Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others
Jurisdiction | Singapore |
Judge | Chua Lee Ming JC |
Judgment Date | 31 March 2016 |
Neutral Citation | [2016] SGHC 48 |
Court | High Court (Singapore) |
Docket Number | Suit No 434 of 2014 |
Year | 2016 |
Published date | 07 April 2016 |
Hearing Date | 22 March 2016,18 March 2016 |
Plaintiff Counsel | Edwin Tong SC, Kenneth Lim Tao Chung, Chua Xinying and Yu Kexin (Allen & Gledhill LLP) |
Defendant Counsel | Tan Shien Loon Lawrence, Senthil Dayalan and Ng Jia En (Eldan Law LLP),Siraj Omar and Premalatha Silwaraju (Premier Law LLC),Sim Chong and Yap Hao Jin (Sim Chong LLC) |
Subject Matter | Civil Procedure,Pleadings,Amendment |
Citation | [2016] SGHC 48 |
On the fourth day of trial, the plaintiff, Parakou Shipping Pte Ltd (in liquidation), made an oral application to amend its statement of claim. I allowed some of the amendments but disallowed certain amendments which sought to introduce a new cause of action against the 1st to 4th defendants. I granted the plaintiff leave to appeal against my decision on these disallowed amendments.
BackgroundThe plaintiff was in the business of ship management, chartering and providing offshore supply vessel services to ships in and around Singapore. The 1st defendant, Mr Liu Cheng Chan, and the 2nd defendant, Madam Chik Sau Kam, were the directors of the plaintiff until 31 December 2008. Both were shareholders of the plaintiff until 21 December 2008. The 2nd defendant is the 1st defendant’s wife.
The 3rd defendant, Mr Liu Por, is the 1st and 2nd defendants’ son. He was Vice-President of the plaintiff from 2006 and was appointed a director on 22 December 2008. Liu Por has also been a shareholder of the plaintiff since 1 January 2005. The 4th defendant, Mr Yang Jianguo, has been a director and shareholder of the plaintiff since 22 December 2008.
The 5th defendant, Parakou Investment Holdings Pte Ltd and the 6th defendant, Parakou Shipmanagement Pte Ltd were at all material times related companies of the plaintiff. At all material times, the 1st, 2nd and 3rd defendants were directors and shareholders of the 5th and 6th defendants, and the 4th defendant was a director of the 6th defendant.
At all material times, the 1st and 2nd defendants and another son, Lau Hoi, were directors of 12 other companies, the names of each of which start with the word “Pretty” (“the Pretty Entities”). The sole shareholder of the Pretty Entities was a company known as Parakou International Ltd (“PIL”). The 1st, 2nd and 3rd defendants and Lau Hoi were the shareholders of PIL.
On 14 April 2011, the creditors of the plaintiff passed a resolution to put the plaintiff into creditors’ voluntary liquidation. The liquidator brought this action in the name of the plaintiff. Essentially, the case against the defendants is that they orchestrated various transactions to strip the plaintiff of its assets in anticipation of it being put into liquidation. There are therefore a multitude of claims against the defendants, including
I disallowed the amendments that were comprised in three new paragraphs (“Paragraphs 42A, 42B and 42C”). The plaintiff subsequently stated that it was no longer proceeding with Paragraph 42B. Paragraphs 42A and 42C related to certain ship management agreements (“SMAs”). The plaintiff had been managing vessels owned by the Pretty Entities (“the Pretty Vessels”) under these SMAs before they were terminated in October 2008.
As currently pleaded in the statement of claim, the plaintiff claims that the 1st to 4th defendants, in breach of their duties owed to the plaintiff, caused the SMAs to be transferred to the 6th defendant for no consideration. The transfer was allegedly effected by causing the Pretty Entities to terminate the SMAs in October 2008 and to enter into new ship management agreements for the Pretty Vessels with the 6th defendant in December 2008, on substantially the same terms as the SMAs that were terminated. The plaintiff alleges that the SMAs were the plaintiff’s “key revenue-generating assets” and that the actions by the 1st to 4th defendants in transferring the SMAs to the 6th defendant caused loss and damage to the plaintiff in the form of loss in management fees and loss of profits under the SMAs.
Paragraph 42A sought to introduce a new cause of action against the 1st to 4th defendants for breaches of fiduciary duties owed to the plaintiff which resulted in the plaintiff suffering loss and damage. In Paragraph 42A, the plaintiff alleged that
In brief, the Addendum agreements changed the fee structure of the SMAs from a fee of US$8,000
Paragraph 42C alleged that the 1st to 4th defendants, having acted in breach of their fiduciary duties owed to the plaintiff, were liable as constructive trustees to account for all profits and benefits derived by or through the Pretty Entities. The plaintiff also claimed to be entitled to “trace into such profits or enforce an equitable lien over any such profits including subsequent profits held on constructive trust” by the 1st to 4th defendants.
Paragraphs 42A and 42C thus sought to make a completely different and new claim which focused on the 1st to 4th defendant’s actions in causing the plaintiff to enter into the Addendum agreements. A key allegation in the new claim was that the Addendum agreements caused the SMAs to be loss-making.
Reasons for my decision The law is well-established. The guiding principle is that amendments to pleadings ought to be allowed if they would enable the real question and/or issue in controversy between the parties to be determined; however, two key factors to bear in mind are (a) whether the amendments would cause any prejudice to the other party which cannot be compensated in costs, and (b) whether the amendments are effectively giving the party who is applying for leave to amend a second bite at the cherry:
I disallowed the plaintiff’s application with...
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...is made, the stronger the grounds required to justify it must be (Asia Business Forum at [12]; Parakou Shipping Pte Ltd v Liu Cheng Chan [2016] SGHC 48 (“Parakou Shipping”) at [13]). The court must carefully consider two primary considerations before allowing an amendment. The first is whet......
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...the moneys they would have otherwise received. It was, thus, speculative at best what the plaintiffs would have done with the money. 1 [2016] SGHC 48. 2 [2016] 2 SLR 1. 3 Cap 322, R 5, 2014 Rev Ed. 4 [2016] 4 SLR 351. 5 Cap 322, 2007 Rev Ed. 6 [2016] 3 SLR 1264. 7 S 813/2014. 8 [2016] 3 SLR......