Ivanishvili, Bidzina and others v Credit Suisse AG and another

CourtHigh Court (Singapore)
JudgeValerie Thean J
Docket NumberSuit No 790 of 2017 (Registrar’s Appeals Nos 229 of 2018 and 232 of 2018)
Hearing Date23 October 2018,30 October 2018,25 October 2018
Published date12 June 2019
Plaintiff CounselN Sreenivasan, S.C., Palaniapan Sundaraj, Lim Min, Ranita Yogeeswaran (Straits Law Practice LLC)
Defendant CounselHarpreet Singh Nehal, S.C., Jordan Tan, Andrew Foo, Ho Wan Yi (Cavenagh Law LLC),Stanley Lai, S.C., Kenneth Lim, Melissa Mak, Afzal Ali, Wong Pei Ting (Allen & Gledhill LLP)
Subject MatterConflict of Laws,Choice of jurisdiction,Exclusive,Jurisdiction,Natural forum
Valerie Thean J: Introduction

The first plaintiff, Bidzina Ivanishvili, a former Prime Minister of Georgia, has been a customer of the first defendant (“the Bank”) since 2004. His relationship has been managed out of the Bank’s branch in Geneva, Switzerland. The Bank is a Singapore registered foreign bank with a registered Singapore address, incorporated in Switzerland and headquartered in Zurich.

The second to fifth plaintiffs are Mr Ivanishvili’s wife and children. The plaintiffs, French and Georgian nationals, are the beneficiaries of the Mandalay Trust, a Singapore discretionary trust established by a declaration of trust on 7 March 2005. The second defendant, the trustee of the Mandalay Trust (“the Trustee”), is a Singapore trust company. The Trustee operates independently of the Bank although both have the same ultimate holding company, Credit Suisse Group AG, which provides global financial services. Arising from arrangements made by the Trustee, the Trust was managed by the Bank.

This suit, which concerns losses to the Mandalay Trust and other assets managed by the Bank, therefore has connections to both Singapore and Switzerland. The defendants applied to stay the suit on the ground of forum non conveniens in favour of Switzerland. A Senior Assistant Registrar granted the orders on 31 August and 10 September 2018. The plaintiffs appealed therefrom. For reasons that follow, I am of the view that Geneva is the forum conveniens for this dispute between parties, and I dismiss both appeals.

Background The Singapore claim

Sometime in or around December 2004, representatives of the Bank approached Mr Ivanishvili to offer him and his family private wealth management services.1 On 28 February 2005, Mr Ivanishvili signed the “Acceptance Documentation, Trust/Company” in Geneva for the formation of the Mandalay Trust.2 The Mandalay Trust is a Singapore discretionary trust, established by declaration of trust on 7 March 2005. The assets of the Trust were held by two investment companies, Meadowsweet Assets Ltd (“Meadowsweet”), incorporated in the British Virgin Islands, and Soothsayer Limited (“Soothsayer”), incorporated in the Bahamas.

On 22 March 2005, Mr Ivanishvili settled approximately USD1.1 billion in the Trust.3 On 23 March 2005, USD550 million were transferred into accounts in the name of Soothsayer with the Singapore branch of the Bank.4 The remaining USD550 million were held in accounts in the name of Meadowsweet with the Geneva branch of the Bank.5 In 2011 the Trustee arranged for Meadowsweet to apply for a unit-linked insurance policy, a Life Portfolio International with Credit Suisse Life (Bermuda) Limited (“CS Life”).6 The policy commenced on 25 October 2011 with Mr Ivanishvili as the insured person, and the premium being invested in an internal fund in accordance with the investment profile in the policy. The premium was held in accounts with the Bank in the name of CS Life.

It is not disputed that the Trustee delegated its asset management and investment powers under the Trust to the Bank, which was given a mandate to manage the Trust assets. At all material times, the trust assets were managed and invested by the Bank, which provided investment reports detailing the performance of the accounts to the Trustee. It is not disputed that the centre of management of the plaintiffs’ portfolio of assets was the Geneva branch of the Bank. Mr Ivanishvili’s relationship manager was initially one Ms Daria Mihaesco.7 From August 2006, one Mr Patrice Lescaudron took over as Mr Ivanishvili’s portfolio manager.8

On 5 July 2013, the Trustee executed a Deed of Amendment and Restatement in respect of the Trust.9 The validity of the Amended Trust Deed is in issue in this suit. The statement of claim contends that the execution of the Amended Trust Deed was an excessive exercise of the Trustee’s power and/or was carried out for an improper purpose. The plaintiffs assert that the Restated Declaration of Trust is void because the amendments to the Declaration of Trust went beyond the intended purpose represented by the Bank to Mr Ivanishvili, of accommodating the investment of artwork under the Mandalay Trust.

Aside from the Mandalay Trust assets, Mr Ivanishvili held accounts with the Bank in his own name and through Wellminstone SA (“Wellminstone”), a company incorporated in the British Virgin Islands (“BVI”). It is not disputed that Mr Ivanishvili is the ultimate owner of Wellminstone.

The Bank reported to the Trustees and Mr Ivanishvili regarding their portfolio of investments from time to time. The plaintiffs allege that beginning in 2013, Mr Lescaudron gave regular reports to the plaintiffs which were false.10 They also allege that in the course of 2014 and 2015, the Bank, through Mr Lescaudron and others, made a series of misrepresentations in relation to the value of the Trust and Wellminstone assets.11 Arising from these representations, Mr Ivanishvili transferred assets held in other banks into accounts held with the Bank. These accounts included his personal account. In March 2015, Mr Ivanishvili agreed to the Bank entering into a framework agreement, which provided that CS Life would pledge all the trust fund’s assets in the CS Life Meadowsweet accounts to the Bank as collateral for a credit facility up to USD150 million.12 In early 2015, Mr Ivanishvili also transferred assets of more than USD210 million to an account held by Sandcay Investment Limited (“Sandcay”) with the Bank, held under the Green Vals Trust. The Green Vals Trust is the subject matter of separate proceedings in New Zealand. In or around June 2015, the plaintiffs agreed to the establishment of new trusts by the Trustee on behalf of each of the plaintiffs.13

In September and October 2015, the Bank issued margin calls totalling USD41.01 million on accounts within the Mandalay Trust.14 The plaintiffs contend that following these margin calls, they discovered misconduct on the part of Mr Lescaudron, in the following manner: Whilst in the care of the Trustee and the Bank, the value of the Trust Fund had dropped substantially. For example, between December 2014 and September 2015 the value of the Trust fund dropped from USD697.68 million to USD437.8 million and this had prompted the margin calls;15 The Plaintiffs had been falsely informed of the value of the Trust fund by both the Bank and the Trustee over a prolonged period of time;16 Instructions given in relation to Trust Assets held in the Soothsayer accounts had been ignored, and the effects of doing so had been actively hidden from the Plaintiffs;17 Various other wrongdoing had occurred on the accounts containing the Trust Assets, including theft, unauthorised and imprudent trading.18 The wrongdoing related to accounts held in Singapore and elsewhere.

The Bank filed a criminal complaint against Mr Lescaudron in Geneva in December 2015.19 Mr Lescaudron admitted most of the allegations against him and in February 2018 was convicted of embezzlement, simple and aggravated misappropriation and forgery and sentenced to 5 years in prison.20 Mr Lescaudron has appealed against his sentence. Various complainants in the criminal proceedings, including the Bank, have appealed against the decision to acquit Mr Lescaudron on certain specific charges. The appeals are due to be heard in January 2019.

The plaintiffs commenced this suit on 25 August 2017. This claim is one framed in the context of losses to the Mandalay Trust, a Singapore trust with a Singapore company as trustee, with the Singapore courts as the forum for the administration of the trust. The plaintiffs claim against the Trustee for failing to take any steps to review or monitor the management of the trust assets.21 Remedies sought against the Trustee include a declaration that the Amended Trust Deed is void, a declaration that the Trustee is liable to account for loss caused to the Mandalay Trust, an account to establish the sums due, equitable compensation to restore the value of the Trust or a declaration to rescind the new trusts, damages for misrepresentation, and damages for negligence.22

It is not disputed that the Bank managed the trust assets under a mandate to do so. The plaintiffs claim against the Bank for liability as an agent of the Trustee, as a constructive trustee and trustee de son tort, and for breach of the duties conferred under the Trustees Act.23 In addition to the trust assets which form the subject matter of the claim against the Trustee, the portfolio of assets include that of Mr Ivanishvili and the Wellminstone account. Further, there is a misrepresentation claim brought against the Bank.24 The plaintiffs contend that Mr Lescaudron and others within the Bank misrepresented the value of the trust accounts, in particular during the course of 2014–2015. Arising from this, further assets were brought into the management of the bank, including into Mr Ivanishvili’s personal account, the Wellminstone account and a third, Sandcay account. A further negligence claim is made arising from the Bank’s voluntary assumption, by letters in September and October 2015, of an obligation to the plaintiffs to use best efforts to protect the plaintiffs’ portfolio.25 Remedies sought against the Bank include a declaration that the Bank is liable to account for losses to the Mandalay Trust, an account to establish the sums due, an account of profits made by the Bank, equitable compensation to restore the value of the Trust, a declaration to rescind the transfers of the further assets or to return these further assets, damages for misrepresentation, an indemnity for the fees of the new trusts, general damages and exemplary damages.26

On 15 November 2017, the Bank and the Trustee filed applications for a stay of the proceedings. Both defendants have undertaken to submit to the jurisdiction of the Swiss courts if the suit is stayed.

The litigation elsewhere

Multiple proceedings...

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