Dresdner Kleinwort Ltd v CIMB Bank Bhd

• Judge: Chan Seng Onn J
• Judgment Date: 14 April 2008
• Neutral Citation: [2008] SGHC 59
• Citation: [2008] SGHC 59
• Defendant Counsel: Alvin Yeo SC, Nish Shetty and Tan Hsiang Yue (WongPartnership LLP)
• Published date: 16 April 2008
• Plaintiff Counsel: Hri Kumar SC, Tan Su-Lin and Bhavish Advani (Drew & Napier LLC)
• Date: 14 April 2008
• Docket Number: Suit No 661 of 2007 (Registrar's Appeal No 20 of 2008)
• Court: High Court (Singapore)
• Subject Matter: Whether governing law the proper law of the contract or the law of the country where enrichment occurred,Defendant intending to commence action against third parties,Choice of law rules governing restitutionary claims where contract procured by fraud,Restitution,Natural forum,Whether temporary stay subject to condition allowing action to be commenced against third parties,Choice of law,Payment received in Singapore,Company incorporated in England claiming restitution of payment made under invalid agreement,Defendant seeking permanent stay on basis of forum non conveniens,Stay of proceedings,Whether permanent stay application should be heard first,Risk of third-party claims becoming time barred before stay is lifted,Whether Singapore or England the natural forum,Plaintiff seeking temporary stay pending determination of foreign proceedings,Civil Procedure,Conflict of Laws

14 April 2008 Judgment reserved.

Chan Seng Onn J:

Introduction

1 The plaintiff’s application is for a temporary stay of its own action pending a final determination of another suit, Siemens Financial Service GmbH v Dresdner Kleinwort Ltd, file no. 11 HK O 21619/05 (District Court of Munich 1) and 7 U 4791/06 (Superior Regional Court of Munich), before the courts of Munich in Germany (“German proceedings”).

2 The defendant’s application is for a permanent stay on the ground that Singapore is not the natural and appropriate forum for the action but England is.

3 At the hearing below, the Assistant Registrar, Ms Denise Wong (“the AR”), heard the plaintiff’s application first and allowed the action to be temporarily stayed pending the conclusion of the German proceedings. The AR refused to hear the defendant’s application and adjourned it to a date after the lifting of the temporary stay. The defendant appealed against her orders.

4 During the appeal before me, the plaintiff argued that its application should be heard first because it was filed earlier, and hearing the defendant’s application first would completely undermine and make redundant the plaintiff’s application, and thereby irrevocably prejudice the plaintiff’s application. The defendant objected that it was wrong in principle to hear the plaintiff’s application first without hearing the fundamental issue of the appropriate forum. Until and unless the appropriate forum is determined, there is no justification for any court in any forum to either leave this issue in limbo or proceed on the assumption that it has undisputed jurisdiction to decide whether or not there is sufficient basis shown for a temporary stay of the main action. I found the defendant’s argument to be more compelling.

5 The logic of the defendant’s argument becomes more apparent when two hypothetical scenarios are used to aid in the analysis. Suppose the plaintiff chooses a totally inappropriate forum say the courts in New Zealand to try the matter and then applies for a temporary stay and a deferment of the hearing of an application concerning forum non conveniens until after the temporary stay is lifted. Obviously, it makes no sense to defer the forum non conveniens hearing as New Zealand in any event is not the appropriate forum to hear the action in the first place and consequently also to hear any related interlocutory application (including that of a temporary stay) in relation to the action. The horse must be put in front of the cart so to speak. The most fundamental question must be determined first, which is whether or not New Zealand is the appropriate forum, and not the secondary question of whether a temporary suspension of the action should be allowed. If New Zealand is in any event not the appropriate forum, then a permanent stay should be ordered and the matter should end there. The action in New Zealand should not be allowed to be temporarily suspended, which serves no useful purpose. The same applies if the plaintiff commences the action in Malaysia. If either Singapore or London is the far more appropriate forum than Malaysia, then again the question which must be accorded priority is the forum non conveniens question so that the action is then properly brought as soon as possible in the appropriate forum where the case can be most suitably tried having regard to the interest of the parties and the ends of justice. The temporary stay question in my view should then be heard by the appropriate forum. But the question of which is the appropriate forum can only be answered after the application for the permanent stay is heard first.

6 Although logically the defendant’s permanent stay application should be heard and determined first, nevertheless I decided to hear the merits of both applications before making any decision on both applications. This approach also enables any relevant cross or linked issues to be considered at the same time. If I were to allow the permanent stay application, then there will of course be no need for me to decide the temporary stay application. However, if I were to dismiss the permanent stay application on the basis that Singapore is the appropriate forum to hear the matter, then I will have to decide whether or not to allow the temporary stay application, and if so, then on what terms (if any).

7 After hearing both applications, I dismissed the permanent stay application and varied the order of the AR to allow the defendant to proceed with its intended third party actions in the meantime whilst the substantive action between the plaintiff and the defendant is temporarily stayed until the final outcome of the German proceedings is known.

8 I now give my reasons on an expedited basis as the defendant has filed an expedited appeal due to its concern with the fast approaching time bar.

Brief facts

9 In this action, the plaintiff (a company incorporated in England offering banking services in the United Kingdom and elsewhere, including the discounting of promissory notes) seeks to recover from the defendant (a bank licensed in Malaysia with branches in other places including London and Singapore), the sum of USD8,199,869.50 paid to the defendant (“payment”) under an alleged sale and purchase agreement (“agreement”) entered into on 6 May 2002 for the purchase without recourse of eight promissory notes (“notes”) of total nominal value USD10,000,000 from the defendant.

10 The notes with a maturity date of 3 February 2004 were issued on 1 February 2002 by Innaria Sdn. Bhd., Kota Kinabalu (“Innaria”), to the order of V.V. Enterprise, Luyang and payable at Maybank Berhad, Kota Kinabalu. These corporate entities are all located in Sabah, Malaysia. In the notes, the authorised signatures for Innaria were made in the name of Lye Kok Keng @ Harry and Mohamed Zulfikar Bin Muzaffar, both named as directors of Innaria.

11 The notes were allegedly guaranteed per aval by Jabatan Kerja Raya, the Public Works Department, Sabah, Malaysia. The signatures for the guarantee were purportedly made in the name of officers from the Jabatan Kerja Raya, namely, John Baptist Badai and Lontou Ujum. A signed stamp of the “Commissioner for Oaths” was located next to these two signatures.

12 Accompanying the notes was a confirmation letter from Innaria that (a) the promissory notes related to the financing of the import and installation of pipes under a certain contract (“project”); and (b) the notes represented Jabatan Kerja Raya’s unconditional and irrevocable undertaking to pay on the promissory notes on the maturity date upon presentation at Maybank Berhad at Kota Kinabalu. The letter also confirmed that all the signatures on the notes were authentic, and legally and validly binding, and the persons were fully authorized to enter into the transaction. It further confirmed that the notes would be governed and construed according to English Law, and that Innaria irrevocably submitted to the non-exclusive jurisdiction of the courts in England. As with the notes, this confirmation letter was signed by Lye Kok Keng @ Harry and Mohamed Zulfikar Bin Muzaffar for Innaria, and also by John Baptist Badai and Lontou Ujum as officers of Jabatan Kerja Raya. A signed stamp of the “Commissioner for Oaths” was again located next to the two latter signatures. The defendant purportedly confirmed that the signatures of all the abovementioned four persons were authentic and legally binding on Innaria and Jabatan Kerja Raya. The verified signature of George Chau Ket Siong (“George Chau”) appeared on this confirmation together with a signed stamp of the “Commissioner for Oaths” next to it.

13 In the agreement, the named buyer was Dresdner Kleinwort Wasserstein Limited (the former name of the plaintiff bank), Riverbank House at 2 Swan Lane, London. The named seller was the Inanam branch at Inanam Plaza, 8 Inanam New Township in Sabah (“Inanam branch”) of the defendant, then known as Bumiputra – Commerce Bank Berhad.

14 On 5 June 2002, the plaintiff sent the payment by SWIFT via its US dollar correspondent bank, the Bank of New York, to the defendant’s Singapore branch (“Singapore branch”). In its SWIFT message, the plaintiff instructed that the said funds be credited to the Inanam branch as the beneficial customer. These instructions of the plaintiff were made pursuant to clause 6.1 of the alleged agreement, which provided that the net proceeds of the transaction would be remitted to the defendant as per the defendant’s separate instructions in writing. Although the separate instructions (allegedly given by the defendant to the plaintiff on or about 29 May 2002) were to remit the payment to the Singapore branch and for the plaintiff also to instruct the Singapore branch to credit the payment to the defendant’s Inanam branch for the account of V.V. Enterprise,the plaintiff did not in its SWIFT message give any instructions to credit V.V. Enterprise as V.V. Enterprise was not a party to the agreement.

15 On 6 June 2002, the Singapore branch received the payment. The Bank of New York sent a SWIFT message to the plaintiff which contained the confirmation from the Singapore branch that it had effected payment on 6 June 2002 in accordance with the plaintiff’s instructions.

16 After the defendant endorsed the notes to the plaintiff, the plaintiff endorsed the notes to DF Deutsche Forfait AG (“DF”) and warranted to DF the legal existence of the notes and the avals contained therein. DF resold the notes to Siemens Financial Service GmbH (“SFS”) and assigned the warranty to SFS.

17 The chain of the sale and purchase transactions for the notes from the defendant to the plaintiff, from the plaintiff to DF, and finally from DF to SFS were arranged by Bon Pour Aval (“BPAL”).

18 When the notes matured on 3 February 2004, SFS presented them for payment. However, the notes were dishonoured.

19 On 9 November 2005, SFS sued the plaintiff in the German proceedings for breach of the warranty....