Petromar Energy Resources Pte Ltd v Glencore International AG

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 14 April 1999
• Neutral Citation: [1999] SGCA 28
• Citation: [1999] SGCA 28
• Defendant Counsel: Michael Hwang SC, Vivian Ang and Corina Song (Allen & Gledhill)
• Published date: 19 September 2003
• Plaintiff Counsel: Belinda Ang, Hong Heng Leong and Gerald Yee (Ang & Partners)
• Date: 14 April 1999
• Docket Number: Civil Appeal No 268 of 1998
• Court: Court of Appeal (Singapore)
• Subject Matter: Mareva injunctions,Whether real risk of assets being dissipated exists,Whether order can extend to searching residence of person unrelated to commercial dispute,Scope of discovery order at ex parte stage,Real risk of destroying or concealing material evidence,Whether order can extend to fishing for information from third parties,Anton piller orders,Civil Procedure

Judgment:

LP THEAN JA

(delivering the grounds of judgment of the court): In this appeal, the appellants, Petromar Energy Resources Pte Ltd (`Petromar`), sought the discharge of two interlocutory orders, an Anton Piller order and a Mareva injunction, the latter prohibiting Petromar from disposing of their assets up to a value of US$21m. These orders were obtained ex parte by the respondents, Glencore International AG (`Glencore`), on 12 June 1998. Following the service of the orders, Petromar applied for the orders to be discharged. The application, however, was refused and they appealed against the refusal. We allowed the appeal and discharged the orders. We now give our reasons.

2. Background

The figure at the centre of the dispute between Petromar and Glencore is a Liberian-registered company, Metro International Trading Inc (`Metro`) which, however, is not a party to the present proceedings. Metro is part of an international group of companies known as `the Kilakos group` which is owned and controlled by one Stamatis Kilakos and his son John Kilakos. Glencore are an international trading company based in Switzerland, dealing, among other things, in oil and oil products. At the material time they stored their oil with Metro at the latter`s storage facility at Fujairah in the Middle East. Glencore claimed that Metro by the use of false documents had diverted and disposed of a large quantity of oil belonging to them, and Metro and the Kilakos group could not account for approximately 1.4 million metric tonnes of oil valued at US$175m while the oil was stored at or on their way to be stored at Metro`s oil storage facility at Fujairah. The loss of the oil stocks was discovered by Glencore in February 1998. In consequence, proceedings were instituted in London against Metro by Glencore and other parties concerned. Glencore further alleged that Metro diverted part of the missing oil stocks to Singapore, where the oil was dealt with by Petromar. Petromar are a Singapore registered company set up in 1985 by one Michael Tziolas (`Tziolas`) and are brokers dealing in oil and oil products. At the material time, their largest customer was Metro.

3.On 12 June 1998, about four months after the loss of the oil stocks from the Fujairah facility was discovered, Glencore initiated proceedings against Petromar in Suit No 920 of 1998 claiming damages for conversion of six shipments of oil (`the oil cargoes`) with a value of US$25m which, it was alleged, arrived in Singapore on six vessels namely: the `Addax`, `Hyperion`, `Obo Victory`, `Shoko` `Devon` and `Vigour`, between December 1997 and February 1998. Glencore claimed that upon arrival in Singapore, the oil cargoes were dealt with by Petromar acting on behalf of Metro and parcels of the oil cargoes were sold to buyers in Singapore, including the Singapore Petroleum Company and Texaco, while the remainder was bought and retained by Petromar. Upon the commencement of the action, Glencore obtained ex parte two interim orders: (a) an Anton Piller order allowing their representatives to enter and search Petromar`s office in Robina House, [num ]17-06, Shenton Way and the residence of one Mr Steven Tan, Petromar`s trading manager at 20, Lorong K, [num ]03-06, Telok Kurau, and (b) a Mareva injunction prohibiting Petromar from disposing of their assets in Singapore up to the value of US$21,202,253.12. Each of the orders was complemented with an ancillary order ordering Petromar to disclose various matters or documents (`the disclosure order`) to which we shall revert in greater detail shortly.

4.On 1 July 1998, Petromar applied for the discharge of the Mareva injunction and Anton Piller. By this time, the Anton Piller order had been partially executed and voluminous documents had been removed from Petromar`s office by Glencore`s representatives and copied. Glencore`s solicitors had also written to Petromar`s bankers, Credit Lyonnais, pursuant to the discovery order contained in the Mareva injunction asking for details of banking transactions effected by Petromar, including all cash, cheque, draft and telegraphic transfers transactions dating back to 1 January 1997. At the end of the hearing, the learned judge declined to discharge either order, and Petromar appealed.

5. The appeal

Before us the question of whether Glencore had satisfied the condition of `a good arguable case` and `an extremely strong prima facie case` laid down for the grant of the Mareva injunction and Anton Piller order respectively was not seriously argued. In our opinion, they clearly had satisfied that condition. The `heart and core` of the appeal before us was whether: (a) in respect of the Mareva injunction, there was a real risk of Petromar dissipating or removing their assets from the jurisdiction and so stultifying any judgment that may be obtained against them, and (b) in respect of the Anton Piller order, there was a real risk of Petromar destroying or concealing evidence relevant to the trial of this action.

6. Real risk

The law on this point is well settled. It is sufficient to quote what this court said in Choy Chee Keen Collin v Public Utilities Board [1997] 1 SLR 604 , 611-612 said at [para ] 20-21:

20 In The Niedersachsen; Ninemia Maritime Corp v Trave Schiffahrtsgesselschaft mbH & Co KG [1984] 1 All ER 398, Mustill J, whose judgment at first instance was upheld on appeal, held that the plaintiff would have to adduce `solid evidence` to support his assertions of a real risk of dissipation. He said, at p 406:

`It is not enough for the plaintiff to assert a risk that the assets will be dissipated. He must demonstrate this by solid evidence. This evidence may take a number of different forms. It may consist of direct evidence that the defendant has previously acted in a way which shows that his probity is not to be relied on. Or the plaintiff may show what type of company the defendant is (where it is incorporated, what are its corporate structure and assets, and so on) so as to raise an inference that the company is not to be relied on. Or, again, the plaintiff may be able to found his case on the fact that inquiries about the characteristics of the defendant have led to a blank wall. Precisely what form the evidence may take will depend on the particular circumstances of the case. But the evidence must always be there.`

21 At the minimum, a plaintiff in seeking a Mareva injunction must furnish `some grounds for believing that there is a risk` of the assets being dissipated (per Lai Kew Chai J in Art Trend Ltd v Blue Dolphin (Pte) Ltd [1983] 1 MLJ 25 , 29); [1982-1983] SLR 362, 367). A mere possibility or unsupported fear of dissipation is insufficient: O`Regan & Ors v Iambic Productions Ltd [1989] 139 NLJ 1378, 1379 where Sir Peter Pain said:

`There are numerous paragraphs in the authorities relating to Mareva injunctions which make it plain that unsupported statements and expressions of fear carry very little, if any, weight. The court needs to act on objective facts from which the court can infer that the defendant is likely to move assets abroad or dissipate them within the jurisdiction. Here there is nothing of that nature in the documents at all ...`

In European Grain & Shipbuilding Ltd v Compania Naviera Euro-Asia SA & Ors [1990] 2 MLJ 219 [1989] SLR 1001 Chan Sek Keong J (as he then was) discharged an ex parte Mareva injunction on the ground, inter alia, that there was no real evidence which suggested that the defendants would take steps to dissipate their assets.

The above which was said with reference to an application for Mareva injunction applies equally to an application for an Anton Piller order, in other words, there must be `solid evidence` of a real risk that the defendant might destroy or conceal evidence relevant to the case.

7.In the present case, Glencore relied heavily on the close association between Petromar and Metro and suggested that Petromar had a role in the alleged fraud, in particular the unauthorised diversion of the oil cargoes from Fujairah and the issue of falsified documents to cover up the diversion. They alleged that Petromar was substantially, if not wholly, controlled by the Kilakos group and their associates, among whom was one Edwin Motte Griffin Jr (`Griffin`) who was the chief executive and president of Metro Trading (USA) Inc, an American affiliate of Metro. In David Toh`s affidavit filed in support of Glencore`s application, he produced the following evidence to support his claim that Petromar was substantially controlled by the Kilakos group: (i). a printout from the Registry of Companies and Businesses showing John Kilakos as a director and shareholder of Petromar and Edwin Motte Griffin Jr as a shareholder;

(ii). the inclusion of Petromar, Metro Trading (USA) Inc, and another shareholder of Petromar, the Liberian-incorporated company Petromar Enterprises Inc, on the list of Metro`s `Worldwide Contacts` found on Metro`s website;

(iii). a clause in an agreement dated 7 February 1998 whereby the Kilakos group promised to promptly transfer `the net asset value of Petromar` to a Kilakos group company;

(iv). a chart of the Kilakos group of companies supplied by Metro and...