Teng Wen-Chung v EFG Bank: Foreign Illegality & Contract Enforcement

In Teng Wen-Chung v EFG Bank AG, Singapore Branch, the Singapore Court of Appeal dismissed Mr. Teng Wen-Chung's appeal against the High Court's decision, which granted summary judgment to EFG Bank. The court addressed whether an indemnity agreement, governed by Singapore law, was unenforceable due to its alleged connection to a contract illegal in Taiwan. The court found that Mr. Teng failed to demonstrate a prima facie case of illegality, and thus the appeal was dismissed.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal dismissed an appeal, holding that an indemnity agreement was enforceable despite alleged connection to foreign illegality.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
EFG Bank AG, Singapore BranchRespondent, PlaintiffCorporationJudgment for RespondentWon
Teng Wen-ChungAppellant, DefendantIndividualAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Andrew Phang Boon LeongJudge of AppealYes
Judith PrakashJudge of AppealNo

4. Counsels

Counsel NameOrganization
Leo Zhen Wei LionelWongPartnership LLP
Chou Sean YuWongPartnership LLP
Pereira Russell Si-HaoWongPartnership LLP
Daniel LeeWongPartnership LLP
Andre ManiamWongPartnership LLP
Kenneth PereiraAldgate Chambers LLC
Lai Yan Ting FrancineAldgate Chambers LLC

4. Facts

  1. Mr. Teng was the chairman, director, and majority shareholder of Singfor Life Insurance Ltd.
  2. EFG Bank AG extended two loan facilities to Surewin Worldwide Limited.
  3. The First Surewin Facility was originally dated August 2007 for US$30m, later increased to US$240m.
  4. The Second Surewin Facility was originally dated December 2011 for US$30m.
  5. On 19 January 2012, Mr. Teng and EFG Bank entered into an Indemnity Agreement.
  6. The Loan Facilities were secured by pledges, including those from Singfor Tactical Asset Allocation Portfolio SA and Volaw Corporate Trustee Ltd.
  7. Singfor was placed under government receivership in August 2014, constituting an event of default.

5. Formal Citations

  1. Teng Wen-Chung v EFG Bank AG, Singapore Branch, Civil Appeal No 96 of 2017, [2018] SGCA 60
  2. 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

DateEvent
First Surewin Facility originally dated
First pledge made by Singfor Tactical Asset Allocation Portfolio SA
Second pledge entered into by Volaw Corporate Trustee Ltd
Second Surewin Facility originally dated
Appellant and respondent entered into the Indemnity Agreement
Loan limit of the First Surewin Facility was increased to US$205m
Loan limit of the First Surewin Facility was increased to US$240m
Second Surewin Facility revised
Singfor was placed under government receivership
Respondent issued a letter of demand to the appellant
Respondent commenced action against the appellant
Appellant convicted for breach of trust and money laundering
Respondent filed an application for summary judgment
Summary judgment granted by the Registrar of the Supreme Court
Hearing Date
Judgment Date

7. Legal Issues

  1. Enforceability of Indemnity Agreement
    • Outcome: The court held that the Indemnity Agreement was enforceable.
    • Category: Substantive
    • Sub-Issues:
      • Foreign illegality
      • Proximity to illegal transaction
    • Related Cases:
      • [1990] 1 QB 1
  2. Foreign Illegality
    • Outcome: The court found that the Indemnity Agreement was not tainted by foreign illegality.
    • Category: Substantive
    • Sub-Issues:
      • Breach of Taiwanese Law
      • Circumvention of Taiwanese Law
    • Related Cases:
      • [1990] 1 QB 1
      • [1945] KB 65
      • [1938] AC 586

8. Remedies Sought

  1. Repayment of outstanding amounts under Loan Facilities
  2. Enforcement of Indemnity Agreement

9. Cause of Actions

  • Breach of Contract
  • Enforcement of Indemnity Agreement

10. Practice Areas

  • Commercial Litigation
  • Banking Law

11. Industries

  • Banking
  • Insurance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
EFG Bank AG, Singapore Branch v Teng Wen-ChungHigh CourtYes[2017] SGHC 318SingaporeCited as the decision being appealed against.
Euro-Diam v BathurstQueen's BenchYes[1990] 1 QB 1England and WalesCited for principles on foreign illegality, but the court expressed reservations about its applicability.
Bowmakers Ltd v Barnet Instruments LtdKing's BenchYes[1945] KB 65England and WalesCited for the principle that a claim is unenforceable if the claimant has to plead or prove illegality to make out his claim.
Beresford v Royal Insurance Co LtdHouse of LordsYes[1938] AC 586England and WalesCited for the principle that a claimant will not be allowed to claim a benefit from his crime.
Overseas Union Bank Ltd v Chua Kok Kay and anotherHigh CourtYes[1993] 1 SLR 686SingaporeCited as an example of a case where Euro-Diam was applied.
Station Hotel Co v Malayan Railway AdministrationCourt of AppealYes[1993] 2 SLR(R) 818SingaporeCited as an example of a case where Euro-Diam was referred to.
Ting Siew May v Boon Lay ChooCourt of AppealYes[2014] 3 SLR 609SingaporeCited for the current law relating to contractual illegality in Singapore.
Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) and anotherCourt of AppealYes[2018] 1 SLR 363SingaporeCited for the current law relating to contractual illegality in Singapore.
Patel v MirzaSupreme CourtYes[2017] AC 467United KingdomCited as a UK Supreme Court decision that might require Euro-Diam to be revisited in England.
Tinsley v MilliganHouse of LordsYes[1994] 1 AC 340England and WalesCited as a case where the 'public conscience' discretionary approach to illegality was disapproved.
Ryder Industries Ltd (Formerly Saitek Ltd) v Chan Shui WooCourt of Final AppealYes[2016] 1 HKC 323Hong KongCited for the observation that aspects of Euro-Diam must be treated with considerable reserve.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Indemnity Agreement
  • Loan Facilities
  • Foreign Illegality
  • Surewin
  • Singfor
  • Pledges
  • Taiwanese Judgment

15.2 Keywords

  • Contract
  • Illegality
  • Singapore
  • Bank
  • Loan
  • Indemnity

17. Areas of Law

Area NameRelevance Score
Illegality and public policy90
Contract Law90
Foreign Law70

16. Subjects

  • Contract Law
  • Banking
  • Foreign Illegality