Hwang Yue Eye Rose and Others v Malayan Banking Bhd

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 09 July 1998
• Neutral Citation: [1998] SGHC 233
• Docket Number: Suit No 1892 of 1997 (Registrar's
• Date: 09 July 1998
• Year: 1998
• Published date: 19 September 2003
• Plaintiff Counsel: JB Jeyaretnam (JB Jeyaretnam & Co)
• Citation: [1998] SGHC 233
• Defendant Counsel: Patrick Ong Kok Seng (PK Wong & Advani)
• Court: High Court (Singapore)
• Subject Matter: Civil Procedure,Striking out,Whether claim frivolous and vexatious and an abuse of court's process,Pleadings,Whether statement of claim discloses reasonable or probable cause of action,Whether new evidence exists since judgment in support of allegations of fraud,Statement of claim to set aside judgment of Court of Appeal on ground of fraud,Whether allegations of fraud are pleaded with sufficient particulars

Judgment:

LIM TEONG QWEE JC

This is an appeal against the order of an assistant registrar made on 19 December 1997 that the statement of claim in this action be struck out on the ground that it is frivolous and vexatious and is an abuse of the process of court and that the action be dismissed with costs. After hearing counsel for the plaintiffs I invited him to consider whether the statement of claim disclosed a reasonable or probable cause of action. Mr Jeyaretnam applied for an adjournment to prepare a draft amended statement of claim and I gave certain directions and granted an adjournment. In the event the matter came before me again on 8 April 1998 when counsel tendered a draft amended statement of claim. After hearing further submissions I dismissed the appeal.

2.In Suit No 1126 of 1992 the defendant in this action (`bank`) was the plaintiff and the plaintiffs in this action were the defendants. In that action (`bank`s action`) the bank claimed against the first plaintiff (`customer`) as its customer for balance of money due for banking facilities and against the second plaintiff (`Patrick Tan`) and the third plaintiff (`Tan Sr`) as guarantors of the customer`s indebtedness. Paragraph 6 of the statement of claim in the bank`s action alleged that the bank issued a standby letter of credit for RM13m and as security for the facility the customer placed a cash deposit of $7,745,400 with the bank. Paragraph 7 alleged that at the request of the customer part of the cash deposit was used to purchase on behalf of the customer AUD14,860,000 NatWest Australia Bank Ltd zero coupon bonds due on 15 January 2002 and it was agreed that the bonds would be registered in the name of the bank and be held by the bank as security for the facility. Paragraph 16 alleged that on or about 22 April 1992 the bank paid on the standby letter of credit and para 17 alleged:

On 27 May 1992 the [bank] as they were entitled to, sold the bonds for AUD 5,500,000.

There was a shortfall and the bank claimed against the customer the balance of her indebtedness. The claims against Patrick Tan and Tan Sr were based on written guarantees given by them.

3.Separate defences were delivered by each of the defendants in the bank`s action. First the customer alleged that she was a nominee for a third party and was not liable on her account with the bank. This is not relevant for the purpose of the present action. Secondly in para 12 of her defence she alleged:

The [customer] denies para 17 of the amended statement of claim. The [bank] did not, before issuing the standby letter of credit, give the [customer] any letter of offer setting out the terms and conditions upon which they would be prepared to issue the standby letter of credit.

Paragraphs 17 and 18 alleged:

17 At the date of the sale by the [bank] the bonds had a value of $7.94m which value was informed to the [bank] by [Patrick Tan] by his letter of 26 May 1992.

18 The [bank] in hastily disposing of the bonds by private treaty has caused a loss of $1.2m.

Paragraph 20 alleged:

The [customer] further states that the [bank] before selling the bonds failed to give the [customer] a reasonable opportunity to find a purchaser at the best price for the bonds ...

Patrick Tan and Tan Sr relied on other defences which are not relevant for the present purpose but Patrick Tan also adopted the customer`s defence.

4.The bank`s action was dismissed but on appeal to the Court of Appeal judgment was on 26 February 1997 given for the bank against all the plaintiffs as claimed. See Malayan Banking Bhd v Hwang Rose & Ors [1997] 2 SLR 1 . The claim in this action is for an order to set aside the judgment of the Court of Appeal on the ground that the judgment was obtained by the fraud of the bank.

5.Paragraph 1 of the statement of claim states the relief claimed and para 2 identifies the parties to the bank`s action. Paragraph 3 states the claims in the bank`s action and para 4 says that the customer`s account was secured by the bonds. Paragraphs 5, 6, 9, 10 and 11 allege:

5 By para 17 of the statement of claim in that action the [bank] alleged that the bonds were sold ...

6 At the trial of the [bank`s action] ... the [bank] gave evidence that the bonds were sold to Natwest Bank (hereinafter referred to as `Natwest`). The trial judge found as a fact that the [bank] had sold the said bonds to Natwest for the sum of AUD 5,500,000 but went on to dismiss the [bank`s] claim on the ground that the [bank] had acted unreasonably in selling the bonds.

9 The plaintiffs have now discovered that the alleged `sale` was not a sale to Natwest Australia Bank Ltd but was a `structured deal` by which the bonds were transferred to a third party through Natwest Capital Markets Ltd London.

10 The plaintiffs will rely:

(i) upon the materiality of the [bank`s] evidence in the action that they had genuinely sold the bonds to Natwest Australia Bank Ltd and that it was an open sale at arms` length and

(ii) falsity of the [bank`s] evidence that it was sold.

11 In the aforesaid circumstances, the [bank] obtained the said judgment by fraud and the plaintiffs pray that the judgment of the Court of Appeal be set aside.

NatWest Australia Bank Ltd has been referred to variously as `Natwest Bank` and `Natwest` and to avoid confusion I shall refer to it either by its full name or as NatWest Bank.

6.In Birch v Birch [1902] P 130 Cozens-Hardy LJ said at p 137:

This is not an appeal by the plaintiff from that judgment, or an application for a new trial. The present action is an independent proceeding to set aside that judgment on the ground that it was obtained by fraud. I do not doubt that such an action may be maintained, at least when the judgment has been procured by the fraud of a party to the action.

See also Boswell v Coaks (No 2) [1894] 86 LT 365n.

7.In Jonesco v Beard [1930] All ER Rep 483 Lord Buckmaster said at p 484:

It has long been the settled practice of the court that the proper method of impeaching a completed judgment on the ground of fraud is by action in which, as in any other action based on fraud, the particulars of the fraud must be exactly given and the allegation established by the strict proof such a charge requires.

The present action is an action to set aside the Court of Appeal`s judgment on the ground of fraud and the fraud alleged must be pleaded with sufficient particulars.

8.I turn now to the statement of claim. The allegations in para 9 do not show that the bonds were not sold or that they were not sold to NatWest Bank. The `structured deal` described in the concluding part of that paragraph is entirely consistent with the bonds having been sold and does not support the allegation in para 10 that the bank`s evidence that the bonds had...