Velstra Pte Ltd (in liquidation) v Dexia Bank Belgium

• Jurisdiction: Singapore
• Judge: MPH Rubin J
• Judgment Date: 21 October 2003
• Neutral Citation: [2003] SGHC 253
• Docket Number: Originating Summons No 1181 of (Registrar's Appeal No 335 of 2003)
• Date: 21 October 2003
• Year: 2003
• Published date: 28 October 2003
• Plaintiff Counsel: Vinodh Coomaraswamy and David Chan (Shook Lin & Bok)
• Citation: [2003] SGHC 253
• Defendant Counsel: Tan Chuan Thye and Ivan Chia (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Defendants facing criminal proceedings involving same transaction in foreign forum,Whether defendants have shown real danger of prejudice to justify granting stay,Civil Procedure,Plaintiffs bringing action to void transaction entered into with defendants,Defendants seeking stay of civil proceedings in Singapore,Stay of proceedings

Introductory

1 This is an appeal by the defendant against an order by the learned Assistant Registrar made on 22 September 2003, refusing the defendant’s application for a stay of proceedings of the action herein pending the final determination of criminal proceedings against the defendants in Belgium. The appeal was dismissed with costs. My reasons for dismissing the appeal follow.

Background facts

2 The plaintiff is a company incorporated in Singapore. The defendant is a bank incorporated in Belgium.

3 By an order of court dated 12 April 2002, the plainitff was ordered to be placed in compulsory liquidation.

4 The present action is at the instance of the liquidators of the plaintiff against the defendant for a declaration that a transaction pursuant to which the plaintiff was caused to pay to the defendant a sum of US$20.92 million on or about 4 January 2000 constitutes a transaction at an under value within the meaning of s 98 of the Bankruptcy Act (Cap 20) read with s 329 of the Companies Act (Cap 50) and that the said transaction be declared null and void and of no effect. The other reliefs prayed for by the plaintiff are ancillary and incidental to the main declaration.

5 In this connection, the facts pleaded by the plaintiff in relation to its claim, as appear in paras 7 to 20 of the plaintiff’s amended statement of claim, are as follows:

7. At all material times, the Plaintiff maintained a bank account with the Shenton Way branch of the Development Bank of Singapore Ltd (“DBS”).

8. At all material times, one Tony Snauwaert was a director of the Plaintiff.

9. On or about 30 December 1999, the Defendant debited the sum of US$31,000,00 from account number 550-9758000-84 (“the Internal Account”), being an account internal to the Defendant of which the Defendant is the legal and beneficial owner. On the same day, the Defendant credited account number 553-2056900-42 (“the Account”) with the sum of US$21,000,000 – which credit was funded from the said debit of US$31,000,000.

10. By so doing, the Defendant discharged a debit balance on the Account using the Defendant’s own funds.

11. On or about 5 January 2000 (“the Relevant Date”), the said Tony Snauwaert caused the Plaintiff to instruct DBS to pay the sum of US$20,920,000 (“the Payment”) from the Plaintiff’s account with DBS to the Defendant.

12. The said Tony Snauwaert in the relevant remittance instructions signed by him in respect of the said payment of US$20,920,000 named the Defendant as the beneficiary of the Payment and gave the Account as the account to be credited.

13. The remittance advice sent to the Plaintiff by DBS and the SWIFT instructions sent by DBS to the Defendant also indicated the beneficiary of the remittance to be the Defendant.

14. On or about 5 January 2000, the sum of US$20,919,991 (being the US$20,920,000 comprised in the Payment less bank and other charges) was credited to the Defendant’s account with the Chase Manhattan Bank in New York. On or about the same day, and funded by the Plaintiff’s remittance, the Defendant credited the sum of US$21,000,000 to the Internal Account, such sum being comprised in a larger credit of US$31,000,00.

15. On or about 13 January 2000, the Defendant made an adjustment to the Account to reflect the difference between US$21,000,000 (the amount credited to the Account as pleaded in paragraph 9 above) and US$20,919,991 (the amount received in the Defendant’s account with Chase Manhattan Bank referred to in paragraph 14 above).

16. By reason of the matters aforesaid, the Defendant was the factual and/or the legal beneficiary of the US$20,920,000 comprised in the Payment.

17. By reason of the matters aforesaid, the Plaintiff by being caused to make the Payment entered into a transaction with the Defendant within the meaning of section 98 of the Bankruptcy Act (Cap. 20, 2000 Ed) read with the definition of “transaction” and “entering into a transaction” set out in section 2(1) thereof.

18. By reason of the matters aforesaid, the Defendant was a party to the said transaction.

19. The Plaintiff received no or no valuable consideration from the Defendant or from any other person in exchange for the Payment.

20. By reason of the matters aforesaid and by reason of the Payment, the Plaintiff was caused to make a gift to the Defendant or otherwise to enter into a transaction with the Defendant on terms that provided for the Plaintiff to receive no consideration within the meaning of section 98(3) (a) of the Bankruptcy Act (Cap 20, 2000 Ed).

6 In essence, the defendant’s defence is that it received the said US$20.92 million in the ordinary course of its banking business and credited the sum to the account of its customers in good faith. It further purports to contend (paras 19 to 21 of the defence) that the said transaction does not fall within the purview of the Bankruptcy Act. The defendant’s averment at para 9 of its defence, in relation to the plaintiff’s allegation in para 9 of the statement of claim is that it will contend that the account number 553-2056900-42 (“the Account”) is an account maintained by its customers, Messrs Jo Lernout, Pol Hauspie and Nico Wilaert (“the Customer”) with the defendant and that the Customer was on or about 30 December 1999 indebted to the defendant in an amount of US$20,869,748.

7 The Reply by the plaintiff was filed on 3 March 2003 and the hearing of this action has been scheduled to commence on 13 October 2003 and to end on 23 October 2003.

8 As it happened, the defendant was indicted in Belgium on 23 June 2003 for some criminal offences under the laws of Belgium. Admittedly, the said indictment straddled transactions which are under dispute between the plaintiff and defendant in Singapore. The defendant’s counsel cannot, however, indicate to the court as to when the court proceedings will commence in Belgium.

9 In the meantime, solicitors for the plaintiff and the defendant started their discovery process in relation to the present action. In this regard, a letter dated 15 July 2003 from the plaintiff’s solicitors addressed to the defendant’s solicitors contained the following request:

Please let us know:

a. Whether your client has in its possession, custody or power or has at any time had in its possession, custody or power a report prepared in or about June 2003 by the Belgian criminal authorities explaining to your client the reasons it has been officially placed under suspicion in connection with its role in the collapse of Lernout & Hauspie Speech...