Compania De Navegacion Palomar, S.A. and others v Ernest Ferdinand Perez De La Sala and another matter

• Jurisdiction: Singapore
• Judge: Quentin Loh J
• Judgment Date: 27 January 2017
• Neutral Citation: [2017] SGHC 14
• Year: 2017
• Docket Number: Suit No 178 of 2012
• Published date: 27 March 2018
• Court: High Court (Singapore)
• Hearing Date: 27 October 2014,24 March 2014,17 March 2014,20 March 2014,28 November 2014,23 July 2015,06 March 2014,03 March 2014,29 October 2014,18 March 2014,02 April 2014,13 October 2014,27 February 2014,04 April 2014,15 October 2014,10 October 2014,14 October 2014,31 October 2014,08 October 2014,03 October 2014,26 November 2014,01 April 2014,22 July 2015,31 March 2014,25 November 2014,11 March 2014,24 November 2014,16 October 2014,03 April 2014,30 October 2014,17 November 2014,26 March 2014,05 March 2014,27 November 2014,09 October 2014,19 March 2014,28 October 2014,26 February 2014,25 February 2014,27 March 2014,12 March 2014,13 March 2014,04 March 2014,07 March 2014,25 March 2014,10 March 2014,28 February 2014,21 March 2014,07 October 2014,28 March 2014,14 March 2014
• Plaintiff Counsel: Thio Shen Yi SC, Samantha Lee, Karen Teo and Sharleen Eio (TSMP Law Corporation)
• Defendant Counsel: Harpreet Singh SC, Lim Shack Keong, Joan Lim and Keith Han (Cavenagh Law LLP),Cavinder Bull SC, Gerui Lim, Adam Maniam, Tan Yuan Kheng and Kelly Lua (Drew & Napier LLC)
• Citation: [2017] SGHC 14

Quentin Loh J: Introduction

The six plaintiff companies (referred to as the “Plaintiff Companies”) bring this action to recover large sums of money, said to be around US$600m to US$800m, which were transferred out of their bank accounts by the defendant, Ernest Ferdinand Perez De La Sala (“Ernest”), who is a director of the Plaintiff Companies, into his personal bank accounts. Ernest claims that the monies are all his and that he set up the Plaintiff Companies (as well as other companies) as nominees or “envelopes” or “pockets” to hold these monies and other assets belonging to him.

Ernest has in turn sued his co-directors: his nephew, Edward De La Sala (“Edward”), his niece, Christina Copinger-Symes nee De La Sala (“Christina”), and Christina’s husband, James Copinger-Symes (“James”), collectively referred to as “ECJ”, for breach of trust, breach of fiduciary duties and knowing assistance in the Plaintiff Companies’ breach of trust, and conspiracy to injure by lawful and unlawful means. ECJ denies these allegations and counterclaims against Ernest for misrepresentation.

Whilst ownership of companies do not normally cause difficulties as one traces its registered shareholders, the Plaintiff Companies have been structured as an “orphan” or “circular” structure, ie, the 1st Plaintiff, Compania De Navegacion Palomar SA (“PAL”), a company incorporated in Panama, owns all the shares in the 2nd Plaintiff, Cosmopolitan Finance Corporation (“CFC”), a company incorporated in the British Virgin Islands (“BVI”), and CFC owns all the shares in the 5th Plaintiff, Peninsula Navigation Company Private Limited (“PEN”), a company also incorporated in the BVI, and PEN owns all the shares of PAL. This orphan structure is legal under Panamanian and BVI law but not under Singapore law. However, nothing turns on that.

The 3rd Plaintiff, Dominion Corporation SA (“DOM”), a company incorporated in Panama, is owned by Summit Finance Corporation SA (“Summit Corp”), which is in turn owned by PAL. The 4th Plaintiff, John Manners & Co (Malaya) Ltd (“JMM”), a company incorporated in Singapore, is owned by Cambay Prince Steamship Co Ltd (BVI) (“Cambay BVI”), which is in turned owned by PEN. PEN also owns the 6th Plaintiff, Straits Marine Company Private Limited (“SMC”), a company incorporated in the BVI. In addition, there are quite a number of companies that will be mentioned in this judgment, many of which have similar or very similar names, but are now of little relevance to the issues in this case, save for context.

At the commencement of this action, the corporate structure of the six Plaintiff Companies was as follows:

These claims arise out of a long and complex set of facts which stretch back to the 1950s. It begins with a remarkable person, Robert Perez De La Sala, (“Robert Sr”) and his incorporation in April 1939 of a company in Hong Kong called Lasala Investments Limited (“LIL”), which was later renamed Northern Enterprises Limited (“NEL”) in 1959. I start with the members of the De La Sala family.

Background The De La Sala family

Robert Sr, the son of a British master mariner of Spanish descent, was born in Manila on 2 October 1908. He moved to Hong Kong and joined John Manners & Co Limited (“JMC”), a company incorporated in Hong Kong in 1916, as an apprentice or clerk on 22 July 1922, when he was not quite fourteen. He was a remarkable person and an astute entrepreneur with an insatiable appetite for work and languages. He worked his way up and by 1 January 1940 became the Chairman as well as the majority shareholder of JMC. He built up a sizeable fleet of vessels in JMC and a stable of companies engaged in all kinds of businesses. The coat of arms on his stationery is no pretension – it is listed in Heraldica and his grandfather was a Spanish general who fought in the Carlist Wars and sought refuge in England after its collapse in the 1870s.

Robert Sr married Camila Vasquez De La Sala (“Camila”) and they have four children: Jerome Anthony Perez De La Sala (“Tony”), who was born on 16 December 1931, Ernest, who was born on 31 January 1933, Robert Perez De La Sala (“Bobby”), who was born on 17 October 1935, and Isabel Brenda Koutsos (“Isabel”), who was born on 10 March 1943 (there was another son, Eddy, who died of some illness sometime around 1950 or 1951). Robert Sr and Camila had all of their children educated in Australia. For ease of reference, I shall refer to Camila and the four children collectively as “JERIC”, an acronym used by Robert Sr, his family and counsel.

Tony moved to Hong Kong after his schooling to work at JMC, but returned to Australia a few years later, married one Ann in 1956, and settled down in Sydney.¹ Although Robert Sr had hoped that Tony would work in JMC in Hong Kong after his studies, Tony did not have any interest in shipping and business. Tony eventually ended up working in JMC’s Australian subsidiary and other businesses in Australia in which Robert Sr had an interest.² Later on in life, his interest was running a shopping centre in Sydney owned by the family. Tony has one son, Pastor, a Latin and French teacher and a specialist in early French organ music, and two daughters, Suzanne and Elena Thasler (“Elena”), and four grandchildren.³ Tony and Elena, who helped Tony run the shopping centre, have filed affidavits and gave evidence in these proceedings.

Ernest finished his schooling and public secretarial studies in Australia and started off by joining John Manners & Company (Australia) Pty Ltd (“JMC(A)”) in 1951.⁴ He then moved to Hong Kong and was made a director of JMC on 14 May 1953.⁵ He eventually went on to manage JMC’s business in Portuguese East Timor.⁶ Thereafter, he returned to Hong Kong and became Joint Managing Director with Robert Sr in 1957.⁷

Ernest married Jennifer and had a son, Robert Ernest Perez De La Sala.⁸ They were later divorced. Ernest then married Hannelore de Lasala-Debring (“Hannelore”) and had another son, Ernest Edward Perez De Lasala.⁹ Ernest and Hannelore were divorced in May 1970.¹⁰ Ernest is estranged from his ex-wives and sons, and has excluded them from any inheritance. Hannelore gave evidence in these proceedings and has independently brought fresh proceedings against Ernest in Hong Kong on the basis that he had misrepresented to her during the divorce proceedings that a very large part of his assets were family assets held by him on trust.¹¹

Bobby married Felicite Terrill Perez De La Sala (“Terrill”) in 1966 and settled in Sydney, Australia.¹² They lived together with Robert Sr and Camila in New South Wales (“NSW”), until Camila passed away in July 2005.¹³ Bobby and Terrill have four children: Maria-Teresa Perez De La Sala (“Teresa”), Maria-Isabel Harry (“Maria-Isabel”), Edward and Christina.¹⁴

Edward married Lyndel and had three children. Christina and James met in 1997 when James was still a Major in the Special Air Service (“the SAS”), an elite regiment in the British Army forming part of the United Kingdom Special Forces.¹⁵ They got married in Sydney around October 1998¹⁶ and have four children. Maria-Isabel married Richard Harry (“Richard”) and the both of them have filed affidavits and gave evidence in these proceedings.

Isabel also settled in Sydney, Australia. She attended a secretarial and business college and then did office work in Sydney.¹⁷ She married Cecil Koutsos (“Cecil”), who was in the real estate business. They have a daughter, Nicole Corbett (“Nicole”), and two grandchildren.¹⁸ Isabel and Nicole have filed affidavits and gave evidence in these proceedings.

The events leading up to the dispute

Bobby’s children, Edward and Christina, and her husband James, allege that they became involved in the Plaintiff Companies as a result of Ernest asking them to join him so that he could train them to be the ‘next generation’ team to manage the De La Sala family assets and give them the benefit of his experience. Maria-Isabel also alleges that she and Richard had been similarly invited by Ernest, but they declined his invitation.¹⁹

Christina and James moved to Singapore in 2004 and initially stayed in an apartment at Balmoral Park, which was allegedly owned by Ernest.²⁰ Edward and Lyndel joined them in Singapore in 2005 but found accommodation on their own.²¹ Edward had started a little earlier by becoming a director of JMC(M) on 26 July 2004, and then a director of PAL and DOM on 2 March 2005. He was also a director in CFC and PEN.

On 24 March 2005, ECJ and Ernest signed a memorandum recording the “arrangements for operations in Singapore”.²² It provided that: The investment portfolio of CFC held at UBS Singapore would be valued as at 3 January 2005, and that value would be the basis for operations for the year up to 31 December 2005. Christina and James (referred to as “Team CJ”) and Edward and Lyndel (referred to as “Team LE”) would be each entitled to 10% of the profits from the portfolio for the year up to 31 December 2005. Both teams would have to meet their personal expenses out of their share of the profits. The benefit that Christina and James would derive from their use of the Balmoral apartment from 1 January 2005 onwards would be offset at market rate so that it would be fair to Edward and Lyndel.

ECJ worked on various schemes and drafts to structure the ‘family trust’ (see also below at [452]–[463]). For example, in 2006, Edward and James worked on a draft memorandum entitled “‘Passing the Baton’ – Providing Opportunities for Future Generations”.²³ A draft was sent to Ernest on 31 July 2006 for him “to confirm whether [Edward and James] are on the right track”.²⁴ In response, Ernest in his email dated 2 August 2006 asked Edward and James to “prepare concept for my review and comparison with others I have”.²⁵ Later, Edward and James were asked to think about how they would structure a trust if they were seeking to protect their own assets.²⁶

In 2008, ECJ...