Manuchar Steel Hong Kong Limited v Star Pacific Line Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Kim Shin JC
• Judgment Date: 23 September 2014
• Neutral Citation: [2014] SGHC 181
• Date: 23 September 2014
• Docket Number: Originating Summons No 927 of 2013
• Published date: 08 October 2014
• Plaintiff Counsel: Leong Lu Yuan (Ang & Partners)
• Hearing Date: 19 May 2014,17 February 2014,17 March 2014,28 April 2014
• Defendant Counsel: Jeyabalen and Arthur Edwin Lim (Jeyabalen & Partners)
• Court: High Court (Singapore)
• Subject Matter: Arbitration,Civil procedure,foreign awards,enforcement,discovery of documents

Lee Kim Shin JC: Introduction

This was an application by Manuchar Steel Hong Kong Limited (“Manuchar”) seeking pre-action discovery from Star Pacific Line Pte Ltd (“Star Pacific”) of all documents relating to the hire, use or operation of a vessel, Fusion 1, by Star Pacific or its servants or agents.

Manuchar wanted the documents to determine if Star Pacific was part of a single economic entity which another company known as SPL Shipping Limited (“SPL Shipping”) was also a part of. Manuchar had hoped to use the information in the documents to commence proceedings against Star Pacific to enforce two arbitral awards which it had obtained against SPL Shipping (“the Awards”).

I dismissed the application for two reasons: First, Manuchar could not persuade me that the documents that it sought were necessary for the purpose of determining if it had sufficient facts to allege that SPL Shipping and Star Pacific were a single economic entity to the extent that the Awards could be enforced against Star Pacific. Second, in any event, Manuchar could not persuade me that its intended cause of action against Star Pacific was recognised at law under either the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) or general company law.

Manuchar applied for leave to appeal my decision which I granted. As far as I am aware, no Notice of Appeal has been filed.

Background

Manuchar is a global logistics services provider based in Hong Kong. Star Pacific is a Singapore-incorporated company. SPL Shipping is a company incorporated in the British Virgin Islands (“BVI”) as a company limited by shares. SPL Shipping’s incorporation was procured by its registered agent, Nerine Trust Company (BVI) Limited (“Nerine Trust”).

Manuchar chartered the vessel, Fusion 1, from SPL Shipping under a charterparty dated 9 July 2008 brokered by agents. Manuchar candidly acknowledged that it was not aware, at the time it entered into the charterparty, that SPL Shipping was a BVI company. The charterparty provided for arbitration in London in the event of disputes.

Dispute, Arbitration and the Awards

Manuchar claimed monies against SPL Shipping arising from disputes under the charterparty in 2008. In pursuit of its claim, Manuchar commenced arbitration proceedings in London but SPL Shipping did not participate at all in the arbitration. Under the Awards made in the arbitration, SPL Shipping was to pay Manuchar its principal claim in the amount of US$427,326.73, interest, and costs of the arbitration.

The substantive orders were made in October 2009, in the Final Award. The second award, a supplementary award, was issued months later in January 2011. It was issued to correct a heading in the Final Award which had misdescribed SPL Shipping as “SPL Shipping Limited of Singapore”.

Enforcement of Awards

The Awards were nothing more than paper judgments as far as Manuchar was concerned. It had taken various steps to enforce the Awards in three different jurisdictions but those efforts were in vain.

As early as 28 October 2009, Manuchar made a demand against SPL Shipping by fax for the sums under the Awards. It gave SPL Shipping until 6 November 2009 to comply. There was no response.

Manuchar then contacted SPL Shipping on three separate occasions, during the period between September 2010 and January 2011, essentially notifying SPL Shipping that the arbitrator would correct the heading of the Final Award which, as mentioned above, resulted in the supplementary award.

These notices were served on SPL Shipping at 5 Shenton Way, #27-08, an office building in Singapore. Interestingly, the person who received these notices stamped the acknowledgment copies with SPL Shipping’s corporate stamp.

Manuchar then sought registration of the Awards in Singapore, England and the BVI under the enforcement regimes of each jurisdiction.

Manuchar obtained an order from the Singapore High Court in early January 2012 granting it liberty to enforce the Awards against SPL Shipping. This was then served on SPL Shipping at its registered address in the BVI, although it was addressed to Nerine Trust. A manager from Nerine Trust acknowledged receipt of service on SPL Shipping’s behalf. It was not entirely clear what role Nerine Trust played but it appears that they provided corporate secretarial services to SPL Shipping.

A similar enforcement order was obtained from the English High Court in early 2012. There was no evidence, however, of service of this order on SPL Shipping either in the BVI or in Singapore.

Finally, a similar enforcement order was obtained from the High Court of Justice in the BVI in July 2012. Manuchar, as creditor, then served a statutory demand on SPL Shipping at its registered address in the BVI in September 2012. Again, service was acknowledged by a manager from Nerine Trust. This statutory demand was issued pursuant to the Insolvency Act, 2003 (No 5 of 2003) which governed the law and procedure relating to insolvency in the BVI.

According to Manuchar, SPL Shipping completely ignored the relevant court processes and orders despite receiving service and notice of the various enforcement processes. No payment was made.

Manuchar’s case

Consequently, Manuchar sought enforcement of the Awards against Star Pacific on the premise that SPL Shipping and Star Pacific are (or were) a single economic entity. Ms Leong Lu Yuan, counsel for Manuchar, explained that the concept of a single economic entity provided that two or more distinct and separate companies can be regarded at law as having the same corporate personality on the ground that they were part of a single economic entity. Ms Leong submitted that this concept has been recognised by the Singapore courts in appropriate cases.

Ms Leong provided five facts in support of the single economic entity argument: SPL Shipping and Star Pacific shared the same Singapore office, apparently being 80 Robinson Road, #09-02 (“the Robinson Road office”). I would just observe here that this was not the address which Manuchar sent the notices informing SPL Shipping of the misdescription in the Final Award (see [12] above). Other parties in the chain of charterparties concerning Fusion 1 appeared to have addressed their correspondence to Star Pacific. Instructions and correspondence concerning Fusion 1 appeared to have come from Star Pacific’s employees and/or SPL Shipping’s personnel signing off in the name of Star Pacific. Documents sent to, or served on, SPL Shipping in Singapore at the Robinson Road office, were accepted and acknowledged as having been received by SPL Shipping. SPL Shipping and Star Pacific also shared the same fax number. The plaintiffs in two separate civil suits in the US had similarly alleged that SPL Shipping and Star Pacific were one economic entity or in any case had no separate corporate identity. These plaintiffs are not connected or associated with Manuchar.

In this application, Manuchar provided an extensive set of documents including emails, letters and court documents which supported its factual assertions. However, Manuchar claimed that these documents were insufficient for the purposes of formulating its claim that SPL Shipping and Star Pacific are (or were) part of a single economic entity.

Manuchar therefore wanted pre-action discovery of “all documents which are or have been in [Star Pacific’s] possession, custody or power, relating to the hire, use and/or operation of the vessel ‘Fusion 1’ by [Star Pacific] and/or their servants or agents”, including but not limited to: correspondence, notes and memoranda passing between SPL Shipping and Star Pacific in the period of June 2008 to September 2008; the charterparty and/or fixture note and/or other similar document between Star Pacific and the owners and/or disponent owners of Fusion 1 for the hire and/or use of the said vessel in the period of June 2008 to September 2008; and bank statements, cash book entries and ledgers, and other documents relating to all financial transactions involving the hire, use and/or operation of Fusion 1 in the period of June 2008 to September 2008.

Star Pacific’s case

Star Pacific’s case was put forward by its sole director and sole shareholder, one Mr Ham, who was neither a director nor employee of Star Pacific at the material time of the dispute in 2008. He only assumed directorship and ownership of Star Pacific in July 2010 from the previous South Korean director cum sole shareholder.

Mr Ham disputed the allegation that SPL Shipping and Star Pacific are (or were) a single economic entity. He said that at the material time, Star Pacific was only an agent of SPL Shipping, as evidenced by an agency agreement. Although Star Pacific shared the same premises with SPL Shipping, namely, the Robinson Road office, so too did at least three other Korean companies. All of them were however separate entities albeit they did, from time to time, take receipt of mail and other deliveries on behalf of each other.

For good measure, Mr Ham insisted in his affidavit that he did not have the documents sought by Manuchar (as described at [21] above). Ms Leong, however, argued that Mr Ham’s affirmation on oath was insufficient as he had not made it clear that Star Pacific (as opposed to its sole director) did not have the documents.

My decision What was meant by single economic entity

I begin by explaining what I understood the single economic entity concept to mean for the purposes of this application. The single economic entity concept means different things in different contexts. It would be dangerous to assume or, worse still, equate the understanding of the single economic entity concept for statutory purposes (such as taxation or competition laws) with the use of the single economic entity concept in the present context, which is simply a dispute between companies over liability under a contract.

The...