Banque Cantonale Vaudoise v RBG Resources plc and Another

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 30 September 2004
• Neutral Citation: [2004] SGHC 222
• Citation: [2004] SGHC 222
• Defendant Counsel: Kenneth Lie and Raghunath Doraisamy (Joseph Tan Jude and Benny)
• Published date: 05 October 2004
• Plaintiff Counsel: Jainil Bhandari and Alvin Looi (Rajah and Tann)
• Date: 30 September 2004
• Docket Number: Suit No 1175 of 2002,Suit No 542 of 2002 (Registrar's,Suit No 1175 of 2002 (Summons in
• Court: High Court (Singapore)
• Subject Matter: Discovery of documents,Relevancy of documents,Order 24 rr 5(3)(c), 7 Rules of Court (Cap 322, R 5, 2004 Rev Ed),Whether second defendant should be allowed discovery and production of documents,Leave to adduce additional evidence for hearing of appeal against summary judgment against second defendant not obtained yet,Application,Civil Procedure,Appeals,Whether second defendant's application for discovery premature

30 September 2004

Woo Bih Li J:

Introduction

1 This action is yet another consequence of the transactions of RBG Resources plc (“RBG”) which was previously known as Allied Deals plc (“Allied Deals”). RBG had engaged in transactions with various banks which had either purchased metals from RBG or lent money to RBG on the security of metals. Many of the metals were allegedly stored in warehouses operated by or on behalf of the second defendant, Fujitrans (Singapore) Pte Ltd (“Fujitrans”). Such warehouses were not approved LME (London Metal Exchange) warehouses. Subsequently, court orders for the liquidation and appointment of liquidators of RBG were made in England and then in Singapore. In Suit No 1175 of 2002, the liquidators commenced an action, pursuant to directions made by me in interpleader proceedings, to determine competing claims of various banks and RBG to metals in warehouses, including those operated by or on behalf of Fujitrans. There were allegations that a Fujitrans employee, one Lim Tau Hee (“Lim”), had assisted RBG to perpetrate a fraud on various banks. Only the claim by one bank, Credit Lyonnais, remained in competition with RBG’s claim by the time the trial was scheduled to commence. The metals claimed by Credit Lyonnais and RBG were also in warehouses operated by or on behalf of Fujitrans. The claims proceeded to trial before me and I have since delivered my judgment: see RBG Resources plc v Banque Cantonale Vaudoise [2004] 3 SLR 421.

Background to the discovery appeal in Suit No 542 of 2002

2 The plaintiff in the present action, Banque Cantonale Vaudoise (“BCV”), is another bank which had entered into transactions with RBG. It has a claim against Fujitrans in respect of various groups of metals, one of which is listed in Schedule 3 of its Re-Amended Statement of Claim filed on 5 September 2002. I will refer to this claim as the Schedule 3 claim and the metals which are the subject thereof as the Schedule 3 metals. BCV alleges that the Schedule 3 metals never existed or, if they did, are no longer in the warehouses operated by or on behalf of Fujitrans.

3 BCV’s action was commenced on 8 May 2002. On 18 June 2002, Fujitrans applied for a stay of the entire action pending the outcome of the action filed or to be filed by the liquidators to determine the competing claims I have mentioned. BCV consented to a stay of their claim in respect of metals which were also the subject of the liquidators’ action but not in respect of the Schedule 3 metals. Fujitrans’ application for a stay in respect of the Schedule 3 metals was heard by me. After hearing submissions, I did not grant a stay in respect of the Schedule 3 metals for the reasons stated in my Grounds of Judgment dated 7 November 2002: see Banque Cantonale Vaudoise v RBG Resources plc [2002] SGHC 264. Fujitrans appealed to the Court of Appeal against this decision but its appeal was dismissed on 19 February 2003.

4 In the meantime, BCV had applied for summary judgment against Fujitrans in respect of the Schedule 3 claim on 5 September 2002, ie, after Fujitrans had applied for a stay but before the hearing of the stay application. Pending my decision and the decision of the Court of Appeal on the stay application, BCV’s application for summary judgment was held in abeyance.

5 BCV’s application for summary judgment was eventually heard before an assistant registrar on 5 November 2003. For the purpose of that application, BCV claimed that its loss in respect of the Schedule 3 claim was caused by the negligent acts of Lim in allowing RBG’s representatives to use Fujitrans’ letterhead to issue false stock confirmations to BCV without regard as to the truth of their contents. RBG was thus vicariously liable for Lim’s negligence.

6 The Schedule 3 claim was in respect of warehouse financing which BCV said was concluded in the following manner:

(a) RBG would “purchase” a quantity of metal of a certain type from a seller on “in-warehouse” terms.

(b) RBG would then send a written request by fax to BCV to make payment of the purchase price to the designated account of the seller.

(c) Copies of RBG’s purchase contract and the seller’s invoice would be attached to the written request, giving the impression that the sale was genuine. The payment term in the purchase contract and/or seller’s invoice would invariably be on an “at sight” basis, ie, payment was supposed to be made to the seller when RBG received the sale documents from it.

(d) On the same day as the written request for financing was made by RBG or on the following day, BCV would also receive a fax on Fujitrans’ letterhead stating that (i) Fujitrans held the type and quantity of metal as specified in the seller’s invoice to BCV’s order but for the account of RBG, and (ii) that Fujitrans would not release the cargo without BCV’s written instructions.

(e) Relying on the attornment in the fax, BCV would make payment of the purchase price to the seller’s designated bank account. The payment was effected either on the same day or the day after the fax attornment was received. BCV’s position was that it would not have made payment if it knew that the fax attornment was false, and/or that the metal did not exist, and/or that it was not held to BCV’s order.

(f) Subsequently, RBG would “sell” the metal to another counterparty. The sale was also invariably on “in-warehouse” terms. However, the sale contract allowed for payment to be made within a credit period of between 135 and 180 days.

(g) RBG would then send another written request to BCV to release the metal to the buyer.

(h) The buyer would execute a bill of exchange in favour of RBG, which would endorse the bill and deliver it to BCV.

(i) BCV would then send a fax to Fujitrans, specifically for the attention of Lim, instructing Fujitrans to release the metal to the buyer. The release instruction would refer to the previous Fujitrans attornment received by BCV.

(j) BCV would then present the bill of exchange for payment, usually through its correspondent bank in the buyer’s jurisdiction. In certain transactions, BCV was paid in full for the sum advanced to RBG. In other transactions, BCV either received partial recovery of the sum advanced or did not receive any payment under the bill of exchange.

The Schedule 3 claim concerned transactions between October 2001 and March 2002.

7 After arguments were made, BCV was granted summary judgment against Fujitrans for US$17,593,289.10, interest and costs. This was on 5 November 2003 as well.

8 On 12 November 2003, Fujitrans filed a notice of appeal to a judge in chambers against this decision. The appeal was initially fixed for hearing on 27 November 2003. It was adjourned to 23 March 2004 due to the unavailability of counsel.

9 Before this appeal was heard, Fujitrans filed an application on 6 February 2004 for discovery of various categories of documents from BCV, that is:

1. Account Statements for all Allied Deals (and later) RBG Resources PLC accounts from 1^st September 1998 until May 2002 (or from the opening of the account facilities until their closure or inactivity) including but not limited to Current and Deposit Accounts and in particular the US$ Overdraft Account numbered 959.94.71.

2. All Term Sheet and Loan Approval Documentation sent to Allied Deals/RBG in respect of the business relationship with BCV for the period 1 September 1998 to May 2002.

3. BCV’s Loans Administration and Securities Manuals (translated into English if necessary) applicable to the business relationship between BCV and Allied Deals/RBG for the period of September 1998 to May 2002.

4. All Approval forms (also known as Offering Tickets) for authorised signatory approval for the release of funds on an overdraft basis on account of Allied Deals/RBG in respect of the following:

a. BCV File 2001-112: Payee Evanson International Pte Ltd paid into their account with Overseas Chinese Banking Corporation (“OCBC”), in the sum of US$724,042.38 (NET) on or around 2 October 2001;

…

[Another 20 files were set out as well.]

5. The Securities Register recording the entry of each of the Bills of Exchange given as security for each of the thirteen payments made in paragraph 4 above. [It was not clear to me why para 5 referred to 13 payments stated in para 4 when para 4 referred to 21 payments.]

6. The Credit Application Form, and any amendments, submitted to the Central Credit Committee of BCV, Lausanne and subsequently approved by them, signed by the BCV Account Managers of Allied Deals and RBG Accounts.

7. All communications (including but not limited to emails, memoranda, records of telephone conversations and faxes) between the Line Supervisor in BVC’s Head Office in Lausanne, Switzerland to Francois Greiner relating to the operation of the overdraft account (No 959.94.71) and any other temporary overdraft facilities granted to RBG.

8. All communications (including by [sic] not limited to emails, memoranda, records of telephone conversations and faxes) between Allied Deals PLC/RBG and the designated account manager at BCV.

10 Apparently in view of Fujitrans’ application for discovery, Fujitrans’ appeal against summary judgment was held in abeyance. The discovery application was heard on 10 June 2004 by an assistant registrar. It was dismissed save for category 3 relating to BCV’s Loans and Securities Manuals. Although the discovery application did not seek the production of documents, an order for production was also made as BCV did not object to the making of such an order since discovery was being ordered. Fujitrans then filed a notice of appeal on 20 July 2004 against the assistant registrar’s decision as it still wanted discovery and production of the other seven categories of documents.

11 The discovery appeal was heard by me on 10 August 2004. Although Mr Kenneth Lie, counsel for Fujitrans, submitted that the discovery application was not confined to the Schedule 3 claim, it seemed to me from the timing thereof...