Bahtera Offshore v Sim Kok Beng: Setting Aside Mareva Injunction for Non-Disclosure

In Bahtera Offshore (M) Sdn Bhd v Sim Kok Beng and Another, the Singapore High Court heard an application to set aside a Mareva injunction. Bahtera Offshore, a Malaysian shipowner, sought the injunction against Sim Kok Beng and Intraline Resources Sdn Bhd (the Defendants) for conspiracy to evade payment of charterhire debts. The court, presided over by Chan Seng Onn J, allowed the Defendants' application, finding that Bahtera Offshore had failed to make full and frank disclosure of material facts, including the extension of a Section 176 Order and the approval of a scheme of arrangement by the Second Defendant's unsecured creditors. The court also found that the Plaintiff did not have a good arguable case and there was no real risk of asset dissipation.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Defendants' application to set aside the ex parte Mareva injunction obtained on 12 February 2009 allowed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court set aside a Mareva injunction due to Bahtera Offshore's material non-disclosure and misleading conduct regarding a scheme of arrangement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Bahtera Offshore (M) Sdn BhdPlaintiffCorporationApplication dismissedLost
Sim Kok BengDefendantIndividualApplication allowedWon
Intraline Resources Sdn BhdDefendantCorporationApplication allowedWon

3. Judges

Judge NameTitleDelivered Judgment
Chan Seng OnnJudgeYes

4. Counsels

Counsel NameOrganization
Liew Teck HuatGlobal Law Alliance LLC
Wang YingyuGlobal Law Alliance LLC
Subramanian A PillaiACIES Law Corporation

4. Facts

  1. Plaintiff is a Malaysian company engaged in business as shipowners/charterers.
  2. Second Defendant is a Malaysian company engaged in business as marine contractors.
  3. First Defendant is the shareholder/director of the Second Defendant.
  4. Between July to November 2007, the Second Defendant chartered several vessels from the Plaintiff.
  5. By 28 January 2008, the Second Defendant owed the Plaintiff RM 3,728,052.40 and USD 539,342.29 in charterhire.
  6. Plaintiff initiated arbitration proceedings in Kuala Lumpur against the Second Defendant for payment of the outstanding charterhire.
  7. Plaintiff commenced proceedings in Kuala Lumpur to obtain security for the arbitration.
  8. On 21 March 2008, the Plaintiff obtained a worldwide Mareva injunction on an ex parte basis in the Security Action.
  9. On 25 June 2008, the Second Defendant commenced separate proceedings in the Shah Alam High Court for the equivalent of Judicial Management.
  10. On 23 July 2008, the court made an order for a stay of all proceedings against the Second Defendant.
  11. On 12 February 2009, Tay Yong Kwang J granted an ex parte worldwide Mareva injunction in Summons No. 242 of 2009.
  12. The Plaintiff failed to disclose that the Section 176 Order was extended and that the extended Order was amended to bind the Plaintiff.
  13. The Plaintiff failed to disclose that a scheme of arrangement had been proposed and approved by the majority of the Second Defendant’s unsecured creditors.

5. Formal Citations

  1. Bahtera Offshore (M) Sdn Bhd v Sim Kok Beng and Another, Suit 47/2009, SUM 1154/2009, 1328/2009, [2009] SGHC 171

6. Timeline

DateEvent
Second Defendant chartered several vessels from the Plaintiff
Second Defendant chartered several vessels from the Plaintiff
Second Defendant owed Plaintiff RM 3,728,052.40 and USD 539,342.29 in charterhire
Plaintiff obtained a worldwide Mareva injunction on an ex parte basis in the Security Action
Second Defendant commenced Section 176 Action
Court made an order for a stay of all proceedings against the Second Defendant
Extended Section 176 Order obtained
Amended extended Order was published and served on the Plaintiff
Second Defendant sent a Notice of the Unsecured Creditors meeting to the Plaintiff
Unsecured Creditors Meeting convened
A copy of the Minutes of the Unsecured Creditors Meeting was sent to the Plaintiff and received by it
Plaintiff filed its ex parte application for a worldwide Mareva injunction
Tay Yong Kwang J granted an ex parte worldwide Mareva injunction
Defendants applied to set aside the Singapore injunction in Summons No. 1154 of 2009
Judgment issued

7. Legal Issues

  1. Culpable material non-disclosure
    • Outcome: The court found that the Plaintiff had intentionally set out to mislead the court on material facts pertaining to the grant of the Mareva injunction.
    • Category: Procedural
    • Sub-Issues:
      • Suppression of material facts
      • Distortion of material facts
      • Failure to disclose extensions and amendments to the Section 176 Order
      • Failure to disclose material facts relating to the Second Defendant’s scheme of arrangement with unsecured creditors which included the Plaintiff
    • Related Cases:
      • [1917] 1 KB 486
      • [1985] FSR 87
      • [2008] 4 SLR 994
      • [1988] 1 WLR 1350
      • [1992] 1 SLR 562
      • [1992] 2 SLR 980
      • [2000] 2 SLR 750
      • [2006] 1 SLR 901
      • [2009] 1 SLR 1000
  2. Test to determine whether full and frank disclosure had been made
    • Outcome: The court outlined the principles governing full and frank disclosure, including the duty to disclose all material facts, the materiality of facts, and the court's discretion in discharging injunctions.
    • Category: Procedural
    • Related Cases:
      • [1917] 1 KB 486
      • [1985] FSR 87
      • [2008] 4 SLR 994
      • [1988] 1 WLR 1350
      • [1992] 1 SLR 562
      • [1992] 2 SLR 980
      • [2000] 2 SLR 750
      • [2006] 1 SLR 901
      • [2009] 1 SLR 1000
  3. Conspiracy
    • Outcome: The court found that there was no reliable prima facie evidence of conspiracy between the First and Second Defendant.
    • Category: Substantive
    • Related Cases:
      • [1997] 1 SLR 390
      • [2000] 1 SLR 385
      • [2009] SGCA 18
      • [1994] 1 SLR 534
  4. Risk of asset dissipation
    • Outcome: The court found that there was no real risk of asset dissipation.
    • Category: Substantive
    • Related Cases:
      • [1984] 1 All ER 398
      • [1983] 1 MLJ 25
      • [1997] 1 SLR 604
      • [2003] 1 SLR 157
      • [2009] 1 SLR 1000

8. Remedies Sought

  1. Mareva injunction

9. Cause of Actions

  • Conspiracy

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
The King v The General Commissioners for the Purposes of the Income Tax Acts for the District of Kensington; Ex parte Princess Edmond de PolignacKing's BenchYes[1917] 1 KB 486England and WalesCited for the principle that a person making an ex parte application must make the fullest possible disclosure of all material facts.
Bank Mellat v NikpourNot specifiedYes[1985] FSR 87England and WalesCited for the principle that a plaintiff seeking a Mareva injunction must make full and frank disclosure of all material facts.
The Vasiliy GolovninNot specifiedYes[2008] 4 SLR 994SingaporeCited for the principle that the judge hearing an ex parte application may not be appropriately sensitised to the real merits of the application and the potentially hazardous ramifications of the remedy.
Brink’s-MAT Ltd v ElcombeNot specifiedYes[1988] 1 WLR 1350England and WalesCited for principles regarding the duty to make full and frank disclosure in ex parte applications.
Poon Kng Siang v Tan Ah KengNot specifiedYes[1992] 1 SLR 562SingaporeCited for the principle that the applicant should make full and frank disclosure of all facts and matters which could or would reasonably be taken into account by the judge.
Nikkomann Co Pte Ltd v Yulean Trading Pte LtdNot specifiedYes[1992] 2 SLR 980SingaporeCited for the principle that the court would consider whether the non-disclosure is of such materiality as to justify or require the immediate discharge of the interim orders without examination of the merits.
Tay Long Kee Impex Pte Ltd v Tan Beng HuwahNot specifiedYes[2000] 2 SLR 750SingaporeCited for the principle that if the defendants successfully show that the plaintiff has misrepresented or suppressed material facts in obtaining the injunction, then the court hearing the discharge application would make such order as it deems fair and just in all the circumstances.
Asian Corporate Services (SEA) v Eastwest Management (Singapore Branch)Not specifiedYes[2006] 1 SLR 901SingaporeCited for principles regarding the duty to make full and frank disclosure in ex parte applications.
Multi-Code Electronics Industries (M) Bhd and Another v Toh Chun Toh Gordon and OthersNot specifiedYes[2009] 1 SLR 1000SingaporeCited for principles regarding the duty to make full and frank disclosure in ex parte applications and the court's discretion in discharging injunctions.
Mohamed Said bin Ali v Ka Wah BankNot specifiedYes[1989] SLR 667SingaporeCited for the principle that the court may continue the injunction notwithstanding non-disclosure.
Lee Hung Khoon v Yeo Tang MuiNot specifiedYes[1990] SLR 509SingaporeCited for the principle that the court may continue the injunction notwithstanding non-disclosure.
Lloyds Bowmaker Ltd v Britannia Arrow HoldingsNot specifiedYes[1988] 1 WLR 1337England and WalesCited for the principle that the court has discretion whether to grant a second Mareva injunction at a stage when the whole of the facts, including that of the original non-disclosure, are before it.
Yardley & Co Ltd v HigsonsNot specifiedYes[1984] FSR 304England and WalesCited for principles regarding non-disclosure.
Eastglen International Corp v Monpare SANot specifiedYes(1987) 137 NLJ 56England and WalesCited for principles regarding non-disclosure.
Ninemia Maritime Corp v Trave Schiffarhtsgesellschaft mbH & Co (“The Niedersachsen”)Not specifiedYes[1984] 1 All ER 398England and WalesCited for the definition of a 'good arguable case' in the context of Mareva injunctions.
Amixco Asia Pte Ltd v Bank Negara Indonesia 1946Court of AppealYes[1992] 1 SLR 703SingaporeCited for the definition of a 'good arguable case' in the context of Mareva injunctions.
Quah Kay Tee v Ong & Co Pte LtdNot specifiedYes[1997] 1 SLR 390SingaporeCited for the elements of conspiracy by unlawful means and conspiracy by lawful means.
Chew Kong Huat v Ricwil (Singapore) Pte LtdNot specifiedYes[2000] 1 SLR 385SingaporeCited for the elements of conspiracy by unlawful means and conspiracy by lawful means.
Beckkett Pte Ltd v Deutsche Bank AG and Another and Another AppealCourt of AppealYes[2009] SGCA 18SingaporeCited for the elements of conspiracy by unlawful means and conspiracy by lawful means.
Seagate Technology (S) Pte Ltd v Heng Eng LiNot specifiedYes[1994] 1 SLR 534SingaporeCited for the principle that the existence of an agreement or understanding between the alleged conspirators is the starting point to all claims in conspiracy.
Art Trend Ltd v Blue Dolphin (Pte) Ltd & OrsNot specifiedYes[1983] 1 MLJ 25MalaysiaCited for the principle that the plaintiff must show that there is a real risk that the defendant might dispose of or dissipate his assets, such that the judgment may remain unsatisfied.
Choy Chee Keen Collin v Public Utilities BoardNot specifiedYes[1997] 1 SLR 604SingaporeCited for the principle that the plaintiff must show that there is a real risk that the defendant might dispose of or dissipate his assets, such that the judgment may remain unsatisfied.
Guan Chong Cocoa Manufacturers v Pratiwi Shipping SANot specifiedYes[2003] 1 SLR 157SingaporeCited for the principle that the plaintiff must show that there is a real risk that the defendant might dispose of or dissipate his assets, such that the judgment may remain unsatisfied.
European Grain & Shipping v Compania Naviera Euro-Asia SANot specifiedYes[1989] SLR 1001SingaporeCited for the principle that the plaintiff must show that there is a real risk that the defendant might dispose of or dissipate his assets, such that the judgment may remain unsatisfied.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R5, 2006 Rev Ed), Order 29 r 1

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed) s 4(10)Singapore
Supreme Court of Judicature Act (Cap 322) s 18(2)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Mareva injunction
  • Full and frank disclosure
  • Material non-disclosure
  • Scheme of arrangement
  • Section 176 Order
  • Conspiracy
  • Asset dissipation
  • Charterhire
  • Ex parte application

15.2 Keywords

  • Mareva injunction
  • Non-disclosure
  • Singapore
  • Civil Procedure
  • Injunctions
  • Commercial Litigation

17. Areas of Law

Area NameRelevance Score
Mareva Injunctions95
Material non-disclosure90
Civil Procedure80
Injunctions75
Fraud and Deceit60
Restructuring and Insolvency50
Avoidance of transfer40
Contract Law30
Commercial Disputes25
Company Law20

16. Subjects

  • Civil Procedure
  • Injunctions
  • Commercial Litigation