Multi-Code Electronics Industries (M) Bhd and Another v Toh Chun Toh Gordon and Others

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeChan Seng Onn J
Plaintiff CounselGopinath s/o B Pillai/Henry Heng/Charmaine Cheong Siao Hwei (Tan Peng Chin LLC)
Defendant CounselMurugaiyan Sivakumar/Parveen Kaur Nagpal (Madhavan Partnership),Sarjit Singh Gill SC/Arvind Daas Naaidu (Shook Lin & Bok LLP),Prabhakaran Nair (Ong Tan & Nair)
Subject MatterWhether court had jurisdiction to grant Mareva injunction despite stay in favour of foreign jurisdiction,Whether court had jurisdiction to maintain Mareva injunction despite absence of full and frank disclosure by applicant,Principles governing stay of local proceedings on grounds of lis alibi pendens and forum non conveniens,Discretionary,Jurisdiction,Conflict of Laws
Date03 November 2008
Docket NumberSuit No 258 of 2008 (Summons Nos 1998 and 2022 of 2008)
Published date09 January 2009

3 November 2008

Chan Seng Onn J:

Introduction and brief facts

1 The plaintiffs’ claim against all the defendants in this action was for a total sum of RM 44,188,262.82. The 1st defendant was the managing director of the 1st plaintiff and director of the 2nd plaintiff at all material times. The 1st defendant first entered into an escrow agreement on or about 29 March 2007 with the 4th and 5th defendants, both of which he was also a director. He later entered into a supplementary escrow agreement on or about 30 March 2007 without the 1st plaintiff’s authorisation.

2 The escrow agreement and supplementary escrow agreement (collectively “the agreements”) allegedly created in the 5th defendant’s name for the 1st plaintiff’s benefit an escrow account with Clariden Leu Ltd, where the 4th defendant purportedly had an account under a company called Singapore Holdings Limited. The 1st plaintiff discovered after investigations that Singapore Holdings Limited was dissolved in 1950.

3 The 4th defendant transferred its money in its alleged account with Clariden Leu Ltd into the escrow account while the 1st and 2nd defendants, the latter a director of the 2nd plaintiff, uplifted the 1st plaintiff’s fixed deposits in the total sum of RM 29,009,917.80 in purported execution of the escrow agreement and paid the said sum to the 4th defendant and other parties without the 1st plaintiff’s authorisation.

4 The 1st defendant also paid RM 2,000,000 from the 2nd plaintiff to the 4th defendant in purported execution of the alleged supplementary escrow agreement without the 2nd plaintiff’s authorisation.

5 The 5th defendant produced alleged copies of supporting bank statements from Clariden Leu Ltd with respect to the escrow account. However, Clariden Leu Ltd confirmed that the said bank statements were not issued by them and that they were never privy to the agreements.

6 During the purported execution of the agreements, it was alleged that the 3rd defendant, who was the representative office assistant manager of the 1st plaintiff at all material times, would, inter alia, propose accounting entries for both agreements and journal accounts for the escrow account set up under the agreements to the 1st plaintiff.

7 Furthermore, the 1st defendant attempted to register the 1st plaintiff in the American Depository Receipt Program (“the ADR Program”) in or about July 2007 without the 1st plaintiff’s authorisation. In purported registration in the ADR Program, the 1st defendant paid RM 4,200,000 from the plaintiffs to various parties.

8 Apart from payments made under the agreements and the alleged registration in the ADR Program, the 1st and 2nd defendants made additional payments of a total sum of RM 8,978,345 to various parties from the plaintiffs’ accounts without the plaintiffs’ authorisation for the period from 1 August 2007 to 31 January 2008.

9 At the 1st plaintiff's meeting of the board of directors on 29 November 2007, the 1st defendant undertook to recall the 1st plaintiff’s deposits in foreign financial institutions amounting to RM 28,603,962 and another investment in a foreign investment fund amounting to RM 3,508,670 and credit both sums into the 1st plaintiff’s bank account.

10 Instead, the 1st defendant presented to the 1st plaintiff’s board of directors on 31 December 2007 two fixed deposit receipts of the total sum of RM32,857,974 allegedly issued by RHB Bank Berhad in the 1st plaintiff’s favour. However, the said two fixed deposit receipts were later ascertained by RHB Bank Berhad to be fraudulent and fictitious.

11 Counsel for the plaintiffs submitted that the defendants (i.e. the 1st, 3rd and 4th defendants who were the only three defendants involved in the present summonses) had not, in any of the affidavits filed, disputed the facts which counsel had summarised as set out above.

Plaintiffs’ causes of action

12 On 7 April 2008, the plaintiffs commenced an action in Malaysia (“the Malaysian action”) against twelve parties, five of whom were the defendants in the Singapore action.

13 The following day, the plaintiffs obtained an injunction in Malaysia on an ex-parte basis against, inter alia, the 1st and 4th defendants preventing them from disposing their assets on a world-wide basis (“the Malaysian injunction”). There was no Mareva injunction obtained against the 3rd defendant in Malaysia.

14 On 10 April 2008, the plaintiffs commenced an action in Singapore against, inter alia, the 1st, 3rd and 4th defendants for almost identical relief (“the Singapore action”) as that claimed in the Malaysian Action.

15 The following day, 11 April 2008, on an ex-parte basis and without prior notice, the plaintiffs obtained an injunction against, inter alia, the 1st, 3rd and 4th defendants preventing them from disposing their assets located in Singapore (“the Singapore injunction”).

16 The plaintiffs’ causes of action in the Singapore action included the following:

(a) The 1st and 2nd defendants’ breach of fiduciary duties and/or breach of trust owed to the plaintiffs;

(b) The 3rd defendant’s breach of contract and/or duties owed to the 1st plaintiff; and

(c) All the five defendants as constructive trustees of the plaintiffs had engaged in a conspiracy to defraud the plaintiffs.

17 The 1st and 4th defendants raised several allegations against the plaintiffs in order to discharge and/or set aside the Singapore injunction. The 3rd defendant aligned himself with the position taken by the 1st and 4th defendants. Counsel for the defendants informed me that the 1st, 3rd and 4th defendants had submitted to the jurisdiction of the Malaysian courts and they had not applied for a stay of the Malaysian action. The 1st and 4th defendants also made no application to discharge the Malaysian injunction against them.

18 In this case, I made an important finding after comparing the actions brought in Malaysia and Singapore by the same plaintiffs against the same 1st, 3rd and 4th defendants that they largely involved the same issues arising from the same factual matrix (i.e. the same subject matter). Accordingly, the actions were indeed duplicitous. At the hearing before me, the plaintiffs took the position that they were entitled to actively prosecute the similar actions against these defendants in the courts of both Singapore and Malaysia.

Stay of proceedings in Singapore on the ground of Lis Alibi Pendens

19 I heard the applications by the 1st, 3rd and 4th defendants for a stay of the Singapore action first and then made a decision on the stay applications before dealing with the other applications to lift the Mareva injunction. This was because the result of the stay applications would have a material impact on the arguments of counsel concerning the lifting of the Singapore injunction. If the stay applications were granted, then counsel for the defendants would be able to run the argument that the Singapore injunction should not be allowed to continue exclusively in support of the foreign proceedings in Malaysia. However if the stay was not granted, then obviously the defendants could no longer utilise that argument as the factual scenario would then be that the Singapore injunction would necessarily also be in support of the Singapore proceedings.

20 It should be noted that the defendants did not apply to strike out the plaintiffs’ action in Singapore on the basis that no reasonable cause of action had been disclosed in the Singapore action or that it was vexatious of the plaintiffs to bring similar actions against them in two jurisdictions in relation to the same subject matter.

The law governing the bringing of actions against the same defendants by the same plaintiffs in two or more jurisdictions on the same issues that arise from the same underlying factual matrix

21 Counsel for the plaintiffs referred me to Hyman v. Helm [1883] 24 Ch. D. 531, where it was held by Chitty J and the Court of Appeal at p. 531 that:

the action ought not to be restrained, for that there was no prima facie inference that the bringing the action abroad, during the pendency of an action in England in which the matters in dispute could be determined, was vexatious, since the course of procedure in San Francisco might be such as to give advantages to C. of which he was entitled to avail himself, and that the burden lay on B. to prove that C.’s action was vexatious, which he had failed to do.

At pp. 537-538, Brett MR said the following:

It seems to me that where a party claims this interference of the Court to stop another action between the same parties, it lies upon him to shew to the Court that the multiplicity of actions is vexatious, and that the whole burden of proof lies upon him. He does not satisfy that burden of proof by merely shewing that there is a multiplicity of actions, he must go further. … … … … But it was held in the cases which I have mentioned, that even where the plaintiff brings two actions, one in England, and the other in a foreign Court, that then the same prima facie case of vexation does not arise, because he might have a reasonable ground for bringing the action abroad, that is to say, it may be of some advantage to him to do so, and if it is of some advantage to him it is not right for the other party to say that the bringing it is vexatious and oppressive as against him. In such a case it lies on the defendant to shew that in fact there is vexation. He would establish that, if he shewed that the plaintiff could get no advantage whatever by the action abroad greater than he could get by the action in England; but it is for the party applying to the Court to shew that.

22 Counsel for the plaintiffs also relied on the case of Transtech Electronics Pte Ltd v. Choe Jerry & Ors [1998] 3 SLR 272 (“Transtech”) where at [16] Judith Prakash J held as follows:

Whilst the courts have accepted that it is undesirable in general for there to be two sets of proceedings in two different jurisdictions involving the same parties and the same issues...

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