Malayan Banking v ASL Shipyard: Priority of Charges, Conspiracy, Malicious Prosecution

In Malayan Banking Bhd v ASL Shipyard Pte Ltd and others, the High Court of Singapore addressed a dispute between Malayan Banking Berhad (MBB) and ASL Shipyard Pte Ltd, PT ASL Shipyard Indonesia, Bakri Navigation Company Ltd, and Red Sea Marine Services Ltd, concerning credit facilities extended to NGV Tech Sdn Bhd, secured by a debenture. MBB claimed an interest in Hull 1118 based on fixed or floating charges and alleged a conspiracy to deprive MBB of its security. The court dismissed MBB's claim, finding Red Sea Marine Services Ltd's interest in Hull 1118 superior and no conspiracy. The court ruled in favor of the defendants on the claim and for the plaintiff on the counterclaim for malicious prosecution.

1. Case Overview

1.1 Court

High Court of Singapore

1.2 Outcome

Judgment for the Defendants on the claim and for the Plaintiff on the counterclaim for malicious prosecution.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court dismisses Malayan Banking's claim against ASL Shipyard regarding vessel charges, conspiracy, and malicious prosecution.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Malayan Banking BerhadPlaintiffCorporationClaim DismissedLost
Bakri Navigation Company LtdDefendantCorporationClaim AllowedWon
Red Sea Marine Services LtdDefendantCorporationClaim AllowedWon
ASL Shipyard Pte LtdDefendantCorporationClaim AllowedWon
PT ASL Shipyard IndonesiaDefendantCorporationClaim AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJudgeYes

4. Counsels

Counsel NameOrganization
Prem GurbaniGurbani & Co LLC
Govintharasah s/o RamanathanGurbani & Co LLC
Wu Lennon Leong ChongGurbani & Co LLC
Bazul Ashhab bin Abdul KaderOon & Bazul LLP
Lailatulqadriah binte JaffarOon & Bazul LLP
Nora Jessica Chan Kai LinOon & Bazul LLP
Cassandra Chow QileiOon & Bazul LLP

4. Facts

  1. MBB extended credit facilities to NGV, secured by a debenture creating fixed and floating charges.
  2. NGV entered into a shipbuilding contract with Bakri for Hull 1118, later novated to Red Sea.
  3. NGV and Red Sea entered into Price Reduction Agreements, reducing the contract price of Hulls 1117 and 1118.
  4. NGV transferred title and possession of Hulls 1117 and 1118 to Red Sea via Completion Contracts.
  5. NGV defaulted on credit facilities, leading MBB to crystallize its floating charge.
  6. MBB commenced action and obtained an injunction restraining the defendants from dealing with Hull 1118.
  7. Red Sea furnished a banker’s guarantee, and the Injunction was discharged.

5. Formal Citations

  1. Malayan Banking Bhd v ASL Shipyard Pte Ltd and others, Suit No 673 of 2013, [2019] SGHC 61

6. Timeline

DateEvent
Bakri commissioned vessels from NGV
Bakri commissioned Hulls 1090 and 1091 from NGV
Bakri commissioned Hulls 1117 and 1118 from NGV
Bakri novated shipbuilding contracts for Hulls 1117 and 1118 to Red Sea
NGV assigned shipbuilding contract proceeds to MBB
NGV was obliged to deliver Hulls 1090 and 1091
NGV and Red Sea agreed to reduce the contract price of Hulls 1117 and 1118
NGV assigned shipbuilding contract proceeds to MBB
NGV was obliged to deliver Hull 1117
NGV was obliged to deliver Hull 1118
NGV entered into agency agreements with QIM
NGV and QIM executed an addendum to the Agency Agreements
NGV and Red Sea executed Completion Contracts for Hulls 1117 and 1118
Red Sea gained title to Hull 1118
NGV appointed Ernst & Young as monitoring accountants
NGV experienced difficulty servicing credit facilities
NGV informed Red Sea it could not complete vessel construction
NGV transferred vessels to ASL Shipyard Pte Ltd and PT ASL Shipyard Indonesia for completion
MBB served notices crystallizing floating charge
MBB terminated credit facilities
Ernst & Young appointed as NGV’s receivers and managers
NGV ordered to be wound up in Malaysia
Red Sea de-registered and re-registered Hulls 1117 and 1118
Hull 1117 delivered to Red Sea, Hull 1118 delivered to SEAPA
MBB commenced action
MBB applied for injunction
Pre-trial conference
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Hearing Date
Judgment reserved

7. Legal Issues

  1. Priority of Security Interests
    • Outcome: The court held that Red Sea's interest in Hull 1118 was superior to MBB's.
    • Category: Substantive
  2. Crystallization of Floating Charge
    • Outcome: The court found that MBB's floating charge only crystallized when MBB gave NGV written notice.
    • Category: Substantive
  3. Conspiracy to Deprive Security Interest
    • Outcome: The court rejected MBB's claim that the defendants conspired with NGV to deprive MBB of its interest in Hull 1118.
    • Category: Substantive
  4. Malicious Prosecution in Civil Proceedings
    • Outcome: The court held that the tort of malicious prosecution does not apply to civil proceedings generally.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages
  2. Injunction

9. Cause of Actions

  • Breach of Contract
  • Conspiracy
  • Malicious Prosecution

10. Practice Areas

  • Commercial Litigation
  • Shipping Law
  • Banking Law

11. Industries

  • Shipping
  • Banking

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Multi-Pak Singapore Pte Ltd (in receivership) v Intraco Ltd and othersHigh CourtNo[1992] 2 SLR(R) 382SingaporeCited regarding the rule of pleading that a plaintiff must state specifically in its statement of claim the relief or remedy which it seeks.
V Nithia (co-administratrix of the estate of Ponnusamy Sivapakiam, deceased) v Buthmanaban s/o Vaithilingam and anotherHigh CourtNo[2015] 5 SLR 1422SingaporeCited regarding the rule of pleading that a plaintiff must state specifically in its statement of claim the relief or remedy which it seeks.
Sun Electric Pte Ltd and another v Menrva Solutions Pte Ltd and anotherHigh CourtNo[2018] SGHC 264SingaporeCited regarding the courts may allow an unpleaded point to be raised if no prejudice is caused to the other party
Rabiah Bee bte Mohamed Ibrahim v Salem IbrahimHigh CourtNo[2007] 2 SLR(R) 655SingaporeCited regarding depriving the defendants of all opportunity to rebut MBB’s case on Hull 1117 and would cause them real prejudice
Keimfarben GmbH & Co KG v Soo Nam YuenHigh CourtNo[2004] 3 SLR(R) 534SingaporeCited regarding a failure to raise a timely objection to inadmissible evidence does not make the evidence admissible
Teknikal Dan Kejuruteraan Pte Ltd v Resources Development Corporation (Pte) LtdHigh CourtNo[1992] SGHC 321SingaporeCited regarding a failure to raise a timely objection to inadmissible evidence does not make the evidence admissible
Nagase Singapore Pte Ltd v Ching Kai Huat and othersHigh CourtNo[2007] 3 SLR(R) 265SingaporeCited regarding the plaintiff failed to raise any objections on the ‘bare denials’ point in respect of any affidavits in its objections to contents of affidavits of evidence-in-chief
Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd)Court of AppealNo[2015] 5 SLR 1187SingaporeCited regarding the task of the court is to ascertain the objective intention of the parties at the time they entered into the contract, paying close attention to both text and context
Transocean Offshore International Ventures Ltd v Burgundy Global Exploration CorpCourt of AppealNo[2013] 3 SLR 1017SingaporeCited regarding the phrase must be read ejusdem generis with the other parts of cl 3.1(a)(ii)
Yarmouth v FranceQueen's Bench DivisionNo(1887) 19 QBD 647England and WalesCited regarding the term “stock in trade” refers to assets which a business trades for profit
Jurong Data Centre Development Pte Ltd (provisional liquidator appointed) (receivers and managers appointed) v M+W Singapore Pte Ltd and othersHigh CourtNo[2011] 3 SLR 337SingaporeCited regarding the assets charged as security are permanently appropriated to the payment of the sum charged, in such a way as to give the chargee a proprietary interest in the assets
Agnew v Commissioner of Inland RevenuePrivy Council (UK)No[2001] 2 AC 710United KingdomCited regarding the assets charged as security are permanently appropriated to the payment of the sum charged, in such a way as to give the chargee a proprietary interest in the assets
Re BrightlifeChancery DivisionNo[1987] 1 Ch 200England and WalesCited regarding a floating charge enables a business to “offer the security of a charge over the whole of the [business’] undertaking without inhibiting its ability to trade
Re Lin Securities (Pte) Ltd; Chi Man Kwong Peter and others v Asia Commercial Bank and othersHigh CourtNo[1988] 1 SLR(R) 220SingaporeCited regarding a floating charge enables a business to “offer the security of a charge over the whole of the [business’] undertaking without inhibiting its ability to trade
Muhibbah Engineering (M) Bhd v Pemungut Duti SetemHigh Court of MalayaNo[2017] 6 MLJ 564MalaysiaCited regarding an encumbrance granted by D in favour of C gives C the right to have recourse to property belonging to D for satisfaction in the event that D defaults in performance of the contractual obligation
Malayan Banking Bhd v Worthy Builders Sdn Bhd & OrsHigh Court of MalayaNo[2015] 3 MLJ 791MalaysiaCited regarding an encumbrance granted by D in favour of C gives C the right to have recourse to property belonging to D for satisfaction in the event that D defaults in performance of the contractual obligation
Dresdner Bank AG and others v Ho Mun-Tuke Don and anotherHigh CourtNo[1992] 3 SLR(R) 307SingaporeCited regarding the floating charge created by cl 3.1(b) of the Debenture expressly covers the whole of NGV’s undertaking
Haw Par Brothers International Ltd v Overseas Textile Co LtdHigh CourtNo[1977-1978] SLR(R) 352SingaporeCited regarding the floating charge created by cl 3.1(b) of the Debenture expressly covers the whole of NGV’s undertaking
Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others v BP Singapore Pte Ltd and another matterHigh CourtNo[2018] SGHC 215SingaporeCited regarding the effect of a decrystallisation clause is to cause the fixed charge which results upon the crystallisation of floating charge to cease to operate where crystallisation is not intended
NGV Tech Sdn Bhd (receiver and manager appointed) (in liquidation) and another v Ramsstech Ltd and othersHigh Court of MalayaNo[2015] 1 LNS 1017MalaysiaCited regarding the automatic crystallisation clause in the Debenture was triggered because the shipbuilding contract was an encumbrance, or an attempt to encumber, within the meaning of cl 1.2 of the debentures
Fire Nymph Products Ltd v The Heating Centre Pty Ltd (in liq) and othersSupreme Court of New South WalesNo(1992) 7 ACSR 365AustraliaCited regarding a dealing with assets … subject to a floating charge otherwise than with a view to carrying on the chargor’s business is a crystallising event
Re City Securities PteHigh CourtNo[1990] 1 SLR(R) 413SingaporeCited regarding a dealing with assets … subject to a floating charge otherwise than with a view to carrying on the chargor’s business is a crystallising event
Diablo Fortune Inc v Duncan, Cameron Lindsay and anotherCourt of AppealNo[2018] 2 SLR 129SingaporeCited regarding in a floating charge, the “constraint placed on the chargor is … fairly weak” as the chargee is “incapable of asserting any proprietary or possessory right to any specific asset even if dispositions of the assets are made outside the chargor’s ordinary course of business or in breach of the terms of the debenture creating the floating charge
Wilson v KellandHigh Court of JusticeNo[1910] 2 Ch 306England and WalesCited regarding although the Debenture was registered in accordance with the laws of Malaysia, this is not sufficient to fix Red Sea with constructive notice of the terms of the Debenture
Neptune Capital Group Ltd and others v Sunmax Global Capital Fund 1 Pte Ltd and anotherCourt of AppealNo[2016] 4 SLR 1177SingaporeCited regarding the court retains a discretion to determine whether there should be an inquiry into the damages payable on the undertaking
Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and another matterCourt of AppealNo[2016] 2 SLR 737SingaporeCited regarding the court retains a discretion to determine whether there should be an inquiry into the damages payable on the undertaking
Lee Tat Development Pte Ltd v Management Corporation Strata Title Plan No 301Court of AppealNo[2018] 2 SLR 866SingaporeCited regarding the tort of malicious prosecution has been definitively held not to apply to civil proceedings generally
EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and anotherCourt of AppealNo[2013] 1 SLR 860SingaporeCited regarding to succeed in its claim in conspiracy by unlawful means, MBB must establish that the defendants and NGV combined together to do certain acts
Gimpex Ltd v Unity Holdings Business Ltd and others and another appealCourt of AppealNo[2015] 2 SLR 686SingaporeCited regarding to succeed in its claim in conspiracy by lawful means, MBB must establish that the defendants and NGV combined together to do certain acts

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97, 1997 Rev Ed)Singapore
Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Debenture
  • Fixed Charge
  • Floating Charge
  • Crystallization
  • Shipbuilding Contract
  • Novation
  • Price Reduction Agreement
  • Completion Contract
  • Injunction
  • Malicious Prosecution
  • Hull 1118
  • Assignments
  • Encumbrance
  • Negative Pledge
  • Direct Payments

15.2 Keywords

  • security interest
  • floating charge
  • conspiracy
  • malicious prosecution
  • shipping
  • banking

17. Areas of Law

Area NameRelevance Score
Contract Law70
Shipbuilding Contracts60
Commercial Disputes60
Conspiracy by Unlawful Means50
Banking and Finance50
Fixed Charges50
Civil Procedure50
Debentures50
Floating Charges50
Injunctions40
Fraud and Deceit40
Torts40
Malicious Prosecution40
Property Law40
Winding Up30
Misrepresentation30
Company Law30
Mortgage30
Estoppel30
Interlocutory injunction30
Bankruptcy30
Letters of Credit30
Equitable Set-Off30
Negative Pledge30
Assignments30
Bona Fide Purchaser30
Automatic Crystallisation30
Ordinary Course of Business30
Agency Agreements20
SEAPA Contract20
Monitoring Accountants20
Receivers and Managers20
Undertaking as to Damages20
Price Reduction Agreements20
Direct payments20
Arbitration20
Completion Contracts20
Costs20
Agency Law20
Summary Judgement20

16. Subjects

  • Security Interests
  • Shipping
  • Banking
  • Civil Procedure
  • Torts