Telemedia Pacific Group Ltd v Credit Agricole (Suisse) SA (Yeh Mao-Yuan, third party)

• Jurisdiction: Singapore
• Judge: George Wei JC
• Judgment Date: 18 November 2014
• Neutral Citation: [2014] SGHC 235
• Plaintiff Counsel: N Sreenivasan SC and Ramesh Bharani (Straits Law Practice LLC)
• Docket Number: Suit No 379 of 2012
• Date: 18 November 2014
• Hearing Date: 27 May 2014,26 May 2014,07 May 2014,30 April 2014,23 May 2014,06 May 2014,16 April 2014,22 April 2014,15 April 2014,02 May 2014,20 May 2014,29 April 2014,22 May 2014,21 May 2014,19 May 2014,17 April 2014,24 June 2014,23 April 2014
• Subject Matter: Negligence,Electronic records,Accounts,Conclusive evidence clauses,Evidence,Documentary evidence,Banking
• Year: 2014
• Citation: [2014] SGHC 235
• Defendant Counsel: Gary Leonard Low, Benedict Teo Chun-Wei, Ng Sook Zhen and Terence Tan (Drew & Napier LLC),Hee Theng Fong, Toh Wei Yi and Ong Po-Qin (Harry Elias Partnership LLP)
• Court: High Court (Singapore)
• Published date: 19 November 2014

George Wei JC: Introduction

This action concerns claims made by a plaintiff-customer against a defendant-bank for a loss of shares placed in the plaintiff’s account with the defendant. The writ in this action was filed on 9 May 2012. The claims are made on the basis of an alleged breach of the defendant’s mandate with the plaintiff, and for the defendant’s alleged breach of its duty to take reasonable care. The defendant has also brought proceedings against the third party for an indemnity or contribution on the basis that any breach of duty owed to the plaintiff was caused by the misrepresentation of the third party.

The plaintiff, Telemedia Pacific Group Limited (“Telemedia”), is a company incorporated in the British Virgin Islands (“BVI”). Telemedia is wholly-owned by Hardy Hartanto (“Mr Hartanto”), a citizen of the Hong Kong Special Administrative Region (“Hong Kong SAR”). Mr Hartanto is also the sole director of Telemedia. Telemedia was an account holder with the Singapore branch of the defendant, Crédit Agricole (Suisse) SA (“Crédit Agricole”), a Swiss bank. The account was opened on 2 December 2010. I shall refer to it as “the Telemedia Account”.

Telemedia held 225m Next Generation Satellite Communications Ltd (“NexGen”) shares in the Telemedia Account. NexGen is a company listed on the Singapore Exchange (“SGX”). (NexGen was previously known as Ban Joo & Company Limited, and there was some reference to a company by that name in the evidence. For convenience, I will only use the name NexGen to refer to that company or its shares.) At the material time, about 60% of NexGen’s issued share capital was held by Telemedia.

In October 2011, Crédit Agricole transferred the NexGen shares out of the Telemedia Account on the instructions of the third party, Yeh Mao-Yuan, also known as Jack Yeh (“Mr Yeh”). Mr Yeh is a citizen of the Republic of China (Taiwan) who travels on a Dominica passport. He was also a business associate of Mr Hartanto. The Telemedia Account was in fact opened pursuant to a joint-investment arrangement between Mr Yeh and Mr Hartanto. Mr Yeh was the person who instructed that the 225m NexGen shares be transferred out of the Telemedia Account into an account maintained by Fullerton Capital Enterprises Limited (“Fullerton”). Fullerton was a subsidiary of Yuanta Asset Management International Limited (“Yuanta”), which was in turn owned by Mr Yeh.

Telemedia claims that Crédit Agricole was not authorised to act on the instructions of Mr Yeh. It submits that Crédit Agricole had, by effecting the transfers of the 225m NexGen shares pursuant to Mr Yeh’s instructions, acted in breach of its mandate, or alternatively, its duty of care owed to Telemedia.

Crédit Agricole’s position is that Mr Yeh was singly authorised to operate the Telemedia Account. Crédit Agricole points to the account-opening forms and supporting documents which were submitted pursuant to the opening of the Telemedia Account. These forms constitute the contractual documents establishing the banker-customer relationship between Crédit Agricole and Telemedia. The forms show both the names and signatures of Mr Yeh and Mr Hartanto and reflect both of them as being singly authorised to provide instructions to Crédit Agricole in respect of the Telemedia Account.

Telemedia challenges the circumstances under which Mr Yeh’s name and signature came to appear on the account-opening forms. Telemedia’s position is that Mr Hartanto was the sole authorised signatory in respect of the Telemedia Account. Telemedia alleges that a Crédit Agricole banker, Brian Goh (“Mr Goh”), handed the account-opening forms to Mr Yeh after Mr Hartanto had signed and returned the forms to Crédit Agricole. Mr Goh purportedly handed the forms to Mr Yeh without Mr Hartanto’s knowledge or consent. Telemedia claims that Mr Goh’s handing over of the account-opening forms to Mr Yeh allowed Mr Yeh to affix his signature on the forms. At the material time, Mr Goh was a director at the Singapore branch of Crédit Agricole’s private banking arm. He was the private banker responsible for managing Telemedia’s banking relationship with Crédit Agricole.

Crédit Agricole disputes Telemedia’s version of events. Crédit Agricole’s position is that the agreement or understanding between Mr Hartanto, Mr Yeh and Mr Goh had been that both Mr Hartanto and Mr Yeh would be singly authorised to operate the Telemedia Account. Crédit Agricole’s position is that when the completed account-opening forms were handed to Mr Goh, the forms bore the names and signatures of both Mr Hartanto and Mr Yeh, consistent with the understanding between the three of them.

Crédit Agricole also commenced third-party proceedings against Mr Yeh, seeking an indemnity from him in the event that Crédit Agricole is found liable. Crédit Agricole’s claim against Mr Yeh, which is predicated on the success of Telemedia’s claim against it, is that Mr Yeh had fraudulently misrepresented to Crédit Agricole that he was singly authorised to operate the Telemedia Account. Crédit Agricole alleges that it had been induced by those misrepresentations to transfer the 225m NexGen shares out of the Telemedia Account on Mr Yeh’s instructions.

It is important to bear in mind two features of the present proceedings. First, Telemedia’s claim is against Crédit Agricole and not Mr Yeh. No claim was brought by Telemedia against Mr Yeh in respect of his alleged unauthorised instruction to Crédit Agricole to transfer 225m shares out of the Telemedia Account. This is, at least on the face it, bizarre. Based on Telemedia’s version of events given in these proceedings, Mr Yeh would have been the main antagonist—he would have been the fraudster who covertly inserted his name into the account-opening forms without Telemedia’s knowledge or consent. But Mr Yeh is party to these proceedings only because Crédit Agricole took out third-party proceedings against him.

To date, neither Telemedia nor Mr Hartanto has instituted legal proceedings against Mr Yeh. Neither does it appear that any police report has been lodged against Mr Yeh.¹ In cross-examination, Mr Hartanto appeared to agree that it was his case that Mr Yeh had defrauded him in respect of the transfer of the 225m NexGen shares (at the very least to have instructed the transfer of shares without authority). Accordingly, his complaint in this suit against Crédit Agricole was made on the basis that Mr Goh and Mr Yeh had ganged up against him.² Mr Hartanto’s evidence was, however, peculiar, as he appeared to hold the view that the fault lay entirely on Crédit Agricole, and that Telemedia might not even have a cause of action against Mr Yeh. While I accept that it is Telemedia’s (or Mr Hartanto’s) sole prerogative as to who to bring proceedings against, and for what, it is still surprising, given the nature of the allegations made by Telemedia in this suit, that neither Telemedia nor Mr Hartanto has initiated an action against Mr Yeh.³

Second, Telemedia’s claim against Crédit Agricole is premised entirely on the fact that Crédit Agricole’s transfer of the 225m NexGen shares out of the Telemedia Account was effected either without authority or in breach of its duty of care. There is no allegation of fraud, notice of fraud or conspiracy made against Crédit Agricole or Mr Goh.

The nub of the dispute is whether Mr Yeh was singly authorised to give instructions in relation to the Telemedia Account. This requires a determination of how Mr Yeh’s name and signature found its way onto the Telemedia account-opening forms. If Mr Yeh was authorised to give instructions in relation to the Telemedia Account, the further question that arises is whether Telemedia validly revoked Mr Yeh’s authority prior to the transfer of the 225m NexGen shares out of the Telemedia Account in October 2011. Before addressing these factual and legal disputes, I will begin by tracing the largely undisputed facts.

The facts The introduction of Mr Hartanto to Mr Yeh and preliminary talks

The origins of the dispute date back to 2005. That was the first time Mr Hartanto was introduced to Mr Yeh in Shenzhen, the People’s Republic of China. They then met again in July or August 2010 at Marina Bay Sands (“MBS”) in Singapore. At this meeting, Mr Hartanto and Mr Yeh discussed the possibility of both of them entering into a joint investment.

The joint investment: the non-recourse loan agreements and securities co-operation agreement

After subsequent meetings and discussions, the skeleton of the joint investment took shape. The plan was for Mr Hartanto and Mr Yeh to invest through the vehicle of a BVI company. The company eventually selected was Asia Energy Management Ltd (“Asia Energy”). Mr Hartanto claims that the entity Asia Energy was not selected till a much more advanced stage in the finalisation of the joint-investment arrangement. I will come back to this point later. Both Mr Hartanto and Mr Yeh also acted through their respective companies, Telemedia and Yuanta, in respect of the joint investment.

The joint-investment arrangement required both Telemedia and Asia Energy to open individual accounts with Crédit Agricole. The arrangement was structured in two stages. The first stage concerned the procurement of financing for Asia Energy. The second stage concerned the actual joint investments made by Asia Energy.

Under the first stage, Yuanta was to advance loans to Asia Energy on the collateral of NexGen shares. These NexGen shares were to be provided by Telemedia. Under the precise mechanics of the arrangement, the NexGen shares would be held in the Telemedia Account. Yuanta would disburse loan monies (which it procured from third-party lenders) to Asia Energy’s account with Crédit Agricole (“the Asia Energy Account”) against the transfer of NexGen shares from the Telemedia Account into Yuanta’s account with Crédit Agricole (“the Yuanta Account”). The loan amount to be...