Teo Wai Cheong v Crédit Industriel et Commercial

• Jurisdiction: Singapore
• Judgment Date: 17 May 2013
• Date: 17 May 2013
• Docket Number: Civil Appeals Nos 59 and 94 of 2012
• Court: Court of Appeal (Singapore)

Teo Wai Cheong

Plaintiff

and

Crédit Industriel et Commercial and another appeal

Defendant

[2013] SGCA 33

Sundaresh Menon CJ

,

Chao Hick Tin JA

and

V K Rajah JA

Civil Appeals Nos 59 and 94 of 2012

Court of Appeal

Banking—Securities for customers—Private bank selling accumulators to customer—Whether customer authorised relationship manager to enter into accumulators on his behalf

Civil Procedure—Discovery of documents—Solicitors' duty in respect of client's discovery obligation

Evidence—Admissibility of evidence—Admissibility of evidence by witness in previous judicial proceeding—Evidence not disclosed at first proceeding due to breach of discovery obligation by party now seeking to admit evidence—Whether witness could not be found—Whether requirement that adverse party in first proceeding had right and opportunity to cross-examine satisfied—Section 33 Evidence Act (Cap 97, 1997 Rev Ed)

Four China Energy (‘CE’) accumulators and one CE accumulator (‘the Disputed Accumulators’) were booked in the account of appellant (‘Teo’) maintained with the respondent (‘the Bank’) on 2 and 3 October 2007 respectively. When Teo failed to pay for shares subsequently delivered pursuant to the Disputed Accumulators, the Bank liquidated assets and set off moneys in his account to effect partial payment. The Bank then sued Teo for sums outstanding and the costs of unwinding these transactions with its counterparties; in the alternative, it sought to recover a loan said to have been extended to Teo to cover such sums and interest thereon. According to the Bank, the Disputed Accumulators were authorised by Teo in two telephone conversations he had with a relationship manager of the bank, Ng, on 2 and 3 October respectively. Teo denied that he had authorised Ng to establish the Disputed Accumulators and accordingly denied that he owed the Bank any moneys. He further counterclaimed against the Bank for wrongful liquidation of assets and set off of moneys and sought an account and repayment of such sums.

The matter was first heard by a judicial commissioner who gave judgment for the Bank. On appeal, the Court of Appeal directed the Bank to produce documents which the Bank had previously failed to disclose (‘the newly disclosed evidence’). Finding itself unable to conclude that the first trial judge's finding would have been unaffected by the newly disclosed evidence, the Court of Appeal set aside the judgment and ordered a retrial of the matter (‘the Retrial’).

On the first day of the Retrial, the Bank applied for leave to admit Ng's affidavits of evidence-in-chief and her oral evidence given at the first trial pursuant to s 33 of the Evidence Act (Cap 97, 1997 Rev Ed) (‘the EA’) on the basis that she could not be found. The High Court judge hearing the Retrial (‘the Retrial Judge’) acceded to the Bank's request and admitted the evidence. On the basis of Ng's evidence, the Retrial Judge found in favour of the Bank, giving judgment for the Bank and dismissing Teo's counterclaim accordingly. Teo appealed against both the Retrial Judge's decision to admit Ng's evidence from the first trial and the entirety of the Retrial Judge's decision on the substantive claims.

Held, allowing the appeals:

(1) The Bank had satisfied the ‘due diligence’ threshold for the purpose of demonstrating that Ng ‘could not be found’, which was the first limb of s 33 of the EA; viewing the efforts of the Bank in the round, they constituted the application of due diligence. This was not a case where Teo could make good any suggestion that the Bank's efforts were not bona fide or that it was trying to avoid locating Ng: at [30].

(2) The second limb of s 33 of the EA required that there must have been a ‘right and opportunity to cross-examine’ in the first proceeding. This was provided for in proviso (b) to s 33 of the EA. This must have been an effective and not merely an illusory right and opportunity. Where the cross-examination was materially impaired it cannot be said that the requirement had nevertheless been fulfilled, especially where this was caused or materially contributed to by the act or omission of the party seeking to invoke s 33. The newly disclosed evidence was not available at the first trial as a result of the Bank's breach of its discovery obligation. Such newly disclosed evidence could have been used by Teo's counsel in his cross-examination of Ng had it been available, and had Ng not been able to satisfactorily explain the documents which appeared prejudicial to the Bank's case, her evidence would have been gravely undermined. The cross-examination of Ng at the first trial was materially impaired and this was brought about by the Bank's breach of its discovery obligations; proviso (b) to s 33 was not satisfied in this case so Ng's evidence at the first trial could not be admitted: at [34], [36], [52] and [54].

(3) As the plaintiff, the Bank bore the burden of proving, in accordance with its pleaded case, that all of the Disputed Accumulators were authorised and on the exact terms on which they had been entered into. Given that the Bank could not rely on Ng's evidence, Ng's unexplained inaction from 3 to 11 October 2007 and the evidence showing Ng's deliberate attempts to lie and mislead her own colleagues in the Bank, the Bank could not be said to have discharged its burden of proving that Teo had specifically authorised the establishment of the Dispute Accumulators: at [58], [82] and [84].

(4) Teo was not estopped from claiming that the Disputed Accumulators were unauthorised. There was no evidence of any representation by Teo to the Bank that they were authorised because he had by 16 or 18 October already disclaimed them in his conversations with Ng. The Bank also had not suffered detriment in reliance on any such representation; it had taken a mistaken view that it would be able to prove that the Disputed Accumulators were authorised and it was on this basis that it did not unwind them earlier: at [88].

(5) As the Bank could not prove that the Disputed Accumulators were authorised, it had no right to appropriate Teo's assets and moneys held with it as payment for them. Teo's counterclaim against the Bank for wrongful liquidation of his assets held by the Bank and set off of moneys in his accounts therefore succeeded: at [89].

[Observation: In seeking to satisfy the court that the witness ‘cannot be found’, an applicant under s 33 of the EA ought to give sufficient details and particulars as to the specific steps and efforts taken to locate the witness. Where an application under s 33 was envisaged, it would ordinarily have been sensible to apprise the opposite party of the measures being taken to locate the witness and to invite comments or suggestions; the interests of the parties would generally be convergent in such circumstances: at [31] and [32].

A solicitor owed a special duty to the court to properly explain to his client what the applicable discovery obligations were. The solicitor also owed a duty of involvement in and supervision of the disclosure process; he must not necessarily be satisfied by the statement of his client that he has no documents or no more than he chooses to disclose, and if he had reasonable grounds for supposing that there were others, he ought to investigate the matter. A solicitor was also duty bound to review the documents disclosed by the client to consider whether relevant documents might have been omitted: at [43], [45] and [47].

In the context of advising a corporation, a solicitor's duty in respect of his client's disclosure extended to ensuring that knowledge and appreciation of the scope of the discovery obligations were passed on to any in the corporation who might have been affected by it: at [48].]

AG, The v Davison (1825) M'Cle & Yo 160; 148 ER 366 (refd)

Chainchal Singh v Emperor AIR 1946 PC 1 (refd)

Crédit Industriel et Commercial v Teo Wai Cheong [2010] 3 SLR 1149 (refd)

Davies v Eli Lilly & Co [1987] 1 WLR 428 (refd)

Koh Teck Hee v Leow Swee Lim [1991] 2 SLR (R) 328; [1992] 1 SLR 905 (refd)

Myers v Elman [1940] AC 282 (refd)

Naylor v Preston Area Health Authority [1987] 1 WLR 958 (refd)

Pertamina Energy Trading Ltd v Credit Suisse [2006] 4 SLR (R) 273; [2006] 4 SLR 273 (refd)

Public Trustee v By Products Traders Pte Ltd [2005] 3 SLR (R) 449; [2005] 3 SLR 449 (refd)

Rockwell Machine Tool Co Ltd v E P Barrus (Concessionaires) Ltd [1968] 1 WLR 693 (refd)

Teo Wai Cheong v Crédit Industriel et Commercial [2011] SGCA 13 (refd)

Vernon v Bosley (No 2) [1999] QB 18 (refd)

Woods v Martins Bank Ltd [1959] 1 QB 55 (refd)

Wright v Doe d Tatham (1834) 1 Ad & E 3; 110 ER 1108 (refd)

Banking Act (Cap 19, 2008 Rev Ed) ss 47, 47 (1)

Evidence Act (Cap 97, 1997 Rev Ed) s 33 (consd)

Financial Advisers Act (Cap 110, 2007 Rev Ed) s 27

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 24

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) s 37 (4)

Chelva Rajah SC and Tham Lijing (Tan Rajah & Cheah), Sean Lim Thian Siong and Gong Chin Nam (Hin Tat Augustine & Partners) for the appellant

Manoj Sandrasegara, Smitha Menon, Aw Wen Ni, Mohamed Nawaz, Daniel Chan, Jonathan Tang and Edmund Koh (Wong Partnership LLP) for the respondent.

Judgment reserved.

Sundaresh Menon CJ

(delivering the judgment of the court):

Introduction

1 This litigation, between the appellant Teo Wai Cheong (‘Teo’) and the respondent Crédit Industriel et Commercial (‘the Bank’) has had a long and tortuous history. This is the third time that the matter has reached the Court of Appeal. As will become evident, the need for much of this arduous journey stemmed from the Bank's abject failure to make proper discovery. The first time the matter came before us, in Civil Appeal No 113 of 2009, we dealt with an interlocutory application, brought by Teo, for further discovery. On that occasion, we allowed Teo's appeal and ordered the Bank to make further...