AL Shams Global Ltd v BNP Paribas

• Jurisdiction: Singapore
• Judge: Kannan Ramesh J
• Judgment Date: 19 June 2018
• Neutral Citation: [2018] SGHC 143
• Plaintiff Counsel: Muthukrishnan Nedumaran (M Nedumaran & Co.)
• Date: 19 June 2018
• Docket Number: Originating Summons No 873 of 2017
• Hearing Date: 05 February 2018
• Subject Matter: Promissory estoppel,Equity,Duty of care,Courts and Jurisdiction,Contract,Declaratory,Breach,Tort,Fiduciary relationships,Consideration,Negligence,Court judgments,When arising
• Year: 2018
• Defendant Counsel: Vincent Leow and Mak Sushan Melissa (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Citation: [2018] SGHC 143
• Published date: 17 April 2019

Kannan Ramesh J:

By Originating Summons No 873 of 2017 (“the Application”), the plaintiff, AL Shams Global Ltd (“ASGL”), sought six declarations in respect of actions taken by BNP Paribas Wealth Management (“the Bank”), in refusing to accept a payment into ASGL’s account with the Bank (“the Account”). The Bank merged with the defendant, BNP Paribas, on 1 October 2016, with all account relationships of the former transferred to the latter by operation of law. For present purposes, I shall refer to both the Bank and the defendant as “the Bank” given that no distinction needs to be made between the two entities. Having heard the parties on 5 February 2018, I dismissed the Application and provided brief oral grounds. As ASGL has appealed, I now give my full reasons.

The facts The parties

ASGL is a company incorporated in the British Virgin Islands (“the BVI”) on 23 November 2005. Jayesh Hasmukh Shah (“Shah”) is a director of ASGL. Shah is a permanent resident of Zimbabwe.

The managing director of the Bank’s wealth management division is Shamju Parakatil (“Parakatil”). He was the principal point of contact in the Bank for Shah and ASGL. Ernest Leung (“Leung”) is also in the wealth management division and his title is “Head of Core Clients APAC”. Shah and ASGL also dealt with Leung.

Several other entities are relevant though they are not parties to the Application. The first is AL Shams Building Materials Trading LLC (“AL Shams Building”), which was incorporated in Dubai on 26 March 1996. Shah’s evidence was that 51% of the shares in AL Shams Building were held by a Dubai local, while the remaining 49% of the shares were held by another company, Saturn Trading and Investments Ltd (“Saturn”). Saturn was incorporated in the BVI in the late 1990s with Shah holding 100% of its shares. Shah deposed that Saturn held its 49% shareholding in AL Shams Building for the benefit of his family, including his brother, one Kalpesh Hasmukh Shah.

Separately, in 2003, AL Shams Building purchased shares in a Zimbabwean company named Ariston Holdings Limited (“Ariston”). Shah deposed that Ariston was listed and its shares quoted on the Zimbabwe Stock Exchange.

I noted Shah’s evidence that he was at all times the legal and beneficial owner of ASGL, AL Shams Building and Saturn. I harboured some doubt as to the accuracy of this claim in respect of AL Shams Building. In particular, Shah deposed that (1) Saturn supposedly held the 49% stake in AL Shams Building for the benefit of the family, which suggested that the beneficial interest in those shares was not entirely his (see above at [4]); and (2) in any event, being only a 49% stake in AL Shams Building, it was not immediately clear how it could be said that Shah was the “owner”, legal or beneficial, of AL Shams Building even assuming the shares in Saturn were Shah’s. Nonetheless, as this point was not material to the Application, I say no more on it.

Background to the dispute Opening of the Account

On 22 June 2010, Parakatil approached Shah and asked if ASGL would be interested in opening an account with the Bank. Sometime in August 2010, the Account was formally opened. Parakatil was the relationship manager for ASGL, and the Bank communicated with and took instructions from Shah, who was the authorised signatory for the Account.

Shah also deposed that prior to the opening of the Account, the Bank had carried out its “Know Your Clients” compliance checks (“KYC Checks”) on, inter alia, Shah and ASGL. These KYC Checks continued even after the opening of the Account. Among other things, the KYC Checks included the Bank procuring details of AL Shams Building and its links with ASGL, as well as posing queries on Shah’s accounts, including specific transactions. Further, Shah said that there were regular visits to Zimbabwe by Parakatil. Shah’s evidence was that throughout the KYC Checks, the Bank never indicated that Shah or ASGL was non-compliant or uncooperative. This was not disputed by the Bank.

At the time that the Account was opened, the applicable terms were the 2010 edition of the Terms and Conditions (“the 2010 Terms and Conditions”). It was not disputed that the 2010 Terms and Conditions were sent by the Bank to Shah on 18 August 2010, which was at or before the time the Account was opened. Further, as part of the account opening documents for the Account, Shah, in a document titled “Mandate for Limited Company Account(s)”, certified that ASGL had, at a meeting duly convened and held on 16 July 2010, resolved: 5. That (A) the Bank’s Terms and Conditions for Accounts … having been read, understood and considered at the meeting, be and are hereby (subject to any amendment or variation to or substitution thereof, notified to the Company) noted, approved and adopted for each account opened or to be opened by the Company with the Bank from time to time;

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Three clauses in the 2010 Terms and Conditions were of significance. They are: 3.5 Deposits

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(D) Deposits in cash will be subject to such limits as the Bank may, from time to time, decide. The Bank shall be entitled at its sole discretion to refuse to accept any deposit (whether by cash deposit, telegraphic transfer or any other payment method whatsoever) in any account at the Bank for any reason whatsoever. In particular but without limitation it may refuse to accept any such deposit if any information or documentation for which it may request, relating to the origin of any such cash, is not provided or, in the opinion of the Bank is insufficient or unsatisfactory.

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3.10 Closing of Account(s)

The Bank may, at any time, without giving any reason, close any account of the Customer by one month’s written notice sent by post to the Customer’s last known address notified to the Bank in writing. The Customer shall be deemed to have received such notice in accordance with these Conditions and the relevant account shall be closed with effect from the close of business on the date stipulated in such notice (the “Closure Date”). With effect from the Closure Date, the Bank shall be released from any further obligations to the Customer in respect of such account, and may refuse payment of any instrument drawn by the Customer and presented after the Closure Date without liability to the Bank. The Customer may collect the balance standing to the credit of such account, if any, from the Bank during the Bank’s normal business hours; alternatively, at the Bank’s option, the balance may be sent by way of a cashier order by post to the last known address of the Customer. All unused cheques and/or other instruments (as appropriate) in respect of any account(s) in the name of the Customer which are closed, whether by the Bank pursuant to this Clause or otherwise, shall upon such closure, become the property of the Bank and shall be returned by the Customer on demand.

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8.21 Change of Terms and Conditions and Information (A) The Bank may vary these Conditions at any time upon notice to the Customer and, if the Customer fails to notify the Bank before the stated or prescribed effective date of the variation that such variation is unacceptable, the Customer shall be deemed to have accepted the same.

[emphasis added]

Parakatil deposed that the Account was governed by the Bank’s terms “as applicable from time to time”. Although he did not provide any basis for this statement, it appeared that the basis was cl 8.21(A) which entitled the Bank to vary the applicable terms upon notice to its customer. Parakatil also deposed that a new set of terms applied between June 2014 to September 2016 and a further set of terms applied at the time he deposed his affidavit, ie, 8 November 2017. However, for present purposes, it sufficed to take the 2010 Terms and Conditions as the applicable terms given that there were no material changes to cll 3.5(D), 3.10 and 8.21(A) in any of the subsequent sets of terms.

The Afrifresh Sale

I pause at this juncture to introduce a transaction that I shall refer to as “the Afrifresh Sale”. The Afrifresh Sale sets much of the context for the Application. As the Bank was not involved in the Afrifresh Sale other than as the recipient of certain payments pursuant to the transaction, the evidence in this regard was provided entirely by Shah.

Shah’s evidence on the Afrifresh Sale was as follows: On 12 April 2012, AL Shams Building agreed to sell all of its shares in Ariston to Afrifresh Group (Pty) Ltd (“Afrifresh”) for a sum of US$2.5 million, plus interest for any delayed payments under a Sale of Shares Agreement (“the SSA”). Afrifresh is a company incorporated in the Republic of South Africa. Under the SSA, it was agreed that the sum of US$2.5 million would be paid in instalments over a period of five years, commencing in 2012 and ending in 2016. Specifically, each instalment would be paid on 17 April of each year. Notably, although the vendor of the Ariston shares under the SSA was AL Shams Building, the SSA provided that Afrifresh should procure that all payments be made to the Account. As stated earlier (at [1]), the Account was in the name of ASGL, not AL Shams Building. On 16 April 2012, Shah notified Parakatil that the Ariston shares had been sold and the first instalment would be credited into the Account. On the next day, 17 April 2012, the first instalment under the SSA was credited into the Account. This first instalment was paid by an entity named Origin Global Holdings (“Origin Global”) on behalf of Afrifresh. On 12 June 2013, the second instalment under the SSA was credited into the Account. This too was paid by Origin Global on behalf of Afrifresh. The third instalment under the SSA was paid in three smaller payments over 2014. The first of the three payments was paid by Origin Global while the later two payments were paid by an entity named Origin Fruits Direct B.V....