Dinesh Kishin Kikla (as Administrator of the Estate of Lalitha Kishin Kikla also known as Lalita Kishin Kikla, Deceased) v The Hong Kong and Shanghai Banking Corporation Limited and others

CourtHigh Court (Singapore)
JudgeChee Min Ping AR
Judgment Date19 February 2013
Neutral Citation[2013] SGHCR 06
Citation[2013] SGHCR 06
Hearing Date31 January 2013
Docket NumberSuit No 76 of 2012 (Summons No 4327 and 4911 of 2012)
Published date21 May 2013
Plaintiff CounselHri Kumar, SC and Melissa Liew (instructed) and Godwin Campos (Godwin Campos LLC)
Defendant CounselLee Eng Beng, SC, Disa Sim, Jonathan Lee and Ng Kexian (Rajah & Tann LLP)
Subject MatterCivil Procedure
AR Chee Min Ping: Introduction

The first and second defendants respectively made the present two applications, viz, for a stay of the present suit in favour of the courts of the United Arab Emirates (“UAE”) on the basis that the UAE is the clearly more appropriate forum for the trial of the present proceedings, and for the setting aside of an order granting leave to the plaintiff to serve the writ of summons out of jurisdiction on the second defendant pursuant to O 12 r 7(1) of the Rules of Court (Cap 322, R5, 2006 Rev Ed).

Background Facts

The undisputed facts are as follows. The plaintiff, Dinesh Kishin Kikla, is the co-administrator of the estate of his late mother, Lalitha Kishin Kikla, also known as Lalita Kishin Kikla (“Lalitha”). Lalitha was resident in Dubai at all material times. When Lalitha passed away intestate on 10 January 2001, she left behind the amounts of US$4,476,765.32 and US$707,947.99 respectively in two fixed deposit accounts which she held with the first defendant, The Hongkong and Shanghai Banking Corporation Limited, a Singapore registered branch (“HSBC Singapore”). These monies were originally held with the second defendant, but were transferred to HSBC Singapore in or around November 1999. The second defendant is HSBC Bank Middle East Limited (“HSBC Middle East”), a Dubai registered branch of the same banking group.

Lalitha’s husband, one Kishin Kikla, was during all material times a director, shareholder and manager of two companies operating in Dubai, namely, Building Material Enterprises (LLC) and Kikla Trading Company (collectively, “Kishin Kikla’s companies”). Kishin Kikla’s companies were granted overdraft facilities (collectively, the “Overdraft Facilities”) by HSBC Middle East some time in the year 2000 and 1999 respectively. Kishin Kikla was the personal guarantor of the Overdraft Facilities.

Some time before Lalitha passed away, she signed an Authorisation Letter authorising HSBC Singapore to accept instructions from Kishin Kikla in respect of the renewal of her fixed deposit accounts in HSBC Singapore.

It subsequently transpired that on or around 9 May 2001 (after Lalitha had passed away), the amounts of US$4,100,000 and US$683,075.12 respectively were transferred out of Lalitha’s fixed deposit accounts with HSBC Singapore to HSBC Middle East for the purpose of discharging the outstandings owing under the Overdraft Facilities. This transaction was effected notwithstanding that no authorisation was received from Lalitha’s estate. It was not disputed that the transfer was effected upon the instructions of Lalitha’s husband, Kishin Kikla, who has since passed away on 13 January 2002.

The third defendant, Namrata Agarwal also known as Namrata Kikla d/o Kishan Kikla, is the plaintiff’s sister and the co-administrator of Lalitha’s estate. She was joined as a defendant in this suit as required by law, although no substantive claims have been made against her. She is also the sole administrator of the estate of the late Mr Kishin Kikla. For ease of reference, any reference to “the defendants” in this judgment shall be construed as a reference to HSBC Middle East and HSBC Singapore, the substantive defendants in this suit.

The plaintiff’s claim

The plaintiff brought the present action against the first defendant, alleging: wrongful debit by the first defendant of the total sum of US$4,783,075.12 in breach of the first defendant’s mandate; alternatively, failure to repay the Estate all monies standing under Lalitha’s fixed deposit accounts , in respect of which the first defendant is indebted to Lalitha’s estate; and breach of an implied term of contract between the first defendant and Lalitha to exercise reasonable care and skill, alternatively, negligence, in effecting the transfer of the monies in Lalitha’s fixed deposit accounts to the second defendant.

As against the second defendant, the plaintiff alleges that: the monies were paid by the first defendant to the second defendant under a mistake of fact; and dishonest assistance or knowing receipt, as the second defendant had received the total sum of US$4,783,075.12, being proper which was the subject of fiduciary duties with knowledge that it was such property, and that Kishin Kikla’s instructions to call on the fixed deposits was a fraudulent breach of such fiduciary duties.

In the affidavits filed and submissions made by the first and second defendants, it was made apparent that a possible defence is that a security interest had been granted by Lalitha during her lifetime in favour of the second defendant, over her fixed deposits as security in the event of default on the Overdraft Facilities. In the second affidavit filed on behalf of HSBC Middle East, its legal counsel, Nasreen Bulos stated that Lalitha had signed certain contractual documents, including a “Pledge Agreement Securing Third Party Obligations”, an “Irrevocable Personal Guarantee” and a “Third Party Guarantee” (collectively, the “HSBC Middle East Securities”) in favour of HSBC Middle East, that purportedly had the effect of creating a lien over the monies in Lalitha’s fixed deposit accounts which were held in HSBC Middle East. Lalitha then authorised the transfer of her fixed deposits from HSBC Middle East to HSBC Singapore in or around November 1999, and HSBC Middle East instructed HSBC Singapore to hold the monies on lien for the benefit of HSBC Middle East. Although the documents constituting the HSBC Middle East Securities were blank (HSBC Middle East’s officers did not sign on these documents and various fields for material information were left blank) save for what appeared to be standard terms and Lalitha’s signature, the defendants maintained that this was their case, and that the merits of their defence was a matter for trial, and not relevant for the purposes of the present applications.

A document entitled “Security Over Deposits with the Bank” was heavily relied on by HSBC Middle East and HSBC Singapore, as evidence that the monies were held subject to the rights granted by Lalitha to HSBC Middle East pursuant to the HSBC Middle East Securities. This document was allegedly executed to give effect to HSBC Middle East’s intention that the fixed deposits be held on lien for its benefit, and was allegedly executed by HSBC Singapore as agent of HSBC Middle East. It is however important to note that the agreement “Security Over Deposits with the Bank” was executed only with respect to the deposit amount of US$661,318.23 with respect to an account number [xxx], which is not the account number of either of the fixed deposit accounts. Bulos also alleges that the arrangement between the first and second defendants are evinced by an internal memorandum dated 24 November 1999 from HSBC Middle East to HSBC Singapore stating that the following:

Please note that the fixed deposits is [sic] under lien to HSBC Bank Middle East, Dubai (the larger amount) and the second deposit is under lien to HSBC Middle East, Deira Branch, Dubai.

The defendants also relied on various letters between Kishin Kikla’s companies and HSBC Middle East, in which contemporaneous references were made of HSBC Middle East’s and Kishin Kikla’s companies’ understanding that the Overdraft Facilities were secured by lien with HSBC Singapore over Lalitha’s fixed deposits. The issues arising in this suit

In the present case, although parties appear to take disparate views as to what are the true issues in dispute in this case, it nevertheless appeared that the case turned on the following issues: Did Lalitha grant to HSBC Singapore a security interest over the fixed deposits which she had in Singapore, as security for default on the Overdraft Facilities? If so, what were the terms of the security agreement and did HSBC Singapore transfer the fixed deposits to HSBC Middle East in accordance with the terms of the security agreement? Once the above issues have been settled, the plaintiff’s claims against HSBC Singapore would be determined. If it is established that HSBC Singapore transferred Lalitha’s fixed deposits to HSBC Middle East in the absence of a security agreement, then the plaintiff would be required to establish wrongdoing on HSBC Middle East’s part, ie, that HSBC Middle East dishonestly assisted in a breach of fiduciary duties, or knowing received monies that were paid pursuant to a breach of fiduciary duties.

The applicable legal principles

The applicable general principles were laid down in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, which has been cited with approval and applied on many occasions in Singapore (see JIO Minerals FZC and others v Mineral Enterprises Ltd [2011] 1 SLR 391 (“JIO Minerals”) at [38]) and summarised by the Court of Appeal in CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 at [26]:

... a stay will only be granted where the court is satisfied that there is some other available and more appropriate forum for the trial of the action. The burden of establishing this rests on the defendant and it is not enough just to show that Singapore is not the natural forum or appropriate forum. The defendant must also establish that there is another available forum which is clear or distinctly more appropriate than Singapore. The natural forum is one with which the action has the most real and substantial connection. In this regard, the factors which the court will take into consideration include not only factors affecting convenience or expense (such as availability of witnesses) but also other factors such as the law governing the transaction and the places where the parties respectively reside or carry on business. If the court concludes, at this stage of the inquiry (“stage one of the Spiliada test”), that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. If, at this stage, it concludes that...

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