EFT Holdings, Inc. v Marinteknik Shipbuilders (S) Pte Ltd

CourtHigh Court (Singapore)
Judgment Date11 December 2012
Docket NumberSuit No 571 of 2010
Date11 December 2012
EFT Holdings, Inc and another
Marinteknik Shipbuilders (S) Pte Ltd and others

Belinda Ang Saw Ean J

Suit No 571 of 2010

High Court

Conflict of Laws—Choice of law—Tort—Meeting where misrepresentations made occurred in Taiwan—Documents involved in misrepresentations executed in Singapore—Whether unlawful means conspiracy committed in Singapore or Taiwan—Whether double actionability rule applied

Res Judicata—Issue estoppel—Share subscription agreement adjudicated in Taiwan—Whether plaintiff estopped from bringing claim on same agreement

Tort—Conspiracy—Unlawful means conspiracy—Documents shown to plaintiff without knowledge of first and second defendants—Plaintiff induced to invest by misrepresentations contained therein—Whether unlawful means conspiracy between all four defendants made out

The plaintiffs in this action claimed, inter alia, damages or a refund of the US$19.193 m that the first plaintiff, EFT Holdings Inc, a publicly trading company incorporated in the USA, invested in Excalibur International Marine Corporation, (‘EIMC’), a Taiwanese company, by subscribing for 48.81% of the ordinary shares in EIMC. The second plaintiff, EFT Investment Co Ltd, was a company incorporated in Taiwan to hold the new share allotments. EIMC held a licence to operate a ferry service across the Straits of Taiwan between Taiwan and China (‘the cross-strait ferry service’).

On 30 June 2008, EFT Holdings Inc and EIMC executed two documents: a subscription agreement (‘the Subscription Agreement’) and a loan agreement (‘the loan agreement’). The Subscription Agreement dealt with the allotment of shares to EFT Investment Co Ltd. The loan agreement provided that EFT Holdings Inc provide the bulk of the purchase price (the deposit of which had already been paid by EIMC) for a second-hand catamaran, the OCEAN LALA.

EFT Holdings Inc and EFT Investment Co Ltd (collectively ‘EFT’) subsequently took over management of EIMC in November 2008. EIMC's cross-strait ferry services started in June 2009. The OCEAN LALA, the vessel deployed for the cross-strait ferry service, sustained severe weather damage during one of the regular ferry crossings on 8 August 2010. The OCEAN LALA was taken out of service and was later declared a constructive total loss.

EFT brought suit in Singapore. EFT's case was that it was injured by an unlawful combination of the four defendants. The first defendant, Marinteknik Shipbuilders (S) Pte Ltd (‘Marinteknik’), was a Singapore-incorporated company which was in the business of building and repairing ships, tankers and other ocean-going vessels. The second defendant, Lim Lan Eng Priscilla (‘Priscilla’) was a director of Marinteknik. The third defendant, Hsiao Zhong-Xing, was at all material times a director of EIMC while the fourth defendant, Lu Tso-Chun was a shareholder of EIMC but it was alleged that he never paid for his shares. The third and fourth defendants did not enter an appearance to the Singapore Action and default judgment was entered against them. The fourth defendant and Marinteknik had previously entered into an agreement in 2005 for the purchase of two vessels, Hull 189And Hull 190. This was later novated to EIMC.

EFT pointed to the following documents (‘the Presentation Documents’) which had been shown to it at a meeting on 24 June 2008 (‘the 24 June 2008 meeting’): Shipbuilding Contracts dated 15 November 2005 and Transfer Affidavits dated 24 April 2007 (‘the Transfer Affidavits’) in relation to Hulls 189And 190, Lloyd's Register certificates and valuation reports for Hulls 189And 190, EIMC's financial statements for the financial year ended 31 December 2007, and an investment agreement dated 11 July 2006 (‘the Investment Agreement'). EFT's managing director, Mr Jack Qin, was told that the Presentation Documents, with the exception of the Investment agreement, had been prepared by Marinteknik and Priscilla (collectively ‘the Singapore defendants’). The Transfer Affidavits stated that EIMC had ownership of Hulls 189And 190. This was inaccurate. The Transfer Affidavits were thus accompanied by addenda (‘the addenda’) which corrected this understanding. The third defendant intentionally withheld the addenda at the 24 June 2008 meeting. EFT alleged that (a)through these false documents created by the defendants and (b)the withholding of the addenda EIMC was able to increase its paid-up capital. The inflated paid-up capital misled EFT into investing in EIMC, believing that EIMC was a financially robust company with a paid-up capital of US$17 m.

The Singapore defendants rejected the conspiracy charge by denying any participation in any unlawful means conspiracy to injure EFT. Priscilla claimed that the Transfer Affidavits had been executed for the sole purpose of allowing EIMC to obtain bank financing to buy Hulls 189And 190. With respect to EFT, Priscilla said that she had never heard of EFT before and had no knowledge of the existence of EFT and EFT's investment in EIMC until EFT took out pre-action discovery proceedings against the Singapore defendants in or around December 2009. The Singapore defendants also contended that EFT was estopped on the basis of res judicata as a claim arising out of the share subscription agreement would also involve the status of the shares issued to the fourth defendant, which matter had already been adjudicated by the Taichung District Court.

Held, dismissing the claim:

(1) Since the series of events constituting the tort substantially took place in Taiwan, the double actionability rule required EFT to show that the wrongs were actionable under Taiwan law and Singapore law. The Transfer Affidavits and addenda were signed in Singapore, nothing else happened thereafter in Singapore. Under the law on unlawful means conspiracy, the existence of an agreement alone was not good enough. The conspiracy was committed only if the agreement was implemented. The unlawful acts occurred in Taiwan, viz, the 24 June 2008 meeting wherein the alleged misrepresentations were made, the transfer of funds for investment from EFT to EIMC, and the setting up of a shell company to hold the shares in EIMC. Since it was EFT that was suing the Singapore defendants for a wrong committed in Taiwan, and the alleged wrong related to the events from 23 June 2008, evidence ought to have been led by EFT that there was civil liability in respect of the very same claim that was being made in Singapore (ie,the lex fori). This was not shown. EFT's action was dismissed for this reason: at [77], [79], [86] and [88].

(2) A defendant was not guilty of conspiracy unless he entered into an agreement or a combination with two or more persons with a common objective of effecting an unlawful act rendering this agreement or a combination unlawful. A person (in the position of the Singapore defendants) who knew that unlawful acts were being committed and who did nothing to stop those acts was not ipso facto a party to a conspiracy to carry out those acts. There was no evidence of an agreement between the four defendants to resurface and reuse the Transfer Affidavits and Tripartite agreement at the 24 June 2008 meeting to deceive EFT into investing in EIMC. The Transfer Affidavits had an expiry date of 24 July 2007. The intended transaction was not completed by 24 July 2007. After that, and by the 28 June 2008 meeting, no further representation could arise from the use of the Transfer Affidavits. An unlawful means conspiracy was thus not made out: at [125], [126], [133], [137].

(3) The Transfer Affidavits did not immediately reveal that EIMC's paid-up capital had increased - for that, Mr Qin would have had to go to the balance sheet and the audited financials and not on the Transfer Affidavits, which would not have given him at a glance the financial information showing EIMC's inflated paid-up capital, a misrepresentation he claimed he based part of his decision on: at [132].

(4) For an unlawful conspiracy to be made out, the defendant had to intend to injure the claimant. There was no intent to injure EFT. The contents of the Transfer Affidavits were plainly false and designed to mislead the banks that Mr Lu and EIMC had paid for Hulls 189And 190. However, at that stage, Priscilla was not told that EIMC was seeking to raise finance by way of an equity placing with investors to buy Hulls 189And 190. During this period of time (24 April 2007 to 24 July 2007), the defendants and EIMC would know that any loan to buy the two hulls would be from the Industrial Bank of Taiwan. There was no evidence that the Singapore defendants intended that a potential fund provider would have relied on the Presentation Documents or that they knew that the Presentation Documents would be used to defraud potential fund providers appearing in June 2008 in connection with a different transaction: at [135], [150] and [153].

(5) Issue estoppel did not apply. The operation of the doctrines of res judicata and abuse of process was qualified in respect of foreign judgments, with the prerequisite that the foreign judgment be recognised in Singapore for it to have any effect. There was no evidence that the Taiwanese judgments were recognised in Singapore: at [154] and [156].

Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2010] Bus LR Digest 1 (refd)

Beckkett Pte Ltd v Deutsche Bank AG [2009] 3 SLR (R) 452; [2009] 3 SLR 452 (refd)

Chew Kong Huat v Ricwil (Singapore) Pte Ltd [1999] 3 SLR (R) 1167; [2000] 1 SLR 385 (refd)

Chua Kwee Chen v Koh Choon Chin [2006] 3 SLR (R) 469; [2006] 3 SLR 469 (refd)

De Krassel v Chu Vincent [2010] 2 HKLRD 937 (refd)

Goh Chok Tong v Tang Liang Hong [1997] 1 SLR (R) 811; [1997] 2 SLR 641 (distd)

Grupo Torras SA v Al-Sabah (No 5) [1999] CLC 1469 (refd)

H (Minors) , Re [1996] AC 563 (refd)

Hornal v Neuberger Products Ltd [1957] 1 QB 247 (refd)

JSI Shipping (S) Pte Ltd v Teofoongwonglcloong...

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9 cases
  • EFT Holdings, Inc. v Marinteknik Shipbuilders (S) Pte Ltd
    • Singapore
    • Court of Appeal (Singapore)
    • 29 November 2013
    ...of an alleged conspiracy by unlawful means. The Judge's decision is reported as EFT Holdings, Inc v Marinteknik Shipbuilders (S) Pte Ltd[2013] 1 SLR 1254 (‘the Judgment’). The present appeal raises some important issues as to the requisite mental element that must be established to sustain ......
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  • Nava Bharat (Singapore) Pte Ltd v Straits Law Practice LLC and another and another suit
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    ...knowledge but also share the common objective. In EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and others [2013] 1 SLR 1254 (“EFT Holdings (HC)”) at [125], Ang J observed “for the sake of argument” that a person who knew that unlawful acts were being committed but di......
  • EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another
    • Singapore
    • Court of Appeal (Singapore)
    • 29 November 2013
    ...by unlawful means. The Judge’s decision is reported as EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and others [2013] 1 SLR 1254 (“the Judgment”). The present appeal raises some important issues as to the requisite mental element that must be established to sustain a......
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3 books & journal articles
    • Singapore
    • Singapore Academy of Law Journal No. 2016, December 2016
    • 1 December 2016
    ...Limitation Periods Act 2012 (Act 13 of 2012). 44[2014] 1 SLR 860 (CA), reversing EFT Holdings Inc v Marinteknik Shipbuilders (S) Pte Ltd[2013] 1 SLR 1254 45EFT Holdings Inc v Marniteknik Shipbuilders (S) Pte Ltd[2014] 1 SLR 860 at [60]. 46EFT Holdings Inc v Marniteknik Shipbuilders (S) Pte ......
  • Conflict of Laws
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    • Singapore Academy of Law Annual Review No. 2013, December 2013
    • 1 December 2013
    ...are relevant to the field of conflict of laws. 11.3 Further, two cases in 2013, EFT Holdings, Inc v Marinteknik Shipbuilders (S) Pte Ltd[2013] 1 SLR 1254 and Global Distressed Alpha Fund I Ltd Partnership v PT Bakrie Investindo[2013] 2 SLR 228 have already been considered in last year's SAL......
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    • Singapore Academy of Law Annual Review No. 2016, December 2016
    • 1 December 2016
    ...SE v MAN Diesel & Turbo SE [2016] SGHCR 6 at [142]–[145]. 21 [2016] SGHC 200. 22 See para 11.18 above. 23 See para 11.22 above. 24 [2013] 1 SLR 1254. 25 [2008] 2 SLR(R) 491. 26 [2014] 1 SLR 860. 27 See para 11.41 above. 28 [1971] AC 356. 29 IM Skaugen SE v MAN Diesel & Turbo SE [2016] SGHCR......

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