BNP Paribas SA v Jacob Agam and another

CourtInternational Commercial Court (Singapore)
JudgeSteven Chong JA,Roger Giles IJ,Dominique Hascher IJ
Judgment Date17 November 2017
Neutral Citation[2017] SGHC(I) 10
Citation[2017] SGHC(I) 10
Published date11 October 2018
Hearing Date07 August 2017,10 August 2017
Defendant Counseldefendants absent.
Plaintiff CounselK Muralidharan Pillai, Luo Qinghui, Foo Ming-En Mark and Andrea Tan (Rajah & Tann Singapore LLP)
Date17 November 2017
Docket NumberSuit No 2 of 2016

[2017] SGHC(I) 10

Singapore International Commercial Court

Steven Chong JA, Roger Giles IJ and Dominique Hascher IJ

Suit No 2 of 2016

BNP Paribas SA
Jacob Agam and another

K Muralidharan Pillai, Luo Qinghui, Foo Ming-En MarkandAndrea Tan (Rajah & Tann Singapore LLP) for the plaintiff;

Defendants absent.

Case(s) referred to

Abani Trading Pte Ltd v BNP Paribas [2014] 3 SLR 909 (refd)

BNP Paribas Wealth Management v Jacob Agam [2017] 3 SLR 27, SICC (refd)

BNP Paribas Wealth Management v Jacob Agam [2017] 4 SLR 14, SICC (refd)

Jacob Agam v BNP Paribas SA [2017] 2 SLR 1 (refd)

Koh Lin Yee v Terrestrial Pte Ltd [2015] 2 SLR 497 (folld)

Mahidon Nichiar bte Mohd Ali v Dawood Sultan Kamaldin [2015] 5 SLR 62 (folld)

PT Jaya Sumpiles Indonesia v Kristle Trading Ltd [2009] 3 SLR(R) 689; [2009] 3 SLR 689 (refd)

Legislation referred to

Evidence Act (Cap 97, 1997 Rev Ed) ss 32, 32(1)(b), 32(3)

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 38 r 4, O 110 r 53(1A)

Contract — Mistake — Non est factum — Whether defence of non est factum established by assertion that defendant did not understand nature of personal guarantee

Credit and Security — Guarantees and indemnities — Whether cross-claim for damages diminished or extinguished liability under personal guarantee notwithstanding no set-off provision in loan agreement

Evidence — Admissibility of evidence — Hearsay — Business records exception — Application of business records exception when defendants not present at trial


The defendants (“the Agams”) owned four properties in France and Monaco through companies which were incorporated in France, Denmark and Panama (“the Agam companies”). In 2010, the Agam companies entered into four facility agreements with BNP Paribas Wealth Management (“BNPWM”), the former subsidiary of BNP, under which a total amount of €61.7m was loaned to the companies. The moneys were disbursed through BNPWM's local branch in Singapore. Approximately €20.2m was used to repay the previous mortgage loans secured on the properties, some €24.7m was held as securities in a joint pledged account maintained by the Agams with BNPWM's Singapore branch, and the balance was left on deposit with the Singapore branch and managed by BNPWM for discretionary investment. Each facility agreement was for a term of five years. The loans were secured by various securities including mortgages over the four properties and joint personal guarantees executed by the Agams in favour of BNPWM.

In 2014, the Tribunal de Grande Instance of Paris ordered the criminal seizure of one of the properties in France following a request by the US authorities as part of their money laundering investigations. This led to a dispute between the parties as to whether the Agam companies were in breach of their obligations under the facility agreements. The parties subsequently entered into discussions to settle the outstanding moneys which the Agam companies owed to BNPWM. But these discussions did not lead to repayment of the moneys loaned under the facility agreements with two of the Agam companies – SCI Ruth Agam and Det Internationale Ejendoms-OG Udviklingsselskab ApS (“Det Internationale”). Following the contractual maturity date for these two facility agreements, BNPWM issued formal notices of demand to SCI Ruth Agam and Det Internationale for repayment of the loans. SCI Ruth Agam and Det Internationale failed to make repayment. Hence BNPWM demanded payment of the outstanding sum of approximately €30.1m from the Agams under the personal guarantees. BNPWM then commenced this present action in the Singapore High Court in November 2015 against the Agams on the same basis.

The Agams were not present at the trial, but raised various defences in their pleadings. The second defendant (“Ruth”) relied on: (a) a defence of non est factum, claiming that she did not understand the nature of the personal guarantees because she only understands Hebrew and would not have agreed to undertake personal liability by way of the personal guarantees; (b) a defence based on supposed improprieties in the execution of the loan documents and the opening of the relevant bank accounts in Singapore; and (c) an allegation that BNPWM had wrongly asserted that there had been a breach of the borrower and global margin requirements under the facility agreements, which gave SCI Ruth Agam a claim for damages which diminished or extinguished BNP's claim.

The first defendant (“Jacob”) pleaded that: (a) it was a condition of the personal guarantees that both Agams should remain parties, and that he will therefore be discharged from all liability thereunder if the personal guarantees were unenforceable against Ruth; (b) he was discharged from liability under the personal guarantees because BNPWM wrongly declared breaches of margin requirements and events of default under the facility agreements, which impaired SCI Ruth Agam and Det Internationale's ability to refinance the loans with third parties and increased the risk to the Agams under the personal guarantees; (c) BNP's claim was diminished by set-off because BNPWM applied approximately €20m from the pledged account in breach of instructions to apply the sum to reduce the liability of all the Agam companies; and (d) each of the Agam companies had claims against BNP for damages which would diminish or extinguish the claim against him. In addition, Jacob counterclaimed for damages and a declaration that he was discharged from all liability under the personal guarantees, alleging wrongful conduct by BNPWM in November 2015 in obtaining a conservatory order in France over his shares in one of the other Agam companies.

Held, allowing the claim and dismissing the counterclaim:

(1) A person is generally bound by his signature on a contractual document even if he did not fully understand its terms. The defence of non est factum is a narrow exception to that position, for which there had to be a radical difference between what was signed and what was thought to have been signed and the person had to show that he took care in signing the document. There was no basis for a finding that Ruth had the benefit of the defence in either of these respects; there was a preponderance of evidence which demonstrated that her allegations on the non est factum defence could not be accepted: at [63] to [73].

(2) It was not shown how the supposed improprieties in the execution of the loan documents and the opening of the relevant bank accounts in Singapore affected Ruth's liability under the personal guarantees. Notwithstanding the improprieties, it remained that the accounts had been opened and were operated on: at [79].

(3) SCI Ruth Agam was not a party to the proceedings to prosecute the claim it allegedly had arising from BNPWM's assertion that there had been a breach of the borrower and global margin requirements under the facility agreements. The defence thus could not be upheld. In any event, an immediate answer to the defence was the “no set-off” provision in the financing documents. Such a provision, if applicable on its proper construction, was recognised and given effect having regard to the legitimate commercial expectations of the claiming party of payment in full without the need to litigate a cross-claim. Repayment of the SCI Ruth Agam loan was payment to be made under its facility agreement, and was required notwithstanding any claim by SCI Ruth Agam for lost profits: at [82] to [85].

(4) The provision in the personal guarantees stating that liability thereunder was joint and several was clear in its terms, and would have preserved Jacob's liability in the event that the personal guarantees were not enforceable against Ruth: at [90]

(5) BNP's claim followed expiry of the terms of the loans and did not depend upon an event of default. Also it was not self-evident that the declaration of the event of default by BNPWM materially impaired the ability of SCI Ruth Agam and Det Internationale to refinance their loans. Hence, the defence based on the alleged wrongful declaration of breaches of margin requirements and events of default under the facility agreements by BNPWM did not avail Jacob. There was also no reason to conclude that BNPWM was wrong in asserting that there was a breach of the margin requirements: at [92] to [95].

(6) As with the margin call issue, the immediate answer to the defence that BNP's claim was diminished by set-off because BNPWM had applied approximately €20m from the pledged account in breach of Jacob's instructions was the no set-off provision which was part of the refinancing documents. There was also no substance in the complaints as to the allocation of the €20m because BNPWM had not acted wrongly: at [97] and [106].

(7) The references by Jacob to claims by companies other than SCI Ruth Agam and Det Internationale were redundant: at [109].

(8) In consideration of the defences, particularly the non est factum issue, regard was had to statements of fact in documents. Where such a statement was not an admission, and regard was had to it not for itself but as evidence of the fact stated, it was hearsay, and was prima facie inadmissible in evidence. A substantial exception to the hearsay rule, however, was admissibility of a statement pursuant to the business records exception provided in s 32(1)(b) of the Evidence Act (Cap 97, 1997 Rev Ed). The documents which BNPWM gave notice of its intention to introduce into evidence mostly did not require the business record exception as they were relevant for themselves. However, all the documents were business records, and the statements of fact therein to which regard was had were admissible: at [110] to [113].

(9) Jacob was not entitled...

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