Ocean Tankers (Pte) Ltd v Debtor: Assignment, Set-Off & Insolvency

In Re Ocean Tankers (Pte) Ltd (in liquidation), the General Division of the High Court of Singapore, presided over by S Mohan J, addressed the validity of assignments of claims and the right to set-off in the context of Ocean Tankers' insolvency. The judicial managers of Ocean Tankers applied for guidance on whether a debtor could assert set-off against the company for claims acquired after the judicial management order and sought a declaration that certain assignments were void. The court held that one assignment was valid, but the other was void as a champertous assignment of bare rights to litigate. The court also found that insolvency set-off did take effect immediately prior to the commencement of the winding up of the company.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Declaration granted in part; insolvency set-off allowed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court addresses validity of claim assignments and set-off rights in Ocean Tankers' insolvency, focusing on non-assignment clauses and mutuality.

1.7 Decision Date

23 November 2023

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Ocean Tankers (Pte) Ltd (in liquidation)	Applicant	Corporation	Declaration granted in part	Partial	Narayanan Sreenivasan, Muralli Rajaram, Jonathan Lim Jien Ming, Ranita Yogeeswaran, Tan Si Xin Adorabelle
Debtor	Respondent	Corporation	Insolvency set-off allowed	Partial	Lok Vi Ming, Lee Sien Liang Joseph, Jean Chan Lay Koon, Mohammad Haireez bin Mohameed Jufferie, Ow Jiang Meng Benjamin

3. Judges

Judge Name	Title	Delivered Judgment
S Mohan	Judge	Yes

4. Counsels

Counsel Name	Organization
Narayanan Sreenivasan	K&L Gates Straits Law LLC
Muralli Rajaram	K&L Gates Straits Law LLC
Jonathan Lim Jien Ming	K&L Gates Straits Law LLC
Ranita Yogeeswaran	K&L Gates Straits Law LLC
Tan Si Xin Adorabelle	K&L Gates Straits Law LLC
Lok Vi Ming	LVM Law Chambers LLC
Lee Sien Liang Joseph	LVM Law Chambers LLC
Jean Chan Lay Koon	LVM Law Chambers LLC
Mohammad Haireez bin Mohameed Jufferie	LVM Law Chambers LLC
Ow Jiang Meng Benjamin	LVM Law Chambers LLC

4. Facts

Ocean Tankers (Pte) Ltd applied for judicial management on 6 May 2020.
The company was placed under judicial management on 7 August 2020.
The judicial managers applied for the company to be wound up on 12 July 2021.
A winding-up order was made on 16 August 2021.
The judicial managers filed applications regarding two assignments of claims obtained by a debtor.
The debtor commenced arbitration against Ocean Tankers, alleging breaches of confidentiality.
The debtor raised the assigned claims in the arbitration as a defense by way of set-off.

5. Formal Citations

Re Ocean Tankers (Pte) Ltd (in liquidation), Originating Summons No 452 of 2020 (Summonses Nos 2989 and 3297 of 2021), [2023] SGHC 330

6. Timeline

Date	Event
2020-05-06	Company applied to be placed under judicial management
2020-07-30	Companies Act amended
2020-08-07	Company placed under judicial management
2020-10-16	Application filed for judicial management order to be discharged
2021-01-12	DSC Letter regarding SUM 4537 tendered to court
2021-03-08	Application for judicial management order to be discharged dismissed
2021-07-12	Judicial managers applied for the Company to be wound up
2021-08-16	Winding-up order made
2023-02-22	Written submissions filed
2023-02-28	Oral arguments presented
2023-03-03	Oral arguments presented
2023-07-11	Further submissions filed
2023-07-25	Reply submissions filed
2023-11-24	Judgment reserved

7. Legal Issues

Validity of Assignment
- Outcome: The court held that one assignment was valid, but the other was void as a champertous assignment of bare rights to litigate.
- Category: Substantive
- Sub-Issues:
  - Effect of non-assignment clause
  - Assignment of bare right to litigate
- Related Cases:
  - [2023] EWHC 398 (Comm)
  - [1982] AC 679
Right of Set-Off
- Outcome: The court found that insolvency set-off did take effect immediately prior to the commencement of the winding up of the company.
- Category: Substantive
- Sub-Issues:
  - Legal set-off
  - Insolvency set-off
  - Mutuality
- Related Cases:
  - [1996] AC 243
  - [1996] 1 SLR(R) 884
Interpretation of Non-Assignment Clause
- Outcome: The court interpreted the non-assignment clause as applying only to contractual rights, not tortious rights.
- Category: Substantive
- Related Cases:
  - [2021] EWHC 834
  - [2007] Bus LR 1719
Mutuality in Insolvency Set-Off
- Outcome: The court determined the relevant time to assess mutuality for insolvency set-off.
- Category: Substantive
- Related Cases:
  - [1996] 1 SLR(R) 884

8. Remedies Sought

Declaration that assignments are void
Guidance on set-off rights

9. Cause of Actions

Breach of Contract
Breach of Duty of Confidentiality
Misrepresentation

10. Practice Areas

Commercial Litigation
Insolvency Litigation

11. Industries

Shipping
Oil and Gas

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Burleigh House (PTC) Ltd v Irwin Mitchell LLP	English High Court	Yes	[2021] EWHC 834	England and Wales	Cited regarding the interpretation of non-assignment clauses, but distinguished by the court due to differing contexts.
Fiona Trust & Holding Corp v Privalov	N/A	Yes	[2007] Bus LR 1719	N/A	Cited for its approach to the construction of arbitration clauses, but the court declined to apply this approach to non-assignment clauses.
Bunge SA and another v Shrikant Bhasi and other appeals	Court of Appeal	Yes	[2020] 2 SLR 1223	Singapore	Cited for the principle that the Fiona Trust principle applies to jurisdiction clauses generally.
Fairview Developments Pte Ltd v Ong & Ong Pte Ltd	N/A	Yes	[2014] 2 SLR 318	Singapore	Cited for the definition of novation.
Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd	House of Lords	Yes	[1994] 1 AC 85	England and Wales	Cited and applied for the principle that an attempted assignment of contractual rights in breach of a contractual prohibition is ineffective.
Total English Learning Global Pte Ltd v Kids Counsel Pte Ltd	High Court	Yes	[2014] SGHC 258	Singapore	Cited for accepting and applying the position set out in Linden Gardens.
Arris Solutions, Inc and others v Asian Broadcasting Network (M) Sdn Bhd	Singapore International Commercial Court	Yes	[2017] 4 SLR 1	Singapore	Cited for acknowledging the rule in Linden Gardens under Singapore law.
Crooks v Newdigate Properties Ltd and others	English Court of Appeal	Yes	[2009] EWCA Civ 283	England and Wales	Cited for the principle that an assignment of a debt, including a judgment debt, is subject to equities.
Payna Chettiar v Maimoon bte Ismail and others	N/A	Yes	[1997] 1 SLR(R) 738	Singapore	Cited for the principle that a default judgment is good and enforceable unless set aside.
Trendtex Trading Corporation and another v Credit Suisse	N/A	Yes	[1982] AC 679	N/A	Cited for the exception that an assignment of a claim is valid where the assignee has a genuine commercial interest in the enforcement of the assigned claim.
Commission Recovery Ltd v Marks & Clerk LLP and another	English High Court	Yes	[2023] EWHC 398 (Comm)	England and Wales	Cited by the Debtor as authority for the proposition that an assignment may be valid notwithstanding that there is a dispute over the assigned property, but distinguished by the court.
Hayate Investment Co Ltd v ManagementPlus (Singapore) Pte Ltd	High Court	Yes	[2012] SGHCR 3	Singapore	Cited for summarizing the principles relating to and background context of legal set-off.
Stein v Blake	N/A	Yes	[1996] AC 243	N/A	Cited for the principle that legal set-off does not affect the substantive rights of the parties against each other until both causes of action have been merged in a judgment of the court.
CKG v CKH	Singapore International Commercial Court	Yes	[2021] 5 SLR 84	Singapore	Cited for implicitly recognizing the power of an arbitral tribunal to give effect to legal set-off.
Glencore Grain Ltd v Agros Trading Co Ltd	English Court of Appeal	Yes	[1999] 2 All ER (Comm) 288	England and Wales	Cited for the principle that a defendant is only entitled to set off a mutual debt if it remains available to him when the plaintiff brings his action.
CIMB Bank Bhd v Italmatic Tyre & Retreading Equipment (Asia) Pte Ltd	N/A	Yes	[2021] 4 SLR 883	Singapore	Cited for the principle that insolvency set-off is mandatory and self-executing.
Good Property Land Development Pte Ltd (in liquidation) v Société-Générale	Court of Appeal	Yes	[1996] 1 SLR(R) 884	Singapore	Cited for the principle that for mutuality to exist, each claimant must be personally liable for the debt he owes to the other claimant and beneficially own the claim which is owed to him by the other claimant.
Bourne v Colodense Ltd	English Court of Appeal	Yes	[1985] ICR 291	England and Wales	Cited for illustrating what constitutes a genuine commercial interest.
Scholle Industries Pty Ltd v AEP Industries (NZ) Limited & Anor	Supreme Court of South Australia	Yes	[2007] SASC 322	Australia	Cited for observations in determining whether there was a genuine commercial interest.
Tan Cheng Bock v Attorney-General	N/A	Yes	[2017] 2 SLR 850	Singapore	Cited for the principle that the court takes a purposive approach to statutory interpretation.
Media Development Authority of Singapore v Sculptor Finance (MD) Ireland Ltd	Court of Appeal	Yes	[2014] 1 SLR 733	Singapore	Cited for the principle that upon the making of a winding up order, a company’s assets are said to be impressed with a statutory trust.
Bloom and others v Harms Offshore AHT “Taurus” GmbH & Co KG and another	English Court of Appeal	Yes	[2010] Ch 187	England and Wales	Cited by the JMs, but the court noted that this case did not decide that a statutory trust applies to the equivalent administration regime in England.
Re Lehman Bros Europe Ltd (in administration) (No. 9) and another	English High Court	Yes	[2018] Bus LR 439	England and Wales	Cited for the point that there is no authority as to whether a statutory trust arises over the assets of a company in administration.
Ng Wei Teck Michael v Oversea-Chinese Banking Corp Ltd	Court of Appeal	Yes	[1998] 1 SLR(R) 778	Singapore	Cited for observations on the purpose of a statutory trust.
Electro Magnetic (S) Ltd (under judicial management) v Development Bank of Singapore Ltd	N/A	Yes	[1994] 1 SLR(R) 574	Singapore	Cited for the principle that a company in judicial management remains a going concern.
Grimmett, Andrew and others v HTL International Holdings Pte Ltd (under judicial management) (Phua Yong Tat and others, non-parties)	N/A	Yes	[2022] 5 SLR 991	Singapore	Cited by Mr. Sreenivasan, but the court found that the point was simply not argued in that case.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
Insolvency, Restructuring and Dissolution Act 2018	Singapore
Bankruptcy Act (Cap 20, 2009 Rev Ed)	Singapore
Companies Act Section 227B	Singapore
Companies Act Section 227G	Singapore
Companies Act Section 327(2)	Singapore
Insolvency, Restructuring and Dissolution Act 2018 Section 219	Singapore
Insolvency, Restructuring and Dissolution Act 2018 Section 219(3)	Singapore
Insolvency, Restructuring and Dissolution Act 2018 Section 226(1)	Singapore
Insolvency, Restructuring and Dissolution Act 2018 Section 526	Singapore
Bankruptcy Act Section 88	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Judicial Management
Winding-Up
Assignment
Set-Off
Insolvency
Mutuality
Non-Assignment Clause
Bare Right to Litigate
Champerty
Liquidated Claim

15.2 Keywords

Insolvency
Assignment
Set-Off
Judicial Management
Winding Up
Singapore
Commercial Law

16. Subjects

Insolvency
Assignment
Set-Off
Commercial Law

17. Areas of Law

Insolvency Law
Choses in Action
Debt and Recovery
Assignment