La Dolce Vita v Deutsche Bank: Pre-Action Discovery & Tracing Fraudulent Transfers

La Dolce Vita Fine Dining Company Limited and La Dolce Vita Fine Dining Group Holdings Limited applied to the Singapore High Court for pre-action discovery against Deutsche Bank Aktiengesellschaft and Credit Suisse AG, as well as Success Elegant Trading Limited, seeking to trace funds allegedly fraudulently transferred by Zhang Lan. The plaintiffs claimed that Zhang Lan manipulated accounting records, leading them to overpay for a food and beverage business. The court granted the applications, ordering the banks to disclose documents related to accounts held by Zhang Lan and Success Elegant Trading Limited to facilitate tracing the funds.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Applications granted; discovery orders made against the defendant banks.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court allows pre-action discovery against banks to trace funds allegedly fraudulently transferred by Zhang Lan. The court found a prima facie case of fraudulent misrepresentation.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Deutsche Bank AktiengesellschaftDefendantCorporationDiscovery order madeLost
Credit Suisse AGDefendantCorporationDiscovery order madeLost
La Dolce Vita Fine Dining Group Holdings LimitedPlaintiffCorporationApplication grantedWon
La Dolce Vita Fine Dining Company LimitedPlaintiffCorporationApplication grantedWon
Success Elegant Trading LimitedDefendantCorporationDiscovery order madeLost

3. Judges

Judge NameTitleDelivered Judgment
Tan Teck Ping KarenAssistant RegistrarYes

4. Counsels

Counsel NameOrganization
Tan XeauweiAllen & Gledhill LLP
Chua Sui TongWongPartnership LLP
Daniel ChanWongPartnership LLP
Harpreet SinghCavenagh Law LLP
Jerald FooCavenagh Law LLP
Elsa GohCavenagh Law LLP
Paul SandoshamCavenagh Law LLP
Tan MingfenCavenagh Law LLP
Edmund KronenburgBraddell Brothers LLP
Grace LokeBraddell Brothers LLP

4. Facts

  1. The plaintiffs acquired shares in a food and beverage business owned by the Founder.
  2. The plaintiffs allege the Founder manipulated the Company’s accounting records to inflate its valuation.
  3. FTI Consulting found pervasive manipulation of South Beauty’s transaction sales data.
  4. The plaintiffs commenced separate arbitration proceedings against the Sellers in CIETAC.
  5. Hong Kong court granted injunction orders against the Founder and Founder HoldCo.
  6. Singapore court granted orders prohibiting the Founder from disposing of assets in Singapore.
  7. The Founder stated her intention to transfer assets to other jurisdictions to put them out of reach of the plaintiffs.

5. Formal Citations

  1. La Dolce Vita Fine Dining Co Ltd and another v Deutsche Bank AG and another and another matter, , [2016] SGHCR 3
  2. La Dolce Vita Fine Dining Company Limited and La Dolce Vita Fine Dining Group Holdings Limited v Deutsche Bank Aktiengesellschaft and Success Elegant Trading Limited, , OS 305/2015
  3. La Dolce Vita Fine Dining Company Limited and La Dolce Vita Fine Dining Group Holdings Limited v Credit Suisse AG and Success Elegant Trading Limited, , OS 307/2015
  4. Unknown, , Originating Summons No. 178 of 2015
  5. Unknown, , Originating Summons No. 180 of 2015

6. Timeline

DateEvent
Founder indicated she wishes to transfer assets to other structure.
Remittance of USD 50,000,000.00 from Founder’s Hong Kong Bank Account to Success Elegant Trading Limited.
Remittance of USD 2,085,489.46 from Founder’s Hong Kong Bank Account to Success Elegant Trading Limited.
Remittance of HKD 25,005, 779.93 from Founder’s Hong Kong Bank Account to Success Elegant Trading Limited.
Remittance of USD 60,000,000.00 from Founder’s Hong Kong Bank Account to Success Elegant Trading Limited.
Founder transferred sole share in Success Elegant Trading Limited to Asiatrust.
Remittance of USD 2,000,000.00 from Founder’s Hong Kong Bank Account to Success Elegant Trading Limited.
FTI Consulting prepared a report.
Hong Kong court granted injunction orders against the Founder and Founder HoldCo.
Singapore court granted orders prohibiting the Founder from disposing of assets in Singapore.
Bank Sarasin provided documentation relating to the Founder’s Hong Kong Bank Account to the plaintiffs’ solicitors in Hong Kong.
Confirmation sought from Credit Suisse AG regarding Success Elegant Trading Limited account.
Herbert Smith Freehills confirmed steps to comply with Singapore Injunctions regarding Credit Suisse AG account.
Allen & Gledhill notified plaintiffs’ solicitors that Deutsche Bank believed Success Elegant Trading Limited’s account is subject to the Singapore Injunctions.
Hearing date.
Hearing date.
Hearing date.
Hearing date.
Hearing date.
Hearing date.
Judgment reserved.

7. Legal Issues

  1. Pre-Action Discovery
    • Outcome: The court held that the requirements for pre-action discovery were satisfied.
    • Category: Procedural
    • Sub-Issues:
      • Requirements for obtaining an order for pre-discovery
      • Justness and necessity of pre-action discovery
  2. Norwich Pharmacal Order
    • Outcome: The court applied the principles of Norwich Pharmacal orders in granting the discovery orders.
    • Category: Substantive
    • Sub-Issues:
      • Facilitation of wrongdoing
      • Requirement of real interest in ascertaining a source
      • Necessary, just and convenient
  3. Banker Trust Order
    • Outcome: The court considered the principles of Banker Trust orders in the context of tracing funds allegedly obtained through fraudulent misrepresentation.
    • Category: Substantive
    • Sub-Issues:
      • Tracing claim
      • Prima facie case of fraud
  4. Fraudulent Misrepresentation
    • Outcome: The court found a prima facie case of fraudulent misrepresentation on behalf of the Founder.
    • Category: Substantive
    • Sub-Issues:
      • Manipulation of financial records
      • Inflated valuation
  5. Banking Secrecy
    • Outcome: The court held that disclosure was permitted under paragraph 7 of the Third Schedule of the Banking Act, as it was necessary to comply with an order of the Supreme Court or Judge thereof pursuant to the powers under Part IV of the Evidence Act.
    • Category: Substantive
    • Sub-Issues:
      • Duty of banking secrecy
      • Exceptions to banking secrecy
  6. Legal Proceedings under s 175 of the Evidence Act
    • Outcome: The court held that the CIETAC arbitration constituted separate and independent legal proceedings and that the inspection of the bankers’ books was for the purpose of the CIETAC arbitration.
    • Category: Procedural
    • Sub-Issues:
      • Definition of legal proceedings
      • Purpose of inspection of banker's books
  7. Court's Power to Intervene in Arbitrations
    • Outcome: The court held that its power to grant relief against non-parties to the CIETAC arbitration was not affected by Article 5 of the Model Law and the IAA.
    • Category: Jurisdictional
    • Sub-Issues:
      • Extent of court intervention
      • Relief against non-parties

8. Remedies Sought

  1. Rescission of the SPA
  2. Return of the purchase price
  3. Damages

9. Cause of Actions

  • Fraudulent Misrepresentation

10. Practice Areas

  • Commercial Litigation
  • Discovery
  • Asset Tracing
  • Banking
  • Arbitration

11. Industries

  • Food and Beverage
  • Financial Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
UMCI Ltd v Tokio Marine & Fire Insurance Co (Singapore) Pte Ltd and othersHigh CourtYes[2006] 4 SLR(R) 95SingaporeCited for the principle that the court has concurrent jurisdiction under Order 24 rule 6(5) and its inherent jurisdiction to order discovery against a non-party.
Dorsey James Michael v World Sport Group Pte LtdCourt of AppealYes[2014] 2 SLR 208SingaporeCited for the caution regarding pre-action disclosure and the principles guiding Norwich Pharmacal orders.
British Steel Corporation v Granada Television LtdHouse of LordsYes[1981] AC 1096England and WalesCited for the principle that an aggrieved person would have, and could demonstrate, a real interest in suing the source.
United Company Rusal plc v HSBC Bank plcQueen's Bench DivisionYes[2011] EWHC 404 (QB)England and WalesCited for the standard of proof required for granting a Norwich Pharmacal order, which is at least an arguable case.
Bankers Trust Co v ShapiraCourt of AppealYes[1980] 1 WLR 1274England and WalesCited for the extension of Norwich Pharmacal orders to include orders compelling non-parties to provide documents to assist with the applicant’s tracing claim where there is a prima facie case of fraud (Banker Trust orders).
Mediterranea Raffineria Siciliana Petroli S.p.a v Mabanaft G.m.b.HCourt of Appeal (Civil Division)YesMediterranea Raffineria Siciliana Petroli S.p.a v Mabanaft G.m.b.H Court of Appeal (Civil Division) Transcript No. 816 of 1978England and WalesCited for the rationale for extending the Norwich Pharmacal order to protect and preserve a trust fund in interlocutory proceedings.
A v CQueen's Bench DivisionYes[1981] 1 QB 956England and WalesCited for the principle that in an action to trace property which in equity belongs to the plaintiff, the court may order a bank to give discovery of documents in relation to the bank account of a defendant who is alleged to have defrauded the plaintiff of his assets.
A v B CoHigh CourtYes[2002] 3 H.K.I.R.D. 111Hong KongCited for the principle that it is not a requirement that the plaintiff must have sufficient information to establish a tracing claim before establishing an entitlement to relief.
Wellmix Organics (International) Ptd Ltd v Lau Yu ManHigh CourtYes[2006] 2 SLR(R) 117SingaporeCited for the key criterion justifying invocation of the court’s inherent jurisdiction, which is that of “need” – in order that justice be done and/or that injustice or abuse of process of the court be avoided.
Wee Soon Kim Anthony v UBS AGHigh CourtYes[2003] 2 SLR(R) 91SingaporeCited for the principle that Part IV of the Evidence Act was enacted for the benefit of bankers and its object is to relieve bankers of the necessity of actually attending court with their books under a subpoena.
Chan Swee Leng v Hong Kong and Shanghai Banking Corp LtdHigh CourtYes[1996] 5 MLJ 133BruneiCited for the meaning of legal proceedings in the context of the Brunei Bankers’ Book Evidence Act (1879) which is in pari material with s 175 of our Evidence Act.
L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appealCourt of AppealYes[2013] 1 SLR 125SingaporeCited for the principle that the Court’s power to intervene in arbitrations are found solely in the International Arbitration Act/Model Law and not elsewhere.
China Ocean Shipping Co. Owners of The M/V Fu Ning Hai v Whistler International Ltd. Charterers of the M/V Fu Ning HaiCourt of First InstanceYes[1999] HKCFI 693Hong KongCited for the principle that the Model Law only governs matters relating to the parties to the arbitration, it does not govern relief sought against non-parties to the arbitration.
Tomolugen Holdings Ltd and another v Silicia Investors Ltd and other appealsCourt of AppealYes[2016] 1 SLR 373SingaporeCited for the principle that an arbitrator whose powers are derived from a private agreement between A and B plainly has no jurisdiction to bind anyone else.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Order 24 rule 6(5) of the Rules of CourtSingapore
Supreme Court of Judicature ActSingapore
Banking ActSingapore
Evidence ActSingapore
International Arbitration ActSingapore
s 175 of the Evidence ActSingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Pre-action discovery
  • Norwich Pharmacal order
  • Banker Trust order
  • Fraudulent misrepresentation
  • Banking secrecy
  • Tracing claim
  • CIETAC arbitration
  • Singapore Injunctions
  • Beneficial ownership
  • Legal proceedings

15.2 Keywords

  • pre-action discovery
  • tracing
  • fraud
  • banking secrecy
  • arbitration
  • Singapore
  • High Court

17. Areas of Law

Area NameRelevance Score
Pre-action discovery90
Fraud and Deceit80
Civil Practice75
Asset Recovery70
Banking Law60
Evidence50
Contract Law40
Company Law30
Arbitration30
Administrative Law20

16. Subjects

  • Civil Procedure
  • Discovery
  • Banking
  • Arbitration
  • Fraud
  • Trusts