Close | Kea Meng Kwang and Another v Merrill
Lynch Investment Managers (Asia Pacific) Ltd and Others [2006] SGHC 161 |
| Suit 311/2005 | |
| 12 Sep 2006 | |
| High Court | |
| Woo Bih Li J | |
| Herman Jeremiah and Koh Kia Jeng (Rodyk & Davidson) for the appellant, Hri Kumar and Kay Pang Ker-Wei (Drew & Napier LLC) for the respondent |
Judgment
12 September 2006 Woo Bih Li J: Background 1 The first
plaintiff, Kea Meng Kwang (“Kwang”), and the second and third defendants, Kea
Meng Cheng (“Cheng”) and Kea Kah Kim (“Kim”), respectively, are
brothers. 2 The second
plaintiff, PT Siak Raya Timber (“PTSRT”), is a company incorporated in
Indonesia. 3 By an
agreement dated 27 June 1991, Kwang, Cheng and Kim appointed Warburg Asset
Management Jersey Ltd, a company based in Jersey, Channel Islands, as the
investment managers of their portfolio of investments. In that agreement they
also appointed SG Warburg & Co (Jersey) Ltd, a bank based in Jersey, as
their bank for custody and banking services. An account, No 0323644 (“the
Account”), was opened with the bank in 1991 in the three names of Kwang, Cheng
and Kim (“the Account Holders”) and funds were deposited into the Account from
1991. At the relevant time, the mandate to operate the Account apparently
required all three Account Holders’ signatures. I say “apparently” because this
point is not conceded by the first defendant whom I shall refer to at [5] below.
The Account Holders were also directors of a family business, KH Kea
Properties Pte Ltd (“Kea Properties”), a company incorporated in
Singapore. 4
SG Warburg & Co (Jersey) Ltd was acquired by the Royal Bank of Scotland
in 1997 and renamed RBSI Custody Bank Ltd (“RBSI”). Some time after 1991, the
investment managers became known as Merrill Lynch Investment Managers (Channel
Islands) Limited (“MLIM(CI)”). 5 The first
defendant, Merrill Lynch Investment Managers (Asia Pacific) Limited
(“MLIM(AP)”), is a company incorporated in Singapore. Its previous names were
Warburg Asset Management Singapore Pte Ltd and Mercury Asset Management Pte Ltd.
MLIM(AP) and MLIM(CI) are part of the Merrill Lynch Investment Managers group of
companies. 6 MLIM(AP) had
no contractual relationship with the Account Holders. However, as it operated
from Singapore, it served as the contact point for the Account Holders and
relayed instructions from the Account Holders in Singapore to MLIM(CI). If
instructions were to be given to RBSI, they would be given in Singapore to
MLIM(AP) who would relay the instructions to MLIM(CI) who would in turn relay
the same to RBSI. 7 From 1991,
the person who contacted MLIM(AP) for the Account Holders was Kim. He would
contact MLIM(AP)’s Digby Armstrong (from 1991 to 1996) and Jeanette Tan
nee Ho (“Jeanette”) (from 1996 to 2001). 8 From 1992,
the Account Holders were granted a guarantee facility by RBSI under which RBSI
would issue guarantees to support credit facilities provided by a bank in
Singapore, Internationale Nederlanden Merchant Bank (Singapore) Ltd (“ING
Singapore”). The guarantee facility from RBSI was secured by funds in the
Account. 9 Between 1992
and 1996, RBSI issued guarantees to support credit facilities provided by ING
Singapore to Kea Properties. 10 In
1997 and 1998, RBSI issued guarantees to support credit facilities provided by
ING Singapore to Kea Properties as well as for an account No 5028
(“Account 5028”). Account 5028 was held in the sole name of Kim. The
purposes of the credit facilities, whether for Kea Properties or for
Account 5028, had nothing to do with the investment portfolio managed by
MLIM(CI). 11
Kwang did not dispute that he had signed to accept the guarantee facility
letters from RBSI for the years 1997 and 1998. However he claimed that he had
thought that the guarantee facility then extended only to guarantees provided to
secure credit facilities for Kea Properties and not for Account 5028 as
well. 12 In
1999, Kim again requested for a guarantee facility from RBSI to secure credit
facilities for Kea Properties and for Account 5028. Due to urgency, RBSI
issued its guarantees to ING Singapore although RBSI’s facility letter and other
related documents for its 1999 guarantees had been signed only by Cheng and Kim,
but not Kwang. This was on Kim’s representation to Jeanette that Kwang was not
in Singapore and he would obtain Kwang’s signature in due course. I should say,
at this stage, that Kwang’s position is that RBSI had relied on MLIM(AP)’s
representation, conveyed through MLIM(CI), that Kwang’s signature would be
procured when RBSI issued its guarantees. Although the 1999 guarantees issued by
RBSI are not in issue as such, I have mentioned Kwang’s position because the
same series of events occurred when RBSI issued its guarantees in 2000 again to
secure credit facilities for Kea Properties and Account 5028. This time
RBSI’s guarantees were called upon and, apparently, it debited the Account to
indemnify itself. 13
Consequently, Kwang commenced the present action. As against MLIM(AP), Kwang’s
action was in respect of the amount debited by RBSI to indemnify itself for the
guarantee issued for Account 5028. He had accepted that RBSI could debit
the Account for the other guarantee issued for Kea Properties. As regards RBSI’s
guarantee for Account 5028, Kwang based his claim on the following causes
of action: (a)
MLIM(AP) procured or induced RBSI to be in breach of its mandate in respect of
the Account; (b)
negligence of MLIM(AP); (c)
breach of MLIM(AP)’s fiduciary duty, owed to each of the Account Holders;
and (d)
dishonest assistance by MLIM(AP) of the breach of fiduciary duty owed by
MLIM(CI) to each of the Account Holders. 14 I
should add that Kwang has another claim in this action against MLIM(AP) in
respect of various sums drawn from the Account and paid into Account 5028
or some other account of Kim with another bank or stockbroker. These sums total
US$1,319,500 but do not relate to the issuance of the RBSI guarantee for Account
5028. 15
The claims by Kwang and PTSRT against Kim and/or Cheng are also not relevant for
present purposes. 16 By
Summons No 6493 of 2005 (“the Summons”) dated 28 December 2005, Kwang
applied under O 39 r 2 of the Rules of Court (Cap 322, R 5,
2006 Rev Ed) for a letter of request to be issued to the proper judicial
authority of Jersey for the examination of 13 persons in Jersey who were current
or former employees of MLIM(CI) or RBSI. However Kwang had not ascertained
whether any of these persons were willing to give evidence in Singapore or via
video link. Subsequently, he was given the opportunity to do so and he limited
his application thereafter to eight out of the 13 persons. In other words, his
summons in respect of five of the persons was unnecessary and he had caused
costs to be wasted in relation to the work done for arguments in respect of
those five persons. 17 At
the third hearing of the Summons on 20 April 2003, Kwang applied to amend
the questions which he was seeking answers to. MLIM(AP)’s position was that the
amendments were substantial but, notwithstanding the objection of its counsel,
Kwang was allowed to amend. The fourth hearing was on 9 May 2006. After
hearing submissions, an assistant registrar dismissed the Summons, as
amended. 18
Being dissatisfied with that decision, Kwang filed an appeal to the judge in
chambers, the appeal being Registrar’s Appeal No 165 of 2006. His appeal
was confined to three persons only and was in respect of certain areas of
evidence which were apparently less extensive than what was sought below. After
hearing submissions, I dismissed his appeal on 19 July 2006. He has since
appealed to the Court of Appeal against my decision. The schedule to the
appeal 19
The schedule to Kwang’s notice of appeal to the judge in chambers (“the
Schedule”) sets out the names of the persons to be examined and the
corresponding areas of evidence on which they were to be examined. It
states: Schedule All the paragraph numbers below
correspond to that set out in the Amended Schedule 2 to the Amended Summons
in Chambers Entered No. 6493 of 2005/G re-filed on 28 April
2006. 2. Ian Henderson, then Senior Manager on the
issue of the guarantee facility in 1998, 1999 and 2000:- Issuance of 1999 and 2000
guarantees (i) RBSI’s
requirement for 3 signatures; (ii) his
reliance on Jeanette Tan’s confirmation in 1999 that inter alia the
3rd brother would sign as soon as possible and documents bearing his
original signatures will be sent to RBSI; (iii) whether
the 1999 and 2000 guarantees was [sic] issued after receipt of
confirmation from MLIM(AP)’s Jeanette Tan; (iv) whether
RBSI exceptionally agreed to proceed on only two signatures to issue the 2000
guarantee only upon confirmation that the 3rd signature would be
forthcoming. Damage (i) whether
the sum of US$3.4 million was debited from the Account and paid to ING Barings
South East Asia Limited? 4. Ms Lorna Morris, Credit
Officer:- Issuance of 1999 and 2000
guarantees (ii) her
email dated 25 October 2000 sent at 16.31 hours to Ms Andrea Le
Maistre in respect of the 2000 guarantee where she stated RBSI’s exceptional
agreement to issue the 2000 guarantee on 2 signatures upon confirmation that the
3rd signature will be forthcoming; (iii) her
memo of 30 October 2000 where she states RBSI’s mandate and where she
enclosed a sample letter for confirmation of signatory requirements; Damage (i) whether
the sum of US$3.4 million was debited from the Account and paid to ING Barings
South East Asia Limited. 5. Derek Ferguson (i) The role
of MLIM(AP). (ii)
Construction of clause 35 of the terms and conditions of the Agreement,
i.e. the context of the clause re the situations where MLIM(CI) would act
as both market-maker and broker and principal and agent and how conflicts in
interest can arise. Order 39 rules 1 and
2 20
Order 39 rr 1(1) and 1(2) and O 39 r 2(1) of the Rules of
Court state: Power to order depositions to be taken
(O. 39, r.1) 1.—(1) The
Court may, in any cause or matter where it appears necessary for the purposes of
justice, make an order in Form 73 for the examination on oath before a Judge or
the Registrar or some other person, at any place, of any person. (2)
An order under paragraph (1) may be made on such terms (including, in
particular, terms as to the giving of discovery before the examination takes
place) as the Court thinks fit. Where person to be examined is out of
jurisdiction (O. 39, r.2) 2.—(1)
Where the person in relation to whom an order under Rule 1 is required is
out of the jurisdiction, an application may be made — (a) for an order in
Form 74 under that Rule for the issue of a letter of request to the
judicial authorities of the country in which that person is to take, or cause to
be taken, the evidence of that person; or (b) if the
government of that country allows a person in that country to be examined before
a person appointed by the Court, for an order in Form 75 under that Rule
appointing a special examiner to take the evidence of that person in that
country. 21 As
can be seen, O 39 r 2(1) read with O 39 rr 1(1) and 1(2)
empowers the court to order the examination of a person even if the person to be
examined is out of the jurisdiction where this process appears (to the court)
necessary for the purposes of justice and the court may make an order on such
terms as the court thinks fit. The court’s reasons and
decision 22 It
was a central plank of Kwang’s causes of action against MLIM(AP) in respect of
the RBSI facility under which RBSI issued its guarantee for Account 5028,
that RBSI had indeed breached its mandate to the Account Holders by issuing the
guarantee without the requisite three signatures. If RBSI was not in breach of
the mandate, all the causes of action pleaded against MLIM(AP) in respect of
that facility would fail. 23 On
the other hand, even if Kwang managed to establish this breach of mandate, it
did not follow that Kwang would necessarily succeed against MLIM(AP). He would
still have to establish MLIM(AP)’s liability under one of the many causes of
action he pleaded, and, as I shall elaborate, that would be an uphill
task. 24 In
other words, it would have been much simpler for Kwang to have sued RBSI than to
sue MLIM(AP) as, in the former instance, he only needed to establish the breach
of mandate, subject to whatever defences RBSI might have. 25
When I asked Kwang’s counsel, Mr Jeremiah, why Kwang did not sue RBSI, he
informed me that there was a provision in the relevant documents that such a
suit would have to be filed in England under an exclusive jurisdiction clause.
His written submission stated at paras 123–127 that: 123
Kwang took into account several factors in respect of litigation in
England: a.
The costs of commencing an
action in England; b.
Having to manage litigation in England from Singapore; c.
Whether too many fronts would be opened up by suing in England; and d. The
key witnesses are in Jersey and an application for a letter of request to be
issued by the English Courts to the Royal Courts of Jersey would still have to
be undertaken. …. 124
Midway through the application below, [MLIM(AP)] then disclose a Standard
Variations to the Agreement on 10 March 2006 (see pages 202 to 204 of
PBOD). This document varies the exclusive jurisdiction of the English Courts to
that of the jurisdiction of the Royal Courts of Jersey. It is not stated whether
the Royal Courts of Jersey have or do not have exclusive
jurisdiction. 125
By this time, parties had already gone through several weighty applications and
the action was at a rather advanced stage. 126
Further, there is every possibility that, if proceedings are commenced against
RBSI in Jersey, RBSI will bring MLIM(AP) in as a party and/or to claim an
indemnity or contribution from them by reason that RBSI relied on the
representations from MLIM(AP). 127
Hence, against all these factors, and the late disclosure of a document which
varies the exclusive jurisdiction of the English Courts, [MLIM(AP)’s] arguments
that proceedings should have been commenced in Jersey are without
merit. 26 I
found the above reasons for not commencing action against RBSI in England or in
Jersey, when a variation in jurisdiction was discovered,[note:
1] to be wanting. 27
First, the costs of litigation in England, however high they may be perceived to
be as compared with costs of litigation in Singapore, must be secondary to the
chances of success in a claim against RSBI as opposed to a claim against
MLIM(AP). 28
Secondly, in today’s context, there is no particular difficulty in managing a
litigation in England from Singapore such as to justify suing on a more
difficult case than is otherwise available to Kwang. 29
Thirdly, as regards the question of opening too many fronts, the claim in
respect of the guarantee for Account 5028 was in any event quite separate
from the claim against MLIM(AP) in respect of the remittances amounting to
US$1,319,500. It was also separate from the claims by the two plaintiffs against
Cheng and/or Kim. Indeed, the claims against Cheng and/or Kim should not have
been lumped together in one suit with the present two claims against MLIM(AP).
The point about having too many fronts was therefore a weak one. 30
Fourthly, and perhaps most importantly, it was not correct that an application
for a letter of request to be issued by the English courts to the court in
Jersey would still have to be undertaken. If RBSI was the defendant in an
English action commenced by Kwang, RBSI would have been obliged to give evidence
in an English court and would be subject to rules such as rules relating to
discovery, further and better particulars and interrogatories. Moreover, and
more importantly, it would have been irrelevant to the action between Kwang and
RBSI for breach of mandate whether RBSI had relied on any assurance from
MLIM(AP). RBSI’s purported reliance on such an assurance was the crux of the
second to the fourth areas of evidence which Kwang was seeking from Ian
Henderson (“Ian”), and the first area of evidence he was seeking from Lorna
Morris (“Lorna”) as set out in the Schedule. In other words, in an action by
Kwang against RBSI, such evidence would no longer even have to be considered at
all as between them, and there would have been no need for Kwang to seek such
evidence from RBSI, whether in Jersey or in England. 31
Indeed, after it was discovered that Kwang could sue RBSI in Jersey, whatever
remaining reservations he might still have had about suing RBSI should have
disappeared. 32 As
for the submission that parties in the action in Singapore had already gone
through several weighty applications and that the action was at a rather
advanced stage, the latter picture painted by this submission was not quite
complete. By an order of 1 June 2006, an assistant registrar had ordered
that the action in Singapore be stayed pending the outcome of five issues in
another action in Singapore, ie, Suit No 624 of 2005. Although the
stay did not apply to the Summons or any appeal in respect of the Summons or the
sending of a letter of request from Singapore to the court in Jersey, if Kwang
was successful in any of his appeals in respect of the Summons, all other steps,
including but not limited to the taking of evidence in Jersey, were stayed. In
other words, even if Kwang had been successful in the appeal which I heard, all
he could do was to obtain the letter of request to be sent to the court in
Jersey, but he could not proceed further pending the outcome of the five issues
in Suit No 624 of 2005. On the other hand, if he were to sue RSBI in
Jersey, there was no prohibition to stop him from continuing with that
action. 33 As
regards the submission that RBSI might bring an action against MLIM(AP) for an
indemnity or contribution, that was a matter between those two
parties. 34 If
Kwang were to bring an action against RBSI in Jersey, the evidence which his
appeal was seeking would be unnecessary, as elaborated in [30] above.
Furthermore, the evidence for his claim would only be received in Jersey. As he
was insisting on his present course of action, some of the evidence would be
received in Jersey and some in Singapore. Much more costs would be incurred as
two sets of solicitors would be involved, one in Jersey and one in Singapore,
and the solicitors in Singapore would have to fly to Jersey. The additional
costs were contrary to Kwang’s reason of wanting to save costs. There would also
be the disadvantage of different tribunals hearing the persons examined in
Jersey and the witnesses in Singapore. 35
Perhaps Kwang was concerned that if he did succeed against RBSI, he would have
to withdraw the claim against MLIM(AP) in respect of RBSI’s guarantee for
Account 5028 and pay costs to MLIM(AP) for that claim. In my view, if that
was his concern, it should not be a significant one compared with all the
additional costs being incurred for which he would not necessarily recover and
the higher threshold he had to overcome as against MLIM(AP). 36
Notwithstanding all the above observations which, in my view, made Kwang’s
appeal no long necessary or advantageous to him, I was mindful that, generally
speaking, it was for Kwang, as plaintiff, to elect his course of action even
though his election was contrary to logic. However, this was not a case where
Kwang could obtain the evidence of Ian or Lorna voluntarily. He had to seek the
assistance of the court and, in my view, the court was entitled to look at the
big picture in deciding where justice lay and whether any terms should be
imposed. 37 It
is appropriate at this juncture to mention that in resisting Kwang’s appeal, Mr
Hri Kumar, counsel for MLIM(AP), had relied on Singapore Court Practice
2005 (Jeffrey Pinsler gen ed) (LexisNexis, 2005) at para 39/2-3/2 which
states: The application of a plaintiff who sues
in Singapore knowing that he might have difficulties securing witnesses from
another country may be looked upon less favourably if he could have brought
proceedings in that other country. Conversely, the defendant who is reluctantly
sued here might be in a better position to obtain a deposition from abroad. (See
Ross v Woodford 38
However, bearing in mind that Kwang was in Singapore (at least for some of the
time) and MLIM(AP) was operating from Singapore, it was difficult to suggest
that Kwang could have conveniently brought proceedings against MLIM(AP) in
Jersey. 39
Nevertheless, the fact that Kwang could conveniently bring proceedings against
another party, ie, RBSI, in Jersey was, in my view, still relevant
especially when it would be relatively much easier for him to establish his
cause of action against RBSI than against MLIM(AP). It seemed to me that while
the facts envisaged in the proposition stated above in Singapore Court
Practice 2005 ([37] supra) did not quite fit those before me, the
logic behind the proposition was still applicable. Superficially, it seemed
relatively easier for Kwang to conduct an action in Singapore. However, given
that such an action would require the obtaining of evidence in Jersey with the
attendant additional costs for him and for MLIM(AP), and given that he has a
relatively easier cause of action available against RSBI, I had reservations as
to whether the court should lend its assistance to such an unwise course of
action when MLIM(AP), who would also be incurring additional costs as a result
of a successful appeal by Kwang, was objecting. 40
Mr Kumar also resisted Kwang’s appeal on the ground that it was oppressive,
relying on First American Corp v Sheikh Zayed Al-Nahyan 41 In
the absence of other authorities, I did not make my decision on the basis of
oppressiveness but on other grounds which I shall come to. 42
The main areas of evidence which Kwang was seeking were really with a view to
blaming MLIM(AP) for RBSI’s breach of mandate, assuming that such a breach of
mandate could be established. Kwang was hoping that, if his appeal was
successful, Ian and/or Lorna would say that he and/or she had relied solely or
primarily on MLIM(AP)’s assurances when they breached the mandate. 43 I
should now elaborate further on the background that led to the issuance of the
1999 and then the 2000 facility for Account 5028. In this context, it is
important to bear in mind that, in the past, Kim was the one liaising with
MLIM(AP). 44 On
9 December 1999, Jeanette from MLIM(AP) sent a fax to Tina Barton (“Tina”)
of MLIM(CI) to say that Kim had signed the requisite guarantee facility letter
but his two brothers (meaning Kwang and Cheng) were away and would be back only
in early January 2000. Kim had said that he had requested the facility earlier
when his brothers were in Singapore but it took RBSI more than two months to
revert. Jeanette asked Tina to find out if RBSI was prepared to issue the
guarantee based on Kim’s sole signature and on the understanding that he would
get the two brothers to sign when they returned to Singapore. 45 On
9 December 1999, Tina sent a note to Ian of RBSI stating: Please find attached the additional
guarantee facility letter signed by Kea Kah Kim. I have been advised by Jeanette
Tan that his two brothers are away until early January 2000 and that Kea has
requested that the guarantee be issued to him pending their signatures – as
happened for the other guarantee issued. Please let me know urgently whether this
is acceptable or not. Kea is handing the original of the document to Jeanette
Tan tomorrow and will get his brothers to sign it as soon as they return to
Singapore. 46
Apparently, thereafter, Cheng signed on various documentation for the facility
and, on 13 December 1999, Tina forwarded to Jeanette an e-mail from Ian to
her (Tina) which stated: Tina – Please obtain Jeanette Tan’s
confirmation that she holds all four original documents signed by the two
brothers (she should have Facility Letter; Security Interest Agreement; Specific
Counter Indemnity; and letter addressed to MAM Forum House) and that she is
forwarding to us. Also confirmation that the third brother will sign as soon as
possible and documents bearing his original signatures will be sent to us.
Please also confirm that MAM CI hold a fax indemnity for this client. Against these confirmations, we will
exceptionally issue the guarantee against fax copies of the
documents. 47
The relevant documents were sent by Jeanette to Tina by courier. Jeanette also
said in an e-mail dated 14 December 1999, “I also confirm that I will get
the third brother to sign … when he returns to Singapore early next year.”
However in that e-mail she also added, “Grateful if RBSI could issue the
guarantee today as the client has again stressed urgency when he personally
delivered the documents to me this morning.” 48
RBSI did issue the guarantee for Account 5028, without Kwang’s signature on
the relevant documents but, as I have mentioned, Kwang’s present suit is not
about the 1999 RBSI guarantee but the one RBSI issued in 2000. 49 On
20 September 2000, Jeanette sent a fax to Tina stating that Kim had
requested the renewal of the two guarantees, including the one for
Account 5028, which were due to expire in November 2000 with a variation,
ie, the guarantee facility for Kea Properties was to be reduced by
US$400,000 (to US$2.6m) and the one for Account Number 5028 was to be
increased by US$400,000 (to US$3.4m). 50 On
25 October 2000, Andrea Le Maistre of MLIM(CI) (“Andrea”) sent a fax to Ian
of RBSI to say that Jeanette had advised that due to the delay in receiving the
renewal documentation, only two of the brothers had signed and the third
(meaning Kwang) would sign upon his return. It also stated that the client had
requested the facility to be in place by 3 November 2000. 51 On
the same day, ie, 25 October 2000, Lorna of RBSI spoke to Andrea and
followed up with an e-mail on that day itself to say, and I quote: We also note from your memo that only two
of the brothers are available to sign the facility agreement and you have
requested we accept this with the third remaining brother signing on his return.
Unfortunately, this situation also arose at the last renewal, and to date, we
have still not received the third [brother’s] signature. We are therefore
reluctant to accept the agreement on only two signatures, as our experience
shows we cannot rely upon the third signature being provided. We will however
exceptionally agree to proceed on only two signatures: please confirm by which
date the third signature will be forthcoming to both the amendment documents and
the documents from last year. This e-mail of 25 October 2000 is
specifically identified in the first area of evidence sought from
Lorna. 52 On
27 October 2000, Jeanette sent a fax to Andrea stating that she had
couriered the original facility letter signed by the two brothers and that, “I
will let you have the third brother’s (Kea Meng Kwang) signature in due course.”
Jeanette also said in that fax that she would be grateful if Andrea could
arrange to get RBSI to issue the guarantees before 3 November 2000.
Jeanette further mentioned that Kim was agreeable to amend the mandate to permit
two out of the three signatures to be binding. 53 As
already indicated, RBSI then proceeded to issue the guarantees (on or about
30 October 2000) for which the guarantee for Account No 5028 is now in
issue. 54 As
for the change in mandate, a sample letter was sent by Lorna to Andrea which
found its way to Jeanette. Jeanette sent it to Kim and she later received the
letter, still undated, but apparently signed by all three Account Holders. I say
“apparently” because Kwang is alleging that his signature thereon is a forgery.
I should also mention that the letter which allowed RBSI to act on any two
signatures of the Account Holders seemed to apply only to future, and not past,
transactions. The letter was couriered by Jeanette to Andrea. In a fax dated
14 December 2000, Jeanette informed Andrea that she had reminded Kim to get
the third signature for the previous documentation and would chase
again. 55
Apparently there was subsequently a phone call between Andrea and Lorna on
9 January 2001. According to Andrea’s handwritten note of that
conversation, Lorna had said that the third signature for the previous
documentation had not been received. However, as Lorna had the original
documentation with two signatures and the subsequent letter (purportedly signed
by all three) stating that two signatures would suffice, “Lorna advised do not
chase further!” 56 In
these circumstances, Mr Kumar submitted that even if Ian and/or Lorna were
to say that RBSI had relied solely or primarily on MLIM(AP)’s assurances (about
obtaining Kwang’s signature) rather than that of Kim’s, it was still open to
MLIM(AP) to argue otherwise. I agreed. 57 In
considering the overall justice of the case and what terms I should impose, if
at all any, I also took into account the merits of the claim by Kwang. Without
my having to go into a very detailed examination of the evidence, it was evident
to me that Jeanette had not intended to give a separate assurance from MLIM(AP)
about getting Kwang’s signature. What she had done was merely to reiterate Kim’s
assurances to her. On the other side of the coin, it was unlikely that RBSI
could have understood otherwise. Any reference by Ian to obtaining Jeanette’s
confirmation about obtaining Kwang’s signature was simply because Jeanette was
the contact person in MLIM(AP). RBSI was prepared to do a favour to the Account
Holders in view of the past relationship and, no doubt, to cultivate that
relationship further. Likewise, Jeanette was keen to help cultivate MLIM(CI)’s
relationship with the Account Holders by forwarding Kim’s request onward to
MLIM(CI) who would in turn forward the request to RBSI. RBSI had taken the
position that in doing that favour, they knew they were not acting strictly on
the mandate they had been given and hence their initial emphasis about making an
exception and their initial reminder to get Kwang’s signature. They then
eventually and specifically told MLIM(CI) to stop chasing for that signature as
I have elaborated above. Even if Lorna should deny the existence or substance of
the 9 January 2001 conversation between Andrea and her, as recorded by
Andrea, the other evidence which I have set out was quite overwhelming. In my
view, there was no suggestion from RBSI that it had relied on Jeanette as having
given a separate assurance, for and on behalf of MLIM(AP), about procuring
Kwang’s signature. 58 I
also noted that Kwang did not suggest that should Ian and Lorna say that they
had relied solely or primarily on Kim’s assurances, as passed on through
Jeanette, and not Jeanette’s assurances, Kwang would withdraw the claim against
MLIM(AP) in respect of the guarantee for Account 5028. Was he then, in that
situation, going to rely on the e-mail and faxes I have referred to, to suggest
that they must have considered Jeanette’s assurances to be separate from those
of Kim’s? If so, that would demonstrate that such evidence carried more weight
than what these two persons might now say. 59
Notwithstanding these considerations, I was, nevertheless, still minded to allow
Kwang’s appeal in respect of the second to the fourth areas of evidence sought
from Ian and the first area of evidence sought from Lorna, but on terms since I
was also concerned about the additional costs being incurred. MLIM(AP)’s
solicitors had estimated additional costs to be around $285,000, which was not a
small sum. Naturally, I did not simply accept such an estimate. I asked
Mr Jeremiah whether Kwang would be prepared to first bear MLIM(AP)’s
additional costs, for the time being, for the exercise in obtaining evidence
from Jersey. If so, the respective solicitors were to see if they could
agree on what constituted a reasonable sum, failing which I would determine what
the reasonable sum should be. If the exercise was as fruitful as Kwang hoped and
he managed to succeed on this claim in reliance on such evidence, he could ask
the trial judge to order MLIM(AP) to repay what he had forked out for its
additional costs, as well as his own. However, Kwang did not rise to the
occasion. His solicitors subsequently wrote in to say that he was not agreeable
to the idea. It was not suggested that he was financially unable to pay
MLIM(AP)’s additional costs first. 60 In
the circumstances, I was not minded to allow the appeal for these areas of
evidence. The next area of evidence sought from Ian and Lorna was in respect of
the requirement under the mandate for three signatures. This was the first area
of evidence sought from Ian and the second area of evidence sought from Lorna,
as set out in the Schedule. Mr Jeremiah’s submission drew my attention to
para 28 of the re-re-amended defence of MLIM(AP) in which MLIM(AP) denied
paras 19 and 20 of the re-re-amended statement of claim. In essence,
paras 19 and 20 were asserting that the mandate required RBSI to obtain all
three signatures for any matter not expressly excepted in the
mandate. 61
Given the stand taken in the written communication between MLIM(AP) and MLIM(CI)
and RBSI which I have stated above, I was surprised to note that MLIM(AP) was
disputing that the mandate required all three signatures for any matter not
expressly excepted in the mandate. 62 Be
that as it may, I was of the view that the interpretation of the mandate did not
depend on oral evidence from Ian or Lorna. Even if Ian and/or Lorna were to
admit that the mandate required all three signatures, this would not bind
MLIM(AP). Whether MLIM(AP) is bound by its own admission or is estopped by its
own conduct and written communication from asserting an interpretation different
from that which MLIM(AP) itself had acted upon is a separate matter that does
not require the evidence of Ian or Lorna. Accordingly, there was no need to
obtain such evidence under O 39 of the Rules of Court in any
event. 63 I
would add that if, as it appeared, the interpretation of the mandate was really
in issue, then the parties should have sought a decision on this preliminary
point first. A decision unfavourable to Kwang on the point would render his
claim futile and the need to obtain any further evidence from Jersey, or
at all, academic. Should the decision be in favour of Kwang, then, again, the
evidence of Ian and Lorna on the requirement for three signatures is, a
fortiori, unnecessary. 64 I
come now to the remaining area of evidence which Kwang was seeking from Ian
and/or Lorna, ie, evidence that the sum in question was in fact debited
from the Account. 65 As
regards this aspect, I would have thought that as an account holder at the
relevant time, Kwang would have been entitled and able to obtain a copy of the
bank statement and other documents to establish the fact of and reason for the
debit easily. Indeed, he should have obtained this statement and other documents
before he even initiated action on this claim. If he was faced with a pending
expiry of a limitation period, he should have obtained the statement and other
documents before taking any further step after filing the action. The debiting
of the Account to reimburse RBSI for the guarantee in question is a basic fact
that should be established at the outset and not after “parties had already gone
through several weighty applications”, as his counsel submitted. Furthermore, it
was doubtful whether such a fact could be established simply by oral evidence of
bank officers given several years later when documentary evidence of the same
must be available. 66
Significantly, Kwang did not elaborate as to what steps he had taken to obtain
the bank statement and other documents before the Summons was filed.
Mr Kumar also indicated to me that upon production of appropriate
documentary evidence to establish that the Account was debited to reimburse RBSI
for the guarantee for Account 5028, MLIM(AP) would not be unduly difficult
on the point. 67
Accordingly, I was also minded not to allow the appeal on this area of evidence
in any event. 68 As
for the evidence sought of Derek Ferguson (“Derek”), Mr Jeremiah submitted
that Derek was the managing director of MLIM(CI) (under one of its previous
names) in 1991 and 1992 and was also the managing director of RBSI in 1999. He
submitted that Derek, as the former managing director of MLIM(CI) and RBSI,
could have relevant evidence of the structure of the Warburg group then and the
role MLIM(AP) had vis-ŕ-vis MLIM(CI) and RBSI, as the role of MLIM(AP) or
its predecessors was not expressly defined in the formal documentation. He said
that this was relevant for the cause of action under negligence to establish a
duty of care and although evidence was available from another person who would
be giving evidence for MLIM(AP) on the areas of evidence sought from Derek,
Kwang should not be constrained by MLIM(AP)’s choice of witnesses. Also Derek,
having left, was more independent than any other witness still employed by
MLIM(AP) or MLIM(CI). 69 I
was of the view that while Kwang was not prima facie constrained by
MLIM(AP)’s choice of witnesses, Kwang was nevertheless seeking the aid of the
court, as I have already stated. If he could, on his own steam, get Derek’s
co-operation, that was his prerogative. I did not think it was a sufficient
reason to say that because Derek is an ex-officer, his evidence would be
preferable. If Mr Jeremiah’s submission was valid, then, a plaintiff who
has commenced action in Singapore, say, against a bank operating in Singapore,
should prima facie receive the court’s assistance under O 39 to
obtain evidence out of jurisdiction from an ex-employee of the bank even though
there is an employee available in Singapore to give the evidence sought. That
would inflate the costs of litigation unnecessarily. Indeed, it is common
knowledge that litigation can and does proceed on the basis that employees of
the defendant will be giving evidence and it is for counsel for the plaintiff to
use his skills to extract the evidence he wants. The court also takes into
account the fact that such witnesses are not independent. 70
Secondly, there was no suggestion that Derek had some special knowledge of the
structure within the Warburg group or the relationship between the corporate
entities in question which was relevant and which others did not have. I did not
think it was sufficient for Mr Jeremiah to submit that he did not know what
Derek’s evidence would be. That was a separate point from Kwang having to
indicate the special knowledge Derek was believed to have. 71 If
Mr Jeremiah’s submission was valid, it would mean that the court should,
generally speaking, make an order under O 39 for an ex-employee to give
evidence in preference to an existing employee since the former’s evidence is
“independent” even though he no longer has ties with the defendant and there is
no suggestion that he has some special evidence to offer. 72
Mr Jeremiah used the same reasons to justify seeking the court’s assistance
to obtain Derek’s evidence for the causes of action under breach of fiduciary
duty and under dishonest assistance. For the reasons I have given, I found such
reasons to be unpersuasive. Indeed, I also saw no hint of any dishonest
assistance by MLIM(AP) from the material before me. 73
Mr Jeremiah also submitted that Derek’s evidence would be relevant in the
construction of cl 35 of the “Terms and Conditions For Discretionary Fund
Management” enclosed with the investment agreement which the Account Holders had
signed with MLIM(CI)’s predecessor. MLIM(AP) was relying on this clause which
states: The relationship between the Manager, the
Customer and the Custodian is as described in this Agreement. Neither that
relationship nor the services to be provided by the Manager nor any other matter
shall give rise to any fiduciary or equitable duties which would prevent or
hinder the Manager or any Associate in transactions with or for the Customer
acting as both market-maker and broker, principal or agent, dealing with other
Associates and other customers and generally effecting transactions as provided
above. 74 On
this point, paras 105–107 of Mr Jeremiah’s submission
stated: 105
The question is whether, the said clause excludes “any fiduciary or equitable
duties from arising” or only that which “would prevent or hinder the
Manager or any Associate in transactions with or for the Customer acting as both
market-maker and broker, principal or agent, dealing with other Associates and
other customers and generally effecting transactions as provided
above.” 106
The 2nd construction is the correct one. The clause is not a blanket
exclusion of all fiduciary duties. The clause is to be understood in the context
of the financial services and securities industry. The terms used support
Kwang’s interpretation. 107
The questions for Ferguson would be of the context of the clause in
particular the situations where MLIM(CI) would act as both market-maker and
broker and principal and agent and how conflicts in interest can arise. [emphasis in original] 75 I
was of the view that the contention of construction as stated in
Mr Jeremiah’s paras 105 and 106 was a matter which he could and should
submit on and it was not for Derek to say how the clause should be
construed. 76 As
for the contention in Mr Jeremiah’s para 107, there was again no
reason why Derek should be required to give evidence when someone else was
available to do so. 77
Accordingly, even if Kwang had been willing to first bear the additional costs
of obtaining evidence from Jersey, I would not have allowed his appeal in
respect of Derek’s evidence or of the evidence from Ian or Lorna on the
requirement for three signatures or the debiting of the Account. 78 In
the circumstances, I dismissed the entire appeal with costs.
