Focus Energy Ltd v Aye Aye Soe

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 12 November 2008
• Neutral Citation: [2008] SGHC 206
• Date: 12 November 2008
• Subject Matter: Conflict of Laws,Whether Myanmar clearly more appropriate forum than Singapore,Relevant issues and evidence determining connecting factors to forum,Natural forum
• Docket Number: Suit No 65 of 2008 (Registrar's Appeal No 221 of 2008)
• Published date: 13 February 2009
• Defendant Counsel: Andy Chiok (Michael Khoo & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: Harish Kumar and Goh Seow Hui (Rajah & Tann LLP)

12 November 2008

Judith Prakash J:

1 This was a stay application by the defendant on the basis that Singapore was not the natural forum for the action. It was first heard before Assistant Registrar Teo Guan Siew (“the AR”) who dismissed it. The defendant appealed. I heard the appeal and, agreeing with the AR, dismissed it. The defendant has appealed further.

2 The plaintiff is a company incorporated in the Territory of the British Virgin Islands (“BVI”) and is registered as a branch of a foreign corporation in the Union of Myanmar (“Myanmar”). The defendant was a director of the plaintiff until 20 November 2007. The plaintiff is a contractor to the Myanma Oil and Gas Enterprise (“MOGE”) and is in the business of enhancing oil production at an oilfield in Myanmar under a Modified Performance Compensation Contract (the “PCC Contract”) dated 18 July 1997, originally entered into between MOGE and Asia Pacific Energy Company Limited, a company incorporated in the BVI.

The plaintiff’s claim

3 The key individuals involved in the plaintiff’s operations were its directors Martin Christen, Maung Maung Kaw Shaw and Carl Stadelhofer. The defendant was the wife of Maung Maung Kaw Shaw. In May 2003, Martin Christen passed away and his son Unni Christen became a director of the plaintiff. In August 2004 Maung Maung Kaw Shaw passed away and the defendant became a director of the plaintiff. From October 2004 Carl Stadelhofer was bought out and thereafter only Unni Christen and the defendant had management control of the plaintiff’s operations in Myanmar. Unni Christen had control of the plaintiff’s bank account while the defendant managed its day-to-day operations. In 2005 disputes arose between the plaintiff and Unni Christen in relation to the plaintiff’s financial affairs. It should be noted that while the plaintiff maintains that its sole shareholder is Sun Energy Holding Inc, a Panamanian company, the defendant asserts that she too is a shareholder of the plaintiff.

4 The plaintiff maintained two principal bank accounts, one in Myanmar with the Myanmar Investment Commission Bank and one outside Myanmar, first with UBS AG in Zurich and later with United Overseas Bank Limited (“UOB”) in Singapore. MOGE paid the plaintiff through the Myanma Foreign Trade Bank (“MFTB”) in US dollars. Payments to the plaintiff were remitted by MFTB by telegraphic transfer to the plaintiff’s UBS account. Around January 2004, MFTB became unable to make payment to the plaintiff by telegraphic transfer, and started paying the plaintiff in cash instead. The plaintiff therefore opened an account with UOB to receive the cash payments couriered from MFTB in Myanmar to Singapore by KMA Corp Pte Ltd (“KMA”), a company incorporated in Singapore.

5 The plaintiff makes two main allegations in its statement of claim: first, that the defendant and KMA had conspired to have KMA charge the plaintiff 5% of the amount of cash couriered, with KMA actually receiving only about 2% and the defendant pocketing the rest (“the alleged courier conspiracy”). Second, the plaintiff alleges that the defendant then wrongfully procured the agreement of MOGE’s former managing director to permit her to deposit the cash payments into her personal account with UOB (the defendant’s “UOB Account”) with the assurance that she would use the monies only for the plaintiff’s legitimate purposes. The plaintiff further alleges that from July 2005 the defendant breached her fiduciary duties to it by depositing the cash payments into bank accounts other than her UOB Account.

6 According to the plaintiff’s statement of claim, around January 2006 MOGE was able to resume payment to the plaintiff by way of telegraphic transfer and these payments were all made to the defendant’s UOB Account. However, payments meant for the plaintiff continued to be made to the defendant’s UOB Account until about July 2007 when the new managing director of MOGE insisted that payments meant for the plaintiff be made to the plaintiff’s account.

7 The plaintiff thus brought this action on 29 January 2008 for an account and inquiry in relation to all moneys received by the defendant as a result of the alleged courier conspiracy and from payments by MOGE meant for the plaintiff but allegedly diverted, in breach of the defendant’s fiduciary duties, to her UOB Account or other accounts from July 2005 to July 2007. The plaintiff claims, inter alia, an order that the defendant account to the plaintiff for (i) all payments made by MOGE meant for the plaintiff but which were instead paid into the defendant’s personal account(s) and any income or proceeds from such payments; and (ii) all sums received by her as a result of the alleged courier conspiracy. The plaintiff also seeks all necessary and proper inquiries and directions for the taking of such accounts, as well as restitution of all moneys misappropriated from the plaintiff.

The defence

8 In her defence, the defendant denies that she received 3% of the couriered moneys from KMA pursuant to the alleged courier conspiracy. She avers that the dispute between her and Unni Christen concerns the wrongful withdrawal of monies from the plaintiff’s UOB account in Singapore operated solely by Unni Christen, and states that she has since commenced Civil Regular Suit No. 1372 of 2007 in the Divisional court of Yangon, Myanmar. The defendant does not dispute that MOGE paid monies temporarily into her UOB Account, but pleads that this was to ensure the smooth continuity of the plaintiff’s operations pending the resolution of her dispute with Unni Christen. The defendant denies that the payments were made wrongfully or in breach of fiduciary duty and reiterates that the monies were used for legitimate purposes for the plaintiff’s benefit, such as disbursement of funds for its operation and overheads. Finally, the defendant also pleads that Singapore is not the appropriate forum for the trial of this action, which should be heard in the courts of Myanmar.

The stay application

9 On 31 January 2008 the plaintiff obtained an interim injunction restraining the defendant from operating various specific accounts into which the plaintiff’s moneys had flowed, owned or controlled by her in Singapore and elsewhere. The defendant has not challenged this injunction order. The plaintiff also obtained leave to serve the writ out of jurisdiction as the defendant is resident in Myanmar. Two months later, the defendant’s Singapore solicitors accepted service on her behalf. On 9 April 2008 they entered an appearance on her behalf and took out an application for a stay of the action on the ground of forum non conveniens or under the court’s inherent jurisdiction, as well as for leave to set aside the Order of Court granting the plaintiff leave to serve the writ of summons on the defendant out of Singapore. This latter application was subsequently dropped. The sole issue that I had to decide, thus, became whether Myanmar or Singapore was the appropriate forum for this action.

10 The defendant argued that Myanmar was the more appropriate forum for the trial of the action. To begin with, the defendant was domiciled in Myanmar, and witnesses, particularly MOGE directors and the plaintiff’s chief accountant Aung Thet Swe, were also resident in Myanmar and it was “unlikely that the witnesses from MOGE [would] even leave Myanmar to testify in Singapore.”

11 Second, the defendant argued that the alleged wrongs took place in Myanmar: the diversion of moneys paid by MOGE took place in Myanmar and “the fact that the monies flowed into Singapore bank accounts is irrelevant, for the alleged tort is completed once MOGE agreed to make payment and did make payment to an account designated by the defendant, be it in Singapore or elsewhere”. The alleged courier conspiracy formed only a small part of the plaintiff’s claim and concerned the issue of whether, from the time when the defendant became a director in August 2004 to April 2005 when the KMA arrangement ceased, there was “proper disclosure of such payments to KMA to the plaintiff’s management”. The defendant argued that this issue could only be tried by adducing evidence from the relevant management of the plaintiff and its chief accountant, and had nothing to do with KMA in Singapore.

12 Third, the defendant argued that the fact that the fruits of the alleged wrongs were in Singapore was not relevant because the real issue was whether the defendant “breached her fiduciary duties when she diverted the monies to the Singapore bank accounts. If she did so, then the relevant tracing remedies will follow suit. The fact that the monies flowed into the Singapore banks is wholly irrelevant, for regardless where judgment was obtained, the plaintiff would have its rights to recovery of these monies”. Further, the defendant submitted, having deposed in her affidavit at [31], [36] and [37] that much of the monies had been paid out of the Singapore bank accounts to the plaintiff’s creditors and remitted back to Myanmar for its operations, the significance of the Singapore banks was reduced and did not affect the alleged liability of the defendant. Finally, the defendant argued that there was a competent body to resolve the dispute in Myanmar, and that the proper law governing the defendant’s duties to the plaintiff was Myanmar law; even if it was not Myanmar law but BVI law, this would be a neutral factor in determining whether Myanmar or Singapore was the natural forum.

13 The plaintiff submitted that the defendant having admitted that she diverted moneys paid by MOGE that were to be paid to the plaintiff, she had no defence to the plaintiff’s claim for an account and an inquiry; her explanation as to what she did with these moneys or the possibility that some or all of the appropriations might have been legitimate would not detract from her obligation to account or the necessity for an inquiry. The plaintiff also submitted that, with respect to...