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Golden Star Marine wins legal suit against Star Formula Marine Services in Vietnam bunker project dispute

03 May 2021

The High Court of the Republic of Singapore on 21 April published a judgement decision regarding a legal case between Singapore-based maritime firms Golden Star Marine Pte Ltd (GSM, or plaintiff) and its former business partner Star Formula Marine Services Pte Ltd (SFM, or defendant).

Summary of the Facts

The case involves GSM Director Bernard Chew filing a suit against SFM Director Martin Chua over a bunkering project at Vietnam, where a client wanted to purchase a large quantity of marine gas oil (MGO) in early 2016, according to the document obtained by Singapore bunkering publication Manifold Times.

Martin, who was in the brink of bankruptcy during the period, approached Bernard for help with the Vietnam project where he would use GSM’s funds to purchase MGO to sell to the Vietnamese buyer.

The bunkers were supplied through Bunkers Marine Pte Ltd in the Vietnam project, while Bernard and Martin agreed to share the profits on a 50:50 basis.

At the material time, three vessels Eustance, the Sea Frontier and Victoria Strike which have been earlier owned by the now defunct Searights Maritime Services Pte Ltd (Searights) were sold/mortgaged to a company called RS Marine Investments Pte Ltd.

Bernard and Martin equally owned the vessels; Martin’s role was to procure the vessels while Bernard would manage the vessels and provide the facilities for their operations through Shipmate (another firm where Bernard is a Director).

Both further agreed that, once full payment was made for the vessels their ownership would be transferred to MB Marine Pte Ltd which is a new company jointly owned by them where Bernard had 50% holding of the shares.

Operation of the vessels commenced after Shipmate sourced and hired crew for the vessels.

Problems Emerge

Initially, the end-buyer would transfer the required funds directly to GSM for any purchase of MGO; however, a change in payment occurred on 8 March 2017 where payment was made to Bunkers Marine after the end-buyer paid SFM – without Bernard’s knowledge or consent.

Bernard, who later found out of the arrangement, held discussions with Martin to change the structure of MB Marine to manage the accounts and receive funds from the Vietnam Project. It was also agreed that upon full payment, the ownership of the vessels would be transferred to MB Marine.

Consequently, GSM supplied MGO or marine fuel oil (MFO) to SFM from 2016 onwards. However, troubles deepened when Martin used SFM’s account to make payment of the last two instalments for the bareboat charter of the vessels.

He went further and subsequently transferred the vessels to parties other than MB Marine, in breach of his agreement with Bernard.

Disappointed, Bernard decided he did not want to have any more dealings with Martin and SFM; Bernard subsequently requested SMF pay up all outstanding sums but was “shocked” to find out claims of USD 691,483.77 owed to RS Marine during a 31 July 2018 meeting.

Martin further presented invoices to GSM for bareboat charters and supply of marine lubrication oil totalling SGD 1,587,000 on 12 July 2019 which Bernard disputed the sum to be monies owed by Martin and SFM to GSM.

Findings by the Court

“There is no doubt on the evidence that the plaintiff and the defendant had a 50:50 partnership in the joint venture until Martin unilaterally took over the entire project and cut out the plaintiff’s share,” stated Senior Judge Lai Siu Chiu.

Judge Lai found the evidence provided by GSM accountant Carmen Lee, GSM Director Doris Ng (also Bernard’s wife) and Bernard to be credible over material from Martin and his assistant Lee Cheng Guan (known as Tony) who was in charge of accounts for SFM in the Vietnam Project.

“I should add that Carmen was not only a credible but also a competent witness, unlike her counterpart Tony from the defendant,” said the Judge.

“Every statement of account disputed by the defendant could be corroborated by her from the plaintiff’s documents, while payments the defendant claimed were not taken into account by the plaintiff were refuted by Carmen’s testimony and/or Tony’s cross-examination.

“As compared with Carmen’s evidence, Tony’s cross-examination showed that the defendant kept poor records and that its version of its running account with the plaintiff was unreliable.

“Despite being in charge of the defendant’s accounts, Tony came across as disorganised if not incompetent – he was not even aware of certain payments made by the plaintiff notwithstanding the undisputed evidence produced by the plaintiff.”

Though Judge Lai noticed Bernard not speaking in complete sentences during cross-examination, she did not find him to be either dishonest or evasive in manner.

“Indeed, Bernard fared much better as a witness than Martin. Martin’s lengthy cross-examination elicited rambling and irrelevant testimony, and he prevaricated and was often evasive. What emerged from his cross-examination was that portions of his AEIC [ affidavit of evidence-in-chief] were clearly false – he was shown to have been untruthful in many instances,” she adds.

“The court finds that the plaintiff and Bernard tolerated Martin’s behaviour despite the frustrations Martin caused because it was Martin who brought the Vietnam Project to the plaintiff as business and the plaintiff had no contact whatsoever with the buyer(s).

“The plaintiff had no choice but to put up with Martin’s misconduct, which culminated in Martin taking away from the plaintiff the Vietnam Project and the vessels from MB Marine.

“Martin’s contention that the plaintiff did not contribute anything to the Vietnam Project ignores the fact that, without the plaintiff’s participation and guarantee to Bunkers Marine, Jack would not have agreed to supply MGO to Martin for the Vietnam Project.

“Moreover, through Shipmate, Bernard crewed, managed and maintained the vessels throughout the duration of the Vietnam Project until Martin cut the plaintiff off.

“In addition, save for the first instalment, which Martin paid from the advance payment made by the cargo buyer under the Vietnam Project, the plaintiff paid to RS Marine the hire purchase instalments (disguised as charter hire) for the vessels. As Bernard alleged, Martin then diverted the vessels away from MB Marine.

“The court not only did not find Martin to be a credible witness, he was ungrateful and dishonest in his dealings with Bernard and the plaintiff.”

Final Judgement

After analysing the facts and findings, Judge Lai decide to award final judgment with costs for the balance sum of USD 1.85 million (exact: USD 1,854,803.66), after taking into account a contra exercise, as well as SGD 5,804.50 in favour of GSM.

She also dismissed SFM’s counterclaim with costs to GSM.

“Martin’s claim for charter hire allegedly due to the defendant was nothing less than dishonest,” she remarked.

Note: The original High Court of the Republic of Singapore judgement document can be viewed here.

 

Photo credit: Manifold Times
Published: 3 May, 2021

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