Success Elegant Trading v La Dolce Vita: Pre-Action Discovery & Fraud

In Success Elegant Trading Limited v La Dolce Vita Fine Dining Company Limited and others, the High Court of Singapore heard appeals against an assistant registrar's decision ordering pre-action discovery against Deutsche Bank Aktiengesellschaft and Credit Suisse AG. The plaintiffs, La Dolce Vita Fine Dining Company Limited and La Dolce Vita Fine Dining Group Holdings Limited, sought discovery of bank documents related to Success Elegant Trading Limited, alleging fraudulent manipulation of financial records in an acquisition. The court dismissed the appeals, affirming the order for pre-action discovery.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Appeals dismissed and the assistant registrar's order affirmed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court addresses pre-action discovery against banks in alleged fraud case involving Success Elegant Trading and La Dolce Vita.

1.7 Decision Date

14 August 2016

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Deutsche Bank Aktiengesellschaft	Respondent, Defendant	Corporation	Neutral	Neutral	Tan Xeauwei of Allen & Gledhill LLP Benjamin Koh Zhen-Xi of Allen & Gledhill LLP
Credit Suisse AG	Respondent, Defendant	Corporation	Neutral	Neutral	Chua Sui Tong of WongPartnership LLP Daniel Chan of WongPartnership LLP
La Dolce Vita Fine Dining Group Holdings Limited	Respondent, Plaintiff	Corporation	Appeal Allowed	Won	Harpreet Singh of Cavenagh Law LLP Jerald Foo of Cavenagh Law LLP Elsa Goh of Cavenagh Law LLP Paul Sandosham of Cavenagh Law LLP Tan Mingfen of Cavenagh Law LLP
La Dolce Vita Fine Dining Company Limited	Respondent, Plaintiff	Corporation	Appeal Allowed	Won	Harpreet Singh of Cavenagh Law LLP Jerald Foo of Cavenagh Law LLP Elsa Goh of Cavenagh Law LLP Paul Sandosham of Cavenagh Law LLP Tan Mingfen of Cavenagh Law LLP
Success Elegant Trading Limited	Appellant, Defendant	Corporation	Appeal Dismissed	Lost	Edmund Kronenburg of Braddell Brothers LLP Grace Loke of Braddell Brothers LLP Jeslyn Tan of Braddell Brothers LLP

3. Judges

Judge Name	Title	Delivered Judgment
Andrew Ang	Senior Judge	Yes

4. Counsels

Counsel Name	Organization
Tan Xeauwei	Allen & Gledhill LLP
Benjamin Koh Zhen-Xi	Allen & Gledhill LLP
Chua Sui Tong	WongPartnership LLP
Daniel Chan	WongPartnership LLP
Harpreet Singh	Cavenagh Law LLP
Jerald Foo	Cavenagh Law LLP
Elsa Goh	Cavenagh Law LLP
Paul Sandosham	Cavenagh Law LLP
Tan Mingfen	Cavenagh Law LLP
Edmund Kronenburg	Braddell Brothers LLP
Grace Loke	Braddell Brothers LLP
Jeslyn Tan	Braddell Brothers LLP

4. Facts

Plaintiffs acquired shares in a food and beverage business beneficially owned by Mdm Zhang.
Plaintiffs alleged manipulation of the Company’s accounting and financial records for the year 2013.
The acquisition agreements contained an arbitration agreement to resolve claims in CIETAC.
The HK High Court granted the Plaintiffs injunctions against Mdm Zhang and Founder Holdco.
The Plaintiffs obtained orders in Singapore prohibiting Mdm Zhang from disposing of her assets.
Bank Sarasin provided documents revealing remittances from Mdm Zhang’s HK Account to third parties, including SETL.
Plaintiffs filed OS 305 and OS 307 for pre-action discovery to identify third parties and trace assets.

5. Formal Citations

Success Elegant Trading Limited v La Dolce Vita Fine Dining Company Limited and others and another appeal, , [2016] SGHC 159

6. Timeline

Date	Event
2013-12-09	Share Purchasing Agreement dated
2013-12-13	Share Sale and Purchase Agreement dated
2013-12-01	Acquisition of shares in food and beverage business beneficially owned by Mdm Zhang
2014-01-02	Success Elegant Trading Limited incorporated
2014-03-10	US$50,000,000 transferred from Mdm Zhang’s HK Account to SETL’s CS Account
2014-03-14	US$2,085,489.46 transferred from Mdm Zhang’s HK Account to SETL’s CS Account
2014-03-14	HK$25,005,896.93 transferred from Mdm Zhang’s HK Account to SETL’s CS Account
2014-03-17	US$24,727,409.74 in securities transferred from Mdm Zhang’s HK Account to SETL’s CS Account
2014-03-24	US$ 60,000,000 transferred from Mdm Zhang’s HK Account to SETL’s CS Account
2014-06-04	Mdm Zhang transferred the sole share in SETL to Asiatrust
2014-07-21	US$ 2,000,000 transferred from Mdm Zhang’s HK Account to SETL’s CS Account
2015-03-02	Plaintiffs obtained Singapore Injunctions
2015-03-03	Bank Sarasin provided documents to the Plaintiffs
2015-03-05	Plaintiffs commenced arbitration proceedings against the Sellers
2015-03-09	Plaintiffs sought confirmation from CS
2015-03-12	Solicitors for CS confirmed that steps had been taken to comply with the Singapore Injunctions
2015-03-14	Plaintiffs’ solicitors were notified by solicitors for DB that SETL had an account with DB
2015-04-06	OS 305 and OS 307 were commenced
2015-04-24	SETL filed summonses for leave to intervene in the proceedings
2015-06-02	Leave was granted and SETL was named as the second defendant in both OS 305 and OS 307
2015-10-01	Hearings on the substantive merits were held before the AR
2016-02-01	Hearings on the substantive merits were held before the AR
2016-02-26	AR rendered her decision
2016-02-29	SETL filed a summons for a stay of execution
2016-03-16	Hearing of the appeals against the AR’s decision to order discovery commenced
2016-03-18	The AR declined to stay the execution of her orders pending appeal
2016-03-23	I allowed the appeals and granted a stay of execution pending the resolution of the appeals before me
2016-05-10	Parties attended before me with the Plaintiffs now seeking leave to adduce further evidence in response to the Mazars Report
2016-07-05	Hearing of the appeals then resumed
2016-08-15	Judgment Date

7. Legal Issues

Pre-Action Discovery
- Outcome: The court held that the requirements for pre-action discovery were satisfied and there were no jurisdictional bars to the grant of pre-action discovery.
- Category: Procedural
- Sub-Issues:
  - Facilitation of wrongdoing
  - Necessity of disclosure
  - Justness of disclosure
  - Singapore nexus
Fraud
- Outcome: The court found that there was strong and cogent evidence of a prima facie case of fraudulent manipulation by Mdm Zhang.
- Category: Substantive
- Sub-Issues:
  - Manipulation of financial records
  - Misrepresentation
  - Tracing of funds
Rescission
- Outcome: The court held that the Plaintiffs had evinced an unequivocal intention to rescind the acquisition agreements and that restitutio in integrum was not impossible.
- Category: Substantive
- Sub-Issues:
  - Impossibility of restitutio in integrum
  - Implied rescission
Duty of Bank Secrecy
- Outcome: The court held that OS 305 and OS 307 each constituted “legal proceeding” within the meaning of s 175 of the Evidence Act.
- Category: Procedural

8. Remedies Sought

Discovery of Documents
Tracing of Assets
Rescission of Acquisition Agreements
Monetary Damages

9. Cause of Actions

Fraudulent Misrepresentation
Breach of Contract

10. Practice Areas

Commercial Litigation
Banking Litigation
Arbitration
Fraud and Asset Recovery

11. Industries

Finance
Food and Beverage

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
La Dolce Vita Fine Dining Co Ltd and another v Deutsche Bank AG and another and another matter	High Court	Yes	[2016] SGHCR 3	Singapore	The decision of the AR being appealed against.
UMCI Ltd v Tokio Marine & Fire Insurance Co (Singapore) Pte Ltd and others	High Court	Yes	[2006] 4 SLR(R) 95	Singapore	Cited for the court's inherent jurisdiction to order disclosure from a non-party.
Bankers Trust Co v Shapira and others	English Court of Appeal	Yes	[1980] 1 WLR 1274	England and Wales	Cited as the eponymous case for Bankers Trust orders, compelling non-parties to provide documents to assist with the applicant’s tracing claim where there was a prima facie case of fraud.
Dorsey James Michael v World Sport Group Pte Ltd	Court of Appeal	Yes	[2014] 2 SLR 208	Singapore	Cited for the principle that pre-action discovery orders could not be granted in aid of foreign proceedings.
Chan Swee Leng v Hong Kong and Shanghai Banking Corp Ltd	High Court	Yes	[1996] 5 MLJ 133	Brunei	Cited for the principle that the Plaintiffs had to show that they were parties to a separate legal proceeding, other than OS 305 and OS 307.
Reese River Silver Mining Company Limited v Smith	House of Lords	Yes	(1869) LR 4 HL 64	United Kingdom	Cited for the principle that contracts tainted by fraud were voidable and not void.
Shalson and others v Russo and others	High Court	Yes	[2005] 1 Ch 281	England and Wales	Cited for the discussion of property acquired by fraud and the revesting of beneficial title upon rescission of a contract for fraudulent misrepresentation.
Westdeutsche Landesbank Girozentrale v Islington London Borough Council	House of Lords	Yes	[1996] AC 669	United Kingdom	Cited for the opinion that money acquired by fraud was held on constructive trust.
Lonrho Plc Fayed (No 2)	Court of Appeal	Yes	[1992] 1 WLR 1	England and Wales	Cited for the explanation that the beneficial interest in the property is treated as having remained vested in the representee throughout, at least to the extent necessary to support a tracing claim.
El Ajou v Dollar Land Holdings plc and another	High Court	Yes	[1993] 3 All ER 717	England and Wales	Cited for the opinion that property revested on an old-fashioned institutional resulting trust.
In re Goldcorp Exchange Ltd (in receivership)	Privy Council	Yes	[1995] 1 AC 74	Jersey	Cited for the explanation that rescission merely entitled one to a personal right to recover monies paid under a contract and not any sort of proprietary right in respect of those monies.
Car and Universal Finance Co Ltd v Caldwell	Court of Appeal	Yes	[1965] 1 QB 525	England and Wales	Cited for the principle that rescission could be effective by communication.
Adam v Newbigging	House of Lords	Yes	(1888) 13 App Cas 308	United Kingdom	Cited for the principle that the failure of a business may preclude rescission, but not where the failure was due to an inherent vice that existed at the time of the sale, and especially not where the misrepresentation related to that vice.
Senanayake v Cheng	Privy Council	Yes	[1965] AC 63	Singapore	Cited for the principle that the failure of a business may preclude rescission, but not where the failure was due to an inherent vice that existed at the time of the sale, and especially not where the misrepresentation related to that vice.
Wee Soon Kim Anthony v UBS AG	Court of Appeal	Yes	[2003] 2 SLR(R) 91	Singapore	Cited for the principle that Part IV does not expand a party’s right of discovery.
South Staffordshire Tramways Co v Ebbsmith	Court of Appeal	Yes	[1895] 2 QB 669	England and Wales	Cited for the principle that an order for inspection would only be made if the litigant was entitled to the information under his right to discovery.
R v Bono	Unknown	Yes	[1913] 29 TLR 635	England and Wales	Cited for the principle that the 1879 Act was not intended to accord to a litigant greater facilities for discovery than what would be allowed under normal discovery principles.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Rules of Court O 24 r 6(5)	Singapore
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)	Singapore
Evidence Act (Cap 97, 1997 Rev Ed) s 175(1)	Singapore
Banking Act (Cap 19, 2008 Rev Ed)	Singapore
International Arbitration Act (Cap 134A, 2002 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Pre-action discovery
Norwich Pharmacal order
Bankers Trust order
Prima facie case of fraud
Facilitation of wrongdoing
Tracing claim
Rescission
Restitutio in integrum
Singapore Injunctions
CIETAC arbitration
Duty of bank secrecy
Beneficial ownership
Point of sale data
TAR spreadsheets

15.2 Keywords

pre-action discovery
fraud
banking
arbitration
Singapore
tracing
rescission

17. Areas of Law

Area Name	Relevance Score
Civil Practice	75
Fraud and Deceit	60
Disclosure Obligations	50
Arbitration	40
Contract Law	30
Property Law	25
Company Law	20

16. Subjects

Civil Procedure
Banking
Arbitration
Fraud
Discovery