Breezeway Overseas Ltd and another v UBS AG and others

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 16 August 2012
• Neutral Citation: [2012] SGHC 170
• Court: High Court (Singapore)
• Hearing Date: 08 March 2012
• Docket Number: Suit No 114 of 2010 (Registrar’s Appeal No 412 of 2011)
• Plaintiff Counsel: Freddy Lim (Lee & Lee)
• Defendant Counsel: Tan Shou Min (Drew & Napier LLC),Charmaine Chan (Legis Point LLC)
• Subject Matter: Civil Procedure,Discovery of documents
• Published date: 23 August 2012

Lee Seiu Kin J:

This was an appeal against part of the decision of the learned senior assistant registrar (“SAR”) regarding certain disputed keyword search terms in the electronic discovery (“e-discovery”) process. The grounds of the SAR’s decision may be found in Breezeway Overseas Ltd v UBS AG [2012] SGHC 41 (“Breezeway”). After hearing both parties, I allowed the appeal in part. I now set out the reasons for my decision.

Background facts The parties

The present appeal arose from a summons (“SUM 2443/2011”) taken out in Suits No 112 of 2010 and 114 of 2010 (“the Suits”) for an order that the parties conduct e-discovery in accordance with the plaintiffs’ draft e-discovery protocol dated 19 May 2011.

The first plaintiff, Breezeway Overseas Ltd, is a company registered in the British Virgin Islands, while the second plaintiff, Mr Vasanmal Murli, is a director of the first plaintiff and the person who exerts effective and complete control over the first plaintiff. The first defendant is UBS AG, a global financial services firm that is headquartered in both Basel and Zurich, Switzerland, while the fourth and fifth defendants are the Hong Kong and Singapore branches of the first defendant. For convenience, the first, fourth and fifth defendants are henceforth collectively referred to as “the Bank”. The second defendant, Susan Abraham, and third defendant, Vikrant Kanyal, were former employees of the Bank and had confirmed that they did not have in their possession, custody or power any discoverable documents. The present e-discovery application is therefore between the plaintiffs and the Bank.

The first plaintiff is a long-time customer of the Bank. The plaintiffs alleged that sometime in or about 2008, they relied on the Bank’s representations and took loans from the fourth defendant to purchase the following bonds (the “leveraged bonds”): 6.625% ICICI Bank Bonds on 13 February 2008; 7.335% Bank of Moscow Bonds on 14 February 2008; 7.335% Bank of Moscow Bonds on 16 April 2008; 6.609% VTB Cap Bonds on 15 April 2008; 8.25% VTB Cap Bonds in July 2008; and 5.75% Kaupthing Bank Bonds on 6 March 2008.

The leveraged bonds were subsequently sold on or about 13 August 2008, and the loan that had been taken to purchase these bonds was applied towards the purchase of 13.625% Venezuela Bonds on or about 13 August 2008.

In a meeting between the second plaintiff and the Bank held at the Bank’s office at Suntec City, the Bank’s employees had allegedly represented that the loans were fixed loans and/or fixed to maturity (which meant that the loans could not be recalled prior to maturity). The second plaintiff claimed that he was not told that the first plaintiff had to provide “collateral” to secure the loans, nor was he informed of which assets were allegedly collateralised.

Sometime in or about March 2009, the Bank issued margin calls on the plaintiffs’ account, which required the plaintiffs to raise huge sums of money within a short period of time, failing which the Bank threatened to liquidate the plaintiffs’ assets against the plaintiffs’ will. During this period of time, the plaintiffs protested strongly against the Bank’s decisions to reduce the quantum of the loans and to make the margin calls.

It was the plaintiffs’ claims against the Bank for, inter alia, misrepresentation, breach of fiduciary duties, gross negligence, wilful misconduct and breach of contract which gave rise to the Suits and, accordingly, the present appeal.

The decision below

SUM 2443/2011 was heard substantively over two separate hearings on 28 July 2011 and 12 December 2011.

At the first hearing on 28 July 2011, the SAR made orders concerning the categories of documents to be disclosed (“the Documents”), as follows: The emails in the Mailboxes (“Mailbox Emails”), emails in the Personal Network Profiles (“P-Drive Emails”), the documents in the Personal Network Profiles (“P-Drive Documents”) and Instant Messaging Records (“IMs”) of Anandraj Jain, Kurt Kumschick, Susan Abraham and Vikrant Kanyal (referred to as the “Four Employees”) for the period of February 2008 to August 2008. The Mailbox Emails, P-Drive Emails, P-Drive Documents and IMs of the Four Employees plus Vikram Malhotra and Andreas Reber (referred to as the “Four Employees Plus Two”) for the period of February 2009 to June 2009.

The SAR also ordered that: The Bank was to conduct reasonable keyword searches (ie, electronic searches of electronic documents with specified words or strings of words) on the Documents. The plaintiffs and the Bank were to try to come to an agreement on a set of keywords to be used to conduct the searches. If an agreement could not be reached, the Bank was to perform preliminary keyword searches (viz, searches intended solely for the purpose of identifying the number of hits of each proposed keyword: see Robin Duane Littau v Astrata (Asia Pacific) Pte Ltd [2011] SGHC 61 (“Robin Duane Littau”) at [19]) using the disputed keywords, before returning to court for a determination on the disputed keywords.

After the 28 July 2011 hearing, the plaintiffs proposed 30 keywords for the conduct of the keyword searches. Of the 30 keywords, the Bank agreed to seven and objected to 23. The seven keywords that the Bank agreed to were keywords which fell within the categories of unique reference numbers (ie bank account numbers) and keywords which identified key witnesses, as follows: “Murli”; “Vee”; “Vasanmal”; “Breezeway”; “mvee@saniva.com.sg”; “207760”; and “910879”.

The Bank rejected the remaining 23 keywords because, in the Bank’s view, those keywords were too generic and broad considering that the Bank was in the banking business, and that the employees whose Documents would be searched were banking professionals in the wealth management business. The Bank therefore conducted the preliminary searches and provided the search results to the plaintiffs.

Parties returned before the SAR on 12 December 2011 for a determination on the 23 disputed keywords. At the hearing, the SAR allowed ten keywords and disallowed the remaining 13, as follows: The word “collateral” would be used in a keyword search of the Mailbox Emails and the P-Drive Emails of the second and third defendants for the periods stated in [10] above. The SAR permitted the keyword “collateral” because one of the issues in dispute was whether the loans which the first plaintiff had taken were secured against collateral, and if so, whether there was any identification of which banking assets had been marked as collateral against the loans. There were also disputes of fact in relation to requests by the Bank for additional collateral or margin call. In addition, the SAR took into consideration the number of hits in the preliminary search. The following words or phrases would be used in a keyword search of the Mailbox Emails, the P-Drive Emails, the P-Drive Documents and the IMs of the Four Employees Plus Two for the periods stated in [10] above: “Fixed Loan”; Proximity search of “fixed” within ten words of “maturity”; “Protest”; “Bank of Moscow”; “Kaupthing”; “Kuznetski”; and “Republic of Venezuela”. The SAR permitted the keywords “Fixed Loan” and the proximity search because one of the issues in dispute was whether the terms and interest rates of the loans taken by the first plaintiff were “fixed to maturity”. The keyword “Protest” was allowed because although it was a common word, its use in the context of the correspondence between the first plaintiff and the Bank was particularly relevant to a key issue, viz, the Bank’s alleged unilateral decision to reduce the “loanable value” of the leveraged bonds which was in turn used by the Bank as a basis for the margin call. The first plaintiff had protested to the Bank against this reduction and margin call. As for the keywords “Bank of Moscow”, “Kaupthing”, “Kuznetski” and “Republic of Venezuela”, these keywords were permitted because the leveraged bonds were fairly unique to the banker-customer relationship between the Bank and the first plaintiff. The terms “ICICI” and “VTB” would be used in a keyword search of the Mailbox Emails and the P-Drive Emails of the second defendant, and the Mailbox Emails of the third defendant, for the periods stated in [10] above. The SAR permitted these keywords because they referred to the ICICI and VTB leveraged bonds which were heavily traded by the India desk and which had been recommended to the first plaintiff. However, in view of the number of preliminary hits, these were restricted to repositories just mentioned.

The appeal

The present appeal concerned nine of the ten keywords that the SAR allowed. Only the proximity search was not part of the appeal because the SAR had indicated at the 12 December 2011 hearing that this keyword would only be allowed if the Bank’s search engine could perform the necessary proximity searches. As the Bank had since deposed on affidavit that its search engine was not capable of performing proximity searches, this keyword was not part of the appeal.

The parties suggested that the key issue in the present case was whether the keywords ordered by the SAR should be used to perform keyword searches on the Documents. The thrust of the Bank’s arguments was that the disputed keywords were of low relevance and that the searches were not necessary for the fair disposal of the Action or for saving costs. It should be noted that the sub-text to this appeal was the Bank’s concern that – on its interpretation of Robin Duane Littau – it would not be permitted to review the search results for relevance, and therefore that the search results may be over-inclusive by including material irrelevant to the Suits (see [27] et seq).

Given that the plaintiffs agreed that the alleged “protest” only arose on or after February...