Compañia De Navegación Palomar, SA and others v Koutsos, Isabel Brenda

• Jurisdiction: Singapore
• Judge: Tan Siong Thye J
• Judgment Date: 23 March 2020
• Neutral Citation: [2020] SGHC 59
• Court: High Court (Singapore)
• Docket Number: Suit No 398 of 2018
• Published date: 26 March 2020
• Year: 2020
• Hearing Date: 10 January 2020,02 March 2020,09 January 2020,07 February 2020
• Plaintiff Counsel: Thio Shen Yi SC, Koh Li Qun, Kelvin, Niklas Wong See Keat, Benjamin Niroshan Bala, Hannah Alysha Binte Mohamed Ashiq and Nguyen Vu Lan (TSMP Law Corporation)
• Defendant Counsel: Vergis S Abraham, Zhuo Jiaxiang, Loo Yinglin Bestlyn (Providence Law Asia LLC)
• Subject Matter: Trusts,Accessory liability,Companies,Directors,Duties,Restitution,Unjust enrichment,Tracing,Equity,Limitation of Actions,When time begins to run
• Citation: [2020] SGHC 59

Tan Siong Thye J: Introduction

This suit was commenced by the six plaintiff companies (collectively, the “Plaintiff Companies”) against the defendant, Isabel Brenda Koutsos (“Isabel”), for the recovery of US$2.75m, which belongs to the Plaintiff Companies. This action represents the latest salvo in a long-running family dispute. The breakdown in familial ties involves multiple generations and concerns massive sums of money and assets.

The Plaintiff Companies had previously brought Suit No 178 of 2012 (“S 178”) against Ernest Ferdinand Perez De La Sala (“Ernest”), who was a director of each of the Plaintiff Companies at the material time, for the misappropriation of moneys and assets that were valued at CAD 663,033,557.61 as at August 2011.¹ In S 178, Quentin Loh J was the judge at first instance and he found in favour of the Plaintiff Companies in Compania De Navegacion Palomar, S.A. and others v Ernest Ferdinand Perez De La Sala and another matter [2017] SGHC 14 (“the S 178 HC Judgment”). The Singapore Court of Appeal (“CA”) in Ernest Ferdinand Perez De La Sala v Compañia De Navegación Palomar, SA and others and other appeals [2018] 1 SLR 894 (“the S 178 CA Judgment”) heard collectively a number of appeals and summonses relating to S 178.

Arising from S 178, the Plaintiff Companies commenced this action against Isabel for the recovery of the US$2.75m that was transferred from Ernest to Isabel. It is necessary to explain the complex relationships amongst the Plaintiff Companies. The relevant findings in the S 178 HC Judgment and the S 178 CA Judgment will also be germane to this case.

I would like to mention that Isabel chose not to testify in these proceedings and her counsel has submitted that there was no case to answer at the close of the Plaintiff Companies’ case.² The Plaintiff Companies called only one witness, namely, James Copinger-Symes (“James”).

The background facts

The Plaintiff Companies are the same plaintiffs in S 178, namely: the first plaintiff, Compañia De Navegación Palomar, SA (“PAL”), a Panamanian company incorporated in 1958; the second plaintiff, Cosmopolitan Finance Corporation (“CFC”), a company incorporated in the British Virgin Islands (“BVI”) in 1995; the third plaintiff, Dominion Corporation SA (“DOM”), a Panamanian company incorporated in 1973; the fourth plaintiff, John Manners & Co (Malaya) Ltd (“JMM”), a Singapore company incorporated in 1948; the fifth plaintiff, Peninsula Navigation Company Private Limited (“PEN”), a company incorporated in the BVI in 1995; and the sixth plaintiff, Straits Marine Company Private Limited (“SMC”), a company incorporated in the BVI in 2008.

The structure of the Plaintiff Companies is relatively complex. PAL owns all the shares in CFC, CFC owns all the shares in PEN, and PEN owns all the shares in PAL. In the S 178 HC Judgment at [3] and the S 178 CA Judgment at [10], they referred to this as an “orphan” or circular structure. This circular structure is legal under Panamanian and BVI laws but not under Singapore law. Further, DOM is owned by a company, Summit Finance Corporation SA, which in turn is owned by PAL. PEN additionally owns SMC, and also owns a company, the Cambay Prince Steamship Co Ltd (BVI), which in turn owns JMM.³

The diagrammatic organisational corporate structure of the De La Sala family companies, including the Plaintiff Companies, is reproduced from the Plaintiff Companies’ documents:

Isabel is a director in each of the Plaintiff Companies, save for JMM.⁴ She is also the sister of Ernest and she had testified as a witness for Ernest in S 178. The rest of the relationships in the De La Sala family have been meticulously addressed in the S 178 HC Judgment at [7]–[14]. For the present purposes, it is relevant to know the relationships between the key members of the De La Sala family. These were set out in the S 178 CA Judgment at [11]–[12] as follows: 11 The [S 178 HC Judgment] sets out the relationships in the De La Sala family in great detail (at [7]–[14]). Since many of these background facts are not disputed and not material for the purposes of the present appeals, we will not repeat them except to introduce the key members of the family who are involved in the present state of affairs: (a) Robert Perez De La Sala Sr (“Robert Sr”) and Camila Vasquez De La Sala (“Camila”) were the patriarch and matriarch of the De La Sala family before their deaths in 1967 and 2005, respectively. Camila was the sole beneficiary of Robert Sr’s will. Robert Sr was the reason for the family’s tremendous wealth as he was a successful self-made businessman. He rose to become the chairman and majority shareholder of the shipping company John Manners and Company Limited (Hong Kong) (“JMC”), which was to be one of the key assets of the De La Sala family. Robert Sr also incorporated Lasala Investments Limited (“LIL”) in 1939, which was an investment company under his control. LIL was renamed North Enterprises Limited (“NEL”) some time after June 1959. In his later years, Robert Sr was preoccupied with reducing his exposure to estate duty as evidenced by his correspondence with his sons prior to his death. By the time of Robert Sr’s death, he had long divested himself of his shareholdings in JMC and NEL, which held much of his wealth. (b) Robert Sr and Camila had four children in the following order: Jerome Anthony Perez De La Sala (“Tony”), Ernest, Robert Perez De La Sala (“Bobby”) and Isabel Brenda Koutsos (“Isabel”). Camila and the four children were known collectively as “JERIC”. We will refer to Camila, Bobby, Isabel and Tony as “JRIC”. Ernest, apparently the most commercially astute of the four children, took over the management of the family’s business interests and assets after the death of Robert Sr, and was the de facto head of the De La Sala family after Camila’s passing. Ernest was the one who was responsible for heavily restructuring the family’s business interests and assets after Robert Sr’s death. As de facto head of the family, he was based outside of Australia, unlike the rest of the family, for tax planning purposes, and disbursed funds to the rest of the family regularly. Ernest was married to Hannelore de Lasala-Debring (“Hannelore”), but they were divorced in May 1970. Hannelore gave evidence in S178 and independently brought fresh proceedings in HCMP1029/2013 against Ernest in Hong Kong (“the Hong Kong proceedings”) 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. Ernest’s witness statements in the Hong Kong proceedings are the subject of some summonses filed in these appeals (see [71] below). (c) Edward De La Sala (“Edward”) and Christina De La Sala (“Christina”) are Bobby’s children, and the nephew and niece of Ernest. Christina married James Copinger-Symes (“James”). They are the defendants in counterclaim in S178 and will be referred to collectively as “ECJ”. ECJ came to Singapore in 2004–2005, having allegedly been invited by Ernest to come here to join him in the management of the Companies (and by extension, the De La Sala family’s assets). The nature and effect of Ernest’s representations to ECJ are issues on appeal. 12 The directors of the Companies are all members of the De La Sala family. ECJ, Isabel and Ernest are directors of CFC, PEN, PAL, DOM and SMC. ECJ and Ernest are the directors of JMM. Edward and James were also shareholders with 5,000 shares each in SMC, but they purportedly held these shares on trust for PEN pursuant to deeds of trust.

Serious disputes between Ernest and the other De La Sala family members

The main rift in the family arose as a result of a breakdown in relationship between two factions sometime in August 2011.⁵ This was between Ernest and Edward De La Sala (“Edward”), Christina De La Sala (“Christina”) and James, collectively known as “ECJ”.

Between 2004 and 2011, ECJ had actively been managing the assets held by the Plaintiff Companies, under the direction of Ernest, as it was time for the next generation to “take on the baton” to run the family business.⁶ The relationship between ECJ and Ernest took a nose dive in August 2011, when Ernest instructed ECJ to remit all US dollar deposits held in Singapore to CFC’s account with UBS Bank (Canada) Vancouver, which was under Ernest’s control.⁷ Although ECJ were puzzled at these instructions, which left no funds for them to manage in Singapore, Edward testified that they complied as they trusted Ernest and were “generally deferential” to him.⁸ However, Ernest then informed ECJ that they were placed on “permanent holiday, [and that] he had made a burden for himself (in reference to [ECJ])”.⁹ It was also at this point that Ernest alleged that the Plaintiff Companies’ assets belonged to him.¹⁰ This allegation spurred ECJ to pass resolutions on 8 August 2011 to limit Ernest’s authority to operate as sole signatory for the accounts of PAL, CFC and DOM with UBS Bank (Canada) Vancouver.¹¹ The effect of these resolutions sent Ernest into a rage, who then complained to Isabel who in turn contacted Edward and Christina’s father, Robert Perez De La Sala (“Bobby”). Eventually, after Isabel had spoken to Bobby, ECJ relented and reversed their earlier resolutions.¹²

Subsequently, in an email marked “lo siento mucho” (translated to mean “I’m very sorry” in Spanish),¹³ Edward apologised to Ernest for the role that he had played in passing the resolutions,¹⁴ but Ernest did not respond. ECJ then collectively emailed Ernest to apologise.¹⁵ This also elicited no reply from Ernest. However, ECJ received, inter alia, an email from Isabel via Bobby, berating them for their actions.¹⁶ Over the next few months, ECJ discovered that Ernest had been transferring assets from the various family companies to his UBS Bank (Canada) personal account (the “Personal UBS Account”). These were...