Ernest Ferdinand Perez De La Sala v Compañía De Navegación Palomar, SA and others

• Jurisdiction: Singapore
• Judge: Steven Chong JA
• Judgment Date: 27 March 2020
• Neutral Citation: [2020] SGCA 24
• Docket Number: Civil Appeal No 193 of 2019
• Date: 27 March 2020
• Published date: 02 April 2020
• Plaintiff Counsel: Chelva Retnam Rajah SC (Tan Rajah & Cheah) (instructed), Joan Peiyun Lim-Casanova and Tay Jia Wei Kenneth (Cavenagh Law LLP)
• Defendant Counsel: Thio Shen Yi SC, Koh Li Qun Kelvin, Niklas Wong See Keat and Benjamin Niroshan Bala (TSMP Law Corporation),Adam Muneer Yusoff Maniam, Tan Yuan Kheng, and Sam Yi Ting (Drew & Napier LLC)
• Court: Court of Appeal (Singapore)
• Hearing Date: 14 January 2020
• Subject Matter: Beneficiaries,Mareva injunctions,Statutory jurisdiction of court,Inherent jurisdiction of court,Variation,Resulting trusts,Trusts,Injunctions,Presumed resulting trusts,Civil Procedure

Steven Chong JA (delivering the grounds of decision of the Court): Introduction

Various types of injunctive relief have been developed by the courts to address different situations. They are governed by different sets of principles though they share some common features. Therefore, to ensure that the correct set of principles is applied, it is first important to understand the specific type of injunction that is in play. The difficulty in identifying and applying the correct principles may be complicated by the fact that different types of injunctions have been issued in the same action.

The appeal arose from a complicated and drawn-out dispute over very substantial assets which were eventually found to be held on resulting trust. Over the course of the convoluted litigation, the court issued both Mareva as well as proprietary injunctions. Several applications were filed to vary the injunctions and at times, the distinction between the Mareva and proprietary injunction might not have been properly appreciated.

At the heart of this appeal lies the essential question as to the circumstances under which a defendant can be permitted to invoke the Trustees Act (Cap 337, 2005 Rev Ed) (“Trustees Act”) and the court’s inherent jurisdiction to permit a withdrawal of funds seized under a proprietary injunction for living, legal and other expenses. We heard and dismissed the appeal on 14 January 2020. We now provide our detailed grounds of decision.

Background

This was an appeal by Ernest Ferdinand Perez De La Sala (“Ernest”), the defendant in the underlying Suit No 178 of 2012 (“Suit 178”), against the High Court Judge’s dismissal of his application in Summons No 2794 of 2019 (“SUM 2794”). SUM 2794 was for a variation of an order of court dated 25 January 2013 (the “Proprietary Injunction”) (as previously varied pursuant to an order of court dated 6 April 2018), to allow the release of the following funds from the account holding the enjoined sums: US$60,000 per month, to be released to Ernest’s personal bank account; and US$6m as a lump sum for legal expenses reasonably incurred, to be released to Cavanagh Law LLP, Ernest’s lawyers.

SUM 2794 was filed pursuant to s 56 of the Trustees Act and/or the inherent jurisdiction of the court in Suit 178. In essence, Ernest sought the court’s exercise of its jurisdiction to release, from trust assets, the requested moneys for his living and legal expenses.

The Judge below dismissed SUM 2794. Instead, he varied a previously-granted carve-out of a Mareva injunction (which is distinct from the Proprietary Injunction), such that Ernest was permitted to spend S$10,000 per week on living expenses and S$40,000 per week on legal expenses.

The parties in Suit 178

Ernest had taken over his family business and assets following his father’s death. This included the management of the first to sixth respondents in this appeal (the first to sixth plaintiffs and fourth to ninth defendants in the counterclaim in Suit 178) (“the Companies”). In the course of such management, Ernest had transferred to himself certain assets of the Companies (“the Assets”). Suit 178 was brought by the Companies to seek, in the main, (a) recovery of the Assets; and (b) a declaration that the Assets in each of their names belonged absolutely to each of them. Ernest’s defence was that he was the sole and beneficial owner of the Companies and the Assets.

The key members of the family involved in the dispute in Suit 178 were Ernest’s mother and three siblings. Ernest, his siblings and his mother were referred to collectively in the proceedings below as “JERIC”, while JERIC sans Ernest was referred to as “JRIC”. For consistency, we adopt these abbreviations here.

The seventh to ninth respondents in this appeal, which we refer to collectively as “ECJ”, were involved in the management of the Companies as directors.

Procedural history

The Proprietary Injunction was granted by an order of court dated 25 January 2013, following the Companies’ application in Summons No 1098 of 2012 for an injunction “to preserve and restore assets of the Compan[ies]”. Ernest had moved monies from the Companies out of their accounts, and the Proprietary Injunction compelled Ernest to procure the transfer of the sum of US$200m to an account with Credit Suisse AG in the name of John Manners And Co (Malaya) Pte Ltd, the fourth respondent (“the Injunction Account”).

The Proprietary Injunction was thereafter varied on several occasions. Notably, the enjoined sum in the Injunction Account was increased to US$250m on 17 May 2017.

On 22 March 2018, the Court of Appeal pronounced judgment on the appeals arising out of the High Court’s decision in Suit 178 – Civil Appeals Nos 34, 35, 59 and 60 of 2017 – as reported in Ernest Ferdinand Perez De La Sala v Compañia De Navegación Palomar, SA and others and other appeals [2018] 1 SLR 894 (“Ernest Ferdinand Perez De La Sala (CA)”). Therein, this Court found that: Ernest is not the sole beneficial owner of the Companies or the Assets (at [154]). The Companies are also not the absolute owners of the Assets. Instead, by operation of a presumption of resulting trust, the Companies hold the Assets on resulting trust for two Hong Kong companies, Northern Enterprises Ltd (“NEL”) and John Manners and Company Limited (Hong Kong) (“JMC”) (at [121]–[124] and [155]). It was clear that a significant portion of the Assets existed for the benefit of JRIC in addition to Ernest, and that Ernest and JRIC had beneficial interests in NEL and JMC. The court held that the issues of precisely who else had a beneficial interest in the Assets, and what the nature and proportion of that beneficial interest is, did not arise to be determined in Suit 178 (at [5], [144] and [186]).

Thereafter, in Summons No 1587 of 2018 (“SUM 1587”), the Companies sought a further proprietary injunction over the portion of the Assets which were held in Ernest’s personal accounts with UBS Bank (Canada) and UBS AG (Singapore branch) (“the SUM 1587 proprietary injunction”). On 6 April 2018, upon Ernest’s counsel’s request, the Judge granted a lump sum carve out of S$500,000 for Ernest’s living and medical expenses on compassionate grounds (the “S$500,000 Carve-out”). Ernest was, however, to file an affidavit within two weeks of the hearing to justify this carve-out, and to state whether he had any other funds elsewhere. However, Ernest later declined to file this affidavit. As a result, on 21 May 2018, the S$500,000 Carve-out was rescinded. On the same day, the SUM 1587 proprietary injunction was granted.

On 7 March 2019, the Companies applied (vide Summons No 1168 of 2019) for a worldwide Mareva injunction over the assets in Ernest’s name and/or under his control up to US$430m (the “Mareva Injunction”). This was the difference between the amount of the Assets Ernest was obliged to account for arising from this court’s decision in Ernest Ferdinand Perez De La Sala (CA) (ie, over US$680m) and the enjoined sum pursuant to the varied Proprietary Injunction (ie, US$250m). On 12 March 2019, the Mareva Injunction for US$430m was granted. The Order of Court further stated that “[f]or the avoidance of doubt, the sum of US$430,000,000 enjoined [under the Mareva Injunction] shall include all sums enjoined [under the SUM 1587 proprietary injunction]” (see [13] above).

Alongside the Mareva Injunction, several conditions were imposed by the court: The Mareva Injunction was subject to a carve-out (the “Mareva Carve-out”): Ernest was allowed to spend S$5,000 a week towards his ordinary living expenses and S$20,000 a week on legal advice and representation. The Mareva Carve-out was subject to the following conditions: before spending any money, Ernest was to inform the Companies’ solicitors where the money was to come from; and the assets spent was not to be derived from the Assets which the Companies held on trust. In addition, Ernest was to disclose all assets worldwide in which he had any interest whatsoever, giving the value, location and details including the nature of interest of all such assets, via an affidavit (“Disclosure Affidavit”). It should be noted that, from this juncture onwards, both the Mareva Injunction and the Proprietary Injunction were in force concurrently. Ernest’s Disclosure Affidavit (his 72nd affidavit) was filed on 27 March 2019.

On 12 March 2019, Originating Summons No 317 of 2019 (“OS 317”) was filed by the Companies for a determination of the precise beneficial interests, whether direct or indirect, in the Assets found to be held on resulting trust by the Companies for NEL and JMC. This was the issue left outstanding in Ernest Ferdinand Perez De La Sala (CA). OS 317 was pending before the courts at the time of the hearing of this appeal.

Coming back to SUM 2794, which was filed on 6 June 2019, the application was for a variation of the Proprietary Injunction to permit trust assets (ie, the Assets held on trust by the Companies) to be released, in the amount of US$60,000 per week for living expenses and a lump sum of US$6m for legal expenses incurred before or after the date of SUM 2794. At the hearing on 8 July 2019, the Judge directed that Ernest file a further affidavit to justify the orders sought in SUM 2794. Ernest filed his 77th affidavit on 15 July 2019, and the hearing was resumed on 22 October 2019. At this second hearing, the Judge dismissed SUM 2794. The Judge, however, accepted the Companies’ submission that a variation of the Mareva Carve-out was more appropriate than a variation of the Proprietary Injunction. The Judge therefore doubled the Mareva Carve-out: Ernest was thereby allowed to spend S$10,000 a week towards his ordinary living expenses and S$40,000 a week on legal advice and representation. Ernest thereafter brought this appeal, ie, Civil Appeal No 193 of 2019 (“CA 193”), against the Judge’s dismissal of SUM 2794.

Decision...