Precious Shipping Public Company Ltd and others v O.W. Bunker Far East (Singapore) Pte Ltd and others and other matters

• Judge: Steven Chong J
• Judgment Date: 21 July 2015
• Neutral Citation: [2015] SGHC 187
• Court: High Court (Singapore)
• Hearing Date: 26 May 2015
• Defendant Counsel: Navin Anand and Teo Ke-Wei Ian (Rajah & Tann Singapore LLP),Kuek Chong Yeow Richard, Cheng Jiankai Eugene, Dharinni Kesavan (Gurbani & Co LLC),Loo Dip Seng, Ng Weiting and Tan Siew Chi (Ang & Partners),Nish Kumar Shetty, Darius Bragassam, Lim Shack Keong and Zhuo Wenzhao (Cavenagh Law LLP),Physical Suppliers: Chua Chok Wah, Muhammad Raffli Bin Mohd Noor and Yeo Wen Yi Brenna (Joseph Tan Jude Benny LLP),Yee Mun Howe Gerald and Nazirah d/o Kairo Din (Clasis LLC),Mohamed Ibrahim s/o Mohamed Yakub (Achievers LLC),Ong Tun Wei Danny and Ng Hui Ping Sheila (Rajah & Tann Singapore LLP),Chew Sui Gek Magdalene and Leong Marnyi Wendy (AsiaLegal LLC),Navinder Singh (KSCGP Juris LLP),Lam Kuet Keng Steven John (Templars Law LLC),Sellers: Davinder Singh SC s/o Amar Singh, Jaikanth Shankar, Kok Chee Yeong Jared, Lee Xin Yi Cherrylene and Tham Yeying Melissa (Drew & Napier LLC)
• Published date: 25 July 2015
• Subject Matter: Interpleader,Admissions of Fact,Administration of Insolvent Estates,Insolvency Law,Application,Conduct of Legal Proceedings,When Granted,Judgments and Orders,Civil Procedure
• Plaintiff Counsel: Purchasers: Mohan s/o Ramamirtha Subbaraman, Thio Soon Heng Jonathan Mark and Yee Weng Wai Bernard (Incisive Law LLC)
• Docket Number: Originating Summons Nos 1076, 1144, 1147, 1148, 1162, 1163, 1164, 1165, 1166, 1172, 1173, 1202, and 1205 of 2014

Steven Chong J: Introduction

On 7 November 2014, O.W. Bunker & Trading A/S (“OW Bunker”), one of the world’s largest bunker suppliers, announced that it (and some of its related entities) had commenced proceedings in the Danish courts to seek bankruptcy protection. In December 2013, OW Bunker and several of its subsidiaries entered into an omnibus security agreement with a syndicate of banks with ING Bank N.V. (“ING”) appointed as the security agent.1Affidavit of Paul David Copley in OS 1076/2014 dated 10 April 2015 (“Paul David Copley’s Affidavit”) at paras 13–14. As part of the agreement, OW Bunker assigned its rights, title, and interest in its third party and inter-company receivables to ING which, in turn, appointed PricewaterhouseCoopers LLP as the global receiver of the secured assets.2Paul David Copley’s Affidavit at para 1. Two of its related entities in Singapore (“the OW entities”) — O.W. Bunker Far East (Singapore) Pte Ltd (“OW Far East”) and Dynamic Oil Trading (Singapore) Pte Ltd (“DOT”) — were placed in creditor’s voluntary liquidation shortly thereafter.3Affidavit of Bob Yap Cheng Ghee in OS 1076 and 1205 of 2014 both dated 10 April 2015 (“Bob Yap’s Affidavits”) at para 1.

The general modus operandi of the OW entities was to enter into contracts with the end-users (“the purchasers”) for the supply of bunkers to vessels and separately contract with bunker traders (“the physical suppliers”) — at a lower price — to have them deliver the requisite bunkers, making a small margin in the process. The bunkers were stemmed and have been consumed4Written Submissions of ING Bank NV on the Applicable Legal Principles in OS 1076/2014 (“Mr Singh’s Submissions on the Law”) at para 11(d)(iii). but, in light of the liquidation, the physical suppliers have not received payment from the OW entities. The purchasers have also not paid the OW entities for the bunkers because some of the physical suppliers have written to the purchasers seeking to recover the price of the bunkers directly from them as they have not received any payment from the OW entities.

The purchasers accept that payments for the bunkers are due and owing but claim that they are unable to decide which party to pay. Under these circumstances, the purchasers decided that it would be prudent to seek interpleader relief from the court. This led the purchasers to file multiple interpleader summonses of which 13 came before me for hearing. As they generally relate to the same factual matrix and concern identical legal issues, it seemed eminently sensible to hear them on a consolidated basis (“the consolidated applications”).

The consolidated applications are unusual in many respects, and they raise several questions about the scope and purpose of interpleader relief. Three stand out for mention. First, the purchasers have all taken the position, on the advice of their solicitors, that the purchase price is due to the OW entities and not the physical suppliers.5Minute Sheet of Steven Chong J dated 26 May 2015 (“Minute Sheet of Chong J”) at p2, para 7; p 3, para 3. In a typical interpleader summons, the applicant is faced with adverse claims and is genuinely in a legal dilemma as to which of the competing claimants to pay. Here, there seems to be no such predicament. In fact, some of the purchasers have explicitly written to the physical suppliers to deny their claims.6See, eg, the position taken by the purchasers in OS 1166/2014 as disclosed in the affidavit of Ganesh, Bharath Ratnam in OS 1205/2014 dated 10 December 2014 (“Ganesh’s OS 1205 Affidavit”) at pp 19–22. Second, in spite of their threats, none of the physical suppliers (as at the date of the hearing) had actually commenced legal proceedings against the purchasers. This is perhaps because the physical suppliers appear to appreciate that, owing to the lack of privity of contract, their alleged claims against the purchasers are far from clear. They have therefore mounted a number of non-contractual arguments to justify their entitlement to recover the price of the bunkers directly from the purchasers. Third, the purchasers had received “competing claims” for different amounts.7See, eg:OS 1076/2014: In respect of bunkers supplied to the “Ploypailin Naree”, ING demanded payment of a sum of $295,059.30 for bunkers supplied to the “Ploypailin Naree”; the physical supplier, Uni Petroleum Pte Ltd, demanded a sum of $ 291,653.45: see Affidavit of Vasudevan Neelakantan in OS 1076/2014 at paras 12 and 17; pp 39 and 40OS 1147/2014: ING demanded payment of a sum of $339,235.51; the physical supplier, Universal Energy Pte Ltd, demanded a sum of $ 333,988.92: see Affidavit of Ganesh, Bharath Ratnam in OS 1147/2014 at paras 8 and 9.OS 1205/2014: ING demanded payment of a sum of $485,685.12; the physical supplier, Sirius Marine Pte Ltd, demanded a sum of $ 481,977.60: see Ganesh’s OS 1205 Affidavit at para 9 and at p 48. ING (as the assignees of the OW entities’ receivables) claimed for the contractual price of the contracts the OW entities concluded with the purchasers whereas the physical suppliers claimed for the contractual price of the bunkers under the contracts they concluded with the OW entities, which was always for a lesser amount (see [8(b)] below).

Is interpleader necessary or even appropriate when the applicant appears to know exactly to whom he is liable? Is the mere assertion of “adverse claims”, however remote or fanciful, sufficient? Can claims be adverse when they relate to different sums referable to different contracts? What are the court’s powers upon a dismissal of an application for interpleader relief? These are some of the questions which will be addressed in the course of this judgment.

Facts

The consolidated applications concern different contracts with different terms and governing laws. However, I need not discuss the detailed facts of each application since only the barest level of detail is required for present purposes. I will first set out the facts of a notional “paradigm case” (which applies to the majority of the applications) before going on to discuss the implications, if any, of two notable “variants”.

The paradigm case

In their essentials, the consolidated applications involve a tripartite relationship between (a) a purchaser; (b) a seller; and (c) a physical supplier. In the paradigm case, the purchaser contracted with an OW entity for the purchase of bunkers for delivery to a vessel (the “Purchaser–Seller contract”). The OW entity would, in turn, conclude a separate contract with a physical supplier which would stem the bunkers (“the Seller–Physical Supplier contract”). After the collapse of OW Bunker, many of the purchasers received two competing claims: (a) the first was from ING for the sum owing under the Purchaser–Seller contract; (b) the second was from the physical supplier for the sum owing under the Seller-Physical Supplier contract. The salient features of the paradigm case can be summarised in the following diagram:

I will highlight three features of the paradigm case. First, the relationships between the parties are governed by two separate contracts concluded at different prices: (i) the Purchaser–Seller contract (at price $x); (ii) the Seller–Physical Supplier contract (at price ($x-y). Each contract was concluded on separate terms and at different times. The Purchaser–Seller contract was concluded on the General Terms and Conditions (“GTCs”) of the relevant OW entity whereas the Seller–Physical Supplier contract was governed by the physical supplier’s GTCs. In every case, the OW entity would purchase the bunkers from the physical supplier under the Seller–Physical Supplier contract at a price which was between 2 and 20 USD per metric ton lower (I have expressed this margin as “y”) than the price which it charged under the Purchaser–Seller contract. Second, there are only ever two competing claims in respect of each bunker delivery. In some of the applications (see, eg, Originating Summons No 1076 of 2014), several deliveries of bunkers were made. However, in respect of each delivery, there is never more than one set of competing claims: one from ING and the second from the relevant physical supplier which stemmed the bunkers. The smaller claim would be that from the physical supplier whereas the larger claim was ING’s. Third, none of the purchasers (save for the exception of the purchaser in Originating Summons 1076 of 2014) were the owners of the vessels in which the bunkers were stemmed.

Variant 1

In Originating Summonses 1144, 1166, and 1205 of 2014 (I will refer to each as “OS 1144/2014”, “OS 1166/2014”, etc.), just as in the paradigm case, the OW entity was the immediate contractual seller and the three salient features of the paradigm case identified at [8] above are also present. The only difference is that an additional party — a bunker trader — was involved. In each of these summonses, the OW entity purchased the bunkers from a bunker trader which, in turn, separately ordered the bunkers from a physical supplier which would then stem the bunkers on the vessel. The only exception is OS 1166/2014, where three different types of bunkers were ordered of which one was physically stemmed by OW Far East itself.

In my view, the interposition of an additional party does not affect the legal analysis. It is interesting to note that none of the bunker traders in each of these OSes have elected to file submissions. One of them — TNS Bunkers (S) Pte Ltd, the bunker trader involved in both OS 1144 and 1205 of 2014 — filed an affidavit stating that it supported the claim of Sirius Marine Pte Ltd, which was the physical supplier with whom it contracted.

Variant 2

In Originating Summons No 1202 of 2014 (“OS 1202/2014”), the purchaser contracted with OceanConnect Marine Pte Ltd (“OCM”). OCM then purchased the requisite bunkers from DOT which, in turn, contracted...