Re: DA SHUN SHIPPING (PTE.) LTD.

Facts

Da Shun Shipping (Pte) Ltd and its sister company An Wei Shipping Pte Ltd were one-ship companies in the Hin Leong group. They were joint and several borrowers under a US$33,800,000 loan from Bank of America (BofA), split into two equal tranches to refinance each company's vessel and secured by cross-collateralised mortgages over both. After the group collapsed, An Wei's vessel, the Sea Horizon, was sold, and US$5,800,866.36 of the proceeds went towards Da Shun's tranche.

HSBC and Societe Generale, Singapore Branch (the writ claimants) had issued admiralty writs in rem against Da Shun's vessel, the Sea Latitude, over cargoes said to have been shipped under bills of lading they held. To make the vessel saleable, Da Shun's judicial managers agreed with them, and on 9 November 2021 obtained a consent order under s 100(2) of the Insolvency, Restructuring and Dissolution Act 2018, allowing a sale free of security. BofA was to be paid first and the balance paid into court as security for the writ claimants' misdelivery claims; in return they discontinued their writs and did not arrest the vessel. After the sale, BofA was paid in full and US$12,450,771.26 was paid into court.

Da Shun went into liquidation in Companies Winding Up No 51 of 2022. Its liquidator sought directions on the balance (HC/SUM 2972/2023 and HC/SUM 3030/2023). An Wei, in creditors' voluntary liquidation, applied in HC/SUM 2280/2025 for US$6,083,702.55 from the balance, claiming to stand in BofA's place as secured creditor by subrogation or, alternatively, contribution as an unsecured creditor.

Issues

1. Whether An Wei was entitled to be subrogated to BofA's mortgage so as to rank ahead of the writ claimants
2. Whether the writ claimants held security over the balance proceeds under the s 100 order despite never arresting the vessel
3. Whether the writ claimants' claims, which An Wei said rested on allegedly fabricated bills of lading, could be decided on affidavits or required a trial

Holding

The court granted the necessary leave to both liquidators, dismissed An Wei's prayers for subrogation, and allowed its contribution claim of US$6,083,702.55 to rank as an unsecured claim in Da Shun's liquidation. It held that the balance proceeds stand as security for the writ claimants' claims, directed a trial of those claims with a case conference within four weeks, adjourned the rest of the liquidator's application and An Wei's prayer for payment pending that trial, and reserved costs.

Reasoning

Contribution was not seriously disputed: the equal tranches showed each borrower was to bear half, so equity is equality applied. Subrogation, however, is a remedy to reverse unjust enrichment and requires a recognised unjust factor. Relying on Wee Chiaw Sek Anna v Ng Li-Ann Genevieve [2013] 3 SLR 801 and Lowick Rose, the judge found none. An Wei had knowingly accepted joint and several liability and cross-collateral security, and what happened matched that bargain; there was no failure of basis or defeated expectation. Section 2 of the Mercantile Law Amendment Act 1856 only codifies the common law and did not help. Further, following the judge's own decision in Da Hui Shipping (Pte) Ltd v An Rong Shipping Pte Ltd [2025] 4 SLR 816, BofA's security was spent once the court-sanctioned sale paid it in full, which was in substance indirect enforcement. Public policy also weighed against subrogation because An Wei waited almost two years to assert priority, having been aware of the s 100 discussions by May 2021.

The s 100 order was a consent order to be read like a contract. Its plain words required the balance to be paid into court as security for the writ claimants, given in exchange for their forbearance from arrest. Natixis, Singapore Branch v Seshadri Rajagopalan [2025] 1 SLR 1020 was distinguishable because the security here came from agreement, which a shipowner may give in lieu of arrest. That An Wei was not a party did not matter.

The writ claimants still had to prove their claims. Hin Leong's liquidators alleged in separate proceedings that the bills of lading were fabricated. Such serious allegations, similar to those already tried in related interpleader proceedings, could not be resolved on affidavits, and the court's powers under ss 6 and 10 of the Act allowed it to direct a trial.

From the judgment