Parakou Shipping v Liu Cheng Chan: Amendment of Pleadings and Fiduciary Duty

In Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others, the High Court of Singapore, on 18, 22 March 2016 and 31 March 2016, disallowed the plaintiff's application to amend its statement of claim to introduce a new cause of action against the 1st to 4th defendants for breaches of fiduciary duties related to certain ship management agreements. The court found that the amendments would cause prejudice to the defendants, give the plaintiff a second bite at the cherry, and affect the management of the court's resources.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's application for leave to amend the statement of claim was disallowed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Plaintiff sought to amend its claim to introduce a new cause of action for breach of fiduciary duty. The court disallowed the amendments.

1.7 Decision Date

30 March 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
PARAKOU INVESTMENT HOLDINGS PTE LTD	Defendant	Corporation	Costs awarded	Won	Sim Chong of Sim Chong LLC Yap Hao Jin of Sim Chong LLC
PARAKOU SHIPMANAGEMENT PTE LTD	Defendant	Corporation	Costs awarded	Won	Sim Chong of Sim Chong LLC Yap Hao Jin of Sim Chong LLC
PARAKOU SHIPPING PTE LTD (IN LIQUIDATION)	Plaintiff	Corporation	Application for leave to amend the statement of claim was disallowed	Lost	Yu Kexin of Allen & Gledhill LLP Kenneth Lim Tao Chung of Allen & Gledhill LLP Chua Xinying of Allen & Gledhill LLP Edwin Tong SC of Allen & Gledhill LLP
LIU POR	Defendant	Individual	Costs awarded	Won	Siraj Omar of Premier Law LLC Premalatha Silwaraju of Premier Law LLC
YANG JIANGUO	Defendant	Individual	Costs awarded	Won	Siraj Omar of Premier Law LLC Premalatha Silwaraju of Premier Law LLC
CHIK SAU KAM	Defendant	Individual	Costs awarded	Won	Senthil Dayalan of Eldan Law LLP Tan Shien Loon Lawrence of Eldan Law LLP Ng Jia En of Eldan Law LLP
LIU CHENG CHAN	Defendant	Individual	Costs awarded	Won	Senthil Dayalan of Eldan Law LLP Tan Shien Loon Lawrence of Eldan Law LLP Ng Jia En of Eldan Law LLP

3. Judges

Judge Name	Title	Delivered Judgment
Chua Lee Ming	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Sim Chong	Sim Chong LLC
Yap Hao Jin	Sim Chong LLC
Yu Kexin	Allen & Gledhill LLP
Kenneth Lim Tao Chung	Allen & Gledhill LLP
Chua Xinying	Allen & Gledhill LLP
Edwin Tong SC	Allen & Gledhill LLP
Siraj Omar	Premier Law LLC
Premalatha Silwaraju	Premier Law LLC
Senthil Dayalan	Eldan Law LLP
Tan Shien Loon Lawrence	Eldan Law LLP
Ng Jia En	Eldan Law LLP

4. Facts

Plaintiff sought to amend its statement of claim to introduce a new cause of action against the 1st to 4th defendants.
The proposed amendments related to certain ship management agreements (SMAs).
The plaintiff alleged breaches of fiduciary duties related to Addendum agreements to the SMAs.
The Addendum agreements changed the fee structure of the SMAs.
The plaintiff claimed the Addendum agreements were not commercial and designed to benefit the Pretty Entities.
The liquidator conceded that the SMAs were loss-making contracts for the plaintiff.
The court found that the amendments would cause prejudice to the defendants.

5. Formal Citations

Parakou Shipping Pte Ltd (in liquidation) v Liu Cheng Chan and others, Suit No 434 of 2014, [2016] SGHC 48

6. Timeline

Date	Event
2005-01-01	Liu Por became a shareholder of the plaintiff.
2006-01-01	Liu Por became Vice-President of the plaintiff.
2007-07-01	Plaintiff entered into Addendum agreements to each of the SMAs.
2008-10-01	SMAs were terminated.
2008-12-21	Liu Cheng Chan and Chik Sau Kam ceased to be shareholders of the plaintiff.
2008-12-22	Liu Por was appointed a director of the plaintiff.
2008-12-22	Yang Jianguo became a director and shareholder of the plaintiff.
2008-12-01	Pretty Entities entered into new ship management agreements with the 6th defendant.
2008-12-31	Liu Cheng Chan and Chik Sau Kam ceased to be directors of the plaintiff.
2011-04-14	Creditors of the plaintiff passed a resolution to put the plaintiff into creditors’ voluntary liquidation.
2014-01-01	Suit No 434 of 2014 filed in the High Court.
2016-02-01	3rd defendant’s Affidavit of Evidence-in-Chief filed.
2016-03-18	Plaintiff made an oral application to amend its statement of claim.
2016-03-31	Judgment delivered.

7. Legal Issues

Amendment of Pleadings
- Outcome: The court disallowed the plaintiff's application for leave to amend the statement of claim.
- Category: Procedural
- Sub-Issues:
  - Prejudice to the other party
  - Second bite at the cherry
  - Management of court resources
Breach of Fiduciary Duty
- Outcome: The court considered whether the defendants were Class 1 or Class 2 constructive trustees in respect of the new claim.
- Category: Substantive

8. Remedies Sought

Account of Profits
Account of Sums Misappropriated
Account of Sums Received as Constructive Trustees
Claw Back of Undervalued Transactions

9. Cause of Actions

Breach of Fiduciary Duty
Breach of Statutory Duties
Breach of Trust
Conspiracy to Defraud

10. Practice Areas

Commercial Litigation

11. Industries

Shipping

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Asia Business Forum Pte Ltd v Long Ai Sin	High Court	Yes	[2004] 2 SLR(R) 173	Singapore	Cited for the principle that the later an application to amend is made, the stronger the grounds required to justify it.
Sin Leng Industries Pte Ltd v Ong Chai Teck	High Court	Yes	[2006] 2 SLR(R) 235	Singapore	Cited for the principle that it is harder to say that justice favors allowing an amendment when it is sought in the middle of a trial.
Multistar Holdings Ltd v Geocon Piling & Engineering Pte Ltd	Court of Appeal	Yes	[2016] 2 SLR 1	Singapore	The plaintiff argued that the new paragraphs did not introduce a new case and were merely “different legal characterisations of the same underlying facts” requiring “no additional factual material” to advance the claim. The court disagreed.
Ong Kai Hian v Tan Hong Suan Cecilia	High Court	Yes	[2009] 3 SLR(R) 385	Singapore	Cited for the principle that the new claim was based on facts known to the plaintiff from the very beginning.
Susilawati v American Express Bank Ltd	High Court	Yes	[2009] 2 SLR(R) 737	Singapore	Cited for the principle regarding the management of the courts’ resources and scheduling.
Chwee Kin Keong v Digilandmall.com Pte Ltd	High Court	Yes	[2004] 2 SLR(R) 594	Singapore	Cited for the principle regarding the management of the courts’ resources and scheduling.
Sheagar s/o T M Veloo v Belfield International (Hong Kong) Ltd	Court of Appeal	Yes	[2014] 3 SLR 524	Singapore	Cited for the principle that judicial proceedings be conducted efficiently and with finality.
Yong Kheng Leong v Panweld Trading Pte Ltd	High Court	Yes	[2013] 1 SLR 173	Singapore	Cited for the distinction between Class 1 and Class 2 constructive trusts and that only Class 1 constructive trustees fall within the ambit of s 22 of the Limitation Act.
Gwembe Valley Development Co Ltd (in receivership) v Koshy (No 3)	Unknown	Yes	[2004] 1 BCLC 131	Unknown	Cited as an illustration of a Class 2 constructive trust.

13. Applicable Rules

Rule Name
Rules Of Court (Cap 322, R 5, 2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Limitation Act (Cap 163, 1996 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Ship Management Agreements
Addendum Agreements
Pretty Entities
Creditors’ Voluntary Liquidation
Constructive Trustee
Fiduciary Duty
Statement of Claim
Amendment of Pleadings

15.2 Keywords

Amendment of Pleadings
Fiduciary Duty
Ship Management
Liquidation

17. Areas of Law

Area Name	Relevance Score
Fiduciary Duties	80
Civil Practice	75
Constructive trusts	75
Insolvency Law	70
Director's Duties	70
Winding Up	70
Trust Law	65
Company Law	60
Tracing	50
Contract Law	40
Commercial Disputes	30
Shareholders	30

16. Subjects

Civil Procedure
Trusts
Company Law