Da Hui Shipping v An Rong Shipping: Contribution, Subrogation & Ship Mortgages
Da Hui Shipping (Pte.) Ltd. (in creditors’ voluntary liquidation) (“Da Hui”) commenced an action against An Rong Shipping Pte. Ltd. (in liquidation) (“An Rong”) in the General Division of the High Court of the Republic of Singapore, seeking leave to commence and continue OA 418 against An Rong, a declaration that An Rong was indebted to Da Hui, and a declaration that Da Hui was entitled to be subrogated to any extinguished securities held by BofA pursuant to the loan agreement. The application arose out of a secured lending transaction involving one lender, Bank of America N.A., Singapore Branch (“BofA”), and two co-borrowers, Da Hui and An Rong. The court granted leave to commence and continue OA 418 against An Rong but otherwise dismissed the application.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Application allowed in part and dismissed in part.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Da Hui Shipping sought contribution and subrogation from An Rong Shipping regarding a loan. The court dismissed the subrogation claim.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Societe Generale, Singapore Branch | Non-party | Corporation | Neutral | Neutral | |
| Da Hui Shipping (Pte.) Ltd. (in creditors’ voluntary liquidation) | Claimant | Corporation | Application allowed in part and dismissed in part | Partial | |
| An Rong Shipping Pte. Ltd. (in liquidation) | Defendant | Corporation | Application allowed in part and dismissed in part | Partial | |
| Petrochina International (Singapore) Pte. Ltd. | Non-party | Corporation | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judge of the High Court | Yes |
4. Counsels
4. Facts
- Da Hui and An Rong were co-borrowers under a secured loan facility agreement with BofA.
- The loan was secured by mortgages over three vessels: “Sea Equatorial” (owned by Da Hui) and “Ocean Goby” and “Ocean Jack” (owned by An Rong).
- Da Hui and An Rong were jointly and severally liable under the Loan Agreement.
- The “Sea Equatorial” was sold, and the proceeds were applied to partially satisfy the debt under the Loan Agreement.
- BofA commenced admiralty actions in rem against the “Ocean Goby” and the “Ocean Jack” to recover the remainder of the debt.
- The “Ocean Goby” and “Ocean Jack” were sold, and the sale proceeds were paid into court.
- Da Hui sought a declaration that it was entitled to be subrogated to any extinguished securities held by BofA, including the mortgages over the An Rong Vessels.
5. Formal Citations
- Da Hui Shipping (Pte) Ltd (in creditors’ voluntary liquidation) v An Rong Shipping Pte Ltd (in liquidation) (Societe Generale, Singapore Branch and another, non-parties), Originating Application No 418 of 2023, [2024] SGHC 166
6. Timeline
| Date | Event |
|---|---|
| Da Hui and An Rong entered into a secured term Loan Agreement with BofA. | |
| HLT’s financial troubles came to light. | |
| The “Sea Equatorial” was sold by way of a private sale. | |
| BofA commenced admiralty actions in rem against the “Ocean Goby” vide HC/ADM 92/2021. | |
| BofA commenced admiralty actions in rem against the “Ocean Jack” vide HC/ADM 94/2021. | |
| Da Hui entered into creditors’ voluntary liquidation. | |
| The “Ocean Goby” was sold. | |
| An Rong entered into compulsory liquidation. | |
| The “Ocean Jack” was sold. | |
| The court in ADM 94 ordered payments from the sale proceeds. | |
| The court in ADM 92 ordered payments from the sale proceeds. | |
| Hearing date. | |
| Oral judgment given. | |
| Da Hui lodged an appeal against the decision to the Court of Appeal. | |
| Judgment Date. |
7. Legal Issues
- Contribution from Co-Debtor
- Outcome: The court was prepared to proceed on the basis that the presumption of equality was displaced and that the burden of repaying BofA’s debt could be equitably apportioned, with the result that Da Hui did, in principle, have a claim in contribution against An Rong for the excess it had repaid for An Rong’s benefit.
- Category: Substantive
- Subrogation to Extinguished Securities
- Outcome: The court did not think that it was possible for Da Hui to be subrogated to a security that had already been fully enforced and therefore spent in the hands of BofA. The court would also have disallowed Prayer 3 for reasons of public policy: the state of affairs Da Hui sought to bring about could not have been achieved without unfairly prejudicing the other in rem creditors in ADM 92 and ADM 94.
- Category: Substantive
- Leave to Commence Action Against Company in Liquidation
- Outcome: The court granted leave to commence and continue OA 418 against An Rong.
- Category: Procedural
8. Remedies Sought
- Leave to commence and continue OA 418 against An Rong
- Declaration that An Rong was indebted to Da Hui
- Declaration that Da Hui was entitled to be subrogated to any extinguished securities held by BofA
9. Cause of Actions
- Contribution
- Subrogation
- Unjust Enrichment
10. Practice Areas
- Liquidation
- Shipping
- Finance
- Banking
11. Industries
- Shipping
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Periasamy Ramachandran and another v Sathish s/o Rames and another | High Court | Yes | [2020] SGHCR 8 | Singapore | Cited for the principles regarding a co-surety's entitlement to contribution from co-sureties. |
| Banque Financière de la Cité v Parc (Battersea) Ltd | House of Lords | Yes | [1999] 1 AC 221 | England and Wales | Cited for the principles of subrogation and unjust enrichment. |
| Liberty Mutual Insurance Company (UK) Ltd and another v HSBC Bank Plc | England and Wales Court of Appeal (Civil Division) | Yes | [2002] EWCA Civ 691 | England and Wales | Cited for the principle that a co-debtor who discharges the entire debt acquires a right to be subrogated to any securities given by the other debtor. |
| Patten v Bond | Chancery Division | Yes | (1889) 60 LT 583 (Ch) | England and Wales | Cited for the principle of partial subrogation. |
| Chetwynd v. Allen | England and Wales High Court (Chancery Division) | Yes | [1899] 1 Ch. 353 | England and Wales | Cited regarding priority of claims in subrogation. |
| Leon v Kensington Mortgage Co Ltd and another | England and Wales High Court (Chancery Division) | Yes | [2023] EWHC 121 (Ch) | England and Wales | Cited for the codification of common law rules on subrogation to extinguished security interests. |
| Bater and Anor v Kare | Supreme Court of Canada | Yes | [1964] SCR 206 | Canada | Cited for the principle that contribution may be inequitable where the plaintiff co-surety enjoys the whole benefit of the guarantee. |
| Day v Shaw and another | England and Wales High Court (Chancery Division) | Yes | [2014] EWHC 36 (Ch) | England and Wales | Cited for the principle that contribution may be inequitable where the plaintiff co-surety enjoys the whole benefit of the guarantee. |
| Boscawen and others v Bajwa and another | England and Wales Court of Appeal (Civil Division) | Yes | [1996] 1 WLR 328 | England and Wales | Cited for the principle that subrogation is available to reverse unjust enrichment. |
| Lord Napier and Ettrick v Hunter | House of Lords | Yes | [1993] AC 713 | United Kingdom | Cited for the principle that an insurer has an enforceable equitable interest in damages payable by the wrongdoer. |
| Wang Aifeng v Sunmax Global Capital Fund 1 Pte Ltd and another | High Court | Yes | [2023] 3 SLR 1604 | Singapore | Cited for the factor that leans in favor of granting Da Hui leave. |
| Official Trustee in Bankruptcy v Citibank Savings Ltd | Supreme Court of New South Wales (Equity Division) | Yes | (1995) 38 NSWLR 116 | Australia | Cited for the principles regarding a co-surety's entitlement to contribution from co-sureties. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| s 133(1) of the Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
| Mercantile Law Amendment Act 1856 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Secured Lending
- Co-Borrowers
- Joint and Several Liability
- Ship Mortgages
- Admiralty Actions In Rem
- Liquidation
- Contribution
- Subrogation
- Unjust Enrichment
- Extinguished Securities
15.2 Keywords
- Shipping
- Insolvency
- Subrogation
- Contribution
- Mortgages
- Liquidation
17. Areas of Law
16. Subjects
- Insolvency
- Shipping
- Restitution
- Finance