Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd

JurisdictionSingapore
JudgeSundaresh Menon CJ
Judgment Date03 July 2020
Neutral Citation[2020] SGCA 62
Plaintiff CounselBull Cavinder SC, Woo Shu Yan, Tan Yuan Kheng and Fiona Chew Yan Bei (Drew & Napier LLC)
Date03 July 2020
Docket NumberCivil Appeal No 26 of 2019 and Summons No 71 of 2019
Hearing Date27 February 2020,22 October 2019
Subject MatterNatural forum,Conflict of Laws,Exclusive,Civil Procedure,Pleadings,Amendment,Choice of jurisdiction
Year2020
Defendant CounselToby Landau QC (Essex Court Chambers Duxton (Singapore Group Practice)) (instructed), Lai Tze Chang Stanley SC, Kenneth Lim Tao Chung, Mak Sushan Melissa, Afzal Ali and Wong Pei Ting (Allen & Gledhill LLP)
CourtCourt of Appeal (Singapore)
Citation[2020] SGCA 62
Published date09 July 2020
Judith Prakash JA (delivering the judgment of the majority consisting of Sundaresh Menon CJ and herself): Introduction

The first appellant, Mr Bidzina Ivanishvili (“Mr Ivanishvili”), holds dual nationality in France and Georgia. In 2005, he settled part of his personal wealth on the Mandalay Trust, a discretionary trust domiciled in Singapore. The trustee is the respondent, Credit Suisse Trust Ltd (“the Trustee”), a Singapore trust company. The beneficiaries of the Mandalay Trust are Mr Ivanishvili and the other appellants, his wife and children. The assets of the Mandalay Trust were managed and invested by the Geneva branch of Credit Suisse AG (“the Bank”), a bank incorporated and headquartered in Switzerland and having a branch in Singapore. The Bank and the Trustee operate independently, although they have the same ultimate holding company, Credit Suisse Group AG.

Towards the end of 2015, the appellants discovered that the Mandalay Trust had suffered tremendous losses which they allege had been hidden from them. The Bank subsequently filed a criminal complaint in Geneva against its employee, Mr Patrice Lescaudron (“Mr Lescaudron”), who was the portfolio manager of the Mandalay Trust at the time. Mr Lescaudron admitted to various forms of misconduct in relation to the Mandalay Trust, including the misappropriation of trust assets, and was eventually convicted in Switzerland on charges of embezzlement, misappropriation and forgery.

On 25 August 2017, the appellants commenced HC/S 790/2017 (“Suit 790”) in Singapore against the Bank and the Trustee. The appellants sought to make the Bank and the Trustee liable for, inter alia, the loss sustained by the Mandalay Trust. Both the Bank and the Trustee applied to stay Suit 790 on the ground that Switzerland was the more appropriate forum. An Assistant Registrar (“the AR”) granted their applications. The appellants’ appeals against the decision to stay Suit 790 were dismissed by the High Court Judge (“the Judge”) for the reasons given in Ivanishvili, Bidzina and others v Credit Suisse AG and another [2019] SGHC 6 (“the Judgment”). The appellants then filed further appeals to this court. Subsequently, however, the appellants withdrew their appeal against the stay in respect of their action against the Bank. Further, on 21 June 2019, they discontinued the proceedings in Suit 790 against the Bank, leaving the Trustee as the sole defendant. The appellants continued to pursue their appeal against the stay of Suit 790 in respect of the Trustee. To this end, they applied in CA/SUM 71/2019 (“SUM 71”) to amend their Statement of Claim so as to reflect the ambit of their new case, which was against the Trustee only, limited to alleged breaches of the Trustee’s duties in relation to the Mandalay Trust.

It is not seriously disputed that SUM 71 constitutes part of a broader recalibration by the appellants of their claims in Suit 790 so as to improve their chances of persuading this court to overturn the stay of the action. By proceeding only against the Trustee, the appellants seek to present their claims as being fundamentally rooted in Singapore, strengthening their case that Singapore is the appropriate forum. There are therefore two key issues in the present appeal: first, whether the appellants’ amendments in SUM 71 are permissible; and second, whether Singapore is the appropriate forum for Suit 790 on the basis of the claims as the appellants now wish to frame them.

Background The parties and their relationships

Mr Ivanishvili became a customer of the Bank in Switzerland in 2004. It is his case that sometime in December 2004, the Bank’s representatives approached him with an offer to provide private wealth management services to him and his family. The Bank’s advice was that he should set up a trust to be administered by the Trustee in Singapore. Mr Ivanishvili accepted this advice. The Mandalay Trust was then established by the Trustee pursuant to a declaration of trust dated 7 March 2005. The trust deed of the Mandalay Trust (“the Trust Deed”) contained a clause providing for the trust to be governed by Singapore law, and for the Singapore courts to be its forum of administration (“cl 2(a)”).

In March 2005, Mr Ivanishvili settled some US$1.1bn on the Mandalay Trust. Half of this sum was held in an account (“the Soothsayer account”) with the Bank’s Singapore branch in the name of a Bahamian company, Soothsayer Ltd (“Soothsayer”), and the other half was held in accounts (“the Meadowsweet accounts”) with the Bank’s Geneva branch in the name of a BVI company, Meadowsweet Assets Ltd (“Meadowsweet”). Both these companies were wholly owned and controlled by the Trustee. The sums held in the Soothsayer account were gradually repatriated by Mr Ivanishvili to accounts at the Bank in Switzerland. The Soothsayer account was closed in 2014.

The Trustee delegated its asset management and investment powers under the Mandalay Trust to the Bank pursuant to discretionary portfolio management agreements with Soothsayer and Meadowsweet. The Bank therefore managed the assets in the Mandalay Trust (“the Trust assets”) and provided investment reports detailing their performance to the Trustee (“the Investment Reports”). It is also undisputed that the Bank performed these tasks primarily at its Geneva branch. Mr Ivanishvili’s relationship manager at the Bank was, initially, Ms Daria Mihaesco (“Ms Mihaesco”). Mr Lescaudron took over as the relationship manager in August 2006.

Mr Ivanishvili frequently communicated directly with Mr Lescaudron on the management of the Trust assets, either personally or through his representative Mr George Bachiashvili (“Mr Bachiashvili”). Pursuant to cl 10(b) of the Trust Deed, Mr Ivanishvili had the right to choose an investment manager to make decisions in relation to the investment of the Trust assets. Initially, Mr Ivanishvili appointed himself as investment manager. Subsequently, in December 2013, he also appointed Mr Bachiashvili as investment manager.

Besides the Mandalay Trust, Mr Ivanishvili’s relationship with the Bank and its associates also extended to numerous other accounts and offshore structures, many of which have also given rise to disputes: Mr Ivanishvili held accounts with the Bank in his own name, as well as in the name of Wellminstone SA, a BVI company of which he was the ultimate beneficial owner (“the Wellminstone accounts”). An account was held with the Bank by Sandcay Investment Limited (“Sandcay”), under the Green Vals Trust. Mr Ivanishvili transferred assets of more than US$210m to this account in early 2015. The beneficiaries of the Green Vals Trust are the appellants. The current trustee of the Green Vals Trust is Credit Suisse Trust Limited (New Zealand), a subsidiary of Credit Suisse Trust AG. An account with Credit Suisse Life (Bermuda) Ltd (“CS Life”) held investments made on a premium of US$480m paid for a life insurance policy obtained by Meadowsweet, as well as another life insurance policy obtained by Sandcay (“the CS Life policies”).

On 5 July 2013, the Trustee amended the Trust Deed by way of a Deed of Amendment and Restatement (“the Amended Trust Deed”). The validity of the Amended Trust Deed is one of the issues in Suit 790.

The discovery of Mr Lescaudron’s wrongdoing

According to Mr Ivanishvili, Mr Lescaudron sent him and Mr Bachiashvili regular reports summarising the performance of Mr Ivanishvili’s investments, including the Trust assets, together with spreadsheets setting out the current value of each of Mr Ivanishvili’s accounts (“the Direct Reports”). The Direct Reports were distinct from the Investment Reports from the Bank, which were made available to the Trustee.

In September and October 2015, the Bank made margin calls totalling US$45.89m on the accounts within the Mandalay Trust. Following one of the margin calls, another representative of the Bank sent Mr Ivanishvili copies of some of the Investment Reports. Mr Ivanishvili claims that this was the first time he had seen these Investment Reports, and having compared them with the Direct Reports from Mr Lescaudron, he realised that the value of the Trust assets as reported by Mr Lescaudron was very different from the reality. According to Mr Ivanishvili, the Investment Reports showed that from 31 December 2014 to 25 September 2015 the value of the Trust assets had declined from US$697.68m to US$437.8m; on the other hand, the Direct Reports from Mr Lescaudron in this period showed an upward trend in the value of the Trust assets.

The other accounts with the Bank which belonged to Mr Ivanishvili had also suffered similar previously undisclosed losses. In this regard, on 2 April 2015, Mr Lescaudron sent a presentation on behalf of the Bank to Mr Bachiashvili (“the Presentation”), stating that the Bank held a total of US$1.04bn in all the trusts set up by Mr Ivanishvili, including US$439m in the Mandalay Trust, when according to Mr Ivanishvili’s calculations the true value of the Trust assets at the time would have been around US$326.9m. Mr Ivanishvili alleged that the incorrect figures from the Presentation were then repeated to him by representatives of the Trustee at discussions and meetings in the subsequent months. According to Mr Ivanishvili, as a result of these representations by the Bank and the Trustee, he was persuaded to transfer further assets from other banks to be managed and invested by the Bank.

The foreign proceedings Criminal proceedings in Switzerland

In December 2015, the Bank made a criminal complaint against Mr Lescaudron in Switzerland for offences relating to assets under his management. Similar criminal complaints were also made by, inter alia, Mr Ivanishvili and Meadowsweet. Criminal charges were brought against Mr Lescaudron, and following a trial in the Swiss Correctional Court, Mr Lescaudron was convicted on 9 February 2018 on charges of embezzlement,...

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6 cases
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    • Singapore
    • Court of Appeal (Singapore)
    • 15 December 2021
    ...2 SLR 333 (refd) Iskandar bin Rahmat v Law Society of Singapore [2021] 1 SLR 874 (refd) Ivanishvili, Bidzina v Credit Suisse Trust Ltd [2020] 2 SLR 638 (refd) Jhaveri Darsan Jitendra v Salgaocar Anil Vassudeva [2018] 5 SLR 689 (refd) Johnson v Gore Wood & Co [2002] 2 AC 1 (refd) Kay Swee Pi......
  • Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd (formerly known as Tian Jian Hua Xia Medical Group Holdings Pte Ltd) (in judicial management) and another
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    • Court of Appeal (Singapore)
    • 15 December 2021
    ...proceedings in multiple jurisdictions (see the decision of this court in Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd [2020] 2 SLR 638 at [113(a)]). Where multiple actions are brought one after the other, courts may rely on doctrines like issue estoppel and the extended doctrin......
  • Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd
    • Singapore
    • International Commercial Court (Singapore)
    • 26 May 2023
    ...Appeal allowed the proceedings as reconstituted to continue in this Court (see Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd [2020] 2 SLR 638). Although this is a matter of history, it is mentioned because the defendant contends that many of the plaintiffs’ claims are more appro......
  • Bunge SA and another v Shrikant Bhasi and other appeals
    • Singapore
    • Court of Appeal (Singapore)
    • 30 September 2020
    ...in this manner also dovetails with the tenor of this court’s judgment in Ivanishvili, Bidzina and others v Credit Suisse Trust Limited [2020] SGCA 62. There, the majority of this court stated that when a matter has not gone for trial and no evidence has been taken, the fact that an amendmen......
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2 books & journal articles
  • Conflict of Laws
    • Singapore
    • Singapore Academy of Law Annual Review No. 2020, December 2020
    • 1 December 2020
    ...Corp Ltd v Shantanu Prakash [2020] SGHC 83 at [70]. 111 Raffles Education Corp Ltd v Shantanu Prakash [2020] SGHC 83 at [69]. 112 [2020] 2 SLR 638 at [85]–[87]. 113 Raffles Education Corp Ltd v Shantanu Prakash [2020] SGHC 83 at [75]. 114 Raffles Education Corp Ltd v Shantanu Prakash ......
  • Equity and Trusts
    • Singapore
    • Singapore Academy of Law Annual Review No. 2020, December 2020
    • 1 December 2020
    ...Conflict of Laws” [2020] Sing JLS 726. 7 [2020] SGHC 106. 8 Eller, Urs v Cheong Kiat Wah [2020] SGHC 106 at [45]. 9 [2020] SGHC 147. 10 [2020] 2 SLR 638. 11 Ivanishvili, Bidzina v Credit Suisse Trust Ltd [2020] 2 SLR 638 at [59]. 12 Ivanishvili, Bidzina v Credit Suisse Trust Ltd [2020] 2 SL......

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