Humpuss Sea Transport Pte Ltd (in compulsory liquidation) v PT Humpuss Intermoda Transportasi TBK and another

• Jurisdiction: Singapore
• Judge: Steven Chong J
• Judgment Date: 18 October 2016
• Neutral Citation: [2016] SGHC 229
• Date: 18 October 2016
• Docket Number: Suit No 896 of 2014 (Summonses Nos 893 and 1045 of 2016)
• Published date: 09 November 2016
• Plaintiff Counsel: David Chan and Tan Aik Thong (Shook Lin & Bok LLP)
• Defendant Counsel: Rakesh Kirpalani Gopal, Allen Lye and Wong Su Ann (Drew & Napier LLC)
• Court: High Court (Singapore)
• Hearing Date: 25 July 2016
• Subject Matter: Foreign judgments,Abuse of process,Recognition,Civil procedure,Striking out,Conflict of laws,Natural forum

Steven Chong J: Introduction

This is another attempt by the 1st and 2nd defendants to halt the action commenced by the plaintiff’s present liquidators (“the liquidators”) in Singapore to recover substantial inter-company loans in excess of US$100 million and to set aside various transfers of shares in related companies and ships from the plaintiff and its subsidiaries to the 2nd defendant. The previous attempt was an application to set aside the service of the writ in Indonesia, which I dismissed – see Humpuss Sea Transport Pte Ltd (in compulsory liquidation) v PT Humpuss Intermoda Transportasi TBK and another [2015] 4 SLR 625.

On this occasion, the defendants mounted two separate applications: one to strike out the action and another to stay the action in favour of Indonesia. I heard both applications together. At the end of the hearing, I found no merit in the striking out application and dismissed it summarily. The striking out application was based solely on the extended doctrine of res judicata. The doctrine is a judicial expression of the need to prevent abuse of the court’s process and is typically invoked to prevent a litigant from raising new points and arguments which should have been raised in earlier proceedings. Here, the 1st and 2nd defendants sought to apply the doctrine on the premise that the plaintiff’s causes of action in the Singapore action, which are separate and distinct from the causes of action in the Indonesian proceedings, should and ought to have been raised in the earlier Indonesian insolvency proceedings involving the 1st defendant. Quite apart from the fact that the Indonesian proceedings do not involve the 2nd defendant, I found, for reasons elaborated at [74]–[84] below, that there was no basis for applying the extended doctrine of res judicata at all.

However, the stay application, grounded on the doctrine of forum non conveniens, merited closer examination following an observation I made at the end of the hearing. There are three seemingly distinct claims in the Singapore action. Both parties approached the stay application on the basis that all three claims should either proceed in Singapore or be stayed in favour of Indonesia. Initially, no specific submission was made for a halfway house of staying some but not all the three claims. When this scenario was raised as a possible outcome of the stay application, counsel for the 1st and 2nd defendants, Mr Rakesh Kirpalani, understandably seized on this option to submit that the claims against the 1st and 2nd defendants in respect of the inter-company loans should be stayed even if the court is not minded to stay the restructuring transactions. This decision will therefore examine, inter alia, the circumstances in which a court may exercise its discretion to stay some but not all the claims in a Singapore action in favour of another jurisdiction, as well as the propriety of doing so. It will also consider whether, in determining the natural forum for the adjudication of the claim, the difficulties in the enforcement of any judgment of the Singapore action in the foreign jurisdiction would be a relevant factor to determine or to displace the natural forum.

I start with an outline of the background facts common to both applications (at [5]–[40]). I then give my grounds for dismissing the striking-out application since it has raised some interesting legal points (at [41]–[85]) followed by my decision on the stay application (at [86]–[131]).

Background facts The parties

The parties to this action are all part of the Humpuss group of companies.¹ The plaintiff is incorporated in Singapore.² It was placed in compulsory liquidation on 20 January 2012.³ Both the 1st and 2nd defendants are incorporated in Indonesia.⁴ The 1st defendant was also listed on the Jakarta Stock Exchange.⁵ The 1st defendant is the sole shareholder of the plaintiff and owns 99% of the 2nd defendant.⁶

The nature of the Singapore action

In the statement of claim filed on 18 August 2014, the liquidators seek the repayment of two inter-company loans which remain unpaid. The plaintiff’s unaudited financial statements for 2009 record that, as at 31 December 2009, there was a loan amount of US$72,608,916 due from the 1st defendant to the plaintiff and a loan amount of US$39,542,815 due from the 2nd defendant to the plaintiff.⁷

The liquidators also seek to set aside a number of transactions which the plaintiff purportedly entered into between July and December 2009 as part of an alleged restructuring of the Humpuss Group (“restructuring transactions”).⁸ Two categories of restructuring transactions are being impugned. First, the transfers of the plaintiff’s shares in four companies to the 2nd defendant. The abbreviated names of the four companies (and the plaintiff’s shareholding therein) are Cometco (51%), Silverstone (100%), Humolco (60%), and MCGC II (45%). Silverstone is incorporated in Panama and the remaining three companies are incorporated in Liberia. The 2nd defendant agreed to pay the plaintiff US$27,372,715 for the Cometco shares, US$8,907,170 for the Silverstone shares, US$600 for the Humulco shares, and US$2,700 for the MGCC II shares.⁹ The liquidators allege that the plaintiff has not received any payment from the 2nd defendant for the share transfers.¹⁰ Second, the transfer of four vessels from the plaintiff to the 2nd defendant. The plaintiff is the registered owner of one of these vessels, the Sapta Samudra. The 2nd defendant agreed to purchase the Sapta Samudra for US$4,020,000.¹¹ The registered owners of the three remaining vessels – the Dasa Samudra, the Griya Asmat and the Nawa Samudra – are three single-ship subsidiaries of the plaintiff incorporated in Panama.¹² The 2nd defendant agreed to purchase the three vessels for US$3,920,000, US$11,856,000, and US$2,100,000 respectively.¹³ The liquidators allege that the plaintiff and its subsidiaries have not received any payment from the 2nd defendant for the transfers of any of the four vessels.

The liquidators’ primary claim is that all the restructuring transactions – including the plaintiff’s transfer of the three vessels through its subsidiaries – are transactions at an undervalue within the meaning of s 98 of the Bankruptcy Act (Cap 20, 2009 Rev Ed) read with s 329(1) of the Companies Act (Cap 50, 2006 Rev Ed), with the result that the court would be bound to make an order for restoring the position to what it would have been if the plaintiff had not entered into the restructuring transactions (s 98(2) Bankruptcy Act). As an alternative, the liquidators claim that the restructuring transactions are voidable for being conveyances intended to defraud the plaintiff’s creditors within the meaning of s 73B of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed).¹⁴

The nature of the Indonesian Proceedings

The 1st defendant is currently in a court-assisted debt restructuring process in Indonesia. On 26 September 2012, a creditor of the 1st defendant filed a Penundaan Kewajiban Pembayaran Utang (“PKPU”) petition against the 1st defendant in Indonesia.¹⁵

PKPU proceedings

PKPU proceedings in Indonesia are similar to the process in Singapore by which a company may propose a scheme of arrangement. PKPU proceedings are governed by Law No 37 of 2004 on Bankruptcy and Suspension of Obligation for Payment of Debts (“Law No 37”).¹⁶

The term “PKPU” broadly refers to a suspension of debt payment obligations.¹⁷ It is a judicial process by which a debtor may propose a composition plan to its creditors to restructure its debts and reorganise its business operations.¹⁸ The process starts when a creditor files a PKPU application with the Commercial Court for the temporary suspension of the debtor’s debt payments.¹⁹ If the court approves the application, it will grant a temporary PKPU order. It will also appoint a supervisory judge who oversees the PKPU process, and one or more administrators who are to manage the debtor company’s assets during the PKPU proceedings.²⁰ The temporary PKPU order releases the debtor from its payment obligations for 45 days, which may be extended on the approval of the creditors. The administrator must give public notice of the PKPU order and summon the debtor and its creditors to attend a hearing within that 45-day period.²¹ At this hearing, the Commercial Court will decide whether or not to approve the composition plan.

Before the hearing, the creditors are entitled to file their claims with the administrator, who will review the claims and decide whether to admit or deny the submitted claims.²²

The debtor may present a composition plan to the creditors either at the hearing or at a creditor’s meeting between the grant of the temporary PKPU order and the hearing.²³ The requisite majority of creditors needed to accept the composition plan is a majority in number of the creditors and at least two-thirds in value of each class of creditors (ie, secured and unsecured) who attend and vote at the meeting or hearing.²⁴ If the composition plan is not accepted, the company will be placed in bankruptcy.²⁵

The composition plan must be approved by the court before it becomes final and binding on all creditors of the debtor. Article 286 of Law No 37 states that an approved composition plan shall bind “all creditors” save for any secured creditor who voted against the plan – Article 281 of Law No 37 prescribes how these secured creditors will be repaid.²⁶ Which other creditors are bound by the plan is not quite clear. The defendants’ expert on Indonesian law was of the view that the approved composition plan would bind all unsecured creditors, including those unsecured creditors who did not participate in the PKPU proceedings.²⁷ The liquidators’ expert on Indonesian law noted that the ratified composition plan would bind all unsecured creditors²⁸ but did not comment specifically on whether unsecured creditors who did not...