Westacre Investments Inc v The State-Owned Company Yugoimport SDPR (Deuteron (Asia) Pte Ltd, garnishee) and others

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 19 May 2011
• Neutral Citation: [2011] SGHC 123
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 1311 of 2004 (Summons Nos 2151 and 2152 of 2005; 4431, 4846, 5282, 5377 and 5736 of 2009; 5513 and 5763 of 2010)
• Published date: 13 March 2012
• Year: 2011
• Hearing Date: 02 November 2010,16 October 2009,23 February 2010,08 November 2010,24 August 2010,12 November 2010,21 September 2010,17 December 2010,16 August 2010
• Plaintiff Counsel: Khoo Boo Jin and Tan Hsuan Boon (Wee Swee Teow & Co)
• Defendant Counsel: Gabriel Peter and Kelvin Tan (Gabriel Law Corporation),Lim Ai Min (Allen & Gledhill LLP),Suresh Damodara (Damodara Hazra LLP)
• Citation: [2011] SGHC 123

Choo Han Teck J: Introduction

The garnishee proceedings before me have been long and acrimonious. Voluminous affidavits, both factual and expert, have been filed. Essentially, there is only one core issue to be answered: who possesses beneficial ownership of the monies in Deuteron (Asia) (Pte) (Ltd) (“the Garnishee”)’s bank account with DnB Nor Bank ASA Singapore Branch (“the Bank”)?

It is undisputed that the State-Owned Company Yugoimport SDPR (“the Judgment Debtor”) owes Westacre Investments Inc (“the Judgment Creditor”) a sum of more than £56 million (including interest) under a judgment from the English High Court on 31 March 1998 (“the English Judgment”)¹. The Judgment Creditor is seeking to enforce the English Judgment in Singapore by garnishing the Garnishee’s bank account which had more than US $17 million in 2009² (“the Funds”). The Judgment Debtor denies that it is the beneficial owner of the Funds and alleges that the Funds in the Garnishee’s account is being held by the Judgment Debtor on trust for Teleoptik-Ziroskopi, Zrak-Teslic and Cajavec (“the Other Parties”).

The Judgment Debtor based his allegations of a trust on four documents (“the 4 Trust Documents”) relating to a contract to supply military equipment to a Government (“the Buyer”). Therefore, if a trust is found to exist, based on the interpretation of the 4 Trust Documents, the provisional garnishee order cannot be made final since the beneficial owner of the Funds is not the Judgment Debtor (see Roberts v Death (1881) 8 QBD 319 (“Roberts v Death”)). However, if there is no trust, the evidence that the beneficial owner of the Funds is the Judgment Debtor cannot be rebutted and the provisional garnishee orders will be made final (see [13] below).

The History of the Garnishee Proceedings

The long history of the garnishee proceedings is important because the Judgment Creditor argues that the trust argument raised by the Judgment Debtor is just one in a series of numerous applications by the Judgment Debtor to unnecessarily prolong and obfuscate the proceedings. In late July 2004, the Judgment Creditor discovered that the Funds were held for the Judgment Debtor in the Garnishee’s account³. Upon the ex parte application of the Judgment Creditor, the English Judgment was registered in Singapore under the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264, 1985 Rev Ed) pursuant to an order dated 5 October 2004 by the Singapore High Court. The Funds were enjoined by an ex parte mareva injunction on 28 October 2004, which remains in force.

The Judgment Creditor filed ex parte Summons in Chambers No 2151 of 2005 and 2152 of 2005 on 28 April 2005 to commence the garnishee proceedings against the Bank and the Garnishee. On 29 April 2005, the Court issued garnishee orders to show cause. However, on 5 June 2005, the Judgment Debtor applied to set aside the registration of the English Judgment in Singapore. The garnishee proceedings were thus stayed.

The Judgment Debtor’s application in Singapore to set aside the registration of the English Judgment went on appeal to the Court of Appeal. At the initial hearing on 9 May 2007, the Court of Appeal directed the Judgment Creditor to refer to the English Court to determine if the English Judgment remained enforceable in England by way of a garnishee order despite the lapse of time (see Westacre Investments Inc v The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) [2009] 2 SLR(R) 166 (“Yugoimport”) at [10]). The reference proceedings went before Tomlinson J in the English High Court (see Westacre Investments Inc v The State-Owned Company Yugoimport SDPR [2008] EWHC 801 (Comm)) and the learned judge decided in favour of the Judgment Creditor. The Court ruled that the English Judgment remained enforceable in England (“the English Reference Proceedings”). Proceedings returned to the Singapore Court of Appeal and the Judgment Debtor’s application to set aside the registration of the English Judgment was denied in the judgment of Yugoimport released on 30 December 2008. The Court of Appeal noted at [53] of Yugoimport that, “the [Judgment Debtor] not only did not seek out the [Judgment Creditor] to pay the amount awarded under the English Judgment, but [it] also deliberately gave a selective and incomplete picture to the English court about its assets for the purposes of stay proceedings in the UK… It was only by a stroke of luck that the [Judgment Creditor] came to know of the [Judgment Debtor’s] alleged Singapore assets”.

In 2009, the garnishee proceedings resumed. On 27 February 2009, the Judgment Debtor⁴ and the Garnishee⁵ filed affidavits alleging the Funds belonged to the Other Parties, but numerous documents referred to in their affidavits were not adduced. The Assistant Registrar (“AR”) largely granted the Judgment Creditor’s application for inspection of documents and on appeal I allowed to be inspected two documents in which the Judgment Creditor were unsuccessful before the AR on 30 July 2009. It is significant to note that one of the documents the Court ordered the Garnishee to produce was a Shareholders’ Resolution of the Garnishee dated 8 April 1999 (“Shareholders’ Resolution 8 April 1999”)⁶. This was a unanimous resolution of the Garnishee confirming that the Funds “belong wholly and exclusively to [the Judgment Debtor]”.

After the protracted discovery proceedings ended (with disputes on the redaction of the 4 Trust Documents), the Judgment Debtor filed Summons No 4431 of 2009 (“Summons 4431”) and Summons No 5736 of 2009 (“Summons No 5736”) to convert the originating summons and garnishee proceedings into a writ action. The Other Parties’ Summons No 4846 of 2009 (“Summons 4846”) is similar in substance. On the other hand, the Judgment Creditor filed Summons No 5282 of 2009 (“Summons 5282”) to summarily determine for the purposes of the garnishee proceedings that the Funds belong “wholly and exclusively” to the Judgment Debtor. The Other Parties then contradicted its Summons 4846 by filing Summons No 5377 of 2009 (“Summons 5377”) to summarily determine that the Funds belong “wholly and exclusively” to the Other Parties.

On 24 August 2010, I dismissed Summonses 4431, 4846 and 5736 and allowed the garnishee proceedings to be summarily determined under O 49 r 5 and r 6(2) of the Rules of Court (“ROC”) (Cap 322, R5, 2006 Rev Ed). As regards Summonses 5282 and 5377 for summary determination, I ordered on 21 September 2010 for parties to file further submissions regarding the governing law for the trust and whether the monies in the Garnishee’s account could be traced to the trust. These submissions will be addressed in detail below.

Judgment Debtor failed to pay any of the legal cost due to the Judgment Creditor throughout their long-running litigation

Both Tomlinson J and our Court of Appeal have recognised the difficulty of enforcing a judgment debt when “faced with an uncooperative judgment debtor whose assets might be furtively squirreled away all over the globe” (Yugoimport at [26]). The Judgment Creditor submitted that the Judgment Debtor repeatedly denied their liability to the Judgment Creditor but failed before the⁷: (i) International Chamber of Commerce (“ICC”) Arbitral Tribunal in 1994, (ii) Swiss Federal Tribunal in 1994, (iii) English High Court in 1998, (iii) English Court of Appeal in 1999, (iv) English House of Lords in 1999, (v) English High Court in 2008, and (vi) Singapore Court of Appeal in 2008. However, the Judgment Debtor never paid a single cent towards the ICC award or the English Judgment. For the ICC Arbitration, the Judgment Debtor and its co-defendant agreed to pay one half of the arbitration costs of US $700,000. However, neither the Judgment Debtor nor its co-defendant paid their share of costs and the Judgment Creditor had to advance an additional US $350,000 for the arbitration procedure to be completed⁸.

Under the cost order in the English Reference Proceedings, the Judgment Debtor was required to make an interim payment of £100,000 to the Judgment Creditor on account of costs by 5 May 2008. The Judgment Creditor did not receive any payment⁹. The Singapore Court of Appeal in Yugoimport at [55] ordered “costs here and below” in favour of the Judgment Creditor, and these costs have yet to be taxed. The cost for the discovery application ordered to be paid by the Judgment Debtor and the Garnishee to the Judgment Creditor also has not been paid.

In my opinion, the long and acrimonious history behind the garnishee proceedings and the utter failure of the Judgment Debtor to pay any legal costs throughout the long-running litigation were relevant factors in considering if the garnishee proceedings should be converted into a writ action which will only lengthen proceedings and increase costs. The Judgment Debtor also pursued its case very unsatisfactorily. It was very late in the proceedings, on 21 September 2010, when the Judgment Debtor asked for four weeks to file an affidavit from the Buyer to confirm that the Funds were paid to acquire military equipment from the Other Parties through the Judgment Debtor. The Judgment Debtor failed to produce any affidavit within the four week deadline and filed Summons No 5513 of 2010 for leave to file an affidavit to adduce further evidence in the proceedings which included, inter alia, a letter from an Embassy of the Buyer. The Other Parties’ Summons No 5763 of 2010 is similar in substance. I dismissed both Summonses on 17 December 2010 because the evidence the Judgment Debtor and Other Parties sought to produce was vague, equivocal and had little probative value. Furthermore, the applications were made late and appeared to me to be the latest in a series of applications that seemed designed to prolong a matter that should have been fully and finally determined (see [65]).

The Court’s Discretion in Making a Provisional Garnishee...