed as deeds. These deeds each contained terms that were materially identical to those excerpted at [9] above, except that Clause 3 of the second set of Letters of Support reads: 3. If the Guarantor and Charterers at any time have insufficient liquidity or cashflow to meet any obligations under or in respect of the Bareboat Charter Agreement and the Guarantee as they fall due, I shall use best endeavours to procure for the Charterer (but shall in no way guarantee), before the relevant due date of the relevant obligations, sufficient funds by means as permitted by applicable laws and regulations so as to enable the Guarantor and Charterers to meet such obligations in full as they fall due. [emphasis added]

Second, also in September 2017, various addenda were entered into in respect of each of the Agreements by the relevant parties. These addenda, which were similar in material respects between the different Agreements, were intended to, amongst other things, modify the charter hire rate and instalment payment scheme under the Agreements in light of the financial situation of the Charterers and OML. Of particular relevance to Sum 49/2019 are the addenda that were entered into on 29 September 2017 (the “Addendum”) between each of the plaintiffs and the relevant Charterer in respect of the relevant Agreement. Each Addendum provided that the Charterers were to deliver to the relevant plaintiff documents satisfactory to the latter evidencing compliance with Schedule 1A of the Addendum:

Clause 5.3

On or before 31 October 2017 (the “Condition Subsequent Satisfaction Date”) the Charterers shall deliver to the Owners documents, in a form and substance satisfactory to Owners, evidencing that the condition set out in Schedule 1A (the “Condition Subsequent”) has been fully complied with.

Failure by the Charterers to satisfy the Condition Subsequent by the Condition Subsequent Satisfaction Date shall be an Event of Default under the Charter, and shall render the amendments to the Charter introduced by way of [the present Addendum] null and void. Without prejudice to the foregoing, any performance of the Charter (as amended by [the present Addendum]) before the Conditions Subsequent Satisfaction Date, including any payment made by the Charterers to the Owners pursuant to the Charter (as amended by this Addendum No. 3), shall remain...