[1999] SGCA 28

In the Court of Appeal of the Republic of Singapore

[1999] SGCA 28

CA 268/1998

Between

Petromar Energy Resources Pte Ltd

… Plaintiff

And

Glencore International AG

… Defendant

grounds of decision

Civil Procedure; Civil Procedure — Mareva injunctions

This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher’s duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports.

Petromar Energy Resources Pte Ltd v Glencore International AG

[1999] SGCA 28

CA 268/1998
Karthigesu JA; L P Thean JA
14 April 1999

1 LP THEAN JA

3 Background

5 The figure at the centre of the dispute between Petromar and Glencore is a Liberian-registered company, Metro International Trading Inc (`Metro`) which, however, is not a party to the present proceedings. Metro is part of an international group of companies known as `the Kilakos group` which is owned and controlled by one Stamatis Kilakos and his son John Kilakos. Glencore are an international trading company based in Switzerland, dealing, among other things, in oil and oil products. At the material time they stored their oil with Metro at the latter`s storage facility at Fujairah in the Middle East. Glencore claimed that Metro by the use of false documents had diverted and disposed of a large quantity of oil belonging to them, and Metro and the Kilakos group could not account for approximately 1.4 million metric tonnes of oil valued at US$175m while the oil was stored at or on their way to be stored at Metro`s oil storage facility at Fujairah. The loss of the oil stocks was discovered by Glencore in February 1998. In consequence, proceedings were instituted in London against Metro by Glencore and other parties concerned. Glencore further alleged that Metro diverted part of the missing oil stocks to Singapore, where the oil was dealt with by Petromar. Petromar are a Singapore registered company set up in 1985 by one Michael Tziolas (`Tziolas`) and are brokers dealing in oil and oil products. At the material time, their largest customer was Metro.

8 The appeal

10 Before us the question of whether Glencore had satisfied the condition of `a good arguable case` and `an extremely strong prima facie case` laid down for the grant of the Mareva injunction and Anton Piller order respectively was not seriously argued. In our opinion, they clearly had satisfied that condition. The `heart and core` of the appeal before us was whether: (a) in respect of the Mareva injunction, there was a real risk of Petromar dissipating or removing their assets from the jurisdiction and so stultifying any judgment that may be obtained against them, and (b) in respect of the Anton Piller order, there was a real risk of Petromar destroying or concealing evidence relevant to the trial of this action.

11 Real risk

13 The law on this point is well settled. It is sufficient to quote what this court said in Choy Chee Keen Collin v Public Utilities Board [1997] 1 SLR 604 , 611-612 said at [para ] 20-21:

20 In The Niedersachsen; Ninemia Maritime Corp v Trave Schiffahrtsgesselschaft mbH & Co KG [1984] 1 All ER 398, Mustill J, whose judgment at first instance was upheld on appeal, held that the plaintiff would have to adduce `solid evidence` to support his assertions of a real risk of dissipation. He said, at p 406:

`It is not enough for the plaintiff to assert a risk that the assets will be dissipated. He must demonstrate this by solid evidence. This evidence may take a number of different forms. It may consist of direct evidence that the defendant has previously acted in a way which shows that his probity is not to be relied on. Or the plaintiff may show what type of company the defendant is (where it is incorporated, what are its corporate structure and assets, and so on) so as to raise an inference that the company is not to be relied on. Or, again, the plaintiff may be able to found his case on the fact that inquiries about the characteristics of the defendant have led to a blank wall. Precisely what form the evidence may take will depend on the particular circumstances of the case. But the evidence must always be there.`

21 At the minimum, a plaintiff in seeking a Mareva injunction must furnish `some grounds for believing that there is a risk` of the assets being dissipated (per Lai Kew Chai J in Art Trend Ltd v Blue Dolphin (Pte) Ltd [1983] 1 MLJ 25 , 29); [1982-1983] SLR 362, 367). A mere possibility or unsupported fear of dissipation is insufficient: O`Regan & Ors v Iambic Productions Ltd [1989] 139 NLJ 1378, 1379 where Sir Peter Pain said:

`There are numerous paragraphs in the authorities relating to Mareva injunctions which make it plain that unsupported statements and expressions of fear carry very little, if any, weight. The court needs to act on objective facts from which the court can infer that the defendant is likely to move assets abroad or dissipate them within the jurisdiction. Here there is nothing of that nature in the documents at all ...`

In European Grain & Shipbuilding Ltd v Compania Naviera Euro-Asia SA & Ors [1990] 2 MLJ 219 [1989] SLR 1001 Chan Sek Keong J (as he then was) discharged an ex parte Mareva injunction on the ground, inter alia, that there was no real evidence which suggested that the defendants would take steps to dissipate their assets.

16 (ii). the inclusion of Petromar, Metro Trading (USA) Inc, and another shareholder of Petromar, the Liberian-incorporated company Petromar Enterprises Inc, on the list of Metro`s `Worldwide Contacts` found on Metro`s website;

17 (iii). a clause in an agreement dated 7 February 1998 whereby the Kilakos group promised to promptly transfer `the net asset value of Petromar` to a Kilakos group company;

18 (iv). a chart of the Kilakos group of companies supplied by Metro and annexed to the agreement, which showed Petromar as being 65% owned by the Kilakos group;

19 (v). the `common market knowledge` that the names Petromar and Metro were used interchangeably in the oil industry, in particular in respect of futures contracts where Metro`s name would sometimes be substituted into the contract in place of Petromar`s name.

21 (ii). the affidavit of one Siobhan Quinn, the regional manager of Texaco, in which she stated that representatives from Petromar and Metro attended meetings as `one` and further that Tziolas was present at meetings between Texaco and Metro in which Petromar had no interest; and

22 (iii). faxes found in the course of the execution of the Anton Piller order which were sent to Metro and marked `To the attention of Michael Tziolas` despite the fact that Petromar Enterprises Inc had a separate fax number and their own office in the same building in Greece as Metro.

24 SSAB Oxelosund AB v Xendral Trading Pte Ltd [1992] 1 SLR 600 , 607). It was not unexpected for Petromar, a new entrant to the oil industry, to jump at the opportunity of associating themselves with a major and apparently reputable company, which Metro was at the time when Petromar commenced operations in Singapore in 1985. The important fact was that Petromar`s operations were at no time controlled by Metro or the Kilakos group. Tziolas had adduced evidence which showed prima facie that the company was set up and run by himself, together with John Benjamin and Steven Tan, and further that John Kilakos and Griffin were never actively involved in Petromar`s affairs even during their directorships.

Whilst it may be that the link between Metro and the defendants was a purely commercial one and that, with respect to these shipments, the defendants were dealing with Metro on an arm`s length basis and in entire ignorance of any wrong-doing by Metro, it is not the court`s function, at this stage, to make a final determination of that issue: that is a matter for the court conducting the trial to determine. I was, however, satisfied, on the evidence before me, including the evidence adduced by the defendants, that there was a strong prima facie case that the relationship between the defendants and Metro went beyond a close commercial relationship and was so close that a strong prima facie case existed that the defendants were knowingly involved in the alleged wrongful diversion by Metro to the defendants of the plaintiffs` oil intended to be stored at the Fujairah facility.

139 By reason of the matters aforesaid, I verily believe that any assets including monies presently standing to the credit of Petromar in the said bank accounts(s) and/or any of her bank account(s) in Singapore are likely to be dissipated and/or remitted by Petromar out of the jurisdiction to avoid satisfying any judgment Glencore may obtain herein. Furthermore, I also believe that unless Anton Piller relief is granted against Petromar in respect of the above list of documents, there is a substantial danger that when proceedings are brought against Petromar all evidence will be hidden and/or documents including computer records will be destroyed or otherwise made unavailable.

32 Scope of the Anton Piller order

34 There are two matters in respect of which we have some concern. The first relates to the scope of the Anton Piller order. The order was made in terms of Glencore`s application which sought an order in unjustifiably wide terms. The order obtained extended to both Petromar`s office in Robina House as well as the home of Steven Tan, Petromar`s trading manager. The action relates purely to a commercial dispute between Glencore and Petromar, and did not involve Steven Tan in his personal capacity. There was nothing in David Toh`s affidavit filed in support of Glencore`s application which showed the necessity for Steven Tan`s home to be searched. All that had been shown and relied on was a single sentence in his affidavit which set out only his belief that some of the documents covered by the order `might be in the possession of the trading manager, Steven Tan, and/or Michael Tziolas, the managing director, at both their residences`. This was a bare assertion completely unsupported by any evidence whatsoever, and clearly did not justify the extension of the Anton Piller order to include Steven Tan`s home. That the scope of the order was unwarranted was borne out by the results of the search at his home, which did not yield any important document relevant to Glencore`s claim against Petromar. We think that considerable humiliation and family distress would be caused when private homes are searched. It is helpful to remind ourselves of what Scott J said in Columbia Picture Industries Inc & Ors v Robinson & Ors [1987] Ch 38, 73:

... Anton Piller orders are often granted not simply in respect of business premises but in respect of the respondent`s home. He is required, on pain of committal, to open the doors of his house to the plaintiffs` representatives and to permit a search of the contents thereof. The plaintiffs and their representatives are at liberty to search and rummage through the personal belongings of any occupant of the house and to remove the material they consider to be covered by the terms of the order. The traumatic effect and the sense of outrage likely to be produced by an invasion of home territory in the execution of an Anton Piller order is obvious.

35 Disclosure order

37 The second matter on which we have serious concern was the very extensive orders for discovery which were tacked on to the Mareva injunction and the Anton Piller order respectively. Glencore sought very extensive discovery against Petromar and the orders were granted in terms of their application. The Mareva injunction contained an order directing Petromar to disclose `at once` all their assets in very broad terms. This was then followed by no less than eight specific items of assets for disclosure, namely:

(a) the identity of all bank or other accounts whether in the defendants` own name or jointly held or held by nominees or otherwise howsoever on its behalf identifying the branch at which the account is held, the account number, the state of the account and the existing balance in each such account; and the defendants shall give its consent in writing within four (4) days of the service of the order to be made hereon to all of its bankers providing to the plaintiffs or its solicitors any information relating to its bank account and/or copies of its bank statements; (b) the nature, value and location of the shareholdings of the defendants, if any, in any company; (c) any overdraft or loan facility with a bank or licensed deposit taker or any other person, partnership or body corporate whatsoever, identifying such person, partnership or body corporate, and stating the nature and terms of the facility, and the state and extent of indebtedness thereunder; (d) any debt owed to the defendants by any other person, partnership or body corporate whatsoever, identifying the amount of such debt, and stating how it arose and when the same is payable; (e) real property, identifying the same and stating in whose name the property is held, whether the property owned freehold or leasehold, the value of the property and whether it is mortgaged or charged and if so, to whom and for what amount; (f) any Oil Products, identifying the same and the location where such Oil Products have been stored, whether on land storage facilities and/or storage vessels or elsewhere; (g) any other property, identifying the nature, sums and stating its value, whether it is pledged or charged and if so, to whom and in what amount; (h) monies, balances, debts, property (real or person) held on behalf of or in trust for the defendants by any other person, partnership or body corporate, stating by whom or which the same is held and the appropriate particulars as are referred to in paras (a) to (g) above.

(a) where all the listed items are; and (b) so far as they are aware: (i) the name and address of everyone who has supplied them, or offered to supply them with the Oil Products referred to in the listed items; (ii) the name and address of everyone to whom they have supplied, or offered to supply, the Oil Products referred to in the listed items; and (iii) full details of the dates, specifications and quantities of every such supply and offer.

43 1 January 1997 to date, showing the date, amount, source, identity of the remitting party, destination and identity of the receiving party, as well as details of all letter of credit transactions from 1 June 1997 to date. In our opinion the information sought from the bankers was totally unwarranted.

45 Conclusion

47 In the result, we allowed the appeal and discharged the two interlocutory orders against Petromar.

Karthigesu JA
L P Thean JA

Belinda Ang, Hong Heng Leong and Gerald Yee (Ang & Partners) for the appellants
Michael Hwang SC, Vivian Ang and Corina Song (Allen & Gledhill) for the respondents