UBS AG v Telesto Investments Ltd

• Jurisdiction: Singapore
• Judgment Date: 14 July 2011
• Date: 14 July 2011
• Docket Number: Originating Summons No 1160 of 2010 (Registrar's Appeal No 59 of 2011) and Suit No 801 of
• Court: High Court (Singapore)

UBS AG

Plaintiff

and

Telesto Investments Ltd and others and another matter

Defendant

[2011] SGHC 170

Steven Chong J

Originating Summons No 1160 of 2010 (Registrar's Appeal No 59 of 2011) and Suit No 801 of 2010 (Registrar's Appeal No 58 of 2011)

High Court

Conflict of Laws—Choice of jurisdiction—Contractual documents containing non-exclusive jurisdiction clauses in favour of Singapore

Conflict of Laws—Natural forum—Contractual documents containing governing law clauses in favour of Singapore

Conflict of Laws—Natural forum—Place of tort prima facie natural forum—Determination of place of tort—Where misrepresentation occurred

Conflict of Laws—Natural forum—Whether natural forum for contractual claim could be displaced by place of tort of misrepresentation

Conflict of Laws—Restraint of foreign proceedings—Non-exclusive jurisdiction clauses—Legal effect of non-exclusive jurisdiction clause—Whether commencement of Australian proceedings was breach of non-exclusive jurisdiction clause in favour of Singapore

Conflict of Laws—Restraint of foreign proceedings—Vexatious and oppressive conduct—Multiplicity of proceedings and possibility of conflicting judgments

Conflict of Laws—Restraint of foreign proceedings—Vexatious and oppressive conduct—Timing of commencement of proceedings in different jurisdictions—Singapore proceedings were commenced prior to that of Australian proceedings

Conflict of Laws—Restraint of foreign proceedings—Vexatious and oppressive conduct—Where key witness was not compellable in foreign jurisdiction

Conflict of Laws—Restraint of foreign proceedings—Vexatious and oppressive conduct—Where there was no difference of sufficient materiality under Australian and Singapore regimes in respect of issue in dispute

The plaintiff, UBS AG, commenced an action in Singapore by way of Suit 801 of 2010 on 15 October 2010 against Telesto Investments Limited (‘Telesto’) and Scott Francis Tyne (‘Mr Tyne’) for the Total Liabilities (as at 14 October 2010) under Telesto's account with UBS AG and Mr Tyne's guarantee executed thereunder in favour UBS AG (‘the Singapore Proceedings’) .

On 2 November 2010, Telesto, Mr Tyne and ACB 074 971 109 Pty Ltd (trustee of the Argot Unit Trust) (‘Argot’) (collectively ‘the defendants’) commenced proceedings in Australia against UBS AG for, inter alia, unauthorised transactions in respect of Telesto's account and misrepresentation by UBS AG's officers (‘the Australian Proceedings’) .

On 11 November 2010, UBS AG filed an application for an anti-suit injunction in OS 1160 of 2010 against the defendants from maintaining the Australian Proceedings. On 21 December 2010, Telesto filed Summons No 5910 of 2010 to stay the Singapore Proceedings in favour of the Australian Proceedings. On 10 January 2011, Mr Tyne filed Summons No 83 of 2011 to stay the Singapore Proceedings in favour of the Australian Proceedings (collectively ‘the stay applications’) .

All three applications were heard by the assistant registrar (‘the AR’) on 21 February 2011. The AR dismissed the stay applications by Telesto and Mr Tyne and granted an anti-suit injunction against the defendants from continuing the Australian Proceedings. The defendants appealed against the AR's refusal to grant the stay applications and also the anti-suit injunction.

Held, dismissing the appeals:

(1) In determining whether a stay of proceedings should be granted on the basis of forum non conveniens, the principles laid down in Spiliada Maritme Corporation v Cansulex Ltd [1987] AC 460 (‘Spiliada’) had to be considered. Under stage one of theSpiliada test, the defendants bore the burden of proving that Australia was clearly or distinctly the more appropriate forum to try the dispute between the parties. In this regard, the court would examine the connecting factors which the dispute bore to each of the two competing jurisdictions: at [50] and [52].

(2) There were factors which pointed towards Singapore being the natural forum, eg, the causes of action against Telesto and Mr Tyne were accrued in Singapore by virtue of the contractual documents which governed their respective relationship with UBS AG and the bulk of the contractual documents contained governing law clauses in favour of Singapore: at [56] to [58] and [62] to [66].

(3) In addition to that, although Mr Betsalel (one of the officers of UBS AG) might give evidence by way of deposition (should the matter be tried in Australia) , this was unsatisfactory as his evidence was crucial in respect of the defendants' claim in misrepresentation. Given so, it was important that he was compellable as a witness such that his credibility could be assessed before the judge trying the matter: at [68] to [70].

(4) In determining the place of tort, one should not focus solely on the place of receipt of the alleged misrepresentation, but also on the place of reliance thereof. If one looked at the continuum of the events: having received the misrepresentation in Australia, Mr Tyne acted upon those misrepresentations by communicating his instructions to the officers in Singapore which then manifested itself in the form of his instructions being carried out by the officers of UBS AG in Singapore. In other words, reliance was crystallised when the officers of UBS AG (Singapore) operated Telesto's account in accordance with Mr Tyne's instruction. This view accorded with business efficacy as in a scenario where UBS AG (Singapore) transacted with, for and on behalf of international clients, to say that the place of the tort was where their client was located(barring any fortuitous happenstance) would be to hold UBS AG (Singapore) to a choice of law to which it had not agreed: at [71], [75] and [80].

(5) There was a very good reason why the natural forum in a dispute involving a contractual claim could not be displaced simply because the defence sought to avoid liability by raising a counterclaim or set-off premised on a tort which, viewed in isolation as an independent claim, might provide for a different natural forum. Commercial entities, in particular banks and financial institutions, strove for certainty of their contractual rights and obligations by choosing appropriately drafted governing law or jurisdiction clauses. It was not uncommon for parties to allege misrepresentation as a defence to a contractual claim. In this regard, it could not have been in the contemplation of the parties that a contractual claim, once properly instituted before a court of competent jurisdiction, could then be displaced by a foreign court merely because the place of the alleged misrepresentation (which constituted a defence to the contractual claim) was a foreign country: at [86].

(6) Although the tort of misrepresentation might be a separate and distinct cause of action, in the context of the present case, it could essentially be raised as a defence to the claims by UBS AG. What was before this court was a classic case of the defendant, not the plaintiff, who was seeking to avoid being sued in the natural forum of the dispute by asserting what essentially was a tortious defence in the guise of a claim in Australia. The attempt to displace Singapore as the natural forum for UBS AG's claim by doing so was disingenuous and was nothing more than an instance of forum shopping by the defendants. The stay principles were not developed to facilitate such objectives. In the light of the above, the place of tort for misrepresentation was found to be Singapore and not Australia. Given this conlusion at stage one of the Spiliada test, the appeal in the stay applications was dismissed: at [87] and [105].

(7) An anti-suit injunction was not invariably granted whenever a stay was refused. The considerations which should be taken into account in determining whether an anti-sut injunction should be granted were usefully stated in the case of John Reginald Stott Kirkham v Trane US Inc [2009] 4 SLR (R) 428. In the present case, it was common ground that the defendants were amenable to the jurisdiction of the Singapore court. The analysis that Singapore was the natural forum of the dispute under the appeal against the stay applications would similarly apply to the appeal against the anti-suit injunction. Thus, the issues which came into acute focus were: whether the commencement of the Australian Proceedings were commenced in breach of the non-exclsuice jurisdiction clauses in favour of Singapore and/or were otherwise vexatious or oppressive: at [106], [108] and [110].

(8) An overview of the cases involving exclusive and/or non-exclusive jurisdiction clauses showed that: the starting point for considering the effect of a non-exclusive jurisdiction clause had to be the wording of the clause. In terms of contract law, a party could not ordinarily be said to be in breach of a contract containing a non-exclusive jurisdiction clause merely by pursuing proceedings in an alternative jurisdiction. There was no presumption that multiplicity of proceedings was vexatious and that in the case of non-exclusive jurisdiction clauses, the burden was on the applicant for the anti-suit injunction to show that the foreign proceedings were vexatious or oppressive for some reason independent of the mere presence of the non-exclusive jurisdiction clause. Duplication of litigation through parallel proceedings was undesirable, but it was an inherent risk where parties elected to adopt a non-exclusive jurisdiction clause. An exclusive jurisdiction clause created a contractual right not to be sued elsewhere, but even then, the court had discretion whether to enforce or even refuse it: at [119].

(9) The case of Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan [2003] 2 Lloyd's Rep 571 (‘Sabah’) did not stand for the general proposition that where a non-exclusive jurisdiction clause applied, the court might infer that the contracting parties did not intend to bring or continue parallel...