The Court of Appeal in the High Court of the Republic of Singapore on Friday (9 October) granted an appeal from Sinfeng Marine Pte Ltd, Cosco Petroleum Pte Ltd, and Costank (S) Pte Ltd. to withhold further information regarding dealings with defunct Singapore-based bunkering firm Coastal Oil Pte Ltd from liquidators, according to a court decision seen by Singapore bunkering publication Manifold Times.
Coastal Oil owed USD 357 million to 79 companies, of which USD 354 million is owed to major banks; the company’s Director Tan Sin Hwa has remained uncontactable since a December 2018 confession to its legal adviser over the preparation of fraudulent documents in order to obtain bank financing.
Sinfeng, Cosco Petroleum, and Costank (the appellants) were contesting a decision made by a High Court Judge on 12 July 2019 for the Production Order of records and documents in relation to their trading relationship, transactions and payment invoices with Coastal Oil between 2016 to 2018.
The appellants refused the requests made by the current joint and several liquidators of Coastal Oil (the respondents) generally on the basis that the documents sought were not necessary or reasonable; in addition, Sinfeng had already shared certain documents with the respondents at an earlier date.
However, the respondents this time were seeking for Production Orders of further material under Section 285 of the Companies Act in order to pursue investigations over suspicion of alleged fraud regarding tripartite trading loops involving Sinfeng, Cosco Petroleum and Costank.
The trading loops included Coastal Oil’s main suppliers of bunkers, namely Arkananta Yasa Pte Ltd (Yasa) and Mewah Logistics Pte Ltd (Mewah).
“In those tripartite trading loops, the same goods were sold by the appellants to Yasa/Mewah, then to the Company [Coastal Oil], and then back to the appellants,” stated the court document.
Judges at the Court of Appeal did not recommend the use of Section 285 of the Companies Act as a means to obtain further information from the appellants for other types of investigations.
“Section 285 is designed, among other reasons, to assist liquidators in pursuing wrongdoers on behalf of the Company,” they said.
“It is not designed for liquidators to investigate causes of action that the creditors or members may wish to take up personally.”
They further believed, amongst other reasons, that the current joint and several liquidators of Coastal Oil already had enough information on hand.
“The respondents had explained that they required documents from 1 July 2012 as Mr Tan had admitted to fraudulently preparing documents since 2013, and the Company’s financial year ending 2013 includes part of 2012,” they said.
“But this was information that the respondents had already been privy to (the Admission and the Announcement) when they requested two years’ worth of documents in February 2019, and this argument therefore did not explain why, within a short span of two months, the respondents required an additional four to five years’ worth of documents.
“This, in our view, suggests that the scope of the Production Orders, in so far as it covered six to seven years’ worth of documents may have been oppressive.
“For these reasons, even if the court had the power to grant the Production Orders, we would have been inclined to set it aside.”
In conclusion, the Court of Appeal Judges were in favour of the appellants’ case and ordered Production Orders of further documents from Sinfeng to be set aside.
“The respondents are to abide by their undertaking to return all the documents and information produced by reason of the Production Orders,” they stated.
“In respect of any documents that had been voluntarily provided, the respondents ought to be able to retain and make use of them.”
The current joint and several liquidators of Coastal Oil are ordered to pay Sinfeng and Cosco the total sum of $40,000 for costs and disbursements; and pay Costank $30,000 for costs and disbursements.
Manifold Times earlier reported China Merchants Bank Co., Ltd suspecting fraud between Sinfeng and Coastal.
A complete coverage of the events leading to the current development has been arranged by Singapore bunker publication Manifold Times (in descending date order) below:
Related: Sinfeng appeals against release of Coastal Oil contract docs; China Merchants Bank suspects fraud
Related: Singapore: Former Coastal Oil employees face forgery charges over fake sales contracts
Related: Coastal Oil hearings progress, court grants liquidators access to Sinfeng documents
Related: China Merchants Bank legal suit with Sinfeng over alleged $13 million debt progresses
Related: Fraud suspected in Coastal Oil Singapore case, says COSCO
Related: Coastal Logistics owned “Atalanta”, “Babylon” to undergo auction
Related: Singapore: Bunker tanker “Coastal Mercury” arrested
Related: Heng Tong Fuels & Shipping in court over DBS Bank bunker tanker loan
Related: Coastal Logistics owned MR tanker “Babylon” arrested
Related: Fraud suspected in Coastal Oil Singapore case, says COSCO
Related: Coastal Oil Singapore: Creditor list surfaces in bunker market
Related: Singapore: Bunker tanker “Coastal Neptune” arrested
Related: Coastal Oil Singapore creditors meeting scheduled on 10 Jan
Related: Coastal Oil Singapore in US $380 million debt to at least 10 banks
Related: Singapore: Coastal Logistics owned MR tanker “Atalanta” arrested
Related: Heng Tong Fuels & Shipping, Coastal Logistics tankers enter S&P market
Related: Coastal Oil Singapore to hold creditors meeting on 28 Dec
Related: Breaking news: Coastal Oil Singapore under liquidation
Photo credit: Manifold Times
Published: 14 October, 2020
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