Recovery Vehicle 1 Pte Ltd v Industries Chimiques Du Senegal

• Jurisdiction: Singapore
• Judge: Audrey Lim J
• Judgment Date: 16 December 2019
• Neutral Citation: [2019] SGHC 289
• Citation: [2019] SGHC 289
• Court: High Court (Singapore)
• Published date: 20 December 2019
• Docket Number: Suit No 724 of 2018 (Registrar’s Appeal No 179 of 2019)
• Plaintiff Counsel: Chan Wai Kit Darren Dominic and Ng Yi Ming Daniel (Characterist LLC)
• Defendant Counsel: Lim Wei Loong Ian, Ngo Shuxiang, Nicholas and Li Wanchun (TSMP Law Corporation)
• Subject Matter: Civil Procedure,Service,Service of writ out of jurisdiction,Conflict of Laws,Natural forum
• Hearing Date: 07 October 2019,06 November 2019,04 December 2019,30 July 2019

Audrey Lim J: Background

Affert Resources Pte Ltd (“Affert”), is a Singapore company that is under compulsory liquidation. The defendant, Industries Chimiques Du Senegal (“ICS”), is a company incorporated in Senegal. Between May 2012 and June 2013, Affert supplied six batches of sulphur to ICS (“the Sulphur Contracts”) and issued six invoices totalling US$22,298,264.60 (“the Six Invoices”). Partial payment of US$5,291,000 had been made on the Sulphur Contracts, and the total amount outstanding is US$17,007,263.60 (“the ICS Debt”).¹

The plaintiff, Recovery Vehicle 1 Pte Ltd (“RV1”), is a Singapore company that is in the business of recovering stressed debts. It is the assignee of the current suit (“the Suit”) against ICS for the ICS Debt (see [10] below). By Registrar’s Appeal No 179 of 2019 (“RA 179”) RV1 appeals against the decision of the registrar who had set aside its writ and service of it out of jurisdiction on ICS in the Suit.

Acquisition of ICS’s shares and waiver of the ICS Debt

Around August 2014, Indorama Holdings B.V. (“Indorama”, incorporated in the Netherlands), purchased Senfer Africa Limited’s (“Senfer”, incorporated in Cyprus) 66% stake in ICS (“the Acquisition”). Senfer and Affert are ultimately controlled by the Archean group (“Archean Group”) based in India.² According to ICS, the Acquisition was done through the following transactions³: Senfer and Indorama entered into a Share Transfer Agreement on 20 August 2014 (“STA”), pursuant to which Indorama paid Senfer US$11m for the shares. Senfer, Indorama, Archean Industries Pte Ltd (incorporated in India, and the ultimate holding company of Senfer) and Indorama Corporation Pte Ltd (a Singapore company) entered into an Assumption for Debt for Change in Control of [ICS] dated 20 August 2014 (“ADA”). In further consideration for 66% of Senfer’s shares in ICS, Indorama paid USD$30m to Senfer’s creditor banks to settle all its debts. This was in addition to the purchase price of US$11m that Indorama paid under the STA. Senfer, Indorama, Archean Industries Pte Ltd and Indorama Corporation Pte Ltd also executed a side letter dated 20 August 2014 (“Side Letter”), where “Indorama shall cause [ICS] to pay to [Senfer]” US$9m as full and final settlement of all of ICS’s related-party debts as at 30 June 2014, which included the debt owed by ICS to Affert of USD$17.28m.

The ADA, STA and Side Letter are collectively referred to as the Acquisition Documents.

ICS explained that pursuant to the Acquisition, it was expressly agreed around October 2014 that Affert would unconditionally waive and forgo all its past claims against ICS including claims in respect of the Sulphur Contracts (“the Waiver”), based on the following documents (“Waiver documents”):⁴ First, one of Affert’s then director, Syam Kumar (“Syam”) sent an email on 1 October 2014 to Indorama’s Munish Jindal stating “As per the overall understanding on take over of ICS by Indorama, we, hereby, agree to consider the dues of ICS to us as part of the overall consideration for the transaction” (“Affert’s 1 October 2014 Email”).⁵ Next, Affert addressed a letter to ICS dated 7 October 2014 where Affert expressly stated that for the US$17,277,886 due to it, “We confirm that we will not claim this amount as per our understanding” and “We hereby confirm that we will not in future dispute or make any claim on ICS or its subsidiaries for any sort of dues to [Affert].” (“Affert’s 7 October 2014 Letter”).⁶

The Waiver was also mentioned in a Deed of Termination dated 24 March 2015 (“DOT”) executed among ICS, Affert and Transfert Fzco (“Transfert”) where, in the preamble of the DOT, “[Affert] further confirmed in their letter dated 7 October 2014 to ICS that they have no further claim on ICS for any amounts whatsoever.”⁷

ICS explained that the Side Letter expressly stated that ICS would pay Senfer the US$9m as full and final settlement of all related parties’ outstandings provided that all the relevant related parties (which would have included Affert) “send the required confirmations to this effect to ICS”. It was pursuant to this, the STA and the ADA, that the Waiver was provided by Affert to ICS via Affert’s 1 October 2014 Email and Affert’s 7 October 2014 Letter.⁸

Affert’s liquidation and the filing of the Suit

On 8 February 2017, Affert placed itself into creditor’s voluntary winding up, and appointed Foo Kon Tan LLP (“FKT”) as its liquidators.⁹ FKT sent a letter of demand dated 7 June 2017 to ICS to claim the ICS Debt (“FKT’s 7 June 2017 Letter”).¹⁰ ICS’s Senegalese lawyers responded on 3 July 2017 stating that “All amounts then due from ICS to Affert were settled as part of the acquisition of ICS from [the Archean Group] by [Indorama] in 2014” and denied that it owed any amount to Affert (“ICS’s 3 July 2017 Letter”). In that letter, the lawyers also attached Affert’s 7 October 2014 Letter and the DOT. The letter was received by FKT on 24 July 2017.¹¹

On 18 September 2017, Affert was compulsorily wound up by Solvadis Commodity Chemicals GMBH (“Solvadis”) in Companies Winding Up No 17 of 2017, and its current liquidators are AAG Corporate Advisory Pte Ltd (“the Liquidators”). The Liquidators sent a letter of demand dated 26 September 2017 to ICS to recover the ICS Debt.¹² On 18 July 2018, the Liquidators filed the Suit against ICS to claim the ICS Debt.

In its letter dated 7 February 2019 to RV1’s lawyers, the Liquidators claimed that it was only around 31 October 2018 that they first knew of the existence of FKT’s 7 June 2017 Letter, ICS’s 3 July 2017 Letter, the correspondences pertaining to Waiver and the DOT.¹³

Affert’s assignment of receivables to RV1 and service of writ in the Suit

Affert (via the Liquidators) and RV1 then entered into a Deed of Assignment of Receivable dated 17 September 2018, whereby Affert assigned the ICS Debt and the claim in the Suit to RV1 with effect from 29 August 2018.¹⁴

RV1 then filed an amended writ on 4 October 2018 (“the Amended Writ”) in the Suit to replace itself as the plaintiff. On 9 October 2018, RV1 applied for leave to serve the Amended Writ out of jurisdiction on ICS (via Summons No 4699 of 2018 (“SUM 4699”)), and leave was obtained on 11 October 2018 (“the Leave Order”). The Amended Writ was served on ICS on 26 November 2018 and ICS entered appearance on 17 December 2018.

RV1 claimed that around 22 October 2018, it received a letter dated 10 October 2018 from ICS’s Senegalese lawyers which enclosed ICS’s 3 July 2017 Letter to FKT which included the Waiver and DOT (“ICS’s 10 October 2018 Letter”). In that letter, ICS also stated that “all amounts due from ICS to Affert have been settled as part of the acquisition of ICS from [the Archean Group] by [Indorama] in 2014 and therefore, there is nothing due and payable from ICS”. RV1 claimed that that was the first time it was informed about the Waiver.¹⁵

The Senegalese proceedings

On 19 December 2018, ICS applied by summons to the Dakar Commercial Court in Senegal for a “Declaration to Extinguish Debt” on the basis of the Waiver (Affert’s 7 October 2014 Letter).¹⁶ Whilst ICS claimed to have fulfilled the procedural requirements for service of the summons in the Dakar proceedings, it was not disputed that neither Affert, the Liquidators nor RV1 were notified of the summons¹⁷ and only knew of the Dakar proceedings when ICS obtained a default judgment and served that on Affert and the Liquidators (see [14] and [15] below).

On 23 January 2019, the Dakar Commercial Court rendered a default judgment, holding that Affert’s 7 October 2014 Letter constituted a unilateral act of debt relief, was valid under Senegalese law, and that Affert had waived the ICS Debt. The finalised default judgment was released on 19 February 2019 (“the Dakar Default Judgment”).¹⁸ On 21 and 28 February 2019, ICS’s lawyers disclosed the summons and the Dakar Default Judgment to RV1, and to Affert and the Liquidators respectively.¹⁹ ICS is in the process of effecting official service of the Dakar Default Judgment on the Liquidators.²⁰

On 21 June 2019, the Liquidators appealed against the Dakar Default Judgment to the Dakar Court of Appeal and the matter is pending.²¹

OS 544 of 2019 – Liquidators’ application to set aside Waiver

On 24 April 2019, the Liquidators applied by Originating Summons No 544 of 2019 (“OS 544”) to set aside the Waiver as an undervalue transaction. OS 544 was served on ICS in Senegal on 7 June 2019.²² On 11 October 2019, pursuant to ICS’s application, the registrar granted a stay of OS 544 pending the determination of the Senagelese proceedings. The Liquidators have filed an appeal against the registrar’s decision, and the matter is pending.

ICS’s application to set aside the Amended Writ

On 22 January 2019, ICS took out Summons No 383 of 2019 (“SUM 383”) to set aside the Amended Writ filed by RV1 and the service of it, and for a declaration that the court had no jurisdiction over ICS in respect of the subject matter of the claim or the relief/remedy sought. Alternatively, the proceedings in the Suit should be stayed on the basis that Singapore is not the proper forum or that the court should exercise its discretion to grant a case management stay.

The registrar allowed ICS’s application and discharged the Leave Order. He found that there was no full and frank disclosure by RV1 of the Waiver that was brought to its attention in October 2018, and the requirements under O 11 r 1 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) had not been met. RV1 appealed against that decision in RA 179.

Issues

The issues before me essentially are: Whether RV1 has made out a case for service out of jurisdiction of the Amended Writ under O 11 r 1 of the ROC. In this regard, the issue of whether RV1 had made full and frank disclosure to the court should be considered. If the requirements under O 11 r 1 of the ROC are met, whether a stay should...