Credit Suisse Trust Ltd v Ivanishvili: Breach of Fiduciary Duty & Equitable Compensation
In Credit Suisse Trust Limited v Bidzina Ivanishvili, the Court of Appeal of Singapore addressed the consequences of a fraud perpetrated by a relationship manager at Credit Suisse AG, where the respondents' assets were deposited. The court found that Credit Suisse Trust breached its fiduciary duties to the respondents by failing to safeguard their assets and act in good faith. The court allowed the appeal in part, adjusting the quantification of losses, and awarded costs to the respondents. The respondents' claim was for breach of fiduciary duty.
1. Case Overview
1.1 Court
Court of Appeal of the republic of singapore1.2 Outcome
Appeal Allowed in Part
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Credit Suisse Trust breached fiduciary duties by failing to safeguard Bidzina Ivanishvili's assets, leading to a US$742.73m compensation award.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Credit Suisse Trust Limited | Appellant | Corporation | Appeal Allowed in Part | Partial | |
| Bidzina Ivanishvili | Respondent | Individual | Appeal Partially Dismissed | Partial | |
| Ekaterine Khvedelidze | Respondent | Individual | Appeal Partially Dismissed | Partial | |
| Tsotne Ivanishvili | Respondent | Individual | Appeal Partially Dismissed | Partial | |
| Gvantsa Ivanishvili | Respondent | Individual | Appeal Partially Dismissed | Partial | |
| Bera Ivanishvili | Respondent | Individual | Appeal Partially Dismissed | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Steven Chong | Justice of the Court of Appeal | Yes |
| Andrew Phang Boon Leong | Senior Judge | No |
| Robert French | International Judge | No |
4. Counsels
4. Facts
- Mr. Ivanishvili established the Mandalay Trust with Credit Suisse Trust Limited (CS Trust) as trustee.
- The Trust Assets were deposited with Credit Suisse AG (CS Bank).
- Mr. Patrice Lescaudron, a relationship manager at CS Bank, perpetrated a fraud over a decade.
- Mr. Lescaudron executed fraudulent investment orders and misappropriated Trust Assets.
- CS Trust was aware of Unauthorised Payments Away (UPAs) but did not adequately address them.
- CS Trust did not notify the respondents of Mr. Lescaudron's fraud until 2015.
- The Judge held that CS Trust had breached its duties by 30 March 2008.
5. Formal Citations
- Credit Suisse Trust Limited v Ivanishvili, Bidzina and others, Civil Appeal No 10 of 2023, [2024] SGCA(I) 5
6. Timeline
| Date | Event |
|---|---|
| Credit Suisse promoted their trust services to Mr Ivanishvili | |
| Funds deposited into Meadowsweet and Soothsayer accounts | |
| Meadowsweet and Soothsayer entered into discretionary portfolio management agreements with CS Bank | |
| Mr Patrice Lescaudron became Mr Ivanishvili’s relationship manager at CS Bank | |
| Six Unauthorised Payments Away totalling US$35.412m were carried out by Mr Lescaudron | |
| Mr Lescaudron made further UPAs exceeding US$46.6m | |
| Mr Lescaudron carried out a total of 21 UPAs | |
| Mr Lescaudron’s fraud was exposed, and he was removed as the relationship manager | |
| Suit No 4 of 2021 filed | |
| Settlement agreement dated 1 December 2022 | |
| Judgment on Costs and Final Orders dated 19 September 2023 | |
| Court hearing | |
| Court hearing | |
| Judgment reserved |
7. Legal Issues
- Breach of Fiduciary Duty
- Outcome: The court found that CS Trust breached its fiduciary duty to perform the trust honestly and in good faith for the benefit of the respondents.
- Category: Substantive
- Sub-Issues:
- Failure to act in good faith
- Conflict of interest
- Failure to safeguard trust assets
- Equitable Compensation
- Outcome: The court awarded equitable compensation to the respondents to repair the losses caused by CS Trust's breach of fiduciary duties.
- Category: Remedial
- Sub-Issues:
- Quantification of losses
- Causation
- Remoteness
- Appellate Intervention on Expert Evidence
- Outcome: The court clarified the threshold for appellate intervention in relation to a trial judge's findings on expert evidence.
- Category: Procedural
- Sub-Issues:
- Assessment of expert credibility
- Evaluation of expert reasoning
- Consistency with objective facts
8. Remedies Sought
- Equitable Compensation
9. Cause of Actions
- Breach of Fiduciary Duty
- Breach of Trust
10. Practice Areas
- Commercial Litigation
- Trusts
- Wealth Management
11. Industries
- Finance
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd | Singapore International Commercial Court | Yes | [2023] 5 SLR 59 | Singapore | Sets out the background facts of the case and the Judge's findings on CS Trust's breach of duty. |
| Ivanishvili, Bidzina and others v Credit Suisse Trust Ltd | Singapore International Commercial Court | Yes | [2024] 3 SLR 78 | Singapore | Concerns the Judge's reasons for arriving at the amount of compensation awarded to the respondents. |
| Tan Yok Koon v Tan Choo Suan and another and other appeals | Court of Appeal | Yes | [2017] 1 SLR 654 | Singapore | Affirms that an express trustee owes a fiduciary duty to perform the trust honestly and in good faith for the benefit of the beneficiaries. |
| Bristol and West Building Society v Mothew | Court of Appeal | Yes | [1998] Ch 1 | England and Wales | Clarifies that the distinguishing obligation of a fiduciary is the obligation of loyalty. |
| Sim Poh Ping v Winsta Holding Pte Ltd and another and other appeals | Court of Appeal | Yes | [2020] 1 SLR 1199 | Singapore | Confirms that the fiduciary duty to act in good faith is a core fiduciary duty. |
| BIT Baltic Investment & Trading Pte Ltd (in compulsory liquidation) v Wee See Boon | Court of Appeal | Yes | [2023] 1 SLR 1648 | Singapore | Establishes that directors owe a fiduciary duty to act honestly and in good faith in the best interests of their company. |
| Goh Chan Peng and others v Beyonics Technology Ltd and another and another appeal | Court of Appeal | Yes | [2017] 2 SLR 592 | Singapore | Explains the test for determining whether a director has acted bona fide in the interests of the company. |
| Ho Kang Peng v Scintronix Corp Ltd (formerly known as TTL Holdings Ltd) | Court of Appeal | Yes | [2014] 3 SLR 329 | Singapore | States that a dishonest director will be in breach regardless of whether he claims to have been acting in the interests of the company. |
| Foo Jee Seng and others v Foo Jhee Tuang and another | Court of Appeal | Yes | [2012] 4 SLR 339 | Singapore | Illustrates that a trustee is under a fiduciary duty to act in the best interests of the beneficiaries. |
| Centre for Laser and Aesthetic Medicine Pte Ltd v GPK Clinic (Orchard) Pte Ltd and others and another appeal | Court of Appeal | Yes | [2018] 1 SLR 180 | Singapore | Demonstrates that a director is in breach of her fiduciary duties when she knows that her fellow director is diverting clients away from her company but fails to report this fact to her company. |
| iVenture Card Ltd and others v Big Bus Singapore City Sightseeing Pte Ltd and others | Court of Appeal | Yes | [2022] 1 SLR 302 | Singapore | States that an appellate court will ordinarily respect a trial judge’s findings on expert evidence, unless there are doubts as to whether the evidence had been satisfactorily sifted or assessed by the trial judge. |
| Poh Soon Kiat v Desert Palace Inc (trading as Caesars Palace) | Court of Appeal | Yes | [2010] 1 SLR 1129 | Singapore | States that expert evidence cannot fly in the face of proven objective facts and the appellate court is entitled to examine the underlying facts to see if the expert opinion is supported by the factual evidence. |
| Teo Ghim Heng v Public Prosecutor | Court of Appeal | Yes | [2022] 1 SLR 1240 | Singapore | States that where a medical expert’s opinion is based on a person’s self-reported symptoms, the court is entitled to examine whether the person’s self-reports are in fact supported by the extrinsic objective evidence in evaluating the expert opinion. |
| South Australia Asset Management Corp v York Montague Ltd | House of Lords | Yes | [1997] 1 AC 191 | United Kingdom | Discusses the Scope of Duty Principle. |
| Manchester Building Society v Grant Thornton UK LLP | Supreme Court | Yes | [2021] 3 WLR 81 | United Kingdom | Discusses the Scope of Duty Principle. |
| Asnah bte Ab Rahman v Li Jianlin | Court of Appeal | Yes | [2016] 2 SLR 944 | Singapore | Defines contributory negligence. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Fiduciary Duty
- Trust Assets
- Unauthorised Payments Away
- Benchmark Portfolios
- Equitable Compensation
- Relationship Manager
- Trustee
- Discretionary Mandate
- Whole Portfolio Model
- Scope of Duty Principle
- Contributory Negligence
15.2 Keywords
- Credit Suisse
- Ivanishvili
- Fiduciary Duty
- Trust
- Equitable Compensation
- Singapore
- Fraud
- Investment
- Breach of Trust
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Fiduciary Duties | 95 |
| Trust Law | 90 |
| Breach of Trust | 80 |
| Equitable Compensation | 75 |
| Breach of Duty of Care | 65 |
| Asset Recovery | 60 |
| Expert evidence | 55 |
| Civil Litigation | 50 |
| Commercial Disputes | 40 |
| Arbitration | 30 |
16. Subjects
- Trusts
- Fiduciary Duty
- Financial Fraud
- Wealth Management
- Civil Litigation