Ching Mun Fong v Standard Chartered Bank

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 26 July 2012
• Neutral Citation: [2012] SGCA 38
• Date: 26 July 2012
• Docket Number: Civil Appeal No 120 of 2011
• Published date: 16 August 2012
• Plaintiff Counsel: Suresh s/o Damodara (Damodara Hazra LLP)
• Hearing Date: 09 April 2012
• Defendant Counsel: Patrick Ang, Mohamed Reza and Alina Chia (Rajah & Tann LLP)
• Court: Court of Appeal (Singapore)
• Subject Matter: Pre-action discovery,Civil procedure,Discovery of documents

Chao Hick Tin JA (delivering the judgment of the court): Introduction

This appeal relates to an application by the Appellant for pre-action discovery against the Respondent in contemplation of an action in contract and/or in tort to be commenced by the former against the latter arising out of two disputed transactions between the parties. The application was first dismissed by an Assistant Registrar, and later on appeal, by a High Court judge (“the Judge”). This is the Appellant’s appeal against the Judge’s decision.

Facts

The Appellant is a client of the Respondent bank. Their relationship began on 4 August 2009 when the Appellant opened a private banking account with the Respondent.¹ On 27 and 28 August 2009, the Appellant gave instructions to enter into two Commodity-Linked Premium Current Investments (“CPCI”).² These transactions are the source of the present dispute between the parties.

According to the Respondent, each CPCI entailed the investment of a quantity of gold (expressed as “XAU”, a unit of measurement of gold) by the Appellant for a stated period of time.³ At the end of that period, the Appellant would receive the principal sum with interest. However, this would not necessarily be returned in XAU. In consideration for the interest received, the Appellant sold a currency option to the Respondent giving the latter the right to make repayment in XAU or in US Dollars upon the maturity of the CPCI. In effect, by using a pre-determined conversion rate stipulated in the CPCI contracts, the transactions allow the Respondent to hedge against increases in gold prices. As events transpired, the Respondent exercised both options and the Appellant was repaid in US Dollars.⁴

The Appellant appears to have a different understanding of the CPCIs. A letter from the Appellant to the Respondent after the maturity of the CPCIs suggests that the Appellant was under the impression that it was she, the customer, who had the option to redeem the investments either in XAU or US Dollars.⁵ Subsequent letters show that the Appellant expected her account to be maintained in gold.⁶ This was said to be market practice, as the Appellant had never had her gold holdings unilaterally converted into other currencies by other banks before. Following a period of communication between the parties, the Appellant in October 2010 made demands for the restitution of her gold holdings.⁷

On 25 November 2010, Messrs Damodara Hazra LLP, acting for the Appellant, requested the Respondent to furnish them with all account opening documentation as well as any documents which the Appellant had executed in respect of the transactions with the Respondent.⁸ The Respondent did not produce the documents requested.

On 1 March 2011, the Appellant applied under s 47 of the Banking Act (Cap 19, 2008 Rev Ed) for the Respondent to deliver to the Appellant’s solicitors the following:⁹ (i) Complete set/s of account opening forms (including but not limited to those relating to Account no. 108518-1) including the terms and conditions thereof, which the Plaintiff has or may have had with the Defendant; (ii) All records, including mechanical, audio, written and computer records of the purported trades effected by the Defendant in respect of any or all of the Plaintiff’s accounts with the Defendant for the dates 29 June 2010, 1 July 2010 and 2July 2010; and (iii) All records, documents, memos and correspondence related to CPCI Deal Nos. 782251 and 783476 respectively.

The Respondent, through its solicitors, responded by providing the Appellant with the documents it thought the Appellant was entitled to.¹⁰ The only outstanding documents or materials which the Appellant still seeks are those referred to in [6](iii) above.

The application was heard by Choo Han Teck J, who ordered that it be amended to one for pre-action discovery under Order 24 Rule 6 (O 24 r 6) of the Rules of Court (Cap 332, R5, 2006 Rev Ed). The Appellant accordingly filed an amended application on 5 July 2011.¹¹ This was first dismissed by the AR and later by the Judge.

Decision below

The Judge noted that the Appellant was seeking only the voice-logs of the communications which she had with the Respondent’s representatives in relation to the two CPCI deals. The Judge discussed the law on pre-action discovery, noting that every application for discovery must meet the test of necessity as provided under O 24 r 7, which also defines the scope of the court’s discretion. Necessity has to be understood in the light of the purpose for which pre-action discovery is sought, which is to assist a plaintiff, who suspects that he has a case against the other party, to obtain the necessary information to allow him to commence proceedings.

The Judge reviewed a number of cases which showed that pre-action discovery would only be granted where the would-be plaintiff did not know if he had a basis on which to bring a claim. On this approach, pre-action discovery would appear to apply only for the limited purpose of allowing a potential plaintiff to obtain the facts and materials needed to mount a claim. It would not be granted if the plaintiff already knows his cause(s) of action and is not otherwise constrained from commencing proceedings. Nor would an application be granted if its purpose is to enable a potential plaintiff to assess or augment the strength of his claim.

Returning to the present case, the Judge held that the Appellant’s application for discovery of the voice-logs was without justification. Based on the contract between the parties and the Appellant’s own personal knowledge of what transpired during the conversations with the Respondent’s representatives, the Appellant was more than able to plead her case for breach of contract and/or the tort of negligence. The proper approach for the plaintiff to adopt would be to first commence proceedings and then avail herself of the ordinary processes of general and specific discovery. The Judge observed that, given the nature of the dispute between the parties, the voice-logs would likely have to be produced in post-action discovery. It was therefore not necessary for pre-action discovery to be granted.

The Appellant sought to reinforce her application for pre-action discovery by relying on the Respondent’s General Terms as well as s 47 of the Banking Act. The Judge noted that both the General Terms and s 47 did not really lend support to the Appellant’s application for pre-action discovery. The Judge also observed that the Rules of Court formed the “port of call” for parties seeking discovery and s 47 could provide no relief where the requirements stipulated in the Rules are not met.

Arguments of parties

The Appellant submits that the Judge was incorrect in finding that pre-action discovery was not necessary. The Appellant contends that she is not in a position to evaluate whether she has a viable claim against the Respondent. She is also unable to plead her case without the voice-logs as pleadings must contain sufficient particulars and allegations of fact should not be made without reference to evidence. The Appellant further asserts that pre-action discovery should be granted where the documents sought are shown to be relevant to a potential claim and that s 47 of the Banking Act also aids in her application. The Appellant accordingly asks for pre-action discovery in respect of the voice-logs.

The Respondent submits that there are no grounds to disturb the Judge’s dismissal of the Appellant’s application. The Respondent clarifies that the requirement of relevance is separate from that of necessity, and that both must be satisfied in order for an application to succeed. The Respondent reiterates that the Judge’s observations on O 24 r 7 are correct, as is the Judge’s application of the law to the present case. In particular, the Respondent asserts that the Appellant has sufficient information to institute proceedings and to plead her case based on the documentary records already in her possession. Indeed, the Appellant had in earlier correspondence expressed the intention of proceeding with a claim in court. In the circumstances, the voice-logs can hardly be regarded as necessary for the Appellant to commence proceedings.

Issue before this Court

The sole issue in the present appeal is whether the Appellant has made out a case for discovery to be ordered and this in turn raises the question as to whether the requirement of “necessity” for pre-action discovery prescribed under O 24 r 7 has been met.

The law on pre-action discovery

The power of the Court to order pre-action discovery stems from s 18(2) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) which provides that the High Court shall have the powers set out in the First Schedule. Paragraph 12 of the First Schedule states: Discovery and interrogatories 12. Power before or after any proceedings are commenced to order discovery of facts or documents by any party to the proceedings or by any other person in such manner as may be prescribed by Rules of Court.

The exercise of the power of the court to grant pre-action discovery must therefore be in accordance with the Rules of Court. The relevant parts of the Rules of Court are: 6. Discovery against other person (O.24, r. 6) (1) An application for an order for the discovery of documents before the commencement of proceedings shall be made by originating summons and the person against whom the order is sought shall be made defendant to the originating summons. (3) An originating summons under paragraph (1) ... shall be supported by an affidavit which must – (a) ... state the grounds for the application, the material facts pertaining to the intended proceedings and whether the person against whom the order is sought is likely to be party to subsequent proceedings in Court; (b) ... specify or describe the documents in respect of which the order is...