UBS AG v Telesto Investments Ltd and others and another matter

JudgeSteven Chong J
Judgment Date14 July 2011
Neutral Citation[2011] SGHC 170
CourtHigh Court (Singapore)
Docket NumberOriginating Summons No 1160 of 2010 (Registrar’s Appeal No 59 of 2011), Suit No 801/2010 (Registrar’s Appeal No 58 of 2011)
Published date18 July 2011
Hearing Date16 May 2011
Plaintiff CounselHri Kumar SC, Shivani Retnam, James Low and Charmaine Chiu (Drew and Napier LLC)
Defendant CounselEddee Ng (Tan Kok Quan Partnership)
Subject MatterCONFLICT OF LAWS,natural forum,restraint of foreign proceedings
Citation[2011] SGHC 170
Steven Chong J: Introduction

The two appeals before me (Registrar’s Appeal No 58 of 2011 and Registrar’s Appeal No 59 of 2011) relate to the issue as to which of the two jurisdictions, ie, Singapore or Australia, is the more appropriate forum to hear and decide the dispute between the parties arising from a customer-banker relationship.

The thrust of the plaintiff’s case in the Singapore proceedings lies in contract where it claims for payment due under various contracts entered with the first and second defendant respectively (see [10], [12] and [17] below). The defendants, on the other hand, have commenced proceedings in Australia against the plaintiff for, inter alia, damages based on “deceptive” or negligent misrepresentation. Counsel for the defendants conceded at the hearing that the defendants’ claim in Australia could essentially be mounted as a defence to the plaintiff’s claim in Singapore. In other words, the Singapore proceedings mirror the Australian proceedings. However, the defendants claimed that based on certain perceived advantages arising from some Australian legislation, ie, the Australian Securities and Investments Act 2001 (Cth) (“ASIC Act”), or alternatively, ss 68 and 72 of the Fair Trading Act 1987 (NSW), or alternatively, ss 99–100 of the Fair Trading Act 1989 (Qld) (“the FTAs”) (collectively known as the “Australian Acts”), their prospects of success in Australia are purportedly enhanced.

This decision will, inter alia, examine whether this factor of perceived juridical advantage, even if true, would be sufficient to displace the natural forum if it is determined to be Singapore instead of Australia. In addition, I will also consider the issue of whether the natural forum of a contractual claim can be displaced by the natural forum of a tort of misrepresentation, on the assumption that the natural fora for the contractual and misrepresentation claims are different, when the latter is in essence a defence to the contractual claim. Finally, I will examine the interplay of the principles governing stay applications with those governing anti-suit injunctions to determine whether such an injunction should be granted even if the stay is refused.

Background Facts Dramatis Personae

The plaintiff in Suit No 801 of 2010 (“S 801/2010” or the “Singapore Proceedings”) and Originating Summons No 1160 of 2010 (“OS 1160/ 2010”) is UBS AG. Although UBS AG is named as the plaintiff in both S 801/2010 and OS 1160/2010, parties have made submissions by reference to UBS Singapore, which is the Singapore branch of UBS AG and carries on business in Singapore. For the avoidance of doubt, this judgment will employ the term “UBS AG (Singapore)” whenever the Singapore branch of UBS AG is referred to.

Telesto Investments Limited (“Telesto”) is an underlying company of the Dog Star Trust which is a purpose trust registered in Jersey, the Channel Islands. On 3 December 2007, Telesto opened an account, ie, Account No [xxx] (“the Telesto account”, “its account” or “the account” as the case may be) with UBS AG (Singapore).

Scott Francis Tyne (“Mr Tyne”), on the other hand, is a director and the controlling mind of Pole Star Funds Management Pte Ltd (“Pole Star”) which, at all material times, was in charge of Telesto’s discretionary investment. Mr Tyne was, at all material times, identified by Telesto (in the minutes of its directors’ meeting) as the sole beneficial owner of the assets in the account.1 He was also the guarantor of all the obligations and liabilities of Telesto owing to UBS AG (Singapore), pursuant to a continuing guarantee and indemnity dated 26 September 2008 (“the Guarantee”) in favour of UBS AG (Singapore).

Telesto and Mr Tyne are the first and second defendants of both S 801/2010 and OS 1160/2010.

ACN 074 971 109 Pty Ltd, the third defendant in OS 1160/2010, is the trustee of the Argot Unit Trust (“Argot”) which is also a customer of UBS AG, having opened an account, ie, Account No [xxx] (“the Argot account”) on or about 4 June 2010 with UBS AG (Singapore). Mr Tyne was, at all material times, the director of Argot and the sole beneficial owner of the assets under the Argot account. Therefore, at all material times, the common denominator of Telesto, Pole Star and Argot was Mr Tyne. The three defendants are hereinafter collectively referred to as “the defendants”.

As an application for a stay of proceedings and/or for an anti-suit injunction typically involves an examination of the connections that the relevant issues of the dispute bear to each jurisdiction for the determination of the natural forum, a careful and detailed analysis of the facts giving rise to the present dispute is essential.

The events leading up to the commencement of S 801/2010
Telesto’s account and the relevant account documents

Telesto’s account was booked in Singapore and was serviced by UBS AG (Singapore). The account is subject to the terms and conditions (“T&Cs”) of the following documents, collectively referred to as the “Account Agreement”: Account Mandate dated 13 November 2007; Risk Disclosure Statement dated 13 November 2007; Charge Over Assets dated 13 November 2007; Master Placing Agreement dated 2 June 2008; UBS AG (Singapore’s) account T&Cs, as supplemented or modified by: the account T&Cs; and investment services T&Cs. Special Risks in Security Trading (Asian version).

Documents (a) to (d) above were issued by UBS AG (Singapore) and were signed by the directors or authorised signatories of Telesto in Jersey. Documents (e) and (f) are the standard T&Cs as incorporated in the Account Agreement by, inter alia, the Account Mandate.

Telesto’s facilities provided by UBS AG (Singapore)

UBS AG (Singapore) extended to Telesto, by way of a Credit Services Notification Letter (“CSNL”) dated 12 December 2007 which was subsequently revised by CSNLs dated 13 February 2008, 1 June 2008 and 1 August 2008, the following facilities: a Short Term Overdraft Facility with a limit of US$60 million; an Exchange Traded Derivative Trading Facility with a maximum risk limit of US$100,000; and an OTC Foreign Exchange and Precious Metal Derivatives Trading Facility with a maximum risk limit of US$100,000. It is not disputed that Telesto executed the CSNLs in respect of the above facilities (“the Facilities”) and is bound by the T&Cs set out therein.

The following are governed by Singapore law and contain (non-exclusive) jurisdiction clauses in favour of Singapore: Pursuant to cl 19.1 of the account T&Cs (General Conditions), the account and Facilities are “governed by and construed in accordance with the law of the country in which the relevant Account is booked [ie, Singapore law] and [Telesto] irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of [Singapore]”;2 Pursuant to paras 27.1 and 27.2 of the Guarantee,3 the Guarantee is “governed by and to be construed in all respects in accordance with, the laws of Singapore. [Mr Tyne] hereby submits to the non-exclusive jurisdiction of the Singapore courts and such other jurisdictions as [UBS AG] may deem fit”.

The events leading to the Standstill Agreement between UBS AG (Singapore) and Telesto

Pursuant to the CSNLs, Telesto utilised the facilities to, inter alia, purchase various investments (“the Investments”) for its account. The Investments were secured by Telesto by way of a Charge Over Asset which, in turn, included the Investments and all other assets in the account (“the Collateral”). Notably, the Investments included bonds issued by certain Kazakhstan financial institutions, including Bank Turan-Alem (“BTA Bank”) and Astana Finance (“Astana”) (collectively the “Kazakh Bonds”).

It is undisputed that UBS AG (Singapore) had sent Telesto periodic statements and confirmations reflecting the purchase of the Investments and other transactions carried out under the Account Agreement. The periodic statements and confirmations were retained by UBS AG (Singapore) in Singapore at its Retained Mail unit pursuant to Telesto’s mailing instructions of 13 November 2007 when it signed the Account Mandate.4 Telesto did not dispute the statements or confirmations at any material time. Pursuant to cl 2.1 of the account T&Cs,5 Telesto undertook to inform UBS AG (Singapore) promptly and in any event, within 14 days from the date of such confirmation, and, within 90 days from the date of such statements (as applicable), of any discrepancies, omissions, credits or debits wrongly made to or inaccuracies or incorrect entries in the account or the contents of each confirmation or statement or the execution of any order. Failing which, upon the expiry of the 14 days, UBS AG (Singapore) may deem Telesto to have approved the original statements as sent by UBS AG (Singapore) to Telesto and in which case, Telesto shall be deemed conclusively to have accepted all the matters contained in such confirmation and statement without any further proof that the account is, and all entries therein and the execution of all the transactions are correct. Further, UBS AG (Singapore) shall be free from all claims in respect of the Account and all such transactions save for unauthorised transactions which have resulted from the forgery, fraud or negligence of UBS AG (Singapore) and/or any of its employees. UBS AG (Singapore), relying on RBS Coutts Bank Ltd v Shishir Tarachand Kothari [2009] SGHC 273, submitted that in the light of cl 2.1 of the account T&Cs, Telesto is deemed to have agreed to the Investments.

In or about September 2008, the value of the Collateral decreased due to market deterioration. Consequently, a margin shortfall occurred in the account. In or around 24 September 2008, Mr Tyne travelled to Singapore to, inter alia, meet with the representatives of UBS AG (Singapore) to discuss how to deal with the margin shortfall. Mr...

To continue reading

Request your trial
1 cases
  • UBS AG v Telesto Investments Ltd
    • Singapore
    • High Court (Singapore)
    • 14 July 2011
    ...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 jurisdictio......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT