Simgood Pte Ltd v MLC Shipbuilding Sdn Bhd and Others

• Jurisdiction: Singapore
• Judgment Date: 25 November 2015
• Date: 25 November 2015
• Docket Number: Suit No 39 of 2011
• Court: High Court (Singapore)

Simgood Pte Ltd

Plaintiff

and

MLC Shipbuilding Sdn Bhd and others

Defendant

[2015] SGHC 303

Vinodh Coomaraswamy J

Suit No 39 of 2011

High Court

Companies — Incorporation of companies — Lifting corporate veil — Related companies having dealings — Whether companies were a façade such that corporate veil should be lifted to pin liability on controllers

Contract — Remedies — Specific Performance — Seller failed to deliver vessel under shipbuilding contract — Whether specific performance should be granted for shipbuilding contract where vessel completed — Section 52 Sale of Goods Act (Cap 393, 1999 Rev Ed)

Tort — Conspiracy — Unlawful means conspiracy — Seller re-assigned hull number of vessel to different vessel — Whether re-assigning hull number of vessel was unlawful act for action in unlawful means conspiracy

Tort — Conversion — Seller re-assigned hull number of vessel to different vessel — Whether contractual right to possession sufficient for action in conversion — Whether on construction of contract buyer had contractual right to immediate possession

Tort — Detinue — Party in possession of vessel refusing to deliver up vessel to party with contractual right to possession — Whether demand on another company was lawful demand for action in detinue

Facts

In April 2008, the first defendant (“MLC Shipbuilding”) agreed to build and deliver a single vessel to the plaintiff under a shipbuilding contract (“Contract 5282”). At that time, an existing vessel (“Vessel A”) was under construction at the fifth defendant’s (“Nantong MLC”) shipyard. Vessel A’s keel was laid in April 2007. It had then been assigned hull number MLC 5282.

In July or August 2008, the seventh, eighth and ninth defendants (“the Tans”) changed Vessel A’s hull number from MLC 5282 to MLC 5284. In September 2008, a keel for a new vessel was laid (“Vessel B”) at Nantong MLC’s shipyard. The Tans re-assigned hull number MLC 5282 to the hull of Vessel B.

Vessel A was completed in March 2009. It was duly delivered to the purchaser, a company related to the plaintiff. Construction of Vessel B continued until September 2009 when it was launched.

Meanwhile, the plaintiff paid all instalments under Contract 5282 except the final instalment which was payable only when MLC Shipbuilding made actual delivery under the contract.

MLC Shipbuilding failed to deliver a vessel under Contract 5282. On 7 October 2010, the plaintiff sent a letter of demand to MLC Shipbuilding, the second defendant (“MLC Barging”), the fourth defendant (“Jiangsu”) and the sixth defendant (“Nantong Tongbao”) alleging that the defendants sold Vessel A to a third party for a profit and then substituted Vessel B for it without the plaintiff’s knowledge or consent. The plaintiff informed the defendants that they were prepared to accept delivery of Vessel B in place of Vessel A. Vessel B was never delivered to the plaintiff.

The plaintiff commenced action alleging that MLC Shipbuilding breached Contract 5282. As a remedy for the breach, it prayed for specific performance of the contract. The plaintiff alleged that the remaining defendants had induced MLC Shipbuilding’s breach of contract or were liable in conversion, detinue and unlawful means conspiracy. The plaintiff also sought to pierce the corporate veil of the MLC companies to hold the Tans liable personally.

As a separate claim arising from the same underlying facts, the plaintiff claimed that it was entitled to recover from both Nantong MLC and Nantong Tongbao the sums of US$4,399,980 and RMB14m as money paid to them during the construction of Vessel B but outside the terms of the shipbuilding contract for Vessel B (“the Extra-Contractual Payments”). It claimed these advances were loans.

MLC Barging and the third defendant (“MLC Maritime”), companies owned and controlled by the Tans, advanced a counterclaim seeking a declaration that the plaintiff did not own and had no right to possession of Vessel B. Their case was that the plaintiff was merely the end buyer of Vessel B and that Contract 5282 was merely the final link in a contractual chain involving MLC Shipbuilding, MLC Barging, MLC Maritime, Jiangsu and Nantong Tongbao.

Held, allowing the claim in part and dismissing the counterclaim:

[Editorial note: The paragraphs indicated in parentheses in holdings (1), (2), (6), (10) and (11) are not reported. They can be found in the unreported version of the judgment ([2015] SGHC 303) on LawNet.]

(1) Only one of the contracts in the contractual chain was genuine. It was not possible to make a finding on the balance of probabilities that the remaining contracts were genuine. That finding collapsed the contractual chain through which MLC Barging and MLC Maritime asserted rights in Vessel B. MLC Barging’s and MLC Maritime’s counterclaim failed: (at [96]).

(2) MLC Shipbuilding offered no contractual justification for its failure to deliver a vessel to the plaintiff in accordance with Contract 5282 and was therefore in breach: (at [122]).

(3) The power to make an order for specific performance under s 52(1) of the Sale of Goods Act (Cap 393, 1999 Rev Ed) was enlivened only where the action was for breach of contract to deliver “specific or ascertained goods”. The definition of “specific goods” in s 61(1) of the Sale of Goods Act required the parties to identify and agree upon the particular goods to be delivered under the contract at the time they entered into the contract. The language of s 61(1) implied that a contract was for sale of specific goods only if the goods in question were in existence at the time of the contract. At the time parties entered into Contract 5282, Vessel B’s keel had not yet been laid nor was its hull in existence and in a position to be assigned a number. Contract 5282 was not a contract for delivery of specific goods with respect to Vessel B: at [127].

(4) Contract 5282 could be a contract for the sale of “ascertained goods” within the meaning of s 52(1) with respect to Vessel B only, if at some point in time after the parties entered into Contract 5282, they unequivocally identified Vessel B as the individual vessel which MLC Shipbuilding was to deliver to the plaintiff under that contract. On the facts, the parties did so and Contract 5282 was a contract to deliver ascertained goods with respect to Vessel B: at [129] and [131].

(5) Specific performance was available as a remedy for contracts that involved a sale of a ship. The main question in deciding if specific performance should be awarded was whether it was just in all the circumstances for the plaintiff to be confined to his remedy in damages. On the facts, Vessel B was commercially unique to the plaintiff and it would take a substantial period of time for the plaintiff to commission and take delivery of a substitute vessel of the same specifications. As Vessel B was complete and afloat, there was no question of a decree of specific performance involving the court supervising the construction of a vessel. Weighing all the factors, it was not just in all the circumstances for the plaintiff to be confined to its remedy in damages: at [132], [137], [138], [140] and [141].

(6) There was no causal link between the acts of the defendants which were argued to be the tortious inducements and MLC Shipbuilding’s breach of contract. The claim for inducing breach of contract was dismissed: (at [145] and [147]).

(7) To have the requisite standing to sue in conversion, a plaintiff had to have, at the time of the act of conversion, actual possession of the converted goods or a right to immediate possession of the converted goods founded on a proprietary right. It was also possible as a matter of law that a plaintiff who had a right to immediate possession of the converted goods founded on a contractual right rather than a proprietary right had standing to sue in conversion. There was no reason why a contractual right to immediate possession of goods should not suffice to confer on a party a right of action in conversion in respect of those goods, especially where the contract operated to vest property in the goods in the transferee once it received possession. The plaintiff never had either actual possession of Vessel A or a right to immediate possession of Vessel A founded on a proprietary right. The plaintiff also did not have a contractual right to possession because not all of its contractual obligations up to the due date for delivery had been performed: at [151], [152], [154] and [158].

(8) A claim in detinue lay at the suit of a person who had a right to immediate possession of goods against a person who was in possession of the goods and who, upon a proper demand and without lawful excuse, failed or refused to deliver them up. A proper demand was crucial to ground an action in detinue because it put the person in possession of the goods clearly on notice that he should no longer retain the goods but instead deliver them up to the person entitled to possession of them. On the facts, the demand on Nantong Tongbao served the essential purpose of putting the persons in actual possession of Vessel B on notice that the plaintiff was seeking Vessel B. A demand on Nantong Tongbao was a sufficient demand to found a claim in detinue against Nantong

MLC: at [159], [163] and [164].

(9) By the time the demand was made, the plaintiff had acquired a contractual right to immediate possession of Vessel B. Although Nantong MLC was not required to take positive steps to move Vessel B to the plaintiff, it could not sit by quietly and ignore the demand from the plaintiff. It had at least to acknowledge the plaintiff’s right to possession and permit the plaintiff to make arrangements at the shipyard to take possession of Vessel B. This it did not do, making the continued retention of Vessel B wrongful. Nantong MLC was thus liable to the plaintiff in detinue. Nantong MLC was ordered to deliver up Vessel B to the plaintiff and was also liable to pay the plaintiff damages...