Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd
Jurisdiction | Singapore |
Judge | Sundaresh Menon CJ |
Judgment Date | 03 July 2020 |
Neutral Citation | [2020] SGCA 62 |
Plaintiff Counsel | Bull Cavinder SC, Woo Shu Yan, Tan Yuan Kheng and Fiona Chew Yan Bei (Drew & Napier LLC) |
Date | 03 July 2020 |
Docket Number | Civil Appeal No 26 of 2019 and Summons No 71 of 2019 |
Hearing Date | 27 February 2020,22 October 2019 |
Subject Matter | Natural forum,Conflict of Laws,Exclusive,Civil Procedure,Pleadings,Amendment,Choice of jurisdiction |
Year | 2020 |
Defendant Counsel | Toby 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) |
Court | Court of Appeal (Singapore) |
Citation | [2020] SGCA 62 |
Published date | 09 July 2020 |
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,
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 relationshipsMr 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:
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 wrongdoingAccording 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,
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