TMT Co Ltd v The Royal Bank of Scotland plc (trading as RBS Greenwich Futures) and others

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 07 February 2017
• Neutral Citation: [2017] SGHC 21
• Docket Number: Suit No 664 of 2015 (Registrar’s Appeals Nos 269, 270 and 271 of 2016 and Summons No 3671 of 2016)
• Date: 07 February 2017
• Published date: 18 October 2017
• Plaintiff Counsel: Deborah Evaline Barker SC, Ushan Premaratne and Shen Peishi, Priscilla (Khattarwong LLP)
• Defendant Counsel: The fourth defendant is unrepresented,Kristy Tan, Melissa Mak and Leong Yi-Ming (Allen & Gledhill LLP),Melissa Marie Tan Shu Ling and Sonia Chan (JLC Advisors LLP)
• Court: High Court (Singapore)
• Hearing Date: 09 September 2016
• Subject Matter: Conflict of Laws,Natural Forum,Stay of court proceedings,Arbitration

Aedit Abdullah JC: Introduction

The primary question in the present Registrar’s Appeals (the “Appeals”) is whether a foreign settlement agreement bars Singapore proceedings. By way of background, the Plaintiff, TMT Co., Ltd, a Liberian company, active in Taiwan (the “Plaintiff”), had earlier claimed against the 1st Defendant, The Royal Bank of Scotland PLC, a British Bank (the “1st Defendant”) in the English Commercial Court. Subsequently, a settlement agreement was reached between them in England.

The Plaintiff then started proceedings in Singapore against the 1st Defendant; the 1st Defendant’s Singapore branch office, The Royal Bank of Scotland Plc (Singapore Branch) (the “2nd Defendant”); the 1st Defendant’s then Chief Executive Officer, Fred Goodwin (the “3rd Defendant”) and two other employees, Ms Neena Birdee (the “4th Defendant”) and Ms Marie Chang (the “5th Defendant”) (collectively, “the Defendants”).

The 1st, 2nd and 5th Defendants applied before the Assistant Registrar (“AR”) for a stay of proceedings. The AR granted the stay. The Plaintiff appeals the AR’s decision. After the AR rendered her decision, the 3rd Defendant filed an application to set aside the service of proceedings against him. This application forms the subject matter of Summons No 3671 of 2016 (“SUM 3671/2016”).

For the reasons that I set out below, I dismiss the Appeals and find that the proceedings in Singapore against the Defendants should be stayed. In respect of SUM 3671/2016, I find that the service out of jurisdiction against the 3rd Defendant should be set aside.

Background

The Plaintiff, a Liberian Company, is part of a ship-owning group, owned or controlled by Mr Hsin Chi Su, a Taiwan resident. In May 2007, the Plaintiff and the 1st Defendant entered into a contractual relationship, through an agreement referred to as the FFA Account Agreement, under which the Plaintiff traded in forward freight agreements and options (“FFAs” and “FFA options” respectively). These trades were cleared by the 1st Defendant through the London Clearing House (“LCH”), of which the 1st Defendant was a Clearing Member.

In July 2007, the Plaintiff also opened a USD Call Deposit Account with the 1st Defendant to facilitate this trading and hold cash for margin payments for such trades. Although this account was governed by a different agreement (the “Currency Account Agreement”), the parties accept that for the purposes of the present suit, the account operation of the USD Call Deposit Account would be governed by the FFA Account Agreement. The governing law of both the FFA Account Agreement and Currency Account Agreement is English law.

The trades carried out eventually resulted in losses for the Plaintiff, and debts were owed to the 1st Defendant. A dispute arose between the Plaintiff and the 1st Defendant as debts arising from the FFAs and FFA options were not paid. Eventually, in August 2010, the Plaintiff and its associates filed a claim in the English Commercial Court against the 1st Defendant, alleging, inter alia, (a) breach of contract in respect of the FFA Account Agreement, concerning information as to the requirements for margin; (b) negligence in respect of those matters; (c) breach of statutory duty concerning risk management, and other obligations; and (d) negligent misrepresentation in the account summaries (the “English proceedings”). It was alleged in the English proceedings that the margin requirements were greatly understated, with margin requirements being increased from USD 1.7 million to about USD 120 million; margin calls being increased from about USD 5.7 million to USD 55.5 million and the provision of various security to meet the margin requirements. Allegations were also made about assurances made by the 1st and 2nd Defendants’ employees, the omission of variation margin in the analysis of the position relating to the FFA options, the use of incorrect account statements; and the imposition of trading restrictions. It was essentially alleged that the incorrect information provided by the 1st Defendant was relied upon by the Plaintiff to make trading decisions, leading to substantial losses. The English proceedings was eventually settled by a settlement agreement dated 29 May 2012 (the “Settlement Agreement”).

The key terms of the Settlement Agreement were as follows:

1. TERMS OF SETTLEMENT

1.1 In full and final settlement of all and any claims, counterclaims, causes or rights of action or proceedings of whatsoever nature and howsoever arising whether known or unknown that [the Plaintiff or its associates] have or may have against the Defendant or that the Defendant has or may have against any of the [Plaintiff or associates] arising from or in connection with the Proceedings and/ or the facts and matters as set out in the statements of case and witness statements served in the Proceedings (including any allegations no longer pursued in the proceedings_, the [Plaintiff] shall [arrange for the Defendant to receive a sum].

The Settlement Agreement also provided for English Law to apply (cl 13.1) and that the English Courts were to have exclusive jurisdiction (cl 13.2).

Subsequently, on 30 June 2015, the Plaintiff started Suit No 664 of 2015 (the “Singapore proceedings”) against the 1st Defendant, its Singapore branch (the 2nd Defendant), Mr Fred Goodwin (the 3rd Defendant), who was the Chief Executive Officer up to November 2008; Ms Neena Birdee, a former employee of Royal Bank of Scotland (“RBS”) Hong Kong (the 4th Defendant); and Ms Marie Chang, a former employee of the 2nd Defendant (the 5th Defendant). The 4th Defendant has not entered appearance thus far.

In the Singapore proceedings, the Plaintiff alleges that there were improper and erroneous margin requirements imposed by the 1st Defendant in respect of the Plaintiff’s trades in FFAs and FFA options, and statements were issued with these erroneous requirements (the “Margin Call Claim”); various collateral and security provided by the Plaintiff to meet the margin calls had been improperly and erroneously valued (the “Collateral / Security Valuation Claim”); moneys were diverted and instructions delayed by the 1st and/or 2nd Defendant from its USD Call Deposit Account (the “USD Call Deposit Account Claim”); that the 3rd, 4th and 5th Defendants had committed wrongful or fraudulent assistance in respect of wrongful and improper acts by the 1st and 2nd Defendants (the “Wrongful Assistance Claim”); and the Defendants had committed conspiracy to carry out the wrongful acts with the intention of causing loss to the Plaintiff (the “Conspiracy Claim”).

The 1st, 2nd and 5th Defendants resisted the Plaintiff’s claims before the AR, seeking a stay of the Singapore proceedings on various grounds. The Plaintiff, the 1st and 2nd Defendants adduced expert opinions from Queen’s Counsels on English law.

The Decision Below

The AR granted a stay of the proceedings in favour of the 1st, 2nd and 5th Defendants on 7 July 2016. In reaching this decision, the AR reasoned as follows: The Plaintiff was prevented by the Settlement Agreement from making the Margin Call Claim. It was conceded by the Plaintiff’s expert and counsel that the Margin Call Claim fell within that Agreement. In any event, the Margin Call Claim and the other claims were disputes arising out of or relating to the Settlement Agreement, which should be determined by an English court, pursuant to cl 13.2 of the Settlement Agreement. Since the Collateral / Security Valuation Claim, the USD Call Deposit Account Claim and the Conspiracy Claim fell within cl 20 of the FFA Account Agreement, stay should be granted in favour of arbitration. Stay could also be granted under cl 22 of the FFA Account Agreement as this was an exclusive jurisdiction clause in favour of England. In any event, England was the more appropriate forum for the dispute, as the connecting factors pointed to England, and stay should be granted in that jurisdiction’s favour. As the proceedings against the 1st and 2nd Defendant should be stayed, a similar result (a point conceded by the Plaintiff’s counsel before the AR) should follow in respect of the claim against the 5th Defendant.

The Application by the 3rd Defendant

SUM 3671/2016 was filed after the decision by the AR in respect of the 1st, 2nd and 5th Defendants. This was an application by the 3rd Defendant to set aside the service of proceedings against him. SUM 3671/2016 was heard by me, together with the Appeals.

The Plaintiff’s Case

The Plaintiff obtained an expert opinion from Mr Raymond Cox QC, an English counsel, on the terms of the Settlement Agreement. Mr Cox was of the view that cl 1.1 of the Settlement Agreement did not cover claims not raised in the English proceedings, or which were not connected to such claims, including through the affidavits or the pleadings. He reasoned that since what the parties intended must be ascertained by their intention at the time of the Settlement Agreement, what was compromised was only what was raised and contemplated in the English proceedings.

On this basis, the Plaintiff argues that the general release clause in the Settlement Agreement (cl 1.1) does not exclude claims which were never raised or do not have any connection to the claims raised in the English proceedings. In this vein, the Plaintiff argues that the Settlement Agreement in England does not bar the Singapore proceedings as the English proceedings were fundamentally different. The claims in the Singapore proceedings relate to fraud, conspiracy, diversion of funds, unauthorised use of moneys, and deliberate delay. None of these were raised in the English proceedings. In making this submission, however, the Plaintiff departs from their expert’s opinion in respect of the categorisation of the claims: while Mr Cox accepts that some of the Plaintiff’s claims are covered by the Settlement Agreement, the Plaintiff...