POSH Semco Pte Ltd v Makamin Petroleum Services Company

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeJeremy Lionel Cooke IJ
Judgment Date18 December 2020
Date18 December 2020
Docket NumberSuit No 1 of 2019

[2020] SGHC(I) 26

Singapore International Commercial Court

Jeremy Lionel Cooke IJ

Suit No 1 of 2019

POSH Semco Pte Ltd
and
Makamin Petroleum Services Co and another

Chan Tai-Hui Jason, Oh Jialing EvangelineandGan Yun Han Rebecca (Allen & Gledhill LLP) for the plaintiff;

Defendants absent and unrepresented.

Case(s) referred to

Offshoreworks Global (L) Ltd v POSH Semco Pte Ltd [2020] SGCA(I) 4 (refd)

Legislation referred to

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 35 r 1(2), O 110 r 3(1)

Civil Procedure — Rules of court — Whether judgment should be ordered without trial

Commercial Transactions — Obligation of good faith — Whether plaintiff breached obligations of good faith under Saudi Arabian law

Credit and Security — Guarantees and indemnities — Whether plaintiff entitled to balance of outstanding debt due under guaranteed settlement agreement — Whether interest should be awarded on sums at agreed contractual rate despite unenforceability under Saudi Arabian law

Facts

On 15 November 2015, the charterer of the vessel POSH Pelican (“MOS”) and the plaintiff entered into a settlement agreement (the “Settlement Agreement”) which set out the parties' agreement on, inter alia: (a) MOS's outstanding debt under a time charterparty (the “Charter”) it had entered into with the plaintiff in relation to the vessel (the “Outstanding Debt”); (b) MOS's payment plan with regard to a sum to be paid in instalments in full and final settlement of claims that the plaintiff had against MOS; and (c) the Charter being amended by the addendum, in “Annex B” of the Settlement Agreement. The Settlement Agreement also provided that if any of the instalments were not paid on time, the entire Outstanding Debt would immediately become payable. The plaintiff subsequently terminated the Charter for MOS's alleged repudiatory breach.

On 6 September 2019, the plaintiff successfully applied for summary judgment for part of its claim against the second defendant (“OWG”), which had given a guarantee to secure MOS's performance of its obligations (the “OWG Guarantee”). OWG was granted unconditional leave to defend the plaintiff's remaining claim for US$771,779.98 (the “remaining claim”). This was because OWG had raised an arguable defence that the Settlement Agreement was governed by Saudi Arabian law (“Saudi law”) and that this would preclude the enforcement of the acceleration provision therein. Following the summary judgment, OWG filed an appeal. The Court of Appeal rejected the appeal on the merits and ruled that a foreign corporation could not appear unrepresented by lawyers on the record.

OWG's solicitors discharged themselves in April 2020. Since the date of the appeal judgment, OWG failed to appear at subsequent case management conferences and did not acknowledge correspondence from the plaintiff and the court. On 21 October 2020, the court gave directions for the matter to be fixed for trial. The plaintiff submitted that judgment ought to be entered without a trial, contending that it was clear that OWG had no intention of defending the remaining claim.

Held, allowing the claim:

(1) The court declined to give judgment without trial. The inevitable inference of OWG's lack of response was that it had no intention of defending the remaining claim. Nonetheless, as OWG had submitted evidence in relation to the remaining claim when resisting summary judgment and in particular, evidence of Saudi law which governed the relationship between the plaintiff and MOS, it was not appropriate to give judgment without exploring this evidence as against the evidence adduced by the plaintiff: at [7] and [10].

(2) Under Saudi law, a commercial party was bound by obligations of good faith found in the Qur'an and the Sunnah. This included the principle that parties should comply with their contractual commitments. The doctrine of good faith fell to be applied in specific situations in light of the overall facts: at [18], [21] and [22].

(3) The plaintiff had not breached its good faith obligations towards MOS under Saudi law. The plaintiff had exercised patience and forbearance in not withdrawing the vessel during an extended period of time when MOS was in breach. MOS was liable for the remaining claim and, as its guarantor, so also was OWG. The plaintiff was therefore entitled to judgment against OWG on the remaining claim: at [27] and [29].

(4) This court had a discretion in the award of interest as a matter of its own procedure. Ordinarily, the prohibition under the law of the contract against the award of interest would carry weight with the court. However, in this case, the court exercised its discretion to award interest at the rate agreed between the plaintiff and MOS in the Charter even though this was unenforceable against MOS under Saudi law. Where there was agreement in the guaranteed contract to pay interest, notwithstanding the governing law to the contrary, effect should be given to what could be assumed to be the true mutual intention of the parties at best. If that was not the assumption, the inference was of duplicitous conduct on the part of the likely paying party in agreeing the provision, knowing it was incapable of enforcement under the governing law: at [31].

(5) Judgment was entered for the plaintiff for US$771,779.98 with interest of US$519,855.72 at a rate of 12% per annum and pro rata up to the date of judgment and continuing thereafter at the same rate up to the date of actual payments: at [32].

18 December 2020

Judgment reserved.

Jeremy Lionel Cooke IJ:

Introduction

1 This action, SIC/S 1/2019, (“the Action”) was listed for trial on 15 December 2020, following a history which can be seen by reference to the Court of Appeal judgment in this matter dated 22 September 2020 (Offshoreworks Global (L) Ltd v POSH Semco Pte Ltd[2020] SGCA(I) 4 (the “Court of Appeal judgment”)) and to the grounds for my decision when giving summary judgment for part of the plaintiff's claim against the second defendant (“OWG”) on 6 September 2019 in respect of its liability under the guarantee given by it on 24 October 2014 (the “OWG Guarantee”). The part of the claim for which summary judgment was not given is the sum of US$771,779.98 which represents the difference between the “Outstanding Debt” and the “Settlement Sum”, as defined in the settlement agreement of 15 November 2015 (the “Settlement Agreement”) between the plaintiff and the charterer (“MOS”) whose liability was the subject of the OWG Guarantee.

2 OWG did not appear on 15 December 2020 following the decision of the Court of Appeal that a foreign defendant in this court could not appear unrepresented. The rationale for that decision appears in the Court of Appeal...

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