Smoothlink Worldwide Services Pte Ltd v Regional Marine & Engineering Services Pte Ltd and another suit

• Jurisdiction: Singapore
• Judge: Chua Lee Ming J
• Judgment Date: 11 May 2020
• Neutral Citation: [2020] SGHC 94
• Court: High Court (Singapore)
• Docket Number: Suit Nos 1273 of 2018 and 421 of 2019
• Year: 2020
• Published date: 14 May 2020
• Hearing Date: 17 January 2020,15 January 2020,16 January 2020,10 January 2020,09 January 2020,29 January 2020
• Plaintiff Counsel: Yasmeen Jamil Marican (Eversheds Harry Elias LLP)
• Defendant Counsel: Navinder Singh and Yik Xin Ying (KSCGP Juris LLP)
• Subject Matter: Commercial Transactions,Sale of goods,Breach of contract,Contract,Contractual terms,Implied terms,Misrepresentation,Inducement,Debt and Recovery,Counterclaim
• Citation: [2020] SGHC 94

Chua Lee Ming J: Introduction

In each of the two consolidated suits, the plaintiff, Smoothlink Worldwide Services Pte Ltd, sued the defendant, Regional Marine & Engineering Services Pte Ltd, for $100,000, being the balance purchase price under a contract for the sale of a drilling rig by the plaintiff to the defendant. Suit No 1273 of 2018 (“S1273”) concerned a drilling rig called the “Vasu Prem” whilst Suit No 421 of 2019 (“S421”) concerned a drilling rig called the “Virat Prem”.

The defendant pleaded misrepresentation and, alternatively, breach of contract by the plaintiff and counterclaimed for damages of $3,739,260 and $2,941,260 in S1273 and S421 respectively. The defendant also sought the return of $280,000 which the defendant claimed to have paid to a third party on behalf of the plaintiff.

I found for the plaintiff and entered judgment for the plaintiff in each suit in the sum of $100,000 with interest at 5.33% from the date of each writ to judgment. I dismissed the defendant’s counterclaims. I also ordered the defendant to pay the plaintiff costs fixed at $75,000 plus disbursements to be decided by me, if not agreed. The defendant has appealed against my decision.

Background

On 1 February 2018, the plaintiff entered into separate agreements with the liquidators of Mercator Okoro FPU Pte Ltd (in creditors’ voluntary liquidation) and Mercator Okwok FPU Pte Ltd (in creditors’ voluntary liquidation) (collectively, “Mercator”) for the purchase of the Vasu Prem and the Virat Prem at the price of $1.1m each (“the Mercator Agreements”).¹ Both rigs were sold on an “as is where is basis”. The plaintiff paid 10% of the purchase price for each rig; per the Mercator Agreements, the balance of $990,000 per rig was to be paid within seven banking days after Mercator tendered Notices of Readiness.

The plaintiff’s and the defendant’s representatives met each other on several occasions. The plaintiff’s director, Mr Mohamed Eunos bin Ahmad (“Eunos”), the plaintiff’s associate, Mr Mohamed bin Haji Ismail (“Samad”), and the defendant’s director, Mr Chang Hong Ang (“Ronnie”), met on 2 February 2018 to discuss the use of the defendant’s wharf to scrap the rigs.² In addition to being a director of the plaintiff, Eunos owned the plaintiff together with his wife.³

Another meeting was held on either 6 or 7 February 2018 during which Samad gave a presentation to the defendant (“the Presentation Meeting”). It was common ground that this meeting was to discuss a possible collaboration for the plaintiff to use the defendant’s facilities to recycle the two rigs, although the plaintiff did not state the date of this meeting in its pleadings.⁴

There was some uncertainty as to the date of the Presentation Meeting. The defendant’s case as pleaded was that the presentation took place on 6 February 2018. However, some of the evidence referred to 7 February 2018. In any event, I did not think that the actual date mattered. What was relevant was what was said at this meeting.

On 8 February 2018, Eunos borrowed $280,000 (“the Loan”) from one Mr Thangarajoo s/o Innasmuthu (“Rajoo”). It was not disputed that of this amount, $220,000 was used to make payment of the 10% of the purchase price for both rigs to Mercator. Eunos and Rajoo signed a Debt Acknowledgement Form dated 8 February 2018.⁵ In his Affidavit of Evidence-in-Chief (“AEIC”), Rajoo said that he gave the loan at Ronnie’s request.⁶ Ronnie stated in his AEIC that the defendant had “made an arrangement” for Rajoo to provide the loan.⁷

On 9 February 2018, the plaintiff and the defendant signed a letter under which they agreed to share the total profits for works on the Vasu Prem and the Virat Prem equally (“the 9 February Agreement”).⁸ The 9 February Agreement did not set out any other terms.

On 12 February 2018, the plaintiff’s and the defendant’s representatives met at McDonald’s at Beauty World, Singapore (“the McDonald’s Meeting”). According to the defendant, the plaintiff called for the meeting because he could not complete the purchase of the two rigs from Mercator and wanted the defendant to take over the purchase. Eunos disputed this at first⁹ but eventually agreed that the purpose of the meeting was to discuss the defendant taking over the purchase of the two rigs from Mercator by waiving the Loan and paying the plaintiff $250,000.¹⁰

On 23 February 2018, the plaintiff entered into separate agreements with the defendant to sell the two rigs to the defendant at the price of $1.1m each (“the Vasu Prem Agreement” or “the Virat Prem Agreement”; collectively, “the Agreements”).¹¹ The Agreements provided that the defendant bought the rigs on an “as in basis”. However, it was clear that this was a typographical error and that it was meant to be “as is basis”.¹²

Pursuant to each of the Agreements: The defendant paid the plaintiff a “first deposit” of $27,500 per rig. The defendant was required to pay the plaintiff a “second deposit” of $100,000 per rig within 24 hours from the time the defendant towed the rig to its premises. The defendant paid Mercator the balance sum of $990,000 per rig.

The following also took place on the same day (ie, 23 February 2018): The plaintiff, the defendant and Mercator entered into a Deed of Novation under which the plaintiff was released from the Mercator Agreements and the defendant agreed to be bound by the Mercator Agreements in place of the plaintiff.¹³ Under cl 3 of the Deed of Novation, the sum of $110,000 that had already been paid by the plaintiff under each of the Mercator Agreements was deemed to have been paid by the defendant. Eunos and Rajoo signed a Release Agreement under which Rajoo released and discharged Eunos from the Loan.¹⁴ Clause 2 of the Release Agreement provided that it was to be executed “upon execution” of the Agreements and the Deed of Novation.

By a letter dated 27 February 2018, the defendant conveyed to the plaintiff that the defendant had been informed by its surveyor that the total weight of the two rigs was “far below” 22,000 metric tons (“MT”), and that it was conducting “some survey on the 2 rigs to ascertain the tonnage”.¹⁵

Pursuant to an agreement dated 26 March 2018, the defendant sold the two rigs to PT Vasbit Prima Niaga (“PT Vasbit”) for a total sum of $2,750,000 (“the Vasbit Agreement”).¹⁶

The plaintiff commenced S1273 and S421 in the State Courts on 25 May 2018 and 8 October 2018 respectively. As the defendant’s counterclaims exceeded the jurisdiction of the State Courts, both cases were subsequently transferred to the High Court and consolidated.

Plaintiff’s claims

It was not disputed that, pursuant to each of the Agreements, the defendant’s liability to pay the plaintiff the sum of $100,000 had fallen due. The Agreements described the sum of $100,000 as a “deposit”. The defendant (in my view, correctly) made no issue of this. It was clear from the Agreements and the Deed of Novation that that the sum of $100,000 payable under each of the Agreements was not a deposit but a payment that was due to the plaintiff upon the defendant having towed the rigs to its premises.

The question was whether the defendant could make good its counterclaims and set off such sums as were sufficient to extinguish the plaintiff’s claims.

Defendant’s counterclaims for misrepresentation

The defendant pleaded that the plaintiff had made the following representations during the Presentation Meeting:¹⁷ The Vasu Prem’s tonnage was about 13,600MT and the Virat Prem’s tonnage was about 11,700MT. The total tonnage of the two rigs was around 24,000MT. The minimum tonnage of the two rigs would be no less than 22,000MT.

The defendant also pleaded that the plaintiff had made the representations in (a) and (c) above during the McDonald’s Meeting.¹⁸ The defendant pleaded that the above representations were not true and that tonnage of each of the two rigs was only 4,697MT.¹⁹ The plaintiff denied this²⁰ and adopted the position that it did not know what the actual weights were.

The plaintiff did not dispute that at the Presentation Meeting, its representative, Samad, gave a presentation to the defendant’s representatives, during which he wrote on a whiteboard “11,700 TON” in connection with the Virat Prem, “13,600 TON” in connection with the Vasu Prem and “± 24K TON”. A photo of what was written on the whiteboard (“the Whiteboard Photo”) confirmed this.²¹

The figure “22,000MT” was not written on the whiteboard. However, Ronnie testified that Eunos and Samad had also assured the defendant that the tonnage of the two rigs would not be less than 22,000MT.²² Samad gave evidence for the defendant and his evidence supported Ronnie’s. Eunos’ evidence was that Samad had started with an estimated total weight of 22,000MT for the two rigs and subsequently told the defendant that 10,000MT “should be the minimum” and that anything more would be a “bonus”.²³

I rejected Eunos’ evidence that Samad had told the defendant that the two rigs had a minimum weight of 10,000MT. This was not the plaintiff’s pleaded case. In its defences to the counterclaims, the plaintiff had merely pleaded that it estimated the weight of the two rigs to be about 22,000MT.²⁴

I accepted the defendant’s evidence that Samad had represented 22,000MT as the minimum weight of the two rigs. Samad had given the presentation as the plaintiff’s representative and he confirmed that he had made such a representation. Further, Samad had already stated the weight of the Vasu Prem as 13,600MT and that of the Virat Prem as 11,700MT, as evidenced by the writings on the whiteboard. Together, these two weights totalled 25,300MT. It did not make sense that he would have referred to 22,000MT as the estimated total weight. In my view, it was more likely that he had referred to 22,000MT as the minimum weight of the two rigs. In its closing submissions, the plaintiff appeared to have tacitly accepted...