Offshoreworks Global (L) Ltd v POSH Semco Pte Ltd

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 22 September 2020
• Neutral Citation: [2020] SGCA(I) 4
• Plaintiff Counsel: Koh Chen Tien as an authorised representative
• Date: 22 September 2020
• Docket Number: Civil Appeal No 180 of 2019
• Hearing Date: 05 August 2020,01 April 2020
• Subject Matter: Non-compliance,Rules of court,Guarantees and indemnities,Credit and Security,Civil Procedure
• Year: 2020
• Defendant Counsel: Chan Tai-Hui Jason SC, Kek Meng Soon Kelvin, Oh Jialing Evangeline and Gan Yun Han Rebecca (Allen & Gledhill LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2020] SGCA(I) 4
• Published date: 26 September 2020

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction Parties

By way of background, the Respondent, POSH Semco Ltd (“POSH”), applied for (a) summary judgment against the Appellant, Offshoreworks Global (L) Limited (“OWG”), for the sum of S$4,078,226.48 with interest and costs; and (b) a declaration that a guarantee issued by OWG to POSH was an “on-demand performance guarantee” under SIC/Summons No 50 of 2019 (“SUM 50”).

OWG and the first defendant, Makamin Petroleum Services Co (“MPS”) in SUM 50, are shareholders of Makamin Offshore Saudi Ltd (“the Charterer”), with OWG being the majority shareholder. Captain Koh Chen Tien (“Cpt Koh”) is OWG’s sole shareholder and Executive Director, and was also the Managing Director of the Charterer at the material time.

The present appeal, Civil Appeal No 180 of 2019 (“CA 180”), is OWG’s appeal against the trial judge’s (“the Judge”) decision to grant summary judgment to the Respondent for part of the sum claimed.

The Original Charterparty dated 28 October 2013

On 28 October 2013, the Charterer entered into a time charterparty (“the Original Charterparty”) with POSH in relation to the vessel “POSH Pelican” (“the Vessel”) on the terms of a BIMCO Supplytime 2005 standard contract and additional clauses. Pursuant to cl 41 of the Original Charterparty, the Charterer provided a bank guarantee to POSH for US$1.293m which was issued by the Royal Bank of Scotland plc (“the RBS Guarantee”).

Guarantees dated 24 October 2014

As of 17 October 2014, POSH claimed that the Charterer owed POSH a sum of over US$3.7m pursuant to the Original Charterparty. The Charterer sought to persuade POSH to withdraw its call on the RBS Guarantee. POSH agreed to do so, provided that OWG (and three other parties related to the Charterer) furnish guarantees to POSH for the purpose of securing performance of the Charterer’s obligations under the Original Charterparty. On 24 October 2014, multiple guarantees by OWG, MPS, Cpt Koh and Dr Abdullah Aseeri Ali were signed with reference to the Original Charterparty.

Of particular significance was the OWG Guarantee issued by OWG in favour of POSH, which provided that OWG “irrevocably and unconditionally guarantee[d] … the due and faithful performance by the Charterer of all its obligations contained in the Supplytime 2005”.

The Settlement Agreement dated 15 November 2015

Following the execution of the OWG Guarantee, the Charterer continued to be in significant arrears. On 15 November 2015, the Charterer and POSH entered into a settlement agreement in relation to the outstanding debt (“the Settlement Agreement”). The Settlement Agreement set out the parties’ agreement on, inter alia, (a) the Charterer’s outstanding debt under the Original Charterparty of US$2,891,241.54 as of 30 June 2015 (“the Outstanding Debt”); (b) the Charterer’s payment plan to POSH with regard to the settlement sum of US$2,119,461.56 in eight monthly instalments over a period between November 2015 and June 2016 (“the Settlement Sum”) in full and final settlement and discharge of any and all past or present claims that POSH had against the Charterer; (c) the amendment of the Original Charterparty by way of Addendum No 1 of the Settlement Agreement; and (d) that in the event that any of the eight instalments was not paid by the stipulated timeline, the entire Outstanding Debt would immediately become payable. The Original Charterparty, as amended by Addendum No 1 of the Settlement Agreement, shall be referred to as “the Post-Addendum Charterparty”.

Breach of the Settlement Agreement

On 31 January 2016, the Charterer failed to make payment of the 3rd instalment under the Settlement Agreement by the agreed date. The balance of the Outstanding Debt fell due, and POSH was entitled to immediately claim the said sum under the Settlement Agreement. Between 16 February 2016 and 21 March 2016, POSH repeatedly demanded that the Charterer fulfil its obligation to pay the remaining Outstanding Debt plus sums which had accrued under the Charterparty subsequent to 30 June 2015, while reserving its rights to withdraw the vessel and terminate the Charterparty.

On 26 March 2016, POSH withdrew its vessel and terminated the Charterparty for the Charterer’s alleged repudiatory breach in accordance with the three-day notification period under the early termination clause of the Post-Addendum Charterparty.

In SUM 50, the Judge held that (a) summary judgment be entered in favour of POSH against OWG for the sum of US$3,306.446.50 with interest and costs (“the Summary Judgment”); and (b) OWG be granted unconditional leave to defend POSH’s claim for the remaining amount of US$771,779.98, being the difference between the 30 June 2015 Outstanding Debt and the Settlement Sum (see [10(f)] below). The Judge made the following findings: The obligation by OWG to pay under the OWG Guarantee was not triggered by a demand whether justified or not, but required that there be real liability on the part of the Charterer for the OWG Guarantee to bite. There was good consideration for the OWG Guarantee. POSH was entitled to withdraw the Vessel and the Post-Addendum Charterparty was rightfully and validly terminated at the point of withdrawal of the Vessel. The terms of the Settlement Agreement and the obligations which arose thereunder fell within the ambit of the OWG Guarantee. The effect of the non-payment of the 3rd instalment in the Settlement Agreement was to accelerate the Charterer’s duty to pay the Outstanding Debt. However, as the Settlement Agreement was governed by Saudi law, questions arose as to the validity of the enforcement of the acceleration provision. OWG had raised a triable issue and had an arguable defence that could only be resolved at a trial where expert evidence on Saudi law will be adduced. As a result, judgment could not be given for the remaining amount of US$771,779.98. The difference in liability of the Charterer depended on whether the acceleration was rightful or wrongful, which was calculated as the difference between the Outstanding Debt and the Settlement Sum in the Settlement Agreement. That was the only sum truly in issue between the parties on the effect of the evidence on Saudi law (viz, US$771,779.98). As for the issue of interest, there was a contractual interest rate at 1% per month which had to be applied for the claims made under the Post-Addendum Charterparty.

Our decision

We now turn to our decision. We first deal with an important preliminary issue of corporate self-representation by foreign bodies corporate.

Issue of corporate self-representation by foreign bodies corporate

On 16 March 2020, we allowed an application made by OWG’s counsel, NLC Law Asia LLC, to be discharged. At the hearing before us on 1 April 2020, Cpt Koh appeared as an authorised representative for OWG as OWG had not appointed new solicitors, and sought an adjournment of the appeal on the basis that OWG was not legally represented. We allowed the adjournment until the week commencing 25 May 2020 and expressly ordered that no further adjournments would be entertained, noting that the hearing of the appeal would be subject to the decision of the court as to whether the appeal could proceed if OWG was still not legally represented. At the final hearing on 5 August 2020, OWG once again appeared before the court without legal representation (notwithstanding the fact that it had effectively a little over two months more to secure legal representation as the hearing initially scheduled for the week commencing 25 May 2020 had been further vacated and adjourned). A preliminary issue therefore arises as to whether OWG, a Malaysian registered body corporate, must be represented by a solicitor.

Counsel for POSH, Mr Jason Chan SC, submitted at the hearing on 1 April 2020 that a foreign body corporate such as OWG cannot appear before the Court of Appeal hearing an SICC matter unless represented by a solicitor by virtue of O 5 r 6(2) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules”), and cannot avail itself of the leave mechanism in O 1 r 9(2) of the same (which would permit corporate self-representation with the leave of court). However, we noted then that the imposition of such a requirement on foreign bodies corporate would lead to a somewhat unsatisfactory outcome that runs counter to the very purpose of establishing the Singapore International Commercial Court (“SICC”), which is to “grow the legal services sector and to expand the scope for the internationalisation and export of Singapore law” (see sicc.gov.sg/about-the-sicc/establishment-of-the-sicc (accessed 5 August 2020)). The issue of whether corporate self-representation for foreign bodies corporate is permissible in Singapore thus arises as a crucial threshold point in the present appeal.

The default position of no corporate self-representation

We begin by examining the key provisions governing the issue of corporate self-representation in Singapore. In Singapore, the starting point is that a body corporate is generally prohibited from commencing or carrying on any action, as well as from entering an appearance in or defending such action, “otherwise than by a solicitor”. This is provided for in O 5 r 6(2) and O 12 r 1(2) of the Rules, which state as follows:

Right to sue in person (O. 5, r. 6)

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(2) Subject to Order 1, Rule 9(2) and any other written law, and except in accordance with any practice directions for the time being issued by the Registrar, a body corporate may not begin or carry on any proceedings in Court otherwise than by a solicitor.

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Mode of entering appearance (O. 12, r. 1)

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(2) Subject to Order 1, Rule 9(2) and any other written law, and except in accordance with any practice directions for the time being issued by the Registrar, a defendant to an action begun by writ which is a body corporate...