BWG v BWF: Winding Up, Disputed Debt, Arbitration Agreement & Abuse of Process

In BWG v BWF, the Singapore Court of Appeal addressed the standard of review for disputed debts subject to arbitration agreements in winding-up applications. BWG appealed against BWF, concerning a disputed debt related to a string of contracts for the sale of crude oil. The court, comprising Sundaresh Menon CJ, Andrew Phang Boon Leong JA, Judith Prakash JA, Steven Chong JA, and Quentin Loh J, dismissed the appeal, holding that the prima facie standard of review applies, and the dispute should be referred to arbitration, as there was no abuse of process by BWF.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal addresses the standard of review for disputed debts subject to arbitration in winding-up applications, focusing on abuse of process.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
BWGAppellant, DefendantCorporationAppeal DismissedLost
BWFRespondent, PlaintiffCorporationInjunction to restrain the appellant from taking out winding-up proceedings grantedWon

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Andrew Phang Boon LeongJudge of AppealNo
Judith PrakashJudge of AppealNo
Steven ChongJudge of AppealYes
Quentin LohJudgeNo

4. Counsels

Counsel NameOrganization
Nish Kumar ShettyCavenagh Law LLP
Han Guangyuan KeithCavenagh Law LLP
Lim Wee Teck DarrenRajah & Tann Singapore LLP
Aleksandar Anatoliev GeorgievRajah & Tann Singapore LLP
Tan Chuan Bing KendallRajah & Tann Singapore LLP
Ting Yong HongRajah & Tann Singapore LLP

4. Facts

  1. There was a string of contracts involving X, the appellant, and the respondent, which concerned the sale and purchase of the same cargo of crude oil.
  2. The first contract was between X and the appellant, with X as the seller and the appellant as the buyer.
  3. The second contract was between the appellant and the respondent, with the respondent as the buyer.
  4. There was another contract downstream between the respondent as the seller and X as the buyer.
  5. X was both the ultimate seller and the ultimate buyer of the Cargo.
  6. The appellant would pay X, by way of a letter of credit, within 30 days upon tender of a notice of readiness at the discharge port.
  7. X would pay the respondent within 89 days of the tender of the NOR.
  8. The respondent was obliged to pay the appellant within 90 days of the tender of the NOR.
  9. The respondent was due to pay the appellant by 11 July 2018.
  10. The respondent did not make payment by this date because its position was that it was obliged to pay the appellant only upon being paid by X.
  11. X failed to pay the respondent by 10 July 2018, as required under the respondent-X contract.
  12. On 12 July 2018, the respondent entered into a settlement agreement with X for the unpaid sum of US$30,253,600.
  13. The appellant’s statutory demand was made after X failed to pay the respondent the first instalment due under the Settlement Agreement on 10 August 2018.

5. Formal Citations

  1. BWG v BWF, Civil Appeal No 12 of 2019, [2020] SGCA 36

6. Timeline

DateEvent
Respondent was due to pay the appellant
X failed to pay the respondent
Shi and two senior employees of X requested to meet Anh of the respondent
Anh met with X’s representatives
Chew met with Machida and Jun
Anh and Chew met
The respondent’s representatives met with X’s representatives together with Chew of the appellant
The respondent entered into a settlement agreement with X
The first payment fell due under the Settlement Agreement
X made part-payment of US$50,000
X made part-payment of US$50,000
The appellant sent a reminder to the respondent that payment was due on 11 July 2018
A second reminder was sent by the appellant
The appellant served a statutory demand on the respondent
The respondent’s solicitors responded by way of letter, disputing the claim
The appellant’s solicitors replied, rejecting the request
The respondent took out HC/OS 1086/2018 to set aside the statutory demand and to restrain the appellant’s pending winding-up proceedings
The respondent served a statutory demand on X
The respondent commenced HC/CWU 260/2018 against X
X applied by way of HC/OS 1539/2018 for a moratorium on proceedings against it
CWU 260 has been stayed
The respondent successfully obtained a bankruptcy order in Hong Kong against Sit
Date of first hearing
Judgment reserved

7. Legal Issues

  1. Standard of Review for Disputed Debt in Winding-Up Application
    • Outcome: The court held that the prima facie standard of review should apply, such that the winding-up proceedings will be stayed or dismissed so long as (a) there is a valid arbitration agreement between the parties; and (b) the dispute falls within the scope of that arbitration agreement, provided that the dispute is not being raised by the debtor in abuse of the court’s process.
    • Category: Substantive
    • Sub-Issues:
      • Application of prima facie standard
      • Abuse of process exception
    • Related Cases:
      • [2020] SGCA 33
      • [2018] 2 SLR 1271
  2. Abuse of Process
    • Outcome: The court held that the respondent had not acted inconsistently such that it would be an abuse of the court’s process for it to invoke the prima facie standard of review to restrain the winding up application.
    • Category: Procedural
    • Sub-Issues:
      • Inconsistent positions
      • Enforcement of settlement agreement
      • Illegality defence
    • Related Cases:
      • [2018] 2 SLR 159
      • [2014] AC 160
      • [1997] 3 SLR(R) 649
      • [2017] 2 SLR 760
  3. Doctrines of Approbation and Reprobation and Waiver by Election
    • Outcome: The court expressed some views on their scope and applicability.
    • Category: Procedural
    • Related Cases:
      • [1937] AC 473
      • [2006] 1 SLR(R) 358
      • [1990] 1 WLR 1320
      • [2002] EWCA Civ 680
      • [2011] CSOH 202
      • [2018] EWHC 672 (Ch)
      • [2001] 1 FLR 505
      • [2003] SGHC 241
      • [2018] 1 SLR 317
      • [2000] 3 SLR(R) 386
      • [2018] 4 SLR 1086

8. Remedies Sought

  1. Injunction to restrain winding-up proceedings

9. Cause of Actions

  • Winding up
  • Breach of contract

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Insolvency
  • Winding Up

11. Industries

  • Commodities Trading
  • Oil and Gas

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company)Court of AppealYes[2020] SGCA 33SingaporeThe court's decision on the standard of review when a dispute that is subject to an arbitration arises in relation to a debt which forms the basis of a winding-up application is set out in full in this case.
Jtrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and othersCourt of AppealYes[2018] 2 SLR 159SingaporeCited with approval Lord Sumption’s statement in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd that “abuse of process is a concept which informs the exercise of the court’s procedural powers”.
Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd)N/AYes[2014] AC 160United KingdomCited for the principle that “abuse of process is a concept which informs the exercise of the court’s procedural powers”.
Gabriel Peter & Partners (suing as a firm) v Wee Chong Jin and othersN/AYes[1997] 3 SLR(R) 649SingaporeCited for the principle that abuse of process imports considerations of public policy and the interests of justice, and signifies that the process of the court must be used bona fide.
Lim Geok Lin Andy v Yap Jin Meng Bryan and another appealCourt of AppealYes[2017] 2 SLR 760SingaporeCited for the principle that the court will exercise its discretion in such a way as to strike a balance between allowing a litigant with a genuine claim to have his day in court on the one hand and ensuring that the litigation process would not be unduly oppressive to the defendant on the other.
Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte LtdN/AYes[2018] 2 SLR 1271SingaporeCited as an example of stay applications based on exclusive jurisdiction clauses.
Projection Pte Ltd v The Tai Ping Insurance Co LtdCourt of AppealYes[2001] 1 SLR(R) 798SingaporeEndorsed the principle that a settlement agreement may be valid even if the underlying claim (which was compromised) is invalid, so long as the plaintiff bona fide believed in the validity of the underlying claim.
Jayawickreme and another v Amarasuriya (since deceased)N/AYes[1918] AC 869N/ACited for the principle that the legal validity or invalidity of the claim the female plaintiff threatened to enforce by action is entirely beside the point if she, however mistakenly bona fide, believed in its validity.
Binder v AlachouzosEnglish Court of AppealYes[1972] 2 QB 151EnglandCited for the principle that a bona fide agreement of compromise, with fair and reasonable terms, is binding and enforceable, and will not be tainted by the illegality of the underlying transaction.
FPH Law (a firm) v Martyn Robert Brown (T/A Integrum Law)Court of AppealYes[2018] EWCA Civ 1629England and WalesBinder was recently upheld and applied in this case.
Hyams v CoombesN/ANo(1912) 28 TLR 413N/ACited as an example of a case where there is a lack of consideration in a settlement agreement.
Burrell & Son v LevenN/ANo(1926) 42 TLR 407N/ACited as an example of a case where there is a lack of consideration in a settlement agreement.
Poteliakhoff v TeakleN/AYes[1938] 2 KB 816N/AAffirmed Burrell & Son v Leven.
Wade v SimeonN/AYes(1846) 2 CB 548N/ACited for the principle that it is almost contra bonos mores and certainly contrary to all the principles of natural justice that a man should institute proceedings against another when he is conscious that he has no good cause of action.
Express Newspapers Plc v News (UK) Ltd and othersN/AYes[1990] 1 WLR 1320United KingdomA wider form of the doctrine has been applied in the United Kingdom to encompass situations where parties assert inconsistent positions against the same party in different proceedings.
Union Music Ltd and another v Watson and anotherEnglish Court of AppealYes[2002] EWCA Civ 680England and WalesAffirmed and applied Express Newspapers.
Redding Park Development Company Limited v Falkirk CouncilOuter House of the Scottish Court of SessionYes[2011] CSOH 202ScotlandAccepted that while the doctrine of approbation and reprobation was initially developed in the field of trusts, wills and succession, it now applies more widely to the context of inconsistent positions taken across proceedings.
Twinsectra Ltd, Haysport Properties Ltd v Lloyds Bank plcEnglish High CourtYes[2018] EWHC 672 (Ch)England and WalesAffirmed the principle of approbation and reprobation.
First National Bank Plc v WalkerN/AYes[2001] 1 FLR 505N/AThe issue was whether the wife had precluded herself from relying on the defence of undue influence against the bank’s claim for possession.
Oakwell Engineering Ltd v Energy Power Systems LtdHigh CourtNo[2003] SGHC 241SingaporeIn Oakwell, the defendants had acquired certain rights in a joint venture project under a settlement agreement with the plaintiff.
Evans v BartlamN/AYes[1937] AC 473N/AThe foundation of the doctrine of approbation and reprobation is that the person against whom it is applied has accepted a benefit from the matter he reprobates.
Treasure Valley Group Ltd v Saputra Teddy and another (Ultramarine Holdings Ltd, Intervener)N/AYes[2006] 1 SLR(R) 358SingaporeThe doctrine of approbation and reprobation precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he has exercised.
Audi Construction Pte Ltd v Kian Hiap Construction Pte LtdCourt of AppealYes[2018] 1 SLR 317SingaporeIn the true sense of the word, however, waiver means a voluntary or intentional relinquishment of a known right, claim or privilege.
Lee Siong Kee v Beng Tiong Trading, Import and Export (1988) Pte LtdN/ANo[2000] 3 SLR(R) 386SingaporeThe respondent counterclaimed against the appellant for the sum of S$360,000.
UAM v UAN and anotherN/ANo[2018] 4 SLR 1086SingaporeValerie Thean JC (as she then was) held that the plaintiff had asserted inconsistent ownership rights over the same property in two separate proceedings.
Re Sit Kwong LamN/ANo[2019] HKCU 1407Hong KongReference to affirmation filed by Sit in Hong Kong proceedings.
Davis Contractors Ltd v Fareham Urban District CouncilN/AYes[1956] AC 696N/AApplying the test in this case, the court went on to consider whether there was something “radically different about the [defendant’s] obligation” as a result of the change of tariffs imposed by the Government of India.
Holmann v JohnsonN/AYes1 Cowp 341N/AThe principle of public policy is this: ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.
PW & Co v Milton Gate Investments LtdN/AYes[2004] Ch 142N/ACases show that the “benefit” that triggers the doctrine of approbation and reprobation is constituted by a judgment.
Dexters Ltd v Hill Crest Oil Co (Bradford) LtdN/AYes[1926] 1 KB 348N/ACases show that the “benefit” that triggers the doctrine of approbation and reprobation is constituted by an arbitral award.
European Grain and Shipping Ltd v JohnstonN/AYes[1983] 3 All ER 898N/ACases show that the “benefit” that triggers the doctrine of approbation and reprobation is constituted by an arbitral award.
Durtnell & Sons Ltd v Kaduna LtdN/AYes[2003] EWHC 517 (TCC)N/AThe requisite “benefit” is made out by “an entitlement to payment”.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 254(2)(a)Singapore
International Arbitration Act (Cap 143A, 2002 Rev Ed)Singapore
International Arbitration Act (Cap 143A, 2002 Rev Ed) s 6Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Winding-up application
  • Disputed debt
  • Arbitration agreement
  • Abuse of process
  • Prima facie standard of review
  • Settlement agreement
  • Letter of credit
  • Notice of readiness
  • Illegality defence
  • Pay when paid defence

15.2 Keywords

  • Winding up
  • Disputed debt
  • Arbitration
  • Abuse of process
  • Insolvency
  • Singapore
  • Contract
  • Settlement

17. Areas of Law

Area NameRelevance Score
Winding Up95
Disputed Debt90
Abuse of Process80
Inconsistent positions75
Arbitration70
Contract Law60
Company Law50
Settlement Agreements50
Breach of Contract40
Collections30

16. Subjects

  • Insolvency
  • Arbitration
  • Contract Law
  • Civil Procedure