EFG Bank AG, Singapore Branch v Teng Wen-Chung

JurisdictionSingapore
JudgeGeorge Wei J
Judgment Date15 December 2017
Neutral Citation[2017] SGHC 318
CourtHigh Court (Singapore)
Docket NumberSuit No 1297 of 2015 (Registrar’s Appeal No 59 of 2017)
Year2017
Published date09 October 2018
Hearing Date18 April 2017
Plaintiff CounselAndre Francis Maniam SC, Lionel Leo Zhen Wei and Russell Pereira Si-Hao (WongPartnership LLP)
Defendant CounselKenetth Jerald Pereira and Lai Yan Ting (Aldgate Chambers LLC)
Subject MatterContract,Illegality and Public Policy,Conflict of Laws,Choice of Law,Effect of Illegality of Related Contract
Citation[2017] SGHC 318
George Wei J: Introduction

The plaintiff is the Singapore branch of EFG Bank AG, a bank incorporated in Switzerland. In these grounds of decision, all branches of EFG Bank AG other than the plaintiff will be referred to as “EFG Bank”. The defendant, Teng Wen-Chung, is a Taiwanese national and also a citizen of the Commonwealth of Dominica. The present dispute concerns the defendant’s liability under an indemnity agreement to pay on demand all sums owed or payable by a third party to the plaintiff.

On 4 December 2015, the plaintiff issued a letter of demand to the defendant for payment of US$199,656,177.77 under the indemnity agreement. As the demand was not met, the plaintiff commenced High Court Suit No 1297 of 2015. On 23 September 2016, the plaintiff filed an application for summary judgment pursuant to O 14 r 1 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules”). The defendant’s response was to apply for leave to amend its defence as part of the attempt to resist summary judgment.

On 21 February 2017, the learned Registrar of the Supreme Court (“the Registrar”) allowed the defendant’s application to amend the defence. However, he also granted summary judgment to the plaintiff. The defendant appealed the grant of summary judgment in Registrar’s Appeal No 59 of 2017 (“RA 59”), while the plaintiff appealed the decision to allow the amendment in Registrar’s Appeal No 63 of 2017 (“RA 63”).

After hearing arguments on 18 April 2017, I dismissed both appeals. The defendant being dissatisfied has filed an appeal against my decision in RA 59. I now set out the reasons for my decision.

Facts Dramatis personae

Singfor Life Insurance Ltd (“Singfor”) is a Taiwanese life insurance company. The defendant was appointed Vice-Chairman of Singfor on 13 February 2007. The appointment took effect after it was confirmed by the Taiwanese Financial Supervisory Commission on 13 September 2007.1 Sometime in January 2008, the defendant became the Chairman of Singfor. He held this position until Singfor was placed under government receivership in August 2014.2 He was also a director and the majority shareholder of Singfor. According to the plaintiff, from about 2009, the defendant has held 99 percent of the shares in Singfor either under his own name or through various nominees.3

Surewin Worldwide Limited (“Surewin”) is a company incorporated in the British Virgin Islands. Surewin opened an account with the plaintiff on 30 May 2007.4 According to the plaintiff, a pledge was created that same day in respect of all assets which come into the possession or control of the plaintiff for the account of Surewin as a continuing security for the payment of “all monies and the performance of all current and future obligations to [the plaintiff] of [Surewin]” (“the Surewin Pledge”).5

High Grounds Asset International Ltd (“High Grounds”) is another company incorporated in the British Virgin Islands.6 High Grounds opened an account with the plaintiff on 23 May 2007.7 The same day, a pledge was created of all assets which come into the possession or control of the plaintiff for the account of High Grounds, also to secure Surewin’s liabilities to the plaintiff (“the High Grounds Pledge”).8

Singfor Tactical Asset Allocation Portfolio SA (“the STAAP Fund”) is a company incorporated in the Bahamas which also opened an account with the plaintiff, in July 2007.9 In August 2007, Singfor executed a “Custodian Agreement” appointing the plaintiff as its custodian, and a “Discretionary Management Mandate” granting EFG Bank the mandate to manage all its assets held in STAAP’s account. A pledge was created on 3 September 2007 over the assets held in STAAP’s account to secure Surewin’s liabilities to the plaintiff (“the STAAP Pledge”).10 The pledge was given in respect of the following:11

[a]ll monies and the performance of all current and future obligations to the Bank of the Borrower and (if different) the Pledgor … and the satisfaction of all liabilities present or future … for which the Borrower and (if different) the Pledgor is now or may at any time after the date of this Pledge be indebted or liable to the Bank …

The borrower was Surewin.12 The STAAP Pledge was expressly stated to be governed by the laws of Singapore.13

The SFIP-1 Unit Trust (“SFIP-1”) is a unit trust created by a Trust Deed dated 7 March 2008.14 Singfor is the sole unit holder of this unit trust.15 SFIP-1 opened a bank account with the plaintiff on 7 March 2008.16 At the same time, SFIP-1’s trustee, Volaw Corporate Trustee Ltd, created a pledge over SFIP-1’s assets in favour of the plaintiff in terms similar to the STAAP Pledge (“the SFIP-1 Pledge”).17 Again, this pledge was created to secure Surewin’s liabilities to the plaintiff.18 The SFIP-1 Pledge was also expressly stated to be governed by the laws of Singapore.19

It appears that Singfor is the ultimate beneficial owner of Surewin and High Grounds.20 According to the plaintiff, Singfor is also the ultimate beneficial owner of the STAAP Fund.21 The defendant disputes that Singfor is the ultimate beneficial owner of Surewin, High Grounds and the STAAP Fund,22 and avers that Singfor is the ultimate beneficial owner of Surewin and High Grounds only insofar as that is what has been stated in the relevant account opening documents with the plaintiff.23 The defendant maintains, however, that neither he nor Huang Cheng-Yi (“Huang”), who was the Chairman of Singfor in 2007, was aware that Surewin, High Grounds, or the STAAP Fund had been incorporated as Singfor’s beneficially owned companies.24

The genesis of the dispute The Loan Facilities

The plaintiff granted two loan facilities (“the Loan Facilities”) to Surewin in 2012 under the following facility letters: A facility letter dated 31 January 2012 as amended by facility letters dated 6 November 2012 and 6 June 2013 (“the January 2012 Facility Letter”).25 The January 2012 Facility Letter granted Surewin an overdraft and/or loan facility for up to US$240m (“the First Surewin Facility”).26 The purpose of the First Surewin Facility was stated as for “investments with and/or outside the Bank.”27 A facility letter dated 6 November 2012 (“the November 2012 Facility Letter”). The November 2012 Facility Letter extended an overdraft/loan for up to US$30m (“the Second Surewin Facility”). The purpose of the Second Surewin Facility was stated as “[t]o finance the single premium payments” for two life insurance policies issued on the life of the defendant (see [21] below). 28

Under cl 25 of the January 2012 Facility Letter and cl 23 of the November 2012 Facility Letter respectively, both of the Loan Facilities are expressly stated to be governed by Singapore law.29 The terms and conditions of the Loan Facilities are not in dispute.

The terms of the First Surewin Facility were governed by the January 2012 Facility Letter. Under cl 20 of the January 2012 Facility Letter, the plaintiff had the right to terminate the facility and declare all outstanding amounts due and payable upon the occurrence of certain “events of default”. These included the following events, “or events having materially the same effects” as the following events:30 Any encumbrancer taking possession of, or a trustee, receiver or similar officer being appointed in respect of all or any part of the assets of Surewin (cl 20(f) of the January 2012 Facility Letter); Any payment default or bankruptcy procedures or proceedings having materially the same effects against Surewin’s ultimate beneficial owner (cl 20(i) of the January 2012 Facility Letter).

The terms of the Second Surewin Facility were governed by the November 2012 Facility Letter. Clause 3 of the November 2012 Facility Letter provided that the plaintiff “[reserved] the right to terminate the Facility at any time at its sole discretion, and to demand with fourteen days’ notice payment in full of all amounts actually or contingently outstanding under the Facility”.31 Clause 18 of the November 2012 Facility Letter provided that the Second Surewin Facility was “subject to the [plaintiff’s] customary overriding right to require repayment on demand if in the [plaintiff’s] opinion it would be contrary to prudent banking practice for the Facility to continue for whatever reason”.32

Both the January 2012 Facility Letter and the November 2012 Facility Letter provided that the Loan Facilities were subject to the plaintiff’s general conditions (“General Conditions”), and that the General Conditions would prevail in the event of any conflict between the terms of the Facility Letters and the General Conditions.33 The General Conditions contained the following provisions:34 A certificate signed by an authorised signatory of the [plaintiff] or the [plaintiff’s] computer printout stating the amount due and owing from the Client under or in relation hereto and/or any other matter shall, in the absence of manifest error, be conclusive against and binding on the Client.

Notwithstanding the provisions of paragraph 41, the [plaintiff] shall have the right at its absolute discretion to terminate its business relationship with the Client at any time with immediate effect and without stating its reason. The [plaintiff] reserves the right, in particular, to cancel all credit committed or advanced, in which case all amounts owed to [the plaintiff] shall immediately become due and payable without prior notice…

41. Events of Default

An Event of Default shall occur and any security … shall immediately become exercisable without notice to the Client or any third party (and without being obliged to give any reason for the same) if any authorised signatory of the [plaintiff] shall certify in writing that in respect of the Client …. any of the following has occurred and that the [plaintiff] elects to treat the same as an Event of Default: any event occurs or circumstances exist...

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3 cases
  • Anuva Technologies Pte Ltd v Advanced Sierra Electrotech Pte Ltd and another suit
    • Singapore
    • High Court (Singapore)
    • 14 Octubre 2019
    ...High Court in Overseas Union Bank Ltd v Chua Kok Kay and another [1992] 2 SLR(R) 811 and EFG Bank AG, Singapore Branch v Teng Wen-Chung [2017] SGHC 318. It is apposite to begin by outlining the Court of Appeal’s decision in Teng-Wen Chung v EFG Bank AG, Singapore Branch [2018] 2 SLR 1145 (“......
  • Teng Wen-Chung v EFG Bank AG, Singapore Branch
    • Singapore
    • Court of Appeal (Singapore)
    • 4 Octubre 2018
    ...that arose in an appeal against the decision of the High Court judge (“the Judge”) in EFG Bank AG, Singapore Branch v Teng Wen-Chung [2017] SGHC 318 (“the GD”). After considering the parties’ submissions, we dismissed the appeal and now give the detailed grounds for our decision. Background......
  • BNP Paribas SA v Jacob Agam and another
    • Singapore
    • International Commercial Court (Singapore)
    • 15 Marzo 2018
    ...branch of BNPWM, later the Plaintiff. The decision of the Singapore High Court in EFG Bank AG, Singapore Branch v Teng Wen-Chung [2017] SGHC 318 at [55] is of relevance. In that case George Wei J accepted that: “the key obligation in a loan contract is generally the obligation to make payme......

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