1 Da Shun Shipping (Pte) Ltd (“Da Shun”) is a one-ship company which is part of the Hin Leong group of companies. ¹ Following the collapse of Hin Leong Trading (Pte) Ltd (“Hin Leong”) and the Hin Leong group from around April 2020 onwards, Da Shun entered judicial management on 10 February 2021 and went into liquidation on 29 April 2022 in these proceedings ie, HC/CWU 51/2022. ² Da Shun’s main asset was the vessel “Sea Latitude” (“Vessel”). ³ On 9 November 2021, Da Shun’s then judicial managers obtained an order of court under s 100 of the Insolvency, Restructuring and Dissolution Act 2018 (Act 40 of 2018) (“IRDA”) authorising the Vessel to be sold as if she was not subject to security (“s 100 Order”). ⁴ In these proceedings, a number of parties contest how the sale proceeds of the Vessel should be applied.

4 An Wei Shipping Pte Ltd (in creditors’ voluntary liquidation) (“An Wei”) is a sister company of Da Shun. Both companies are subsidiaries of Xihe Capital (Pte) Ltd, another company in the Hin Leong group of companies. ⁵ Like Da Shun, An Wei was also a one-ship company – An Wei’s main asset was the vessel “Sea Horizon”.

6 Da Shun and An Wei were joint and several borrowers under a US$33,800,000 term loan facility agreement with Bank of America, N.A., Singapore Branch (“BofA”) dated 27 November 2019 (“Facility Agreement” and “Loan”). ⁶

7 The loan amount under the Facility Agreement was split into two tranches as follows: ⁷

8 “Vessel A” was a reference to the “Sea Horizon” while “Vessel B” was a reference to the Vessel. ⁸

9 Clause 3 of the Facility Agreement provided that the sums advanced under Tranches A and B were to be used to refinance Vessels A and B respectively: ⁹

10 Notwithstanding that the Facility Agreement was notionally meant to fund two separate tranches to refinance An Wei’s and Da Shun’s respective vessels, their liability under the Facility Agreement was joint and several. ¹⁰ The Loan was secured by, amongst others, cross-collateralised mortgages over both the “Sea Horizon” and the Vessel. ¹¹ Accordingly, BofA was at liberty to enforce its security interest against either vessel or both vessels to recover any sums owed to BofA under the Facility Agreement.

11 Due to financial difficulties encountered by the Xihe Group entities (which were also part of the Hin Leong group of companies), the “Sea Horizon” (owned by An Wei) was sold subject to the terms set out in a BofA side letter dated 12 January 2021. ¹² BofA ultimately received US$21,376,185.54 from the sale of the “Sea Horizon”. ¹³ The proceeds from that sale were sufficient to pay off sums owed under Tranche A of the Facility Agreement in full. ¹⁴ Additionally, (a) a sum of US$132,604.42 was applied towards outstanding default interest under Tranche B; and (b) a sum of US$5,668,261.94 was applied towards the outstanding principal under Tranche B. ¹⁵

12 Accordingly, a total sum of US$5,800,866.36 was applied by BofA from the sale of the “Sea Horizon” (ie, An Wei’s vessel) towards the repayment of Tranche B, which concerned the “repayment of Da Shun’s rateable portion of the Facility Agreement”. ¹⁶ This sum will henceforth be referred to as the “Contributed Sum”.

13 As of 10 February 2021, the total amount of principal and interest which remained due under the Loan stood at around US$8.4m. ¹⁷

14 On 24 April 2020, HSBC filed HC/ADM 91/2020 (“ADM 91”), which was an admiralty action in rem against the Vessel for a claim by HSBC relating to a cargo of approximately 134,380.142 mt of low sulphur fuel oil said to be shipped on board the Vessel under a bill of lading no. OTK19-2992 dated 20 November 2019 (“HSBC BL”). ¹⁸ The originals of the HSBC BL had been delivered to HSBC by Hin Leong pursuant to inventory financing that HSBC had provided to Hin Leong; HSBC claims that it was at all material times and remains the lawful holders of the HSBC BL. ¹⁹ HSBC’s claim in ADM 91 is quantified in its proof of debt at US$29,040,000. ²⁰

15 On 1 April 2021, SG filed HC/ADM 52/2021 (“ADM 52”), which was an admiralty action in rem against the Vessel for a claim by SG relating to a cargo of 155,268.649 mt of low sulphur fuel oil said to be shipped on board the Vessel under a bill of lading no. OTK19-3195 dated 4 December 2019 (“SG BL”). ²¹ Like HSBC, SG had obtained the SG BL as security for inventory financing which it had given to Hin Leong, and SG claims that it was at all material times and remains the lawful holder of the SG BL. ²² In its proof of debt, SG quantifies its claim at US$35,522,361.52. ²³

(a) After the sale of the “Sea Horizon”, the outstanding principal and interest owed under the Loan was around US$8.7m. ²⁴ This sum was still secured by, amongst others, BofA’s mortgage over the Vessel.

(b) Additionally, the Writ Claimants had since asserted the Statutory Lien Claims over the Vessel. ²⁵

(c) The Vessel continued to “incur operating expenses in an untenable fashion without reciprocal benefit to the Company”. ²⁶ These operating expenses were estimated to be approximately US$163,994.92 per month. ²⁷

(d) The Vessel was unable to trade due to the Statutory Lien Claims creating a risk of arrest should the Vessel enter Singapore’s port limits (at the time, the Vessel had remained anchored outside Singapore port limits to reduce the risk of an arrest). ²⁸

18 In light of this untenable position, the judicial managers entered into discussions with HSBC and SG on the need to dispose of the Vessel free of encumbrances, including the Statutory Lien Claims, and the mechanisms by which to achieve this. ²⁹ One mechanism to achieve this was for the judicial managers to make an application to court under s 100(2) of the IRDA, which allows the court to authorise the disposal of secured property as if it were not subject to security, if it would promote one or more of the purposes of judicial management.

19 Following these discussions, Da Shun’s judicial managers, HSBC and SG entered into an agreement dated 17 June 2021 (“17 June Agreement”) containing the following key features. ³⁰ First, the judicial managers would apply to court under s 100 of the IRDA for an order allowing them to dispose of the Vessel as if it were not subject to any security (the “s 100 Application”). ³¹ While the 17 June Agreement referred to s 100(1) of the IRDA, the eventual order was (correctly, in my view) made under s 100(2). ³² Secondly, under the 17 June Agreement, the sale proceeds would be applied in the following order of priority:

20 For their part, the Writ Claimants agreed not to object to the s 100 Application ³⁶ . The Writ Claimants also undertook not to issue new writs or arrest the Vessel for a period of three months from the date of the agreement and to take reasonable steps to facilitate the sale of the Vessel. ³⁷

21 While BofA was not a party to this agreement, it appears from the evidence that BofA was involved in the discussions leading up to it – the record contains a side letter from BofA to Da Shun dated 15 June 2021, in which BofA agreed to fund the s 100 Application. ³⁸ Subsequent to this agreement, BofA also played an active role in the discussions between the parties on the terms of the proposed s 100 Application. ³⁹

22 The s 100 Application was eventually filed on 8 October 2021 in HC/OS 1023/2021 (“OS 1023”), ⁴⁰ where Da Shun’s judicial managers submitted that disposing of the Vessel was likely to promote a more advantageous realisation of Da Shun’s assets than on a winding up (see s 89(1)(c) of the IRDA). ⁴¹ However, as the Statutory Lien Claims would survive the change of ownership of the Vessel, the Vessel was rendered “practically unsaleable”. ⁴² No party would purchase it given the immediate threat of arrest upon any transfer of ownership, as a going-concern purchaser would not have the statutory moratorium that Da Shun enjoyed. ⁴³

23 Accordingly, Da Shun’s judicial managers submitted that selling the Vessel free of encumbrances “would realise the best value of the Vessel, and [would] therefore [be] in the interests of [Da Shun] and its creditors”. ⁴⁴ Active enforcement proceedings by way of an arrest of the Vessel were not ideal because: (a) the arresting party would likely have to incur significant upfront costs; and (b) an arrest and sale of the Vessel might end up being a somewhat protracted process. ⁴⁵ In the circumstances, all parties (ie, Da Shun, BofA, and the Writ Claimants) supported the s 100 Application. ⁴⁶

24 On 9 November 2021, Kannan Ramesh J (as he then was) granted the s 100 Order by consent, which by and large reflected the terms of the 17 June Agreement and the product of the subsequent negotiations between Da Shun’s judicial managers, HSBC and SG. ⁴⁷ As the terms of the s 100 Order are a key part of the present dispute, the relevant parts of the order are set out in full: ⁴⁸

25 Pursuant to the s 100 Order, the Writ Claimants filed Notices of Discontinuance in ADM 91 and ADM 52 respectively. This enabled Da Shun’s judicial managers to “market the Vessel for sale free of encumbrances”. ⁴⁹

26 The Vessel was sold by the judicial managers and delivered to its buyers on 4 February 2022. ⁵⁰ The sale proceeds from the Vessel amounted to US$24,645,009.27. ⁵¹ BofA was repaid the monies it was owed and the Mortgage on the Vessel was discharged on 4 February 2022. ⁵² Following the settlement of accounts and further receipts and/or payments from the sale proceeds, the balance proceeds paid into court amounted to US$12,450,771.26. ⁵³ While the affidavit of Mr Yit refers to a sum of US$12,452,818.82 as representing the balance proceeds, ⁵⁴ the amount eventually paid into court, as indicated in Directions to Accountant-General for Payment In in HC/DRI 62/2023 (Amendment No. 1) filed on 8 November 2023, amounted to US$12,450,771.26. Nothing turns on this difference but henceforth, this sum is referred to as the “Balance Proceeds”.

(a) While the Writ Claimants have filed Notices of Discontinuance in respect of their Statutory Lien Claims, they continue, collectively, to assert a priority / security interest over the Balance Proceeds in accordance with paragraph 2(ii) of the s 100 Order. ⁵⁵

(b) On 29 December 2022, An Wei’s previous solicitors informed Mr Yit that An Wei had a claim in contribution against Da Shun and sought to assert the proprietary remedy of subrogation against the Balance Proceeds. ⁵⁶

(b) HC/SUM 3030/2023 (“SUM 3030”) is Mr Yit’s application (under s 170(2) of the IRDA) for leave to commence SUM 2972 against An Wei, and for the costs of the application to be in the cause of SUM 2972.

(c) HC/SUM 2280/2025 (“SUM 2280”) is An Wei’s application. An Wei seeks leave under s 133(1) of the IRDA to commence and proceed with SUM 2280. Substantively, An Wei applies for an order to be paid the sum of US$6,083,702.55 out of the Balance Proceeds in priority over all other claimants including HSBC, SG and Da Shun. This sum comprises the Contributed Sum at [12] plus 50% of various costs incurred and claimed by BofA in relation to its enforcement of the Facility Agreement. ⁵⁷ An Wei asserts that it has an entitlement to stand as a secured creditor in the place of BofA under the Mortgage, following its payment to BofA which discharged part of Da Shun’s debt to BofA. Alternatively, An Wei seeks payment of the same by way of contribution, but as an unsecured creditor.

(c) Should An Wei fail on the First Issue, and the Writ Claimants succeed only on the Third Issue but not the Second Issue, then An Wei and the Writ Claimants will only be able to recover their claims pari passu as unsecured creditors of Da Shun.

34 Additionally, Clause 2.2.2 of the Facility Agreement contemplates each co-borrower possessing rights of indemnity inter se in respect of the sums repaid under the Loan. Clause 2.2.2 reads: ⁵⁸

35 In Da Hui (HC), I had summarised the law on contribution (at [32] and [35]) as follows:

36 Applying the above statements of law to this case, and based on the provisions of the Facility Agreement referred to above (at [33]–[34]), it can in my view be reasonably concluded that Da Shun and An Wei did not intend that their respective contributions to repaying the Loan would be disproportionate or unequal. Therefore, the presumption of “equity is equality” is not displaced on the facts of this case and as such, the rateable contribution sought by An Wei from Da Shun is justified.

37 Following from the conclusion above, the live issue that remains is whether An Wei can or ought to be subrogated to BofA’s security interest, so as to allow its claim a priority over the Vessel’s sale proceeds that is superior to that of the Writ Claimants’. An Wei submits that, having paid part of Da Shun’s share of the mortgage debt, it is entitled to the remedy of subrogation and to step into BofA’s shoes, ⁵⁹ thereby ranking ahead of the Writ Claimants in the distribution of the Balance Proceeds. ⁶⁰ Following Re Downer Enterprises Ltd [1974] 2 All ER 1074, subrogation entitles the paying party to succeed not only to the creditor’s underlying claim, but also to their priority position in liquidation.

40 An Wei submits that it is entitled to subrogation on the grounds that Da Shun was unjustly enriched when An Wei paid part of Da Shun’s debt to BofA. ⁶¹ An Wei’s right to subrogation, it argues, arises from its partial payment of Da Shun’s proportionate share of the debt as a joint and several borrower.

41 By paying part of Da Shun’s debt to BofA and discharging their joint liability, An Wei claims the right to stand in BofA’s shoes vis-à-vis Da Shun and the Vessel, thereby ranking ahead of the Writ Claimants. ⁶² An Wei contends that its contribution directly benefitted Da Shun’s estate by increasing the funds available to creditors, and that this enrichment at An Wei’s expense being unjust forms the basis of its subrogation claim. ⁶³ In the alternative, An Wei relies on s 2 of the Mercantile Law Amendment Act 1856 (2020 Rev Ed) (“MLAA”), which it submits preserves a joint and several co-debtor’s rights even after it pays off its co-debtor’s debt owing to the creditor. ⁶⁴ On this basis, BofA’s priority interest was not extinguished upon payment but is instead maintained for An Wei’s benefit to prevent unjust enrichment, ⁶⁵ and this would allow An Wei to step into BofA’s shoes and inherit the Mortgage with its attendant priority. ⁶⁶ An Wei contends that this proprietary right arises upon payment, survives liquidation, and is not defeated by the discharge or enforcement of the security. ⁶⁷

42 The Writ Claimants submit that subrogation is unavailable on several grounds. First, An Wei has no claim in unjust enrichment against Da Shun, as An Wei knowingly assumed joint and several liability for the Loan. ⁶⁸ Secondly, the rationale for equitable subrogation is not engaged since the Vessel has been sold and delivered to the purchaser. ⁶⁹ As stated in Da Hui (HC) at [60], equitable subrogation aims to cure the unconscionability of the defendant being restored to his collateral in circumstances where the claimant discharged the defendant’s liability to his creditor. ⁷⁰ Since the Vessel has been sold, Da Shun no longer possesses any right or interest which Da Shun cannot in good conscience keep An Wei out of ⁷¹ – put simply, there is no security left to which An Wei can be subrogated to.

52 An Wei relies on BFC in support of its application, but it is clear from Lord Hoffmann’s speech in BFC quoted above at [51] that identifying a specific and recognised unjust factor is essential. It is only where such an unjust factor exists that, absent any public policy grounds to refuse relief, any justification would even begin to exist for the claimant to be afforded a priority interest over the defendant via the remedy of subrogation. Absent such an unjust factor, the elevation of the claimant’s interest above that of the defendant would lack principled justification and would, paradoxically to the claimant’s assertion that the remedy should be granted to prevent injustice to itself, result in an injustice to the defendant. The doctrine of subrogation will not be applied if its application would itself produce an unjust result (BFC at 241H, citing Boodle, Hatfield & Co v British Films Ltd 1986 PCC 176 at 182–183).

55 In Anna Wee, the appellant contended that her former husband had, in the course of ancillary proceedings relating to their divorce, fraudulently concealed the existence of lucrative agreements, thereby misrepresenting his true financial position. Upon discovering years later that the undisclosed assets had been settled into trusts prior to his death, the appellant commenced proceedings against her former husband’s estate and the trustees alleging fraudulent misrepresentation and unjust enrichment.

61 On the facts, An Wei was under an existing legal obligation to repay the entire debt to BofA, having entered into the Facility Agreement as a joint and several borrower alongside Da Shun. There was no shared assumption, expectation or intention (nor was any evidence adduced) that An Wei would obtain, over and above any rights of contribution it may have had against Da Shun, any security or proprietary benefit over the Vessel in the event the sale proceeds of its own mortgaged vessel were utilised to discharge BofA’s debt. Nor was An Wei compelled to make the payment in circumstances of legal necessity that would support equitable relief. It was An Wei’s commercial decision to enter into the Facility Agreement on joint and several terms and to offer its vessel as cross-collateralised security for the Loan. ⁷² The subsequent realisation of the debt by BofA upon An Wei and Da Shun’s default under the Facility Agreement was thus entirely consistent with the risk allocation that An Wei had knowingly accepted. In short, what eventually transpired (ie, BofA enforcing its claim against both Da Shun and An Wei’s vessels for different and unequal sums) was entirely consistent with the very bargain that An Wei entered into. There was no failure of basis, or any normative defect in the transaction or defeated expectation that An Wei could point to in aid of its case. In my judgment, since no legally recognised unjust factor or event arises on the present facts for the reasons I have given above, no question of equitable subrogation arises either. On this basis alone, the relief that An Wei seeks in prayers 2 and 3 of SUM 2280 cannot succeed and must be dismissed.

63 The Writ Claimants submit that An Wei’s claim stands to be dismissed also by reason of my decision in Da Hui (HC).

64 In Da Hui (HC), I held that subrogation is unavailable when the mortgagee’s security interest is spent as a result of the security itself being realised to discharge the primary debt (at [57]). Accordingly, in Da Hui (HC), I denied the applicant’s claim for subrogation.

66 In Da Hui (HC) at [57]–[63], I held that Da Hui could not be equitably subrogated to securities that had already been realised. BofA had already fully enforced its mortgages over An Rong’s vessels by the commencement of admiralty in rem proceedings and arrest of the vessels concerned, culminating in the judicial sale of those vessels. I further held that because BofA’s interests as mortgagee had been exhausted or merged into its admiralty causes of action and judgments, no proprietary interest remained for Da Hui to be subrogated into. Da Hui appealed my decision and the Court of Appeal dismissed that appeal – see Da Hui Shipping (Pte) Ltd v An Rong Shipping Pte Ltd [2025] 1 SLR 998 (“Da Hui (CA)”).

67 An Wei submits that Da Hui (HC) is distinguishable from the present case. First, An Wei argues that in Da Hui (CA), the Court of Appeal dismissed the appeal on essentially procedural grounds ie, that Da Hui ought to have commenced proceedings before the admiralty court and not by way of an originating application. Thus, the Court of Appeal did not address whether my substantive decision on the merits was correct. An Wei’s second and related submission is that in any event, in Da Hui (HC), the mortgages were “spent” through judicial enforcement by BofA (namely, the arrest and judicial sale of An Rong’s vessels). Conversely, in the present case, BofA did not enforce the mortgage (in the sense of arresting the Vessel in admiralty proceedings and having it judicially sold) – the Vessel was instead sold privately by the liquidator and BofA’s security was “extinguished upon discharge of the debt by repayment”. On this basis, An Wei contends that BofA’s security was not “spent” in the same way as it was in Da Hui (HC). In this case, An Wei, as co-debtor, paid a portion of Da Shun’s debt and thus was entitled to obtain an equitable right to the surplus by subrogation as the obstacle identified by me in Da Hui (HC) does not arise in this case. ⁷³

68 The Writ Claimants submit that this distinction is immaterial. ⁷⁴ How the security was realised does not affect the applicability of Da Hui (HC) to An Wei’s claim. In both Da Hui (HC) and the present case, BofA’s security was fully enforced and therefore spent. ⁷⁵ As a matter of fact, BofA received full repayment under the Facility Agreement from the sale of the Vessel and thereafter, discharged the Mortgage. The security held by BofA was thus fully spent.

70 In my view, the mechanism by which the realisation of BofA’s security (ie, the mortgaged vessel) took place in both cases is immaterial. What matters is that here, BofA’s secured debt was fully satisfied by liquidating the mortgaged vessel and converting it into cash through a court sanctioned process. In this case, that process involved a sale of BofA’s security sanctioned by an order of court (ie, the s 100 Order), granted on the application of Da Shun’s then judicial managers as officers of the court. The s 100 Order expressly preserved BofA’s rights and priority to the sale proceeds of the Vessel qua mortgagee. BofA in turn accepted and agreed to the terms of the s 100 Order which allocated the Balance Proceeds to other parties only after BofA was repaid in full. Clearly, the quid pro quo was that BofA would forbear from actively enforcing its rights against the asset that represented its security – that forbearance was key to the s 100 Order being successfully implemented. But that does not mean that the s 100 Order, a critical plank of the mechanism to sell the Vessel free from encumbrances, was not itself a means by which BofA was at the very least indirectly or passively enforcing its rights as mortgagee of the Vessel. It is noteworthy that in its side letter dated 15 June 2021 (see [21] above), BofA agreed to fund the s 100 Application “with a view to preserving and enforcing our rights under the Finance Documents (including the Mortgage) and our security interest in the Vessel…” (emphasis added in italics). ⁷⁶ Further, the s 100 Order itself (at paragraph 7 – see above at [24]) made clear that BofA was not obliged to discharge the Mortgage until all sums due to it had been paid from the proceeds of sale of the Vessel. BofA participated in the distribution of the sale proceeds as envisaged by terms of the s 100 Order and recovered the amounts due to it under the Facility Agreement from the Vessel’s sale proceeds, also in accordance with the terms of the s 100 Order. On completion of the sale of the Vessel, the liquidator confirmed that the Mortgage was discharged by BofA on 4 February 2022. ⁷⁷ For all intents and purposes, BofA’s enforcement rights against the Vessel were, on the completion of the sale pursuant to the s 100 Order, transferred to the Vessel’s sale proceeds.

73 I make two final points here relating to Da Hui (HC).

74 The first concerns the Writ Claimants’ submission that An Wei, having previously confirmed to the court that it would be bound and abide by the outcome in Da Hui (HC), cannot now resile from that position. ⁷⁸ This follows from a confirmation given by the previous solicitors of An Wei during a Case Conference on 21 December 2023 and recorded by the Assistant Registrar who conducted the case conference, that An Wei agreed to be bound by Da Hui (HC) and any appeal therefrom on the basis that the legal issues to be determined in Da Hui (HC) and this case were similar. ⁷⁹ I reproduce the exchanges between the Assistant Registrar and the then counsel for An Wei: ⁸⁰

76 The second point relates to An Wei’s submission that, by virtue of the principle in Ex parte James; In re Condon (1874) LR 9 Ch App 609, court officers including liquidators must not act in a manner that, even if lawful, falls below the standards of fairness expected of court officers. An Wei submits that the liquidator of Da Shun would be in breach of this principle if it is allowed to retain the benefit of An Wei’s payment that partially discharged Da Shun’s debt to BofA. An Wei contends that in these circumstances, any honest person would consider it fair to recognise An Wei’s subrogated security rights. ⁸¹

77 In my view, there is no basis to contend that Da Shun’s liquidators acted in a manner that attracts the principle (assuming it applies) such that they should be held to account, whether as constructive trustees or on any other basis. The then judicial managers applied for the s 100 Order and acted in accordance with its terms. After Da Shun went into liquidation, Mr Yit as Da Shun’s liquidator applied to the court for determination of the rights and interests of the three claimants (ie, HSBC, SG and An Wei) against the Balance Proceeds. Far from acting in a manner prejudicial to the interests of creditors, the liquidators of Da Shun discharged their duties as expected of them. Accordingly, I have no hesitation rejecting the submission advanced by An Wei.

78 An Wei relies in the alternative on s 2 of the MLAA. An Wei submits that, in order to prevent unjust enrichment, equity may “keep the security alive” for the benefit of the party who discharged the debt, and this is envisioned by s 2 of the MLAA. ⁸² Accordingly, repayment of the debt does not necessarily extinguish BofA’s security interest. Instead, s 2 may operate so as to treat the benefit of the mortgage as having been assigned to the paying party, effectively by way of subrogation (BFC at 236, Boscawen v Bajwa [1996] 1 WLR 328 (“Boscawen”) at 334 and 342, Bofinger v Kingsway Group Ltd [2010] 3 LRC 75 (“Bofinger”) at [48]–[50]). An Wei also cited the cases of Bank of Cyprus and Leon v Kensington Mortgage Co Ltd [2023] EWHC 121 (Ch) (“Leon”) in support of its case.

81 I note that even in An Wei’s written submissions, An Wei relies on case authorities on unjust enrichment to substantiate its case for relief under s 2 of the MLAA, and in fact contends that there is unjust enrichment in this case that justifies An Wei being granted relief under s 2. Thus, An Wei itself is cognisant that s 2 of the MLAA does not operate in isolation without regard to the relevant principles of common law that underpin it.

87 Before I leave the First Issue, I address a factual point that arises from An Wei’ submissions. An Wei argues, in reliance on Bofinger, that BofA was, whether as some form of fiduciary or as constructive trustee, obliged to account for the Balance Proceeds that BofA “released” to Da Shun and which were eventually paid into court. ⁸³ In my view, this contention is factually incorrect. It is plain from the record that, in carrying out the terms of the s 100 Order, the sale proceeds were paid by the Vessel’s buyer to Da Shun as the seller. Upon completion of the sale and delivery of the Vessel to the buyer on 4 February 2022, Da Shun’s judicial managers then paid BofA a sum of US$10,704,938.26 in satisfaction of BofA’s remaining claim under the Facility Agreement. ⁸⁴ As noted above, BofA discharged the Mortgage on the Vessel on the same day the sale of the Vessel was completed ie, on 4 February 2022. The Balance Proceeds were eventually paid into court by Da Shun’s liquidators sometime between September and November 2023. Thus, the factual premise upon which An Wei’s submissions are grounded (ie, that BofA was a fiduciary of the Balance Proceeds and subject to a constructive trust) is incorrect and contradicted by the evidence. BofA were never in possession of the Balance Proceeds, nor did they release or pay any of the proceeds over to Da Shun’s liquidators. The evidence shows that it was Da Shun (through its judicial managers and subsequently, liquidators) who were at all times in possession of the proceeds from the sale of the Vessel. As such, I fail to see how BofA could be under any obligation to account for the balance or surplus sale proceeds of the Vessel when they were never in possession of those proceeds in the first place.

88 I turn now to the Public Policy Issue. The Writ Claimants submit that the remedy of subrogation should in any event be refused on public policy grounds, as An Wei’s belated assertion of proprietary rights seeks to gain priority over other creditors, would improperly enlarge an extinguished mortgage beyond what BofA itself could claim, and would cause irreversible prejudice to the Writ Claimants, contrary to the principles governing fair distribution in liquidation. ⁸⁵

90 In my view, in the present case, permitting An Wei to be subrogated would likewise disrupt the orderly priority of claims and undermine the equitable distribution of Da Shun’s assets. From the available evidence, by January 2021, An Wei would have been aware that the proceeds from the sale of its own vessel (the “Sea Horizon”) had been applied towards the repayment of part of Tranche B (ie, Da Shun’s “portion”). ⁸⁶ By May 2021, An Wei was also aware that BofA and the Writ Claimants were contemplating the disposal of the Vessel by way of a s 100 Order. It is not disputed that An Wei was represented at a meeting of Da Shun’s creditors on 11 May 2021 where a s 100 IRDA application was referenced and discussed. ⁸⁷

91 Thus, if not in early 2021, then at least by May 2021, An Wei could and ought to have objected to the terms of the s 100 Order then contemplated or at least asserted its interest, had it considered that it possessed a proprietary interest ranking in priority to the Writ Claimants. It did not do so. Even when An Wei lodged its proof of debt with Da Shun’s liquidators as late as October 2022, An Wei failed to assert any security interest, instead indicating “Nil” in the box titled “Security Held”. ⁸⁸ An Wei asserted a proprietary / priority interest for the first time only on 29 December 2022 when its former solicitors raised the claim in a letter to Da Shun’s liquidators. ⁸⁹

94 The Writ Claimants rely on the s 100 Order to support their asserted security interest. This consent order was endorsed by the judicial managers of Da Shun, BofA, and the Writ Claimants. ⁹⁰

95 The Writ Claimants contend that this court should give effect to the agreement of the parties as reflected in the s 100 Order. The order expressly contemplated the Writ Claimants giving up their rights to arrest the Vessel, in reliance on the promise or agreement by Da Shun to ringfence the Balance Proceeds, after payment of the higher priority claims, to secure the Writ Claimants’ claims pending their adjudication and determination. However, An Wei submits that the Writ Claimants should not be permitted to assert any claims against the Balance Proceeds as they are not secured creditors nor hold any security interest. An Wei relies heavily on the Court of Appeal’s decision in Natixis, Singapore Branch v Seshadri Rajagopalan [2025] 1 SLR 1020 (“Natixis (CA)”) (affirming my decision in Natixis, Singapore Branch v Seshadri Rajagopalan [2025] 4 SLR 1031). ⁹¹ As held in Natixis (CA), an admiralty claimant only becomes a holder of security in its true sense upon the arrest of the relevant vessel by that claimant, and not by the mere issuance of an admiralty in rem writ against the vessel concerned (at [72]–[77]). Similarly, An Wei submits that as the Writ Claimants did not arrest the Vessel, the Writ Claimants hold no security or security interest in the Balance Proceeds and therefore have no priority entitlement under s 100(2) of the IRDA. ⁹² Finally, on the whole, An Wei argues that the words of the s 100 Order cannot confer on the Writ Claimants security or any security interest (whatever the import of that phrase might be) where none existed. The s 100 Order does not create security as it is merely a procedural tool to allow a sale of property free of encumbrances, and only preserves existing security, which HSBC and SG lack. ⁹³

98 Applying these principles, in my view, the s 100 Order did intend to accord HSBC and SG security over the Balance Proceeds. The relevant part of the s 100 Order at paragraph 2(ii) reads: ⁹⁴

99 In my view, the plain language of the s 100 Order is clear and admits of no ambiguity. Once the costs and expenses relating to the sale, operation, and preservation of the Vessel are deducted, the remaining sale proceeds must first be used to satisfy the amounts owed to BofA as the first ranking claim in terms of priority. Any balance proceeds remaining thereafter must be paid into Court as security for the claims of the Writ Claimants pending the determination of those claims. If and when the Writ Claimants establish their misdelivery claims after the same have been adjudicated upon in accordance with any of the processes enumerated in paragraph 2(ii)(B) of the s 100 Order, they would be entitled to payment from the Balance Proceeds retained in court as security for those claims. Thus, on the plain terms of the s 100 Order, Da Shun (through its judicial managers) agreed to provide security to the Writ Claimants for their claims and that agreement to provide security was carried through by the payment of the Balance Proceeds into court as the agreed form of security. Viewed from that perspective, the questions that arise are whether the following considerations would adversely affect the court’s ability to give effect to that agreement, namely: (a) the decision in Natixis (CA); and (b) the fact that An Wei was not party to the making of the s 100 Order.

100 The first issue is whether Natixis (CA), which held that an admiralty writ in rem does not in and of itself create a security interest, but only a right to obtain security perfected by the arrest of the ship concerned, provides a basis to defeat the interest the Writ Claimants say they have over the Balance Proceeds by way of security or a security interest. An Wei submits that here, the Writ Claimants do not possess any security or security interest, as neither of the Writ Claimants arrested the Vessel and thus, only held “unexecuted admiralty writs” against the Vessel. ⁹⁵ The fact that the s 100 Order states in its preamble that the sale of the Vessel was ordered “subject to the following security and/or security interests and without prejudice to the security and security interests” could not elevate the position of the Writ Claimants when they had no security in the first place. The s 100 Order merely recorded what the Writ Claimants (mistakenly) thought they had in terms of security or a security interest. Conversely, the Writ Claimants submit that the only reason there was no arrest is due to their forbearance in exercising their right of arrest upon agreeing to the terms of the s 100 Order. ⁹⁶ They further submit that the factual matrix of the present case is distinguishable from that in Natixis (CA). ⁹⁷

101 HSBC submits that An Wei’s reliance on Natixis (CA) is misplaced because HSBC’s entitlement to the Balance Proceeds does not depend on it being a security holder under s 100(2) of the IRDA, but rather on the terms of the s 100 Order. ⁹⁸ The s 100 Order was entered into by consent and is unaffected by Natixis (CA). ⁹⁹ Secondly, the s 100 Order confers clear benefits on all parties. HSBC and SG agreed to withdraw their respective in rem actions and not pursue arrests of the Vessel, enabling the judicial managers to sell the Vessel at a higher price and hold the Balance Proceeds to secure the misdelivery claims. ¹⁰⁰ Consistent with the principle of sanctity of contract, the court ought to uphold the s 100 Order and reject An Wei’s challenge to it. ¹⁰¹

102 SG makes similar arguments. First, its entitlement to the Balance Proceeds comes directly from the s 100 Order. ¹⁰² Once BofA is paid, any remaining proceeds are to go to the Writ Claimants if the Statutory Lien Claims are established. ¹⁰³ Secondly, An Wei’s reliance on Natixis (CA) is misplaced. ¹⁰⁴ The s 100 Order does not depend on SG holding a security interest or arresting the Vessel. ¹⁰⁵ Lastly, even if security were required, it should suffice that SG had an equitable interest in the form of its in rem writ and intention to arrest. ¹⁰⁶ SG gave up the right to arrest only in reliance on the s 100 Order. ¹⁰⁷

108 Importantly, the Writ Claimants withdrew their in rem writs and refrained from arresting the Vessel while the sale was being conducted and completed. This forbearance directly contributed to a more advantageous realisation of the Vessel’s sale price. ¹⁰⁸ But even more importantly, and as I mentioned above at [104], Da Shun as the owners of the Vessel agreed in return to provide security to the Writ Claimants, and in fact did so by the payment into court of the Balance Proceeds.

116 The Writ Claimants each submit that they are the lawful holder of their respective BLs. ¹⁰⁹ The BLs being valid documents of title entitle them to the delivery of the cargo described in their BLs. However, the carrier delivered the cargoes concerned without the presentation of the original BLs, thereby causing the Writ Claimants loss and entitling them to damages for breach of contract, negligence, and/or conversion. ¹¹⁰

117 On the other hand, An Wei challenges the very validity of the BLs on which the Writ Claimants base their claims. Specifically, An Wei notes that there is a serious issue of whether the bills of lading which HSBC and SG purportedly hold and rely on are fabricated and fraudulent, as asserted by the liquidators of Hin Leong in separate proceedings before the court in HC/S 805/2020 (“S 805”). ¹¹¹ In those proceedings, the liquidators of Hin Leong alleged that the HSBC BL and SG BL were, among various other bills of lading, fabricated, that the cargo onboard the Vessel did not belong to Hin Leong as Hin Leong did not possess the requisite authority to pledge the cargo, and the bills were neither signed by the Master of the Vessel nor prepared in the usual course of business. ¹¹²

118 If indeed the HSBC BL and SG BL are proven to be fabricated (and accordingly, void and of no legal effect), the Writ Claimants would have no claim at all and thus, no right to any part of the Balance Proceeds. The result would then be that the Writ Claimants would no longer be considered creditors of Da Shun – be it secured or unsecured. ¹¹³

120 Both HSBC and SG argue that An Wei makes nothing more than bare assertions that the BLs are fabricated and were issued fraudulently. ¹¹⁴ They contend that there is sufficient evidence by way of affidavits and documents that demonstrate that the BLs were issued by persons authorised to do so. ¹¹⁵ In the course of the oral hearing, I raised with counsel for HSBC and SG the fact that similar allegations and issues had also been raised in relation to a number of other bills of lading in a series of interpleader proceedings that are presently before me, namely, HC/OS 489/2020, HC/OS 549/2020, HC/OS 593/2020, HC/OS 616/2020 and HC/OS 631/2020 (collectively, the “Interpleader Proceedings”). In the Interpleader Proceedings, HSBC and SG are also among the various parties who have asserted title to various oil commodities and are represented, in part, by the same counsel that appeared before me in this case. One of the issues in the Interpleader Proceedings is whether a number of other bills of lading in the hands of various banks (including HSBC and SG) purportedly issued for cargoes onboard other vessels and, which were issued in similar circumstances to the HSBC BL and SG BL, were fabricated/forged and are accordingly nullities. Notably, the Interpleader Proceedings proceeded to a full trial, where, inter alia, evidence was adduced from various witnesses employed at the material time by Hin Leong and Ocean Tanker (Pte) Ltd regarding the preparation and issuance of the various bills of lading that are in question in the Interpleader Proceedings. While the parties in the Interpleader Proceedings are not identical to those before me in this case, I cannot ignore the fact that the issue surrounding the validity of the HSBC BL and SG BL upon which HSBC and SG ground their claims in this case bears numerous similarities to the very same issue I am presently considering in the Interpleader Proceedings in relation to various other bills of lading.

121 In addition, given the allegations that have been raised regarding the HSBC BL and SG BL, I will have to consider and decide if those bills were fabricated, including whether the signatures on the bills were forgeries. These questions go towards the very heart of determining if the HSBC BL and SG BL are nullities with no legal effect whatsoever. I do not consider that such an issue can be decided simply on the basis of the affidavits filed by HSBC and SG and the submissions made by HSBC, SG and An Wei. In this regard, I have derived valuable assistance from the recent decision of the Appellate Division of the High Court in Yit Chee Wah v Fulcrum Distressed Partners Ltd [2026] 1 SLR 1 (“Fulcrum Distressed Partners”) on the approach to be taken in determining if a proof of debt ought to be decided summarily. Ang Cheng Hock JCA, delivering the judgment of the court, noted at [6] that the proof of debt regime:

122 While Fulcrum Distressed Partners involved a proof of debt submitted in personal bankruptcy proceedings, the court’s observations above are, in my view, equally apposite in the context of a proof of debt submitted in corporate insolvency proceedings. In Fulcrum Distressed Partners, allegations were made that the bankrupt had breached her duty to act honestly and in good faith in the interests of a company. The court noted that those were “serious accusations” and that the available evidence did not appear sufficient to establish such dishonesty and lack of good faith. The court concluded that the claim should proceed to a trial, and given the nature of the claims asserted against the bankrupt, noted (at [138]) that “at the least, pleadings should be filed to define the issues in dispute, discovery ought to be given, and the necessary individuals ought to be ordered to attend court to give oral evidence and be cross-examined”.

(a) With regard to SUM 3030, as prayed for in prayer 1 of the application, I grant Mr Yit leave to commence and proceed with SUM 2972 against An Wei.

(c) With regard to SUM 2280:

(i) as prayed for in prayer 1 of the application, I grant An Wei’s liquidators leave to commence and proceed with the application. As for the substantive prayers in SUM 2280 pertaining to subrogation, namely prayers 2 and 3, both prayers are dismissed.

(ii) as there is no dispute that An Wei is, as a co-borrower with Da Shun vis-à-vis BofA, entitled to a contribution from Da Shun in the amount claimed of US$6,083,702.55, An Wei’s claim for contribution against Da Shun in the amount claimed is allowed, and is to rank as an unsecured claim in Da Shun’s liquidation.