The “Ocean Winner”

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeAng Cheng Hock J
Docket NumberAdmiralty in Rem No 86 of 2020 (Summons No 1912 of 2020); Admiralty in Rem No 87 of 2020 (Summons No 1913 of 2020); Admiralty in Rem No 88 of 2020 (Summons No 1914 of 2020); Admiralty in Rem No 89 of 2020 (Summons No 1915 of 2020)

[2021] SGHC 8

General Division of the High Court

Ang Cheng Hock J

Admiralty in Rem No 86 of 2020 (Summons No 1912 of 2020); Admiralty in Rem No 87 of 2020 (Summons No 1913 of 2020); Admiralty in Rem No 88 of 2020 (Summons No 1914 of 2020); Admiralty in Rem No 89 of 2020 (Summons No 1915 of 2020)

The “Ocean Winner” and other matters

Tan Poh Ling Wendy, Tang Yuan Jonathan, Kelley Wong Kar Ee (Morgan Lewis Stamford LLC) for the plaintiff;

Lee Eng Beng SC, Ng Hui Ping Sheila, Ting Yong Hong, Ho Qi Rui Daniel (Rajah & Tann Singapore LLP) for the defendant.

Case(s) referred to

Bolbina, The [1993] 3 SLR(R) 894; [1994] 1 SLR 554 (folld)

Bunga Melati 5, The [2012] 4 SLR 546 (refd)

Chee Siok Chin v Minister for Home Affairs [2006] 1 SLR(R) 582; [2006] 1 SLR 582 (refd)

Chem Orchid, The [2015] 2 SLR 1020 (refd)

Dictator, The [1892] P 304 (folld)

Fierbinti, The [1994] 3 SLR(R) 574; [1994] 3 SLR 864 (folld)

Hull 308, The [1991] 2 SLR(R) 643; [1991] SLR 304 (refd)

IM Skaugen SE, Re [2019] 3 SLR 979 (refd)

Indian Grace, The (No 2) [1998] 1 Lloyd's Rep 1 (refd)

Jian He, The [1999] 3 SLR(R) 432; [2000] 1 SLR 8 (refd)

Kuo Fen Ching v Dauphin Offshore Engineering & Trading Pte Ltd [1999] 2 SLR(R) 793; [1999] 3 SLR 721 (refd)

Kusu Island, The [1989] 2 SLR(R) 267; [1989] SLR 119 (folld)

Neo Corp Pte Ltd v Neocorp Innovations Pte Ltd [2005] 4 SLR(R) 681; [2005] 4 SLR 681 (refd)

PP v Lam Leng Hung [2018] 1 SLR 659 (refd)

Royal Bank of Scotland NV, The v TT International Ltd [2012] 2 SLR 213 (refd)

Tan Cheng Bock v AG [2017] 2 SLR 850 (refd)

Trade Resolve, The [1999] 2 SLR(R) 107; [1999] 4 SLR 424 (folld)

Legislation referred to

Companies Act (Cap 50, 1988 Rev Ed) ss 262(3), 262(3)(a)

Companies Act (Cap 50, 2006 Rev Ed) ss 211B(8)(c), 211B(8)(d), 211B(8)(e) (consd); ss 210, 210(1), 210(10), 211, 211A–211J, 211B, 211B(1), 211B(4), 211B(4)(a), 211B(8), 211B(8)(a)–211B(8)(f), 211B(8)(c)–211B(8)(d), 211B(13), 212, 227AA–227X, 227C, 227C(c), 227D, 227D(4)(a)–227D(4)(f), 227D(4)(d), 258–262, 260, 262(3)

Distress Act (Cap 84, 2013 Rev Ed) s 7

High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) ss 3, 4, 4(2), 4(3), 4(4), 4(4)(i)

Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) ss 63–72, 64(8)(c), 64(8)(d), 64(8)(e), 88(1), 95, 96, 129, 129–133, 130(2), 133(1)(a), 526(1)(b)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 12 r 7(1), O 18 r 19(1) (consd); O 18 r 19(1)(b), O 18 r 19(1)(d), O 46 r 1

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) s 13

Admiralty and Shipping — Practice and procedure of action in rem — Writ in rem — Plaintiff filing admiralty in rem writs against ships without leave of court while there was subsisting moratorium under s 211B Companies Act (Cap 50, 2006 Rev Ed) in favour of ships' bareboat charterer — Whether plaintiff required leave of court to file admiralty in rem writs — Section 211B Companies Act (Cap 50, 2006 Rev Ed)

Civil Procedure — Striking out — Whether admiralty in rem writs should be struck out or set aside because they were filed without leave of court — Order 12 r 7(1) and O 18 r 19(1) Rules of Court (Cap 322, R 5, 2014 Rev Ed)

Companies — Schemes of arrangement — Whether filing of admiralty in rem writ was commencement of “proceedings” against bareboat charterer under s 211B(8)(c) Companies Act (Cap 50, 2006 Rev Ed) — Whether filing of admiralty in rem writ was “execution, distress or other legal process” against “property” of bareboat charterer under s 211B(8)(d) Companies Act — Sections 211B, 211B(8)(c) and 211B(8)(d) Companies Act (Cap 50, 2006 Rev Ed)

Facts

The present applications in Summonses Nos 1912–1915 of 2020 (“the Summonses”) were brought by the judicial managers of Ocean Tankers (Pte) Ltd (“OTPL”) to set aside and/or strike out four admiralty in rem writs (collectively, “the Writs”) filed by the plaintiff, PetroChina International (Singapore) Pte Ltd (“PetroChina”), on 22 April 2020 against four vessels which had been demise chartered by OTPL. The basis for these applications was that there was a subsisting automatic moratorium under s 211B of the Companies Act (Cap 50, 2006 Rev Ed) (“CA”) which applied in OTPL's favour at the time when the Writs were filed.

PetroChina was the “owner of and/or shipper and/or consignee and/or lawful holder” of certain bills of lading in respect of cargo shipped onboard the vessels named in the Writs (collectively, “the Vessels”). At all material times, OTPL was the bareboat or demise charterer of the Vessels: “Ocean Winner” in Admiralty in Rem No 86 of 2020 (“ADM 86”); “Chao Hu” in Admiralty in Rem No 87 of 2020 (“ADM 87”); “Ocean Goby” in Admiralty in Rem No 88 of 2020 (“ADM 88”); and “Ocean Jack” in Admiralty in Rem No 89 of 2020 (“ADM 89”). The Vessels were owned by subsidiaries of either Xihe Holdings Pte Ltd or Xihe Capital Pte Ltd (all collectively referred to as the “Xihe Group”).

On 17 April 2020, OTPL filed Originating Summons No 406 of 2020 (“OS 406”) for moratorium relief pursuant to s 211B(1) of the CA (“s 211B moratorium”). An automatic moratorium came into effect upon the filing of the application under s 211B of the CA, which was to last for 30 days or until the application was heard and determined, whichever came earlier.

On 22 April 2020, PetroChina filed the Writs for ADM 86–89. The Writs named the defendant as the “Owner and/or Demise Charterer” of the respective Vessels. They disclosed cargo claims by PetroChina against the respective Vessels.

On 6 May 2020, OTPL filed: (a) Summons No 1902 of 2020 (“SUM 1902”) to withdraw its application in OS 406 for moratorium relief; (b) Originating Summons No 452 of 2020 (“OS 452”) for an order that it be placed under judicial management; and (c) Summons No 1903 of 2020 (“SUM 1903”) for an order that, pending the determination of OS 452, it be placed under interim judicial management (“IJM”).

On 8 May 2020, OTPL entered an appearance in ADM 86–89 and filed the Summonses to set aside or strike out the Writs under O 12 r 7(1) and/or O 18 r 19(1) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”).

On 12 May 2020, a High Court judge granted OTPL's application in SUM 1902 to withdraw OS 406. Therefore, the s 211B moratorium flowing from the filing of OS 406 was no longer in place. The judge also granted OTPL's application in SUM 1903 for it to be placed under IJM. On 7 August 2020, the judge granted OS 452 and OTPL's interim judicial managers were appointed as its judicial managers.

None of the Writs had been served on the Vessels. On 1 October 2020, OTPL filed Summons No 4257 of 2020 (“SUM 4257”) for leave to disclaim unprofitable contracts previously entered into by OTPL, including bareboat charter agreements for 96 vessels including the Vessels. On 23 November 2020, the High Court allowed the application to disclaim 11 of the bareboat charterparties, including those for Ocean Winner and Chao Hu. For certain other charterparties, including those for Ocean Goby and Ocean Jack, the application for leave to disclaim those contracts was adjourned.

OTPL relied on ss 211B(8)(c)–211B(8)(d) of the CA to submit that the Writs could not be filed without leave of court. Two main issues arose for determination in this case. First, was the filing of the admiralty in rem Writs the commencement of “proceedings” against “the company”, OTPL, under s 211B(8)(c) of the CA? Second, was the filing of the admiralty in rem Writs an “execution, distress or other legal process” against “property” of OTPL under s 211B(8)(d) of the CA?

Held, dismissing the applications:

(1) The filing of the Writs was not the commencement of “proceedings” within the meaning of s 211B(8) of the CA, since it merely created the security interest (viz, the statutory lien, granted by s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) (“HCAJA”)) for the plaintiff. The admiralty jurisdiction of the court was not yet invoked. In that limited sense, the action did not substantively “commence” until service of the Writs. The filing of the admiralty in rem writ merely crystallised the claimant's security interest, and the company was not denied any “breathing space” by the mere filing of the admiralty writs or was in any way hindered in its efforts to devise a scheme of arrangement: at [35], [58] and [71].

(2) If the plaintiff was unable to file the admiralty in rem writ to even create its statutory lien, the plaintiff's right to a security interest in the form of the statutory lien was potentially at risk of being destroyed by the shipowners. This was because the shipowner could defeat the plaintiff's in rem claim by terminating the bareboat charters with the charterers' agreement and accepting physical redelivery of the vessel before the writ was filed. While s 211B of the CA was intended to protect companies from being distracted by having to defend legal proceedings while devising a scheme proposal, it was never intended to defeat or deny the creation of substantive legal rights: at [61].

(3) That was precisely what OTPL and the Xihe Group attempted to do in this case. The person who would be liable in personam for PetroChina's cargo claims in the Writs was the bareboat charterer (OTPL), not the Vessels' owners. Yet, on or around 18 May 2020, after OTPL had been placed under IJM, OTPL sought to terminate the majority of its bareboat charterparties by redelivering the vessels to the respective Xihe Group shipowners. This was an obvious attempt to ring fence the Xihe Group's assets. The termination of the bareboat charterparties for Ocean Winner and Chao Hu (and potentially Ocean Goby and Ocean Jack) prevented further admiralty in rem writs from being issued against these ships pursuant to s 4(4) of the HCAJA, since OTPL would no longer be the ships' bareboat charterer: at [62] and [64].

(4) The fact that OTPL's judicial managers sought to disclaim the bareboat charterparties for all four of the Vessels on the basis that they were “unprofitable...

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