On 16 June 2017, the court fixed this matter for hearing for three weeks commencing on 30 April 2018. By an amended notice of motion filed on 29 March 2018, the defendant, who I will refer to as Justin, sought an order vacating that hearing to permit him to obtain production by Credit Suisse AG of bank statements for an account held at its Singapore branch in the name of Cheng-Lung Yang (the Credit Suisse Yang Account) for the period 1 July 2006 to 31 December 2014 either through a letter of request directed to the Supreme Court of Singapore or a subpoena directed to Credit Suisse AG directly.
On 3 April 2018, I refused the orders sought by Justin and indicated that I would give my reasons later. These are those reasons.
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Background
Justin is the eldest son of Chung-Yi Cheng (Mr Cheng), who died in August 2012. Prior to his death, Mr Cheng controlled the first plaintiff, Chung-Yi Pty Ltd (Chung-Yi), which was a family company that had substantial investments in real property in Australia. Mr Cheng (or his Estate) held approximately 16.668 per cent of the shares in Chung-Yi. At all relevant times, Justin held approximately 10.833 per cent of the shares in Chung-Yi. His wife, Teresa, held approximately 8.333 per cent of the shares. Justin was, until his removal on 23 April 2014, a director and company secretary of Chung-Yi. Justin has four younger siblings and they and their respective spouses (with one exception) together held the remaining shares in Chung-Yi and, together with Chung-Yi, are the plaintiffs in this action.
As originally pleaded, the plaintiffs claimed that between 2009 and 2013 Justin caused a number of payments to be made from bank accounts held by Chung-Yi either directly or indirectly to himself or his wife in breach of his duties as a director. A number of those payments were also said to have been made fraudulently.
In response to that claim, Justin filed a cross-claim alleging that the payments were made to him pursuant to a family agreement, arrangement or understanding devised by Mr Cheng as part of an inheritance plan by which the assets of Chung-Yi would be distributed equitably among Mr Cheng's five children (the Equalisation Agreement). Justin claims that the payments made to him were made in accordance with that agreement and that if he is liable to repay those amounts, then, in accordance with the Equalisation Agreement, he also caused Chung-Yi either directly or indirectly to pay to each of his siblings, or persons or entities associated with them, amounts in excess of $5,000,000 each, which they also are liable to repay to Chung-Yi.
In making the distributions that he did, Justin used a number of intermediary accounts including accounts held by four individuals who were resident outside of Australia. One of those individuals was Mr Yang. Justin refers in his affidavits to those accounts as "ECYMF" (External Chung-Yi Money Fund) accounts. It is not disputed that at all relevant times Justin had control over those accounts. The evidence is that in all $51,097,878 (27 payments) were paid out of Chung-Yi accounts to ECYMF accounts between 1 July 2006 and 30 June 2014.
On 17 November 2017, by leave, the plaintiffs amended their claim substantially. By their amended claim, the plaintiffs allege among other things that, during the period 1 July 2006 to 30 June 2014, Justin caused Chung-Yi to distribute the amount of $97,897,313.70, of which $27,661,055.86 or alternatively $25,828,814.43 were paid to him, his family or entities controlled by him.
In relation to the allegation that Justin caused payments to be made of $25,828,814.43, the particulars to para 7H of the Amended Commercial List Statement relevantly provide:
(c) In relation to the distributions to the value of $25,828,814.43, $20,513,233.02 was paid to Justin from the Chung-Yi Monies and $5,315,581.41 was paid to Yang from the Chung-Yi Monies (Yang Monies): …
(d) It is to be inferred that the Yang Monies were paid to Justin from the following facts, matters and circumstances:
i. During the period 1 January 2006 to 30 June 2014, Justin was the ultimate recipient of at least $20,513,233.02 from the Chung-Yi Monies.
ii. During the period 1 January 2006 to 30 June 2014, Justin received payments totalling $27,661,055.86.
iii. Justin had control and operating authority over the Yang Monies; and
iv. The Yang Monies were not paid to the Siblings.
The figure of $5,315,581.41 is a net amount consisting of payments to accounts in the name of Mr Yang totalling $13,651,885.34 less payments from those accounts of $8,336,303.93. There are two Yang accounts. One was held with Westpac Banking Corporation in Singapore (the Westpac Yang Account). The other was the Credit Suisse Yang Account.
Justin does not have copies of the bank statements for the two accounts. However, he does give evidence that in about 2010, Grace Law prepared a worksheet on his instructions recording payments from Chung-Yi accounts to or for the benefit of himself, his father and his siblings, which was then updated on his instructions from time to time. On 29 March 2018, I made an order under s 192A of the Evidence Act 1995 (NSW) that the worksheet and the affidavit explaining the worksheet be admitted into evidence, subject to certain qualifications, at the hearing of this matter.
It is common ground that the bank statements for the Westpac Yang Account and the Credit Suisse Yang Account, at least for the period 2009 to 2014, were relevant to the issues in the case even before the plaintiffs amended their Commercial List Statement. That was because in his cross-claim, Justin alleged that between 2009 and 2014 payments and other benefits totalling more than $5,000,000 were made or provided to each of his siblings in accordance with the Equalisation Agreement and the bank statements for those two accounts may have evidenced payments to one or more of the siblings or accounts associated with them.
Some attempts were made to obtain copies of the bank statements for the Credit Suisse Yang Account before the current application. On 23 January 2017, Justin served a subpoena on Credit Suisse AG (and on Westpac) in Sydney seeking production of the bank statements. Not surprisingly, none was produced. On 25 May 2017, the plaintiffs filed a notice of motion seeking discovery from Justin including discovery of bank statements for the Credit Suisse Yang Account. On 8 June 2017, McDougall J ordered discovery of those documents. The plaintiffs contend that Justin should have taken some steps to obtain the statements following that order, although whether those steps would have included an application for the court to issue a letter of request to the Supreme Court of Singapore is highly doubtful. On 9 November 2017, the plaintiffs made an application for a Sabre order requiring Justin to take all reasonable steps available to him to obtain the bank statements for the Credit Suisse Yang Account among other documents. Initially, Justin resisted that order and it was not until 16 February 2018 that he first raised the issue of a letter of request.
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Submissions
Justin's submissions in support of an order for the issue of a letter of request and consequent vacation of the hearing date had three broad strands. First, he submitted that the statements for the Credit Suisse Yang Account were necessary or important in answering the contention contained in para 7H of the Amended Commercial List Statement that he caused payments which totalled $25,825,814.43 to be made to himself, his family or entities controlled by him from Chung-Yi Monies. In making that submission, he relied on a report prepared by Mr Temple-Cole, an expert accountant retained by him, which states that in order to identify the ultimate recipients of all amounts paid out of Chung-Yi Accounts, he would require the statements for the Credit Suisse Yang Account, among other information. Second, Justin submitted that that allegation was only introduced by the amendments made on 17 November 2017, after the case had been set down for hearing. Third, he submitted that the normal discretionary considerations against vacating a hearing date did not outweigh the injustice he would suffer if the hearing were not vacated to permit him to obtain the additional evidence he seeks. In particular, the application has been made several weeks before the hearing is due to commence so that the Court is likely to be able to make the time available to other litigants; the plaintiffs do not point to any specific prejudice they will suffer; both sides accepted that the bank statements are important; Justin has made reasonably diligent enquiries to obtain the bank statements; and any delay is the fault of the lawyers for failing to consider a letter of request procedure earlier. It is not the fault of Justin.
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Reasons for decision
On balance, I considered that the interests of justice did not favour vacating the hearing date and that consequently there was no point in making an order for the issue of a letter of request, given the time that it was likely that the letter of request would take to issue and be dealt with. I reached that conclusion for a number of reasons.
First, the bank statements for the Credit Suisse Yang Account will not complete the picture in relation to payments from Chung-Yi accounts. For example, Justin does not have copies of the statements for the Westpac Yang Account and it is known that Westpac has not retained copies of those statements. Consequently, even if the statements for the Credit Suisse Yang Account are available, they will not show the recipients of all money paid from the accounts held by Mr Yang. Mr Temple-Cole also identifies bank statements from a number of other accounts and other documents he would require in order to identify from the accounting records the ultimate recipients of all amounts paid from the Chung-Yi accounts.
Second, it is unclear which, if any, of the statements sought from Credit Suisse have been retained. Credit Suisse has refused to disclose that information voluntarily, relying on Singapore's bank secrecy laws. It seems likely that Credit Suisse would keep records for a period of at least seven years, but it is unclear whether it keeps records beyond that time.
Third, it is unclear whether the bank statements, if they exist, would shed any light on the issues in the case. The plaintiffs accept that the Yang Monies (as defined in para 7H of the Amended Commercial List Statement) were not paid directly to Justin. Consequently, the statements are not needed to prove that Justin was not a direct recipient of those monies. For reasons which are unclear from the evidence, it was common for payments to be made from one EYCMF account to another. Consequently, the statements may reveal nothing about the ultimate recipient of any of the funds in question. I accept, of course, that it is possible that the statements would show direct payments to one or more of Justin's siblings or accounts associated with them and that that evidence would seriously undermine the plaintiffs' case. However, whether that is what the bank statements would show or not is simply a matter for speculation at present.
Fourth, there is other evidence relating to the relevant payments. In particular, there is evidence given by Justin, including the records he kept. The siblings have discovered their Australian bank account records and, in accordance with directions given by Hammerschlag J, the plaintiffs (other than Chung-Yi) have each sworn an affidavit stating that they have no other bank statements in their possession, custody or control that record the receipt by them (whether individually or jointly) or any entity associated with them of any monies paid out by Chung-Yi directly or indirectly during the period 1 July 2006 to 30 June 2014 and that they have not provided Justin or Mr Cheng or any person acting on their behalf any details of any other bank account held in their name other than those identified in the affidavit. There may be issues about whether the bank statements discovered by the plaintiffs are complete, whether Justin's evidence should be accepted and what inferences should be drawn from other evidence concerning payments received by the plaintiffs (other than Chung-Yi). The point, however, is that there is evidence before the court from which conclusions can be reached on the issues in the case and it is unclear what, if anything, the bank statements for the Credit Suisse account would add, assuming they exist.
Fifth, although I accept that the nature of the case has changed as a result of the amendments permitted in November, and that the period over which relevant payments were made has been extended, I do not think those changes provide an adequate explanation for why Justin has not sought an order that a letter of request issue before now. At the heart of the case against Justin has been the allegation that he caused Chung-Yi to make payments to him or for his benefit to which he was not entitled and at the heart of Justin's defence has been the assertion that the payments made to him were made in accordance with the Equalisation Agreement and that payments were also made to or for the benefit of his siblings in accordance with that agreement. Although the date range has changed, the fact is that the bank statements for the Credit Suisse Account have been relevant to the issues in the case at least since Justin filed his cross-claim and, in particular, relevant to the question whether payments were made from that account to or for the benefit of the plaintiffs (other than Chung-Yi). Justin's legal advisors recognised that when they served the subpoenas on Credit Suisse and Westpac. Justin has had ample opportunity to seek to obtain those statements through an application for a letter of request if he thought they were necessary for his case.
Sixth, plaintiffs in the commercial list in particular are entitled to expect their cases to be brought on quickly. The case was commenced on 25 January 2016. It was set down for hearing in June last year. Because of other demands on the Court's time, cases, particularly those involving a three week hearing, generally must be set down a number of months in advance. It is uncertain how long it would take for any letter of request to be issued and for the Supreme Court of Singapore to respond to it. However, the likelihood is that it would take a number of months. That places the court in a difficult position. It would be reluctant to fix a new hearing date until it could be confident that the letter of request process would be completed in time. It is possible that information revealed by the bank statements would lead to other enquiries. The result is that it may not be possible to fix a hearing date for a number of months and that that new hearing will not be until a number of months after that. It would not be reasonable to require the plaintiffs to wait that additional time to enable Justin to seek to obtain additional evidence which may or may not be available, which may or may not shed light on the issues in the case if it is, and which he was in a position to seek earlier.
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Decision last updated: 09 April 2018