Yugoimport SDPR v Westacre Investments: Garnishee Orders & Express Trusts Dispute

The Court of Appeal of Singapore heard four cross-appeals concerning provisional garnishee orders obtained by Westacre Investments Inc against Deuteron (Asia) Pte Ltd, a subsidiary of The State-Owned Company Yugoimport SDPR, and DnB Nor Bank ASA Singapore Branch. The central issue was whether funds held in Deuteron's accounts belonged beneficially to Yugoimport SDPR or to other parties (Teleoptik-Ziroskopi, Zrak-Teslic, and Cajavec). The court found that the funds belonged to Yugoimport SDPR and made the garnishee order against Deuteron absolute, but not against the bank.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part. Provisional garnishee order against Deuteron made absolute; order against the bank not made absolute.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court addresses garnishee orders against Yugoimport SDPR's subsidiary and bank, focusing on beneficial ownership of funds and trust law.

1.7 Decision Date

30 August 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
The State-Owned Company Yugoimport SDPR (Also known as Jugoimport – SDPR)	Appellant, Respondent	Corporation	Appeal allowed in part	Partial	Gabriel Peter of Gabriel Law Corporation Kevin Au of Gabriel Law Corporation Shehzhadee Abdul Rahman of Gabriel Law Corporation
Westacre Investments Inc	Respondent, Appellant	Corporation	Appeal allowed in part	Partial	Giam Chin Toon SC of Wee Swee Teow & Co Tan Hsuan Boon of Wee Swee Teow & Co Seow Ai Lin of Wee Swee Teow & Co
Deuteron (Asia) Pte Ltd	Appellant, Respondent	Corporation	Appeal allowed in part	Partial	Gabriel Peter of Gabriel Law Corporation Kevin Au of Gabriel Law Corporation Shehzhadee Abdul Rahman of Gabriel Law Corporation
Teleoptik-Ziroskopi	Appellant, Respondent	Corporation	Claim Dismissed	Dismissed	Francis Xavier SC of Rajah & Tann Singapore LLP Tng Sheng Rong of Rajah & Tann Singapore LLP Amy Seow of Rajah & Tann Singapore LLP Clement Ong Ziying of Damodara Hazra LLP Ang Tze Phern of Rajah & Tann Singapore LLP Suresh Damodara of Damodara Hazra LLP Joseph Lau of Rajah & Tann Singapore LLP
Zrak-Teslic	Appellant, Respondent	Corporation	Claim Dismissed	Dismissed	Francis Xavier SC of Rajah & Tann Singapore LLP Tng Sheng Rong of Rajah & Tann Singapore LLP Amy Seow of Rajah & Tann Singapore LLP Clement Ong Ziying of Damodara Hazra LLP Ang Tze Phern of Rajah & Tann Singapore LLP Suresh Damodara of Damodara Hazra LLP Joseph Lau of Rajah & Tann Singapore LLP
DnB Nor Bank ASA Singapore Branch	Respondent	Corporation	Neutral	Neutral	Yap Yin Soon of Allen & Gledhill LLP
Cajavec (previously known as Rudi Cajavec)	Respondent	Corporation	Neutral	Neutral

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	Yes
Andrew Phang Boon Leong	Judge of Appeal	No
Steven Chong	Judge	No

4. Counsels

Counsel Name	Organization
Gabriel Peter	Gabriel Law Corporation
Kevin Au	Gabriel Law Corporation
Shehzhadee Abdul Rahman	Gabriel Law Corporation
Giam Chin Toon SC	Wee Swee Teow & Co
Tan Hsuan Boon	Wee Swee Teow & Co
Seow Ai Lin	Wee Swee Teow & Co
Francis Xavier SC	Rajah & Tann Singapore LLP
Tng Sheng Rong	Rajah & Tann Singapore LLP
Amy Seow	Rajah & Tann Singapore LLP
Clement Ong Ziying	Damodara Hazra LLP
Ang Tze Phern	Rajah & Tann Singapore LLP
Suresh Damodara	Damodara Hazra LLP
Joseph Lau	Rajah & Tann Singapore LLP
Yap Yin Soon	Allen & Gledhill LLP

4. Facts

Westacre Investments Inc. sought to enforce an arbitral award against Yugoimport SDPR.
Westacre obtained provisional garnishee orders against Deuteron and DnB Nor Bank.
The orders were based on the claim that funds in Deuteron's accounts belonged to Yugoimport.
Yugoimport, Deuteron, and other parties contested the orders, claiming the funds belonged to the other parties.
The High Court initially determined the funds belonged to Yugoimport, but this was reversed on appeal.
The funds were held in Deuteron's accounts with DnB Nor Bank in Singapore.
Deuteron's financial statements declared the funds belonged to Yugoimport.

5. Formal Citations

The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) v Westacre Investments Inc and other appeals, Civil Appeals No 117, 118, 121 and 134 of 2015, [2016] SGCA 51

6. Timeline

Date	Event
1949-01-01	The State-Owned Company Yugoimport SDPR founded in Yugoslavia.
1988-01-01	Westacre Investments Inc incorporated in Panama.
1991-06-18	Deuteron (Asia) Pte Ltd incorporated.
1991-07-23	Supply Contract entered into by the Buyer and the Judgment Debtor.
1991-10-04	The Buyer paid the Advance to the Judgment Debtor’s account with the National Bank of Yugoslavia.
1991-10-21	Pre-Protocol concluded between the Judgment Debtor and Deuteron.
1991-11-18	The Advance transferred to Deuteron’s accounts with the Bank in Singapore.
1991-12-12	Contract E/4860-1 concluded between the Judgment Debtor and the Other Parties.
1991-12-28	Protocol concluded between the Defendants.
1992-06-10	Monetary Authority of Singapore issued a circular to freeze funds in Singapore that were linked to Serbia and Montenegro.
1994-02-28	Westacre Investments Inc prevailed in arbitration proceedings against the Judgment Debtor.
1995-12-01	Deuteron wrote to the Bank asking it to transfer all the monies in its accounts to a bank account of Acedale Holdings Limited in Hong Kong.
1998-03-13	Judgment Creditor obtained an English judgment against the Judgment Debtor to enforce the arbitral award.
1999-04-08	Resolution passed by Deuteron’s shareholders.
2000-06-01	Deuteron wrote to the Bank asking it to apply to MAS for approval to release 6.278m Swiss Francs to PSI Procurement Supply International.
2001-04-30	Settlement agreement between Jovan Cekovic, Zoran Matic, and Lim Poh Weng.
2004-07-01	Dispute shifted to Singapore.
2004-10-05	Judgment Creditor registered the English judgment in Singapore.
2004-10-28	Judgment Creditor obtained a Mareva injunction over Deuteron’s assets.
2005-04-28	Judgment Creditor filed two summonses for provisional garnishee orders against Deuteron and the Bank.
2005-04-29	Provisional garnishee orders were granted.
2005-06-02	Judgment Debtor applied to set aside the registration of the English judgment in Singapore.
2005-12-23	The Judgment Debtor came to wholly own Deuteron and gained complete control of its board.
2008-04-01	Tomlinson J answered the question in the affirmative in April 2008.
2008-12-30	Court of Appeal reversed the High Court’s decision and dismissed the Judgment Debtor’s application.
2009-03-20	MAS circular was revoked.
2011-05-19	High Court summarily determined that the Funds belonged wholly and exclusively to the Judgment Debtor.
2011-09-28	Court of Appeal allowed the appeals in part, setting aside the order making the garnishee orders absolute, and directed a trial to resolve the disputes of fact.
2013-11-01	Trial began.
2015-02-01	Trial ended.
2016-01-19	Judgment reserved.
2016-08-31	Judgment delivered.

7. Legal Issues

Beneficial Ownership of Funds
- Outcome: The court found that the Funds were beneficially owned by the Judgment Debtor and not by the Other Parties.
- Category: Substantive
Garnishee Order Against Subsidiary
- Outcome: The court held that the garnishee order against the subsidiary, Deuteron, should have been made absolute because it owed the Judgment Debtor a debt in equity.
- Category: Procedural
Garnishee Order Against Bank
- Outcome: The court held that the garnishee order against the bank should not have been made absolute because the bank did not owe the Judgment Debtor a debt.
- Category: Procedural
Creation of Express Trust
- Outcome: The court found that no express trust was created in favour of the Other Parties because there was no certainty of intention to create a trust.
- Category: Substantive
Equitable Debt
- Outcome: The court found that Deuteron owed the Judgment Debtor an equitable debt because it held the Funds on a bare trust for the Judgment Debtor and the Judgment Debtor had demanded the Funds.
- Category: Substantive

8. Remedies Sought

Garnishee Order
Enforcement of Judgment

9. Cause of Actions

Enforcement of Arbitral Award
Garnishee Proceedings

10. Practice Areas

Commercial Litigation
Banking Litigation
Trust Litigation

11. Industries

Banking
Legal Services
Defense

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Westacre Investments Inc v The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) and others	High Court	Yes	[2015] 4 SLR 529	Singapore	The judgment under appeal; the Court of Appeal is reviewing the High Court's decision on the beneficial ownership of funds and garnishee orders.
Westacre Investments Inc v The State-Owned Company Yugoimport SDPR	Queen’s Bench Division (Commercial Court)	Yes	[2009] 1 All ER (Comm) 780	United Kingdom	Cited as the English court's affirmative answer to whether the judgment was still enforceable in the UK.
Westacre Investments Inc v The State-Owned Company Yugoimport SDPR	Court of Appeal	Yes	[2009] 2 SLR(R) 166	Singapore	Cited for the Court of Appeal's decision to reverse the High Court's decision and dismiss the Judgment Debtor’s application.
Westacre Investments Inc v The State-Owned Company Yugoimport SDPR (Deuteron (Asia) Pte Ltd, garnishee) and others	High Court	Yes	[2011] SGHC 123	Singapore	Cited for the High Court's summary determination that the Funds belonged wholly and exclusively to the Judgment Debtor.
Teleoptik-Ziroskopi and others v Westacre Investments Inc and other appeals	Court of Appeal	Yes	[2012] 2 SLR 177	Singapore	Cited for the Court of Appeal's decision to allow the appeals in part, setting aside the order making the garnishee orders absolute, and directing a trial to resolve the disputes of fact.
Vandepitte v Preferred Accident Insurance Corporation of New York	Privy Council	Yes	[1933] AC 70	Canada	Cited in relation to the Vandepitte procedure.
Guy Neale and others v Nine Squares Pty Ltd	Court of Appeal	Yes	[2015] 1 SLR 1097	Singapore	Cited for the principle that it is the substance, and not the form, of the alleged settlor’s words and conduct that is important and the alleged settlor is not required to state explicitly or specifically that he is creating a trust.
Paul v Constance	Court of Appeal	Yes	[1977] 1 WLR 527	England and Wales	Cited for the principle that the intention of the alleged settlor must be to dispose of the property so that somebody else to the exclusion of the disponent acquires the beneficial interest in the property.
Hinckley Singapore Trading Pte Ltd v Sogo Department Stores (S) Pte Ltd	High Court	Yes	[2001] 3 SLR(R) 119	Singapore	Cited for the principle that where an agreement does not contain any express term that reflects the intention to create a trust, whether such an intention may nonetheless be inferred would depend on what may appropriately be taken to be the expectations of the parties in the light of the commercial context.
In re Hallett’s Estate; Knatchbull v Hallett	Court of Appeal	Yes	(1880) 13 Ch D 696	England and Wales	Cited for the presumption that a trustee is taken to have dealt with his own money first where sums are removed from his bank account containing a mixture of trust monies and the trustee’s own monies.
James Roscoe (Bolton) Ltd v Winder	High Court of Justice	Yes	[1915] 1 Ch 62	England and Wales	Cited for the proposition that a trustee may reconstitute a trust if he repays funds into the trust account and expresses an intention that the funds are for the benefit of the trust.
Ong Jane Rebecca v Lim Lie Hoa and others	Court of Appeal	Yes	[2005] SGCA 4	Singapore	Cited for the principle that each bank account is a separate and distinct asset, and the fact that monies may have been credited into one account did not necessarily mean that the monies in all the accounts that the trustee had with the bank would be regarded as trust funds.
Zoom Communications Ltd v Broadcast Solutions Pte Ltd	Court of Appeal	Yes	[2014] 4 SLR 500	Singapore	Cited for the principle that a plaintiff retains the burden of showing that Singapore is the proper forum at the inter partes stage if the foreign defendant who has been served, after the plaintiff succeeded at the ex parte stage to obtain leave to serve the originating process on a foreign defendant out of jurisdiction, challenges the jurisdiction of the Singapore court.
Webb v Stenton and Others, Garnishees	Queen's Bench Division	Yes	(1883) 11 QBD 518	England and Wales	Cited for the principle that the term “debt” in the context of garnishee proceedings encompasses not only legal debts but also equitable debts.
Wilson v Dundas and Stevenson (Garnishees)	Unknown	Yes	[1875] WN 232	Unknown	Cited for the principle that the term “debt” in the context of garnishee proceedings encompasses not only legal debts but also equitable debts.
Ex parte Culley, In re Adams	Court of Appeal	Yes	(1878) 9 Ch D 307	England and Wales	Cited for the definition of an equitable debt as “a debt enforceable only in equity”.
Bank of Montreal v Chantry and Chantry	Saskatchewan District Court	Yes	[1979] 5 WWR 470	Canada	Cited for the argument that even where the beneficiary has yet to make a demand for the trust property, a bare trustee owes an equitable debt to the beneficiary by way of implied contract.
Canadian Imperial Bank of Commerce v Madelyn Grotsky, International Brokers Co. Ltd, Samuel Grotsky and Joel Grotsky	Saskatchewan Court of Appeal	Yes	[1994] 8 WWR 191	Canada	Cited for endorsing the decision in Chantry.
Ikram v Joo	Ontario Superior Court of Justice	Yes	[2009] OJ No 37	Canada	Cited for following the decision in Chantry.
Parker-Tweedale v Dunbar Bank Plc and Others	High Court of Justice	Yes	[1991] Ch 12	England and Wales	Cited for the principle that a beneficiary under a trust cannot sue a third party in relation to the trust property because he does not have a claim at law against the third party and thus has no cause of action against him.
Hitachi Leasing (Singapore) Pte Ltd v Vincent Ambrose and another	High Court	Yes	[2001] 1 SLR(R) 762	Singapore	Cited for a possible way to avoid the dissipation of assets.

13. Applicable Rules

Rule Name
Order 49 Rule 5 of the Rules of Court

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Garnishee Order
Beneficial Ownership
Express Trust
Bare Trust
Equitable Debt
Provisional Garnishee Order
Judgment Debtor
Judgment Creditor
Trustee
Cestui Que Trust
Mareva Injunction

15.2 Keywords

garnishee order
beneficial ownership
express trust
equitable debt
Singapore
Yugoimport
Westacre
Deuteron
DnB Nor Bank

17. Areas of Law

Area Name	Relevance Score
Garnishee Proceedings	90
Express trusts	90
Trust Law	85
Civil Procedure	70

16. Subjects

Civil Procedure
Trust Law
Banking Law
Agency Law