EFG Bank AG v Teng Wen-Chung: Illegality & Public Policy in Contract & Conflict of Laws
In EFG Bank AG, Singapore Branch v Teng Wen-Chung, the Singapore High Court addressed a claim by EFG Bank against Teng Wen-Chung under an indemnity agreement. The bank sought payment of US$199,656,177.77. Teng argued the agreement was tainted by illegality due to breaches of Taiwanese law. The High Court dismissed Teng's appeal, finding the indemnity agreement enforceable and that Teng failed to demonstrate a bona fide defense.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case involving EFG Bank's claim against Teng Wen-Chung under an indemnity agreement. The court addressed illegality and conflict of laws.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| EFG Bank AG, Singapore Branch | Plaintiff, Respondent | Corporation | Appeal Dismissed | Won | Andre Francis Maniam SC, Lionel Leo Zhen Wei, Russell Pereira Si-Hao |
| Teng Wen-Chung | Defendant, Appellant | Individual | Appeal Dismissed | Lost | Kenetth Jerald Pereira, Lai Yan Ting |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| George Wei | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Andre Francis Maniam SC | WongPartnership LLP |
| Lionel Leo Zhen Wei | WongPartnership LLP |
| Russell Pereira Si-Hao | WongPartnership LLP |
| Kenetth Jerald Pereira | Aldgate Chambers LLC |
| Lai Yan Ting | Aldgate Chambers LLC |
4. Facts
- EFG Bank AG, Singapore Branch, granted loan facilities to Surewin Worldwide Limited.
- Teng Wen-Chung executed an indemnity agreement in favor of EFG Bank for Surewin's liabilities.
- Surewin defaulted on the loan facilities.
- Singfor Life Insurance Ltd, where Teng was Chairman, was placed under government receivership.
- EFG Bank demanded payment from Teng under the indemnity agreement.
- Teng claimed the indemnity agreement was tainted by illegality due to breaches of Taiwanese law.
- The loan facilities and indemnity agreement were governed by Singapore law.
5. Formal Citations
- EFG Bank AG, Singapore Branch v Teng Wen-Chung, Suit No 1297 of 2015(Registrar’s Appeal No 59 of 2017), [2017] SGHC 318
6. Timeline
| Date | Event |
|---|---|
| Defendant appointed Vice-Chairman of Singfor Life Insurance Ltd | |
| High Grounds Asset International Ltd opened an account with the plaintiff | |
| Surewin Worldwide Limited opened an account with the plaintiff | |
| Singfor Tactical Asset Allocation Portfolio SA opened an account with the plaintiff | |
| Pledge created over assets held in STAAP’s account to secure Surewin’s liabilities to the plaintiff | |
| Defendant's appointment as Vice-Chairman of Singfor confirmed by Taiwanese Financial Supervisory Commission | |
| Defendant became the Chairman of Singfor | |
| SFIP-1 Unit Trust created by a Trust Deed | |
| SFIP-1 opened a bank account with the plaintiff | |
| Defendant executed an indemnity agreement | |
| Manulife policy was assigned to the plaintiff | |
| Plaintiff granted the First Surewin Facility to Surewin | |
| Plaintiff granted the Second Surewin Facility to Surewin | |
| AIA policy was assigned to the plaintiff | |
| Facility letters amended | |
| Singfor was placed under government receivership | |
| Plaintiff issued a letter of demand to the defendant under the Indemnity Agreement | |
| Plaintiff commenced proceedings | |
| Plaintiff filed an application for summary judgment | |
| Registrar allowed the defendant’s application to amend the defence and granted summary judgment to the plaintiff | |
| Arguments heard | |
| Reasons for decision set out |
7. Legal Issues
- Enforceability of Indemnity Agreement
- Outcome: The court held that the indemnity agreement was enforceable, even if the related loan facilities were tainted by illegality.
- Category: Substantive
- Sub-Issues:
- Validity of indemnity despite illegality of related contract
- Distinction between indemnity and guarantee
- Related Cases:
- [2009] 3 SLR(R) 689
- [2007] 2 SLR(R) 756
- Foreign Illegality
- Outcome: The court held that the alleged illegality under Taiwanese law did not render the Singapore-governed indemnity agreement unenforceable.
- Category: Substantive
- Sub-Issues:
- Effect of Taiwanese law on Singapore contract
- Application of Euro-Diam principles
- Related Cases:
- [1990] 1 QB 1
- Summary Judgment
- Outcome: The court granted summary judgment, finding that the defendant failed to demonstrate a reasonable probability of a bona fide defense.
- Category: Procedural
- Sub-Issues:
- Establishment of prima facie case
- Demonstration of bona fide defense
- Related Cases:
- [2015] 1 SLR 325
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Enforcement of Indemnity
10. Practice Areas
- Commercial Litigation
- Banking Litigation
- Contract Disputes
11. Industries
- Banking
- Insurance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| PT Jaya Sumpiles Indonesia v Kristle Trading Ltd | Court of Appeal | Yes | [2009] 3 SLR(R) 689 | Singapore | Cited for the principle that liability under a guarantee is collateral, while an indemnitor’s liability is original and independent. |
| S Y Technology v Pacific Recreation Pte Ltd | Court of Appeal | Yes | [2007] 2 SLR(R) 756 | Singapore | Cited for the principle that a creditor may still recover losses under an indemnity even if the primary transaction is defective. |
| Euro-Diam v Bathurst | Queen's Bench | Yes | [1990] 1 QB 1 | England and Wales | Cited for the principles on how to determine if a contract is tainted by foreign illegality. |
| Devaynes v Noble | High Court of Chancery | Yes | (1816) 35 ER 781 | England and Wales | Cited regarding the creditor's right to appropriate monies realized from collateral as deemed fit. |
| M2B World Asia Pacific Pte Ltd v Matsumura Akihiko | Court of Appeal | Yes | [2015] 1 SLR 325 | Singapore | Cited for the principles applicable to summary judgment. |
| Eng Mee Yong v Letchumanan | Privy Council | Yes | [1979] 2 MLJ 212 | Malaysia | Cited for the principle that a judge is not bound to accept every statement in an affidavit as raising a dispute of fact. |
| Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal | Court of Appeal | Yes | [2008] 2 SLR(R) 491 | Singapore | Cited for the principle that foreign law is an issue of fact that may be proven through raw sources or expert opinion. |
| Overseas Union Insurance Ltd v Turegum Insurance Co | Court of Appeal | Yes | [2001] 2 SLR(R) 285 | Singapore | Cited for the principle that the governing law of a contract is determined by its express terms. |
| Peh Teck Quee v Bayerische Landesbank Girozentrale | High Court | Yes | [1999] 3 SLR (R) 842 | Singapore | Cited for the principle that the key obligation in a loan contract is the obligation to make payments, and the place where those payments must be made is the place of performance. |
| Foster v Driscoll | King's Bench Division | No | [1929] 1 KB 470 | England and Wales | Cited regarding the principle that a court will not enforce a contract if its object involves violating the law of a foreign state. |
| Regazzoni v K C Sethia (1944) Ltd | House of Lords | No | [1958] AC 301 | United Kingdom | Cited regarding the principle that a court will not enforce a contract if its object involves violating the law of a foreign state. |
| Ralli Brothers v Compania Naviera Sota y Aznar | King's Bench Division | No | [1920] 2 KB 287 | England and Wales | Cited regarding the principle that a contract is invalid if performance is unlawful in the country where it is to be performed. |
| BCBC Singapore Pte Ltd v PT Bayan Resources TBK | Singapore International Commercial Court | No | [2016] 4 SLR 1 | Singapore | Cited for its survey of the law on foreign illegality. |
| Bowmakers Ltd v Barnet Instruments Ltd | Court of Appeal | Yes | [1945] KB 65 | England and Wales | Cited for the principle that a man’s right to possess his own chattels will as a general rule be enforced against one who, without any claim of right, is detaining them, or has converted them to his own use, even though it may appear either from the pleadings, or in the course of the trial, that the chattels in question came into the defendant’s possession by reason of an illegal contract between himself and the plaintiff, provided that the plaintiff does not seek, and is not forced, either to found his claim on the illegal contract or to plead its illegality in order to support his claim. |
| Beresford v Royal Insurance Co Ltd | House of Lords | Yes | [1938] AC 586 | United Kingdom | Cited for the principle that a man is not to be allowed to have recourse to a Court of Justice to claim a benefit from his crime whether under a contract or a gift. |
| Station Hotel Co v Malayan Railway Administration | Court of Appeal | Yes | [1993] 2 SLR(R) 818 | Singapore | Cited for the application of the Euro-Diam principles. |
| Ting Siew May v Boon Lay Choo | Court of Appeal | No | [2014] 3 SLR 609 | Singapore | Cited for its review of the law concerning when a contract is unenforceable for illegality. |
| Habibullah Mohamed Yousuff v Indian Bank | High Court | Yes | [1999] 2 SLR(R) 880 | Singapore | Cited for the wording of a clause that appeared to be a true indemnity. |
| Gulf Bank KSC v Mitsubishi Heavy Industries Ltd (No 2) | Commercial Court | Yes | [1994] 2 Lloyd’s Rep 145 | England and Wales | Cited for the validity of a clause preserving liability even if facilities were deemed void or unenforceable. |
13. Applicable Rules
| Rule Name |
|---|
| Order 14 Rule 1 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
| Order 14 Rule 3 of the Rules of Court |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Indemnity Agreement
- Loan Facilities
- Surewin
- Singfor
- Illegality
- Foreign Illegality
- Summary Judgment
- Pledges
- Taiwanese Law
15.2 Keywords
- indemnity
- illegality
- contract
- singapore
- taiwan
- loan
- banking
- insurance
16. Subjects
- Contract Law
- Conflict of Laws
- Banking
- Insurance
- Civil Litigation
17. Areas of Law
- Contract Law
- Conflict of Laws
- Banking Law
- Insurance Law
- Civil Procedure