The "Dolphina"

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 30 December 2011
• Neutral Citation: [2011] SGHC 273
• Court: High Court (Singapore)
• Docket Number: Admiralty in Rem No 113 of 2008
• Published date: 29 February 2012
• Year: 2011
• Hearing Date: 06 March 2010,05 March 2010,02 March 2010,04 November 2011,12 March 2010,23 February 2010,22 February 2010,07 March 2010,02 November 2011,11 March 2010,08 March 2010,11 November 2011,26 February 2010,24 February 2010,16 March 2010,25 February 2010
• Plaintiff Counsel: Vivian Ang, Kenny Yap and Bryna Yeo (Allen & Gledhill LLP)
• Defendant Counsel: Prem Gurbani and Bernard Yee (Gurbani & Co)
• Subject Matter: Admiralty and Shipping
• Citation: [2011] SGHC 273

Belinda Ang Saw Ean J: Introduction

This has been, in many ways, a most unsatisfactory case, as evidenced by the length of time it has taken since the first day of trial for this judgment to be released.

The cause of this has been the evolution of the nature of the case as it radically transformed from a fairly straightforward claim for breach of contract due to misdelivery of cargo without production of the original bills of lading into a claim for civil conspiracy, with a detour through issues of subrogation. In order to accommodate fresh evidence coming to light, fundamental assumptions being challenged and jettisoned, the opening of different trains of enquiry, and new causes of action and/or submissions being formulated in response, these proceedings have occupied four tranches: From 22 February to 16 March 2010 (the “first tranche”), the action was originally mounted, fought and tried on the basis of breach of contract due to misdelivery of cargo, and I reserved judgment at the conclusion of the trial. In the course of my deliberations I began to entertain serious misgivings about certain fundamental matters that had apparently been taken for granted by both parties, but this was not taken up by them when I sought clarification of my doubts in January 2011. By 6 June 2011 (the “second tranche”), however, I was certain that the characterisation of the action as a claim for delivery of cargo without production of bill of lading was questionable in that some significant issues (including the equitable remedy of subrogation) had been overlooked, and I invited parties to address me on them. On 18 July 2011, however, one of the parties sought to introduce important new documentary evidence which would alter the complexion of the case quite dramatically. From August to September 2011 (the “third tranche”), after numerous adjournments, the new documentary evidence was finally admitted and the pleadings allowed to be amended to include a new claim in conspiracy. The proceedings finally concluded in November 2011 (the “fourth tranche”) with the hearing of the conspiracy claim.

As will become apparent, these unfortunate and unsatisfactory vicissitudes are attributable to the nature of the allegations, which involve fraud and commercial roguery implicating a number of actors; to the state of the evidence, which, though substantial, was not always presented in a coherent fashion and has had to be painstakingly pieced together (and even now there are still some missing links); and to the issues of law involved, several aspects of which are quite complex.

Dramatis Personae

Before explaining what this case is all about and exploring the facts in greater detail, it is important to first record the key characters in this saga.

The plaintiff

The plaintiff is Bank of Communications Co Ltd, Hangzhou Branch, now known as Bank of Communications Co Ltd, Zhejiang Provincial Branch (“BOC”), a mainland Chinese bank that provides financial services to import and export companies,¹ and represented in these proceedings by Ms Vivian Ang (“Ms Ang”).

The defendant

The defendant is Universal Shipping Group Inc (“Universal”), a company incorporated in Panama and the registered owner of the vessel Dolphina, represented in these proceedings by Mr Prem Gurbani (“Mr Gurbani”).

Universal has three directors: Kwan Ngen Wah (“Alvin Kwan”), his brother Kwan Ngen Chung (“Steve Kwan”), and Chong Kan Hiung (“K H Chong”).² The two shareholders of Universal, and the beneficial owners of the Dolphina, are Alvin Kwan and Steve Kwan.³ As the following paragraphs will demonstrate, these two individuals own shareholdings, and occupy directorships, in a number of other entities which feature prominently in these proceedings.

Kwantas Oil Sdn Bhd

One such company is Kwantas Oil Sdn Bhd (“KOSB”), an operator of palm oil mills and a palm oil refinery plant, as well as a wholesaler and distributor of palm oil products.⁴

That Universal and KOSB are closely connected is, in my view, amply borne out by the following: The ultimate parent company of KOSB was and is Kwantas Corporation Berhad (“KCB”),⁵ a Malaysian listed company which has also been publicly recorded in Lloyd’s Sea-Web as being the “Group Owner” of Universal,⁶ and, even as late as 22 February 2010⁷ and 2 November 2011,⁸ Universal continues to be publicly recorded in Lloyd’s Sea-Web as a “subsidiary” of KCB. Alvin Kwan, Steve Kwan and K H Chong are all directors of KOSB, as well as director-shareholders of KCB (indeed Alvin Kwan and Steve Kwan are substantial shareholders of KCB, and Steve Kwan is the Managing Director thereof).⁹ Universal provided the sea freight requirements of KCB and its subsidiaries (which I will refer to as the “KCB Group”), and those transactions were disclosed in KCB’s 2008 Annual Report as freight charges paid to a related party (namely, Universal), “a company in which certain directors of [KCB] have interest [sic]”.¹⁰ Universal occupies a physical address at 1st Floor, Fordeco Building, Jalan Singamata, 91100 Lahad Datu, Sabah, which is identical to that of KOSB and KCB,¹¹ while the domain name of Universal’s e-mail and website address – kwantas.com.my – refers to that of KOSB. Lloyd’s Sea-Web also publicly recorded Universal as having a second address at Suite 1-6-W9, 6th Floor, CPS Tower, Jalan Centre Point, 88000 Kota Kinabalu, Sabah, which is the same address that appears on Universal’s letterhead.¹² That latter address was also clearly used by KOSB as its business address, for instance, in key documents such as the charterparty relating to the charter of the Dolphina,¹³ KOSB’s commercial invoice¹⁴ and letter of indemnity,¹⁵ a letter of credit with KOSB as beneficiary,¹⁶ as well as in KOSB’s banking correspondence,¹⁷ and furthermore was the venue of choice for meetings of the board of KCB.¹⁸ In addition to the identical addresses, even though KOSB and Universal purportedly had their own staff, some employees of the former also helped out in the office of the latter.¹⁹

Dongma Oils and Fats (Guangzhou Free Trade Zone) Co, Ltd

Another company related to Universal and KOSB is Dongma Oils and Fats (Guangzhou Free Trade Zone) Co, Ltd (“Dongma”), which, inter alia, operates a palm oil refinery and other downstream installations.²⁰ Dongma’s links to Universal (through KOSB) are disclosed by the facts that: Dongma was 51% owned by KCB at the material time.²¹ Alvin Kwan, Steve Kwan and K H Chong are all directors of Dongma,²² and Steve Kwan is in fact its “Legal Representative”.²³ Wang Shi Hui (also known as Sophia Wang) (“Sophia Wang”), the assistant manager of Dongma, was a witness for Universal, and testified that she saw KOSB as Dongma’s “head office”.²⁴ The domain name of Dongma’s e-mail and website address – “kwantas.com.cn” – like that of Universal’s (see [9(d)] above) again refers to that of KOSB.

Fordeco Shipping Sdn Bhd

Yet another associated company is Fordeco Shipping Sdn Bhd (“Fordeco”), which acted as Universal’s shipping representative,²⁵ and is connected to Universal by the following facts: Alvin Kwan and Steve Kwan are director-shareholders of Kwan Ah Hee Holdings Ltd, which wholly owns Fordeco.²⁶ Universal and Fordeco occupy the same physical address (which is the same as that of KOSB and KCB (see [9(d)] above)).²⁷ KOSB was formerly known as Fordeco Oil Sdn Bhd.²⁸ Universal’s shipping manager, Yong Kui Fong (“K F Yong”), who was authorised to run the commercial business of Universal, was also being employed by Fordeco.²⁹

Zhejiang Zhongguang Industry Co Ltd

A company known as Zhejiang Zhongguang Industry Co Ltd (“Zhongguang”) was a customer of BOC and a buyer of palm oil from KOSB.

Felda Vegetable Oil Products Sdn Bhd

Felda Vegetable Oil Products Sdn Bhd (“Felda”) is a Malaysian company in the business of refining crude palm oil and palm kernel oil for the oleochemical industries.

Ningbo Shanke Import and Export Co Ltd

Ningbo Shanke Import and Export Co Ltd (“Shanke”), like Zhongguang, is a customer of KOSB,³⁰ and there is some suggestion that Zhongguang was a nominee buyer of KOSB’s palm oil for Shanke in relation to the events leading to these proceedings.³¹

Beyond that, very little is known about Shanke, save that a Ms “Xu Feng Zheng” (also known as Xu Zheng Feng) seems to have been acting on its behalf at the material time.

Malayan Banking Berhad

Malayan Banking Berhad (“Maybank”) played a number of different roles in this case, some of which did not come to light until the third tranche of the proceedings, but it can now be said with some confidence that, at the material time, Maybank was the banker of both KOSB and Felda, but that on one occasion it was not acting on their behalf as banker or agent, but in its own right as principal.

These Proceedings

How I intend to approach the exposition of the facts and procedural history of this case is to set out the four tranches over which these proceedings took place. Within each tranche I then explain what facts were available to me (and what were missing). I also set out some of my findings in relation to the disputed facts, although legal analysis is deferred to subsequent portions of this judgment.

I should also mention, for completeness, that before this action came on for trial before me, there had been a failed attempt by BOC to obtain summary judgment against Universal, as well as a number of other interlocutory matters such as an application by Universal for security for costs.

First Tranche

The first tranche of these proceedings appeared to be a fairly straightforward claim by BOC against Universal for breach of contract for misdelivery of cargo without production of the original bills of lading, based on the following facts.

Available evidence

The Zhongguang Contract

On or around 16 January 2008, KOSB entered into a contract (numbered ZJZ/RPL/16118/0308) with Zhongguang, pursuant...