Offshoreworks Global (L) Ltd v POSH Semco Pte Ltd [2020] (Case Summary)

22 September 2020

Case summary

Civil Appeal No 180 of 2019

Offshoreworks Global (L) Ltd v POSH Semco Pte Ltd [2020] SGCA(I) 4

--------------------------------------------------------------------------------------------------------------------------------------

Decision of the Court of Appeal (delivered by Judge of Appeal Justice Andrew Phang Boon Leong):

Outcome: The Court of Appeal dismisses the appeal and affirms the Judge’s findings on the summary judgment entered in favour of the respondent against the appellant.

Pertinent and significant points of the judgment

CoA held that under the present legal regime, the prohibitions against corporate self-representation in O 5 r 6(2) and O 12 r 1(2) of the Rules of Court (Cap 322, 2014 Rev Ed) (“ROC”) applied to the Singapore International Commercial Court (“SICC”) and that the leave mechanism in O 1 r 9(2) of the ROC was not available to foreign bodies corporate appearing in SICC matters as a possible legal avenue for corporate self-representation with leave of court. Any change in this regard must be made by way of the appropriate legislative amendments: at [32].

Background facts

• 1The Respondent, POSH Semco Ltd (“POSH”), applied for (i) summary judgment against the Appellant, Offshoreworks Global (L) Limited (“OWG”), for the sum of S$4,078,226.48 with interest and costs; and (ii) a declaration that a guarantee issued by OWG to POSH was an “on-demand performance guarantee” under SIC/Summons No 50 of 2019 (“SUM 50”).
• 2OWG and the first defendant in SUM 50, Makamin Petroleum Services Co (“MPS”), are shareholders of Makamin Offshore Saudi Ltd (“the Charterer”), with OWG being the majority shareholder. Captain Koh Chen Tien (“Cpt Koh”) is OWG’s sole shareholder and Executive Director, and was also the Managing Director of the Charterer at the material time.
• 3On 28 October 2013, the Charterer entered into a time charterparty (“the Original Charterparty”) with POSH in relation to the vessel “POSH Pelican” (“the Vessel”) on the terms of a BIMCO Supplytime 2005 standard contract and additional clauses. Pursuant to cl 41 of the Original Charterparty, the Charterer provided a bank guarantee to POSH for US$1.293m which was issued by the Royal Bank of Scotland, plc (“the RBS Guarantee”).
• 4As of 17 October 2014, POSH claimed that the Charterer owed POSH a sum of over US$3.7m pursuant to the Original Charterparty. The Charterer sought to persuade POSH to withdraw its call on the RBS Guarantee. POSH agreed to do so, provided that OWG (and three other parties related to the Charterer) furnish guarantees to POSH for the purpose of securing performance of the Charterer’s obligations under the Original Charterparty. On 24 October 2014, multiple guarantees by OWG, MPS, Cpt Koh and Dr Abdullah Aseeri Ali were signed with reference to the Original Charterparty. Of particular significance was the OWG Guarantee issued by OWG in favour of POSH, which provided that OWG “irrevocably and unconditionally guarantee[d] … the due and faithful performance by the Charterer of all its obligations contained in the Supplytime 2005”.
• 5On 15 November 2015, the Charterer and POSH entered into a settlement agreement in relation to the outstanding debt (“the Settlement Agreement”). The Settlement Agreement set out the parties’ agreement on, inter alia, (a) the Charterer’s outstanding debt under the Original Charterparty of US$2,891,241.54 as of 30 June 2015 (“the Outstanding Debt”); (b) the Charterer’s payment plan to POSH with regard to the settlement sum of US$2,119,461.56 in eight monthly instalments over a period between November 2015 and June 2016 (“the Settlement Sum”) in full and final settlement and discharge of any and all past or present claims that POSH had against the Charterer; (c) the Original Charterparty, as amended by Addendum No 1 of the Settlement Agreement (collectively referred to as “the Post-Addendum Charterparty”); and (d) that in the event that any of the eight instalments was not paid by the stipulated timeline, the entire Outstanding Debt would immediately become payable.
• 6On 26 March 2016, POSH withdrew its vessel and terminated the Charterparty for the Charterer’s alleged repudiatory breach in accordance with the three-day notification period under the early termination clause of the Post-Addendum Charterparty.

   

  The Judge’s decision

• 7In SUM 50, the Judge held that (a) summary judgment be entered in favour of POSH against OWG for the sum of US$3,306.446.50 with interest and costs (“the Summary Judgment”); and (b) OWG be granted unconditional leave to defend POSH’s claim for the remaining amount of US$771,779.98, being the difference between the 30 June 2015 Outstanding Debt and the Settlement Sum.

   

  The Court of Appeal’s decision

• 8The Court of Appeal dismissed the appeal and affirmed the Judge’s finding on the Summary Judgment.

  Preliminary issue of corporate self-representation by foreign bodies corporate

• 9The Court of Appeal held that the governing provisions that foreign bodies corporate in all proceedings before the SICC as well as in all appeals from the SICC (collectively referred to as “SICC matters”) must be represented by a solicitor. As the leave mechanism pursuant to O 1 r 9(2) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules”) did not apply to foreign bodies corporate, this possible legal route for corporate self-representation was unavailable to a party which was a foreign body corporate: at [22].
• 10Under the present legal regime, the prohibitions against corporate self-representation in O 5 r 6(2) and O 12 r 1(2) of the Rules did apply to SICC matters and that the leave mechanism in O 1 r 9(2) of the Rules was not available to foreign bodies corporate appearing in SICC matters as a possible legal avenue for corporate self-representation with leave of court. There were limits to the manner in which given provisions (here, rules of court) could be interpreted. The Court of Appeal could not effectively rewrite the relevant rules in order to achieve what it perceived would be a just and fair result: at [32].
• 11The Court of Appeal observed that it was unfortunate that the present legal regime did not permit foreign bodies corporate the possibility of availing themselves of the leave mechanism in O 1 r 9(2) of the Rules and that such an outcome was neither pragmatic nor desirable in the context of SICC matters, which almost always involved at least one party who is a foreign body corporate. The Court of Appeal highlighted this issue as a gap or lacuna in the current legal regime governing corporate self-representation, and were of the view that this issue was sufficiently significant to merit consideration for the introduction of appropriate legislative amendments in the future: at [34].

  Merits of the appeal

• 12The Court of Appeal held that in any case, OWG’s appeal ought to be dismissed even on its merits: at [35].
• 13Having examined the substance of the transaction and considered the existence of the arrangements that were concluded at about the same time at the end of October 2014 when the OWG Guarantee was given, the Court of Appeal agreed with the Judge’s finding that there was sufficient consideration in law for the OWG Guarantee: at [42].
• 14The Court of Appeal held that the Judge correctly found that Addendum No 1 of the Settlement Agreement was merely a variation in the Original Charterparty that was not so fundamental as to take one outside the terms of the OWG Guarantee, despite having noted the significant changes to the existing charter. There was also no wrongful termination as the requisite notice pursuant to cl 31(b) of the Post-Addendum Charterparty had been given from as early as 16 February 2016. The Court of Appeal also agreed with the Judge that, notwithstanding cll 3 and 11 of the Settlement Agreement, the terms of the Settlement Agreement and the obligations which arise under it did fall within the ambit of the OWG Guarantee: at [44]–[46].
• 15The Court of Appeal rejected OWG’s argument that the RBS Guarantee was not intended to apply any dues under the Settlement Agreement. The Court of Appeal also held that the amount that the Second Commercial Circuit Court at the Seat of the Commercial Court of Dammam (“the Saudi Court”) had ordered the Charterer to pay POSH should not be in any way relevant to or binding on the principal amount that the Judge had entered summary judgment for in the court below. Further, the Court of Appeal rejected OWG’s submission that it was not liable for the interest amounts claimed by POSH under Invoice Nos 2008041 and 2008387 because the claim against OWG was premised on the OWG Guarantee, which was governed by Singapore law pursuant to paragraph 15 of the OWG Guarantee. The Court of Appeal also agreed with the Judge’s holding that the indemnity provision in paragraph 4 of the OWG Guarantee was wide enough to include the interest on the claim and there was also no reason why the contractual provisions on the rate of interest set out in the Post-Addendum Charterparty should not be given effect. Finally, the Court of Appeal rejected OWG’s argument that there should be no claim in the Singapore courts because the Charterer had allegedly settled the sums due to POSH in relation to the Saudi Court proceedings. However, no settlement had in fact been reached between the parties and as of 5 August 2020, POSH had yet to receive any payment by the Charterer in relation to the order made by the Saudi Court. In this regard, the Court of Appeal also noted that the present appeal dealt solely with the liability of OWG, while any payment made by the Charterer to POSH in lieu of the Saudi Court proceedings was relevant only at the enforcement stage. It further noted that counsel for POSH had provided an undertaking at the hearing that POSH would not be seeking double recovery in either jurisdiction at the enforcement stage: at [47]–[51].

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.