Comboni Vincenzo and Another v Shankar's Emporium (Pte) Ltd

JurisdictionSingapore
JudgeKan Ting Chiu J
Judgment Date20 April 2007
Neutral Citation[2007] SGHC 55
CourtHigh Court (Singapore)
Year2007
Published date19 June 2007
Plaintiff CounselNehal Harpreet Singh SC and Kelly Fan (Drew & Napier LLC) (instructed) and Vijai Parwani (Parwani & Co)
Defendant CounselAng Cheng Hock, Mohammed Reza and Yew Zhong Ming (Allen & Gledhill)
Subject MatterTrusts,Constructive trusts,Remedial constructive trust,Whether remedial constructive trust should be imposed,Whether recipient acting unconscionably or displaying want of probity in receiving funds from fraudulent scheme,Nature of categories of knowledge constituting necessary unconscionability to found remedial constructive trust,Express trusts,Constitution,Whether words "for the account of" constituting express trust where no evidence existing to show transferor of funds intending for recipient to hold money on trust,Recipient liability,Funds from fraudulent scheme transferred into recipient's bank account,Whether recipient receiving funds knowing they were transferred in breach of trust,Whether recipient having knowledge of fraud after receipt,Whether recipient liable as constructive trustee
Citation[2007] SGHC 55

20 April 2007

Judgment reserved.

Kan Ting Chiu J:

1 In this case, there is an intriguing account of fraudsters deceiving their unsuspecting victim into parting with substantial sums of money, which find their way into the bank account of a third party.

2 The fraudsters’ victim is the first plaintiff, Vincenzo Comboni (“Mr Comboni”). Mr Comboni, a retired banker, a licensed financial trustee in Switzerland, and a practising solicitor in Italy, is in his seventies. Mr Comboni is a director of the second plaintiff, GB & Associates Inc (“GB”).

3 The recipient of the funds, Shankar’s Emporium (Pte) Ltd is a company incorporated in Singapore.

The plaintiffs’ case

The investment management agreement and the three remittances

4 Mr Comboni’s troubles began when his son forwarded to him an unsolicited email from one Frank Nsugbe (“Nsugbe”). Nsugbe claimed that his father who was murdered in Zimbabwe had left US$20m (“the funds”) with a security firm in South Africa, and he was looking for assistance investing the funds.

5 Mr Comboni offered his professional services. He replied to Nsugbe’s email and through Nsugbe, he came into contact with Charles Khumalo (“Khumalo”) who was purported to be a lawyer. Mr Comboni had received from Khumalo a letter dated 18 December 2003[note: 1] on paper printed with the letter head “A.C Khumalo & Associates (Solicitors and Fund Managers)” together with a draft investment agreement. The words “A.C. Khumalo & Associates” were stamped next to Khumalo’s signature in the letter.

6 In January 2004, Mr Comboni travelled to Johannesburg to meet Nsugbe and Khumalo, and to execute the investment agreement. During this meeting he obtained another letter from Khumalo which attested to Nsugbe’s entitlement to the funds. Interestingly, this letter which was dated 24 January 2004[note: 2] was printed with the letter head “C. Khumalo & Associates (Solicitors and Fund Managers)” without the precedent “A” of the letter of 18 December 2003. This second letter also bore a stamp next to Khumalo’s signature which read “Charles Khumalo and Associates”.

7 Mr Comboni did not take notice of these discrepancies, and proceeded to sign, in the name of GB, an investment management agreement with Nsugbe, on terms that were evidently favourable to GB.

The three remittances

The first remittance

8 After the investment management agreement was signed in January 2004, Mr Comboni and GB did not receive the funds that were to be invested. Eventually, in April 2004, Mr Comboni received a telephone call from a person identifying himself as Allen Davis (“Davis”) who purported to represent an entity in Canada known as the Foreign Payment & Credit Centre (“FPCC”). Davis claimed to be able to assist in expediting the transfer of the funds.

9 On 16 April 2004, Mr Comboni received a fax from FPCC[note: 3] which gave him instructions to verify the transfer of the funds via the Deutsche Bank, New York, to his account number. He complied with the instructions and was told that US$18,720,000 would be transferred from the Deutsche Bank, but he did not receive the funds.

10 Instead, Mr Comboni received by fax a memo dated 19 April 2004[note: 4] under the letterhead of a “RBC Group” with an address in Toronto. The fax bore a transmission imprint “Royal Bank of Canada”, and Mr Comboni treated it to be a memo from the bank. The memo stated that the remittance of US$18,720,000 was held up pending the payment of insurance bond fees of US$125,080 to an entity described as the “American British Insurance Corporation”, and the US$18,720,000 would be paid out after the insurance bond was provided.

11 On the same day, Mr Comboni received a fax from FPCC[note: 5] which advised that the payment for the insurance bond was to be paid to:

BANK NATIONALE DE PARIS, NEW YORK

UID CHIP NO:0768

SWIFT CODE:BNPASGSG

CREDIT A/C NO:200195286-003-39 OF

BANK NATIONALE DE PARIS SINGAPORE

BENEFICIARY: SHANKAR'S EMPORIUM PTE LTD

A.C. NO: 50-000160-00791

BY ORDER OF : LIKO

and the funds would be released thereafter.

12 That was the first time Mr Comboni became aware of the defendant, and he was assured, after he went into the defendant’s website and learnt that it was a Singapore incorporated company, because of Singapore’s reputation as a corrupt-free and transparent country. Being so assured, Mr Comboni arranged for the payment of the insurance bond.

13 However, after he had made the arrangements, he received another fax from FPCC on 21 April 2004[note: 6] requesting the payment to be made to the defendant’s account with the DBS Bank in Singapore thus:

BANK OF NEW YORK, NEW YORK

SWIFT CODE: IRVTUS3N

FAVOURING: DBS BANK, SINGAPORE

SWIFT CODE: DBSSSGSG

A/C NO: 0001-000953-01-0-022

BENEFICIARY: SHANKAR'S EMPORIUM PTE LTD

BY ORDER OF : LIKO

14 Mr Comboni complied with these instructions as well and recalled the remittance he had made earlier. He then instructed UBS AG to pay US$125,080 to the defendant’s DBS account and that the remittance advice was to specify “For account of Vincenzo Comboni” and this was confirmed in the UBS AG’s debit advice.[note: 7] In his affidavit of evidence-in-chief, Mr Comboni explained that he had requested that the words “For account of Vincenzo Comboni” be inserted “to highlight to the Defendant that it was I who was remitting the moneys to them and hence they had to account to me for it.”[note: 8]

15 One may ask why Mr Comboni, an experienced banker and a lawyer, did not communicate directly with the defendant and seek its agreement and confirmation. It is also noteworthy that Mr Comboni gave a different explanation for the insertion of those words when he was cross-examined, which I shall deal with at the appropriate stage of this judgment.

16 This then led to the first remittance of US$125,080 on 22 April 2004.

The second remittance

17 Mr Comboni deposed in [22] and [23] of his affidavit of evidence-in-chief:

22. A few days later, I received another call from the said Allen Davis informing me that a further payment of USD380,000 was required and that the balance sum for the insurance bond was to be paid by the entity called Liko.

23. I then arranged to transfer the sum of USD 380,000 to the Defendants [sic] account with DBS bank as requested on 27th April 2004. The payment was similarly arranged through the 2nd Plaintiffs’ bank account with UBS AG Bank. Again, I also instructed the payment details to state that the monies were “For the account of Vincenzo Comboni” so that the Defendants knew that they had to account to me for this payment.

18 For this remittance, also from the account of GB, the debit advice also recorded that the details of payment included the words “By order of Liko for account of Vincenzo Comboni”.[note: 9]

19 Mr Comboni had also asked for receipts for these two remittances. He received two invoices,[note: 10] issued by “Shanker Emporium Pte Ltd (Insurance Brokers)” with an address in Toronto.

20 He accepted the receipts despite the differences in the name and the address of the company. He explained in [24] of his affidavit of evidence-in-chief that:

24. I did not think anything was amiss then and only realised much later that there was a very slight variation in the spelling in that the Defendants are known as “Shankar” and not “Shanker”.

The third remittance

21 No funds were released to Mr Comboni or GB after the first and second remittances. Mr Comboni explained further in his affidavit of evidence-in-chief:

27. On further contacts made with the said Allen Davis, I was led to believe that a further and final remittance of USD 620,000 to the Defendants [sic] account in Singapore would result in the prompt transfer of the Funds into my account. As I had already transferred the sum of USD 505,080 into the Defendants’ account, I agreed to effect this last remittance.

28. Again I wish to stress that I was comforted in the knowledge that the payment was being effected to a Singapore registered company.

29. So on 7th May 2004, I arranged to transfer the sum of USD620,000 from my personal account maintained with Banca Popolare di Sondrio bank in Italy to the Defendants’ bank account maintained with DBS bank.

22 At this stage, I should point out that Mr Comboni did not explain why he agreed to make the second and third remittances when the RBC Group memo of 19 April 2004 referred to in [10] hereof stated that the fee payable for US$18,720,000 was US$125,080. Why did he not ask what these additional sums in the second and third remittances were for, and comply without query?

23 The third remittance was made, as evidenced in a SWIFT message from the paying bank, Banca Popolare di Sondrio dated 7 May 2004[note: 11] showing that the payment was made out of Mr Comboni’s account (not GB’s accounts as in the previous two remittances) and the beneficiary was stated as “Shankar’s Emporium Pte Ltd By Order of Liko” for “Cover Balance for USD 1,000,000 Refundable cash bond”.

Discovery of the truth

24 Neither Mr Comboni nor GB received any of the promised funds. Davis made the excuse that Liko had failed to provide additional insurance cover. Davis agreed to refund the US$1m that GB and Mr Comboni had paid on the three remittances.

25 No refunds were made. Subsequent efforts to trace Davis, Nsugbe, Khumalo and FPCC bore no results. When Mr Comboni was cross-examined by counsel for the defendant, he admitted that he should have been more careful, and if he had made reasonable precautions, the fraud would have been exposed.

26 Mr Comboni deposed at [35] and [36] of his affidavit of evidence-in-chief:

35. On hindsight, and based on professional searches made after the events which evidenced that:

(a) The Investor had presented himself by a false passport and no trace could be found in Zimbabwe of the asserted death of a person by the name of his assumed father;

(b) The person, by the self-asserted name of Charles Khumalo, who had pretended to be the Investor’s solicitor and issued to me, on a letterhead, a...

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1 books & journal articles
  • The End of Knowing Receipt
    • Canada
    • Canadian Journal of Comparative and Contemporary Law No. 2-1, January 2016
    • 1 January 2016
    ...1478 [ Ultraframe ]; First Energy Pte Ltd v Creanovate Pte Ltd , [2006] SGHC 240 at para 53; Comboni v Shankar’s Emporium (Pte) Ltd , [2007] SGHC 55 at para 49; Zambia v Meer Care & Desai , [2007] EWHC 952 (Ch) at para 515; OJSC Oil Co Yugraneft v Abramovich , [2008] EWHC 2613 (QB (Comm)) a......

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