NSL Oilchem v Prosper Marine: Contractual Disputes, Breach, and Guarantees

In a consolidated suit before the High Court of Singapore, NSL Oilchem Waste Management Pte Ltd (NOWM) sued Prosper Marine Pte Ltd (Prosper Marine) for unpaid invoices under two contracts, a claim on personal guarantees from Prosper Marine's directors, and unpaid charter hire and breaches of a charterparty. Prosper Marine counterclaimed for damages arising out of alleged breaches of these contracts. The court found in favor of NOWM on all three suits, dismissing Prosper Marine's counterclaims and holding Prosper Marine and its directors liable for the outstanding debts.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case involving NSL Oilchem and Prosper Marine concerning unpaid invoices, breach of contract, and director's guarantees.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
NSL Oilchem Waste Management Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Prosper Marine Pte LtdDefendantCorporationCounterclaim DismissedLost
Ong Yi Ling, EileenDefendantIndividualJudgment for PlaintiffLost
Daniel Lee Khan WeeDefendantIndividualJudgment for PlaintiffLost
Ong Cheng HoDefendantIndividualJudgment for PlaintiffLost
NSL Oilchem Marine Pte LtdPlaintiffCorporationJudgment for PlaintiffWon

3. Judges

Judge NameTitleDelivered Judgment
Lee Seiu KinJudgeYes

4. Counsels

Counsel NameOrganization
Woo Shu YanDrew & Napier LLC
Cavinder Bull SCDrew & Napier LLC
Jonathan YapDrew & Napier LLC
Wesley ChanDrew & Napier LLC
Daryl HoDrew & Napier LLC
Low Chai ChongDentons Rodyk & Davidson LLP
Sean ChenDentons Rodyk & Davidson LLP
Chua Hua YiDentons Rodyk & Davidson LLP
Ng Sook ZhenDentons Rodyk & Davidson LLP

4. Facts

  1. NOWM and Prosper Marine had a 14-year commercial relationship.
  2. NOWM is in the business of treating marine and land-based slop.
  3. Prosper Marine is a "one-stop centre" for maritime services, including slop collection and disposal.
  4. The parties entered into two contracts in May 2014: a Disposal Contract and an RFO Contract.
  5. Prosper Marine was heavily in arrears, owing NOWM $10.63m as of February 2013.
  6. NOWM imposed a credit hold on Prosper Marine in July 2015.
  7. Prosper Marine executed a deed for the sale and purchase of the vessel 'Prosper 9' in August 2015.
  8. The Prosper Directors executed a Deed of Guarantee and Indemnity in favor of NOWM.
  9. NOWM terminated the Charterparty and repossessed Prosper 9 in September 2016.

5. Formal Citations

  1. NSL Oilchem Waste Management Pte Ltd v Prosper Marine Pte Ltd and other suits, Suit Nos 1062 of 2017, 853 of 2017 and 1048 of 2016, [2020] SGHC 204

6. Timeline

DateEvent
Prosper Marine incorporated
Fire broke out at NOWM’s plant
NOWM suspended from receiving marine slop
NOWM's license was restored
Parties agreed to terms via letter
Finalised arrangement in effect
Finalised arrangement ended
Prosper Marine was heavily in arrears
Prosper Marine proposed a payment schedule
AR balance had ballooned to $9.1m
UOB Guarantee obtained
Parties entered into two contracts
NOWM requested a minimum of $1.6m to be paid every month
Prosper Marine was told its AR balance had to be brought down to $7m
Parties reached an agreement on repayment
Three invoices remained outstanding beyond the MEP
Atradius’ coverage was suspended
Prosper Marine secured a further guarantee from UOB
Prosper Marine was behind on its payment commitments
NOWM decided to impose a credit hold on Prosper Marine
Email sent with alleged false representations
Prosper Marine executed a deed for “Sale & Purchase of the Vessel ‘Prosper 9’”
NOM entered into the “BIMCO Standard Bareboat Charter, Code Name: ‘BARECON 2001’”
Secured confirmation that Prosper Marine would give a joint and several guarantee
Prosper Directors executed a “Deed of Guarantee and Indemnity of the Obligations of Prosper Marine Pte Ltd to NSL Oilchem Waste Management Pte. Ltd.”
Parties reached a decision that NOWM would address “up to $2m of the outstanding AR with [its] net equity”
NOWM recorded a formal restructuring of the parties’ business relationship
Prosper Marine renewed the 2015 UOB Guarantee
NOM issued a letter of demand for $400,000
NOM terminated the Charterparty and repossessed Prosper 9
NOM arranged for a class condition survey to be carried out on Bureau Veritas
NOM arranged for an underwater inspection of Prosper 9’s hull
Bureau Veritas carried out another survey of Prosper 9 and certified her fit for use
Hearing date
Hearing date
Hearing date
Hearing date
Reply Closing Submissions date
Judgment reserved

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that Prosper Marine breached its obligations under the 2014 Contracts by failing to pay sums due under invoices.
    • Category: Substantive
  2. Enforceability of Guarantees
    • Outcome: The court held the Prosper Directors personally liable for NOWM’s outstanding invoices under the Directors’ Guarantee.
    • Category: Substantive
  3. Charterparty Obligations
    • Outcome: The court found Prosper Marine liable for outstanding charter hire fees and breaches of the Charterparty.
    • Category: Substantive
  4. Fraudulent Misrepresentation
    • Outcome: The court dismissed Prosper Marine's counterclaim of fraudulent misrepresentation.
    • Category: Substantive
  5. Contractual Interpretation
    • Outcome: The court interpreted the terms of the 2014 Contracts, finding that NOWM was not obliged to receive a minimum volume of marine slops or sell a minimum volume of RFO.
    • Category: Substantive
  6. Penalty Clauses
    • Outcome: The court found that the late payment interest rate of 18% per annum did not amount to an unenforceable penalty clause.
    • Category: Substantive

8. Remedies Sought

  1. Monetary Damages
  2. Interest
  3. Indemnity

9. Cause of Actions

  • Breach of Contract
  • Breach of Guarantee
  • Fraudulent Misrepresentation

10. Practice Areas

  • Commercial Litigation
  • Admiralty Law
  • Debt Recovery

11. Industries

  • Maritime
  • Waste Management

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Yap Son On v Ding Pei ZhenCourt of AppealYes[2017] 1 SLR 219SingaporeCited for the principles of contractual interpretation.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdHigh CourtYes[2008] 3 SLR(R) 1029SingaporeCited for the admissibility of extrinsic evidence in contractual interpretation.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the test for implying terms into a contract.
Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte LtdCourt of AppealYes[2018] 2 SLR 1271SingaporeCited for the test for incorporating terms by a course of dealing.
Xia Zhengyan v Geng ChangqingCourt of AppealYes[2015] 3 SLR 732SingaporeCited for the law on penalty clauses.
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co LtdHouse of LordsYes[1915] AC 79United KingdomCited for the Dunlop Principles on penalty clauses.
Cavendish Square Holding BV v MakdessiUK Supreme CourtNo[2016] AC 1172United KingdomCited for the revised test for ascertaining whether a clause is a penalty clause.
Leiman, Ricardo and another v Noble Resources Ltd and anotherCourt of AppealNo[2020] SGCA 52SingaporeCited for the Court of Appeal's undecided position on the applicability of the Cavendish test.
CLAAS Medical Centre Pte Ltd v Ng Boon ChingHigh CourtYes[2010] 2 SLR 386SingaporeCited for the burden of showing whether a contractual interest rate amounts to a penalty.
Panatron Pte Ltd and another v Lee Cheow Lee and anotherHigh CourtYes[2001] 2 SLR(R) 435SingaporeCited for the elements of fraudulent misrepresentation.
The “Asia Star”High CourtYes[2010] 2 SLR 1154SingaporeCited for the principle of mitigation of loss.
United Overseas Bank Ltd v Sin Leong Ironbed & Furtniture Manufacturing Co (Pte) LtdHigh CourtYes[1988] 1 SLR(R) 76SingaporeCited for the principle that contractual agreements on costs generally upheld.
Tan Chin Yew Joseph v Saxo Capital Markets Pte LtdHigh CourtYes[2013] SGHC 274SingaporeCited for the general rule that costs are awarded on an indemnity basis only in exceptional circumstances.
Abani Trading Pte Ltd v BNP ParibasHigh CourtYes[2014] 3 SLR 909SingaporeCited for the principle that contractual arrangement between the parties would be a relevant factor in the court’s exercise of its discretion.
Telemedia Pacific Group Ltd v Credit Agricole (Suisse) SA (Yeh Mao-Yuan, third party)High CourtYes[2015] 4 SLR 1019SingaporeCited for the principle that the court will tend to exercise such discretion to uphold the contractual bargain entered into by both parties unless it would be manifestly unjust to do so.

13. Applicable Rules

Rule Name
O 59 r 2(2), Rules of Court

14. Applicable Statutes

Statute NameJurisdiction
Misrepresentation Act (Cap 390, 1994 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Slop
  • Sludge
  • RFO
  • AR Balance
  • Disposal Contract
  • RFO Contract
  • Directors’ Guarantee
  • Charterparty
  • Tank top
  • Minimum Volume Term
  • Loading Rate Term
  • Minimum RFO Term

15.2 Keywords

  • contract
  • breach
  • guarantee
  • charterparty
  • debt
  • recovery
  • shipping
  • marine
  • oilchem
  • slop
  • sludge
  • invoice
  • Singapore
  • High Court

17. Areas of Law

Area NameRelevance Score
Contract Law90
Breach of Contract90
Commercial Law70
Debt Recovery70
Guarantees and indemnities60
Credit and Security60
Admiralty and Maritime Law50
Charter Parties50
Shipping Law50
Bareboat charterparties50
Damages30
Remedies30
Civil Procedure20

16. Subjects

  • Contract Law
  • Shipping Law
  • Debt Recovery
  • Guarantees
  • Commercial Disputes