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Singapore: Court of Appeal dismisses CIMB USD 5.7 million claim over earlier WFS/Panoil bunker contracts

17 Mar 2021

Editor: The following article is a summary of the full 47-page judgement from the High Court of the Republic of Singapore. The complete document published on 5 March 2020 is available here.

The Court of Appeal on 5 March upheld an earlier decision made by the High Court against CIMB Bank Berhad (CIMB) and dismissed an appeal made by the bank as a legal assignee under a deed of debenture*.

CIMB in June 2020 lost a legal claim of approximately USD 5.7 million against bunker trading company World Fuel Services (Singapore) Pte Ltd (WFS) over a deed of debenture issued by former Singapore physical bunker supplier Panoil Petroleum Pte Ltd (Panoil).

The bank lost the earlier suit at the High Court due to issues in proving the authenticity of the debenture; it could not prove two signatures purportedly belonged to Alvin Yong Chee Ming (Yong), Panoil’s former managing director, and Lim Shi Zheng (Lim), a director of Panoil; both did not show up in court.

However, in the latest development, Judges at the Court of Appeal found CIMB did produce enough evidence to proof the authenticity of the debenture; but offered a different perspective on why the case still favoured WFS.

“In the present case, it was not disputed that the legal burden of proof to show authenticity was on CIMB,” the Judges stated.

“We have considered the omission by CIMB to call Yong and Lim or to introduce any expert evidence together with the rest of the evidence.

“Relying predominantly on the circumstantial evidence available before the court, however, we reach a different conclusion from the Judge on the issue of authenticity.

“We find that CIMB has established authenticity of the Debenture on a balance of probabilities and discharged its burden of proof.”

Instead, Judges at the Court of Appeal noted previous contracts between WFS and Panoil including a right of set-off favouring WFS under documents signed by the parties.

“Accordingly, it is unnecessary to address WFS’ argument that an adverse inference should be drawn against CIMB for not calling Yong and Lim as witnesses on the right of set-off,” they reasoned.

“WFS was therefore entitled to a right of contractual set-off under the 2014 Offset Agreement. In the circumstances, the question of the application of the Umbrella Contracts to the Subject Transactions is academic. Likewise, it is unnecessary to consider WFS’ claim to an equitable set-off.

“We therefore find that CIMB cannot succeed in its claims against WFS, but for a different reason than that of the Judge, and dismiss CIMB’s appeal in CA 107/2020. Although CIMB has established the authenticity of the Debenture, WFS has established its right of set-off.”

Background:

Panoil Petroleum and its five other associated companies, namely Panoil Tankers Pte Ltd, Panoil Shipping Pte Ltd, Panoil Marine Pte Ltd, Pan Energy Pte Ltd, and Panoil Logistics Pte Ltd., were placed under judicial management during October 2, 2017.

Panoil Petroleum’s bunker supplier license was not renewed by the Maritime and Port Authority of Singapore (MPA) when it expired on August 31, 2017 due to unauthorised alterations being made on the pipelines of the bunker tankers between the Mass Flow Meters (MFM) and the flow boom.

The alterations allow bunker fuel that have been measured by the MFM to be siphoned out and undermines the accuracy of the readings from the MFM system, according to the MPA.

Its bunker craft operator licence was earlier revoked by the port authority on 15 August, 2017.

*A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, they must rely on the creditworthiness and reputation of the issuer for support. Both corporations and governments frequently issue debentures to raise capital or funds. [Source: Investopedia]

Related: Panoil Petroleum and Pan Energy appoint liquidator to hold meeting of creditors
Related: Singapore: CIMB Bank loses USD 5.7 million claim against WFS over Panoil debenture
Related: Singapore: Liquidators seek to wind up Panoil Petroleum at High Court

 

Photo credit: Manifold Times
Published: 17 March, 2021

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