The Oriental Baltic

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DMC/SandT/12/00

The “Oriental Baltic”

Singapore High Court: Tan Lee Meng J : [2011] 3 SGHC 75

Goh Wing Sun (WS Goh & Co) for the Plaintiff

Bernard Yee (Gurbani & Co) for the intervener

OWNERS OF VESSEL UNDER VOLUNTARY LIQUIDATION: IN REM PROCEEDINGS AGAINST VESSEL COMMENCED AFTER LIQUIDATION: PLAINTIFF FILED CAVEAT AGAINST RELEASE AGAINST VESSEL PRIOR TO LIQUIDATION: ACTION AGAINST COMPANY UNDER LIQUIDATION ORDINARILY STAYED UNDER THE COMPANIES ACT: WHETHER LEAVE SHOULD BE GRANTED TO PLAINTIFF TO CONTINUE WITH ITS ACTION

Summary

The Singapore High Court held that a plaintiff who had not commenced in rem proceedings against a vessel before the liquidation of the defendant shipowner-company, other than having earlier filed a caveat against release in respect of the same vessel, would not be granted leave to continue with its action against the defendant.

This note has been contributed by Ang & Partners, international contributors to the website for Singapore

Facts

The Oriental Baltic (the "Vessel") was owned by Oriental MES Logistics Pte Ltd ("OML"). She was arrested in Singapore in November 2009 by an Indonesian claimant. The plaintiff United Bunkering & Trading (Asia) Pte Ltd ("UBT") filed a caveat against the Vessel’s release on 25 May 2010. UBT subsequently commenced its in rem action against the Vessel on 8 September 2010 after OML had commenced winding up proceedings in voluntary liquidation.

Another creditor of OML, PMP (who had obtained judgment in its own in rem action against the Vessel), intervened in UBT’s action to challenge UBT’s application to the Court for leave to continue its action against OML. The question before the court was whether UBT should be granted leave to continue with its action against OML under section 299 of the Companies Act, as actions against companies under liquidation were stayed except with the court's leave.

Judgment

Leave would not be granted to UBT to continue its action, as doing so would be unfair to OML's other creditors. There were two alternative questions to be considered in deciding whether leave should be granted for a plaintiff to continue his action against a company under liquidation: namely (1) whether the plaintiff could assert against all the world that the vessel belonging to the company was security for his claim immediately before the commencement of winding up proceedings against her owners, and (2) whether it was right and fair in the circumstances to allow the continuance of the action.

UBT failed on both questions as it did not institute in rem proceedings against the Vessel before the winding up of her owners and the filing of a caveat against release of the Vessel could not be considered as giving rise to a security on the Vessel.