CREDIT SUISSE TRUST LIMITED v BIDZINA IVANISHVILI & 4 Ors

[2024] SGCA(I) 5 Court of Appeal (International) 5 July 2024 • CA/CAS 10/2023 • 79 min read

16 cases cited (13 SG, 3 foreign) Cited by 2 cases

Outcome

Appeal allowed

we allow the appeal but only in part.

Source: [2024] SGCA(I) 5, Court of Appeal (International), decided 5 July 2024. Read directly from the judgment.

Key facts

Court	Court of Appeal (International)
Decided	5 July 2024
Judges	Andrew Phang Boon Leong, Robert French, Steven Chong
Charges / claim	Equity, Evidence
Outcome	Appeal allowed
Counsel	Allen & Gledhill LLP, Drew & Napier LLC, Rajah & Tann LLP, Afzal Ali, Cavinder Bull, Disa Sim, Gan Yun Han Rebecca, Gerald Paul Seah, Justin William Jeremiah, Kelly Tseng Ai Lin, Kenneth Lim Tao Chung, Lee Eng Beng, Liang Fang Ling Elizabeth, Mak Sushan Melissa, Tan Yuan Kheng, Torsten Cheong, Wong Pei Ting, Woo Shu Yan

Source: [2024] SGCA(I) 5, Court of Appeal (International), decided 5 July 2024 — eLitigation. Updated 25 June 2026.

Catchwords

Equity — Remedies — Equitable compensation Evidence — Principles — Expert evidence on appeal Equity — Fiduciary relationships — Duties — Duty to act in good faith

Practice Areas

Equity Evidence

Judges (3)

Andrew Phang Boon Leong Coram Robert French Coram Steven Chong Delivered

Counsel (18)

Allen & Gledhill LLP Firm Drew & Napier LLC Firm Rajah & Tann LLP Firm Afzal Ali Counsel Appellant Cavinder Bull Counsel Respondent Disa Sim Counsel Appellant Gan Yun Han Rebecca Counsel Appellant Gerald Paul Seah Counsel Respondent Justin William Jeremiah Counsel Appellant Kelly Tseng Ai Lin Counsel Respondent Kenneth Lim Tao Chung Counsel Appellant Lee Eng Beng Counsel Appellant Liang Fang Ling Elizabeth Counsel Respondent Mak Sushan Melissa Counsel Appellant Tan Yuan Kheng Counsel Respondent Torsten Cheong Counsel Appellant Wong Pei Ting Counsel Appellant Woo Shu Yan Counsel Respondent

Parties (6)

Credit Suisse Trust Limited Appellant Bera Ivanishvili Respondent Bidzina Ivanishvili Respondent Ekaterine Khvedelidze Respondent Gvantsa Ivanishvili Respondent Tsotne Ivanishvili Respondent

Case Significance

Credit Suisse Trust Limited v Ivanishvili, Bidzina and others [2024] SGCA(I) 5 was a decision of the Court of Appeal of Singapore (Civil Appeal No 10 of 2023), arising from Suit No 4 of 2021. The judgment was delivered by Steven Chong JCA on 5 July 2024, sitting with Andrew Phang Boon Leong SJ and Robert French IJ, following hearings on 8 April and 10 May 2024. The appeal concerned the consequences of a fraud perpetrated over more than a decade by a relationship manager who was a senior employee of Credit Suisse AG ("CS Bank"), not of the appellant, Credit Suisse Trust Limited ("CS Trust"); both formed part of the Credit Suisse Group.

The respondents — Bidzina Ivanishvili, Ekaterine Khvedelidze, Tsotne Ivanishvili, Gvantsa Ivanishvili and Bera Ivanishvili — had deposited assets (the "Trust Assets") which CS Trust owed a duty to protect and safeguard. CS Trust did not dispute that it had breached its duty to safeguard the Trust Assets, and the court noted that the ultimate analysis of the consequences of the fraud depended on the nature of that breach of duty. As recorded in the catchwords, the appeal engaged equitable compensation, fiduciary duties including the duty to act in good faith, and the principles governing expert evidence on appeal. CS Trust was represented by Allen & Gledhill LLP and Rajah & Tann LLP, while the respondents were represented by Drew & Napier LLC, with Cavinder Bull among their counsel.

[2024] SGCA(I) 5 explained

CREDIT SUISSE TRUST LIMITED v BIDZINA IVANISHVILI & 4 Ors ([2024] SGCA(I) 5) is a Singapore judgment decided by the Court of Appeal (International) on 5 July 2024. It is categorised under Equity and Evidence. Within this corpus it has since been cited by 2 other reported Singapore judgments, a measure of how often later decisions have referred to it. This page summarises what the reported decision covers and links the primary sources — the full judgment, the statutes it cites, and the other cases it engages with — so the decision can be read in context. It is reference information, not legal advice, and it does not state the outcome or any holding beyond what the official judgment records.

What is [2024] SGCA(I) 5 about?

CREDIT SUISSE TRUST LIMITED v BIDZINA IVANISHVILI & 4 Ors ([2024] SGCA(I) 5) is a Court of Appeal (International) decision from 2024. Its published catchwords are “Equity — Remedies — Equitable compensation”, “Evidence — Principles — Expert evidence on appeal”, and “Equity — Fiduciary relationships — Duties — Duty to act in good faith”, which indicate the subject matter the judgment addresses. The full reasoning and orders are in the judgment itself, linked below.

How influential is [2024] SGCA(I) 5?

Within this corpus, [2024] SGCA(I) 5 has been cited by 2 later reported Singapore judgments. That count reflects references from other decisions held in this corpus only and is a conservative lower bound on how often the case has actually been cited.

Summary

SUPREME COURT OF SINGAPORE

5 July 2024

Case summary

Credit Suisse Trust Limited v Ivanishvili Bidzina and 4 Ors [2024] SGCA(I) 5

Court of Appeal of the Republic of Singapore — Civil Appeal No 10 of 2023

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Decision of the Court of Appeal (delivered by Judge of Appeal Steven Chong):

CA/CAS 10/2023 is an appeal by Credit Suisse Trust Limited (“CS Trust”) against the decision of the trial judge (the “Judge”) to award the respondents US$742.73m in compensation for CS Trust’s breach of fiduciary duties. In 2004, Credit Suisse approached the first respondent, Mr Bidzina Ivanishvili (“Mr Ivanishvili”), with a proposal to establish a trust over assets exceeding US$1.1bn. CS Trust was the trustee of that trust, for which the respondents were the beneficiaries. Assets under the trust (the “Trust Assets”) were held in accounts with another member of the Credit Suisse Group (the “Trust Accounts”), Credit Suisse AG (“CS Bank”). CS Trust’s breaches of its fiduciary duties allowed one Mr Patrice Lescaudron (“Mr Lescaudron”), Mr Ivanishvili’s relationship manager at CS Bank from 2006 until 2015, to commit fraud upon the Trust Assets. Mr Lescaudron was convicted by the Swiss courts and was found to have not only misappropriated from the Trust Assets, but also to have covertly transferred and manipulated them for the purposes of concealing and covering losses in other client’s accounts. Mr Lescaudron’s actions caused substantial losses to the respondents, the quantification of which also forms a key issue on appeal.

Pertinent and significant points of the judgment

• A tortious duty of care and a fiduciary duty are distinct duties. The duty of care targets careless and incompetence. It measures the performance of the tortfeasor against an objective standard of reasonable behaviour. In contrast, the fiduciary duty targets disloyalty, mere incompetence is not enough. The difference between the two lies in the person’s state of mind in performing. Although there can be overlap between the two in the factual circumstances of a breach, they are neither binary nor mutually exclusive: [31], [49]–[53].

• Fiduciary duties are not limited to the no-profit rule and no-conflict rule. An express trustee owes a fiduciary duty to perform the trust honestly and in good faith for the benefit of, and in the interest of, the beneficiaries of the trust: at [39]–[42].

• To act in good faith, trustees must not simply refrain from acting in bad faith, something more is required. Trustees must act in good faith in the performance of their duties and in the exercise of their powers and are required to act in circumstances where they know that the interests of the beneficiaries are at risk of harm: at [44]–[53].

• CS Trust was in breach of its fiduciary duty. CS Trust ought to have informed and notified the respondents of its knowledge that large sums of money were leaving the trust without authorisation: [55]–[59].

• CS Trust was in breach of the no-conflict rule. CS Trust preferred the business interests of Credit Suisse over the duties it owed to the respondents: at [60]–[61].

• Once the respondents showed that there was a breach of such a duty, and that loss has been sustained, a rebuttable presumption arises that CS Trust’s breaches caused the loss. CS Trust would have to show that the respondents would have suffered the loss in spite of its breach: at [62]–[64].

• The appeal was allowed in part in respect of quantification of the respondents’ loss. The Judge’s award of US$742.73m in compensation was to be adjusted based on changes made to the specifications of the Whole Portfolio Model and Benchmark Portfolios: [96]–[159].

Background to the appeal and the material facts

1 Credit Suisse promoted their trust services to Mr Ivanishvili in 2004. Mr Ivanishvili then agreed to their proposal to establish a trust over assets exceeding US$1.1bn (the “Mandalay Trust”). The Mandalay Trust had the objective of “Inheritance Planning and Asset Holding” and was to be for the benefit of Mr Ivanishvili and his family, the second to fifth respondents (collectively, the “respondents”). CS Trust was appointed the trustee of the Mandalay Trust. CS Trust is a wholly owned subsidiary of Credit Suisse Trust AG (“CS Trust AG”). The Trust Assets were deposited with CS Bank, in accounts at branches in Geneva (“CS Bank (CH)”) and Singapore (“CS Bank (SG)”). Clementi Limited (“Clementi”), another related company wholly owned by CS Trust, was appointed the authorised signatory of the Trust Accounts. This meant that payments could (ostensibly) only be made out of Trust Accounts upon Clementi’s signed instructions. Mr Ivanishvili, on the other hand, was never appointed as an authorised signatory of the Trust Accounts: [5]–[8].

2 Mr Lescaudron was Mr Ivanishvili’s relationship manager at CS Bank from 2006 until 2015, when his fraud was discovered. Mr Lescaudron was then convicted by the Swiss courts and was found to have not only misappropriated from the Mandalay Trust, but also to have covertly transferred and manipulated the Trust Assets for the purposes of concealing and covering losses in other clients’ accounts, losses which Mr Lescaudron had also caused. Amongst other acts of subterfuge, Mr Lescaudron executed fraudulent investments orders by forging Mr Ivanishvili’s signature. A significant (but by no means the only) aspect of Mr Lescaudron’s fraud took the form of Unauthorised Payments Away (“UPAs”), a term used internally by Credit Suisse to refer to a type of high-risk transaction.: [10]–[11].

3 Mr Lescaudron was never formally authorised to deal with the Trust Assets. Nevertheless, Mr Lescaudron was allowed to do so with impunity between 2006 to 2015. In particular, the UPAs started in November 2006, several months after Mr Lescaudron took over as Mr Ivanishvili’s relationship manager in July 2006 and was allowed to persist unabated until 2015. This was notwithstanding the fact that CS Trust was aware of the UPAs since 5 December 2006 and had expressed concerns about them: [13]–[22].

4 Even after the collapse of the value of the Trust Assets in 2015, CS Trust did not immediately notify the respondents of this very significant development: [23].

5 CS Trust admits that it breached its duty to safeguard the Trust Assets by failing to take steps to detect and prevent Mr Lescaudron’s misappropriations. CS Trust admits that it should have contacted Mr Ivanishvili directly and should have ensured that movements out of the Trust Accounts were authorised: [26].

Decision on appeal

CS Trust’s breach of duty to act honestly and in good faith in the interest of the beneficiary

6 Fiduciary duties are not limited only to the no-profit rule and the no-conflict rule. An express trustee owes a fiduciary duty to perform the trust honestly and in good faith for the benefit of, and in the interest of, the beneficiaries of the trust: [39]–[42].

7 What the duty of good faith entails is invariably contextual. To act in good faith, a trustee must not simply refrain from acting in bad faith, something more is required. The trustee’s fiduciary duty to perform the trust honestly and in good faith for the benefit of, and in the interest of, the beneficiaries of the trust can manifest in at least two ways. The first requires a trustee to act in good faith in the performance of their duties and in their exercise of their powers. The second requires trustees to act in circumstances where the trustee knows that the interests of the beneficiaries are at risk of harm. This fiduciary duty is clearly distinct from a non-fiduciary duty to act with skill, care, and diligence. at [44]–[53].

8 Although both the tortious duty of care and a fiduciary duty entail a scrutiny of the conduct of the person subject to the duty, they are distinct duties. The duty of care targets careless and incompetence. It measures the performance of the tortfeasor against an objective standard of reasonable behaviour. In contrast, the fiduciary duty targets disloyalty, mere incompetence is not enough. The difference between the two lies in the person’s state of mind in performing. Although there can be overlap between the two in the factual circumstances of a breach, they are neither binary nor mutually exclusive. A person subject to both duties may, in certain circumstances, be in breach of both duties: [31], [49]–[53].

9 CS Trust was in breach of its fiduciary duty to perform the trust honestly and in good faith for the benefit of, and in the interests of, the respondents. CS Trust ought to have informed and notified the respondents of its knowledge that large sums of money were leaving the trust without authorisation. CS Trust knew and was alarmed by the significant volume (in terms of rate and quantum) of UPAs carried out by Mr Lescaudron early on. The risk of fraud was expressly raised. Yet, CS Trust did nothing for several years to inform Mr Ivanishvili of the ever-increasing volume of UPAs. At the very least, CS Trust turned a blind eye and abdicated its duty to perform the trust honestly and in good faith: at [55]–[59].

10 CS Trust was in breach of the no-conflict rule as it preferred the business interests of Credit Suisse over the duties it owed to the respondents. at [60]–[61].

11 With respect to CS Trust’s breaches of its fiduciary duties, once the respondents established that loss has been sustained, a rebuttable presumption arises that CS Trust’s breaches caused the loss. CS Trust would have to show that the respondents would have suffered the loss in spite of its breach: [62]–[64].

Quantification of compensation

12 The remedy of equitable compensation seeks to place the respondents in a position they would have been in had there been no breach of fiduciary duty. This was done with the assistance of forensic accounting experts and wealth management experts. The wealth management experts constructed “Benchmark Portfolios” that were alternative medium-risk portfolios for the various accounts the Trust Assets were held in. The forensic accounting experts then used the Benchmark Portfolios to project what the returns would have been for each account if the Trust Assets had been invested in accordance with those Benchmark Portfolios. Various models (the “Models”) were applied to calculate the compensation owed to the respondents, based on the different proportions of Trust Assets in the assessment: at [69]–[70].

13 It was accepted that if CS Trust had advised Mr Ivanishvili directly by 30 March 2008 (at the very latest) about Mr Lescaudron’s misconduct, as it was duty bound to do, it was more probable than not that Mr Ivanishvili would have moved the Trust Assets to another professional trustee. The “Whole Portfolio Model” which assumes that at a defined date, the Trust Assets were no longer invested in the Trust Accounts but were instead invested in accordance with the Benchmark Portfolios, is an estimation of how a competent professional trustee would have performed and is most appropriate. Trust Assets which Mr Ivanishvili had himself invested or authorised must be excluded in determining the value of Trust Assets to be accounted for under the Whole Portfolio Model: [87]–[94].

14 The experts use different specifications for the Models and in their differing Benchmark Portfolios. The former affects the portion of Trust Assets to be accounted for under the Whole Portfolio Model, the shortfall for which CS Trust needs to compensate the respondents. The latter affects the construction of the Benchmark Portfolios and the corresponding rates of return used. In constructing an alternative investment portfolio, it is important to avoid doing so in the abstract or from the perspective of a hypothetical reasonable person. The construction should be done (as far as possible) with reference specifically to Mr Ivanishvili and the factual matrix of the case. This includes a consideration of what can be discerned about Mr Ivanishvili’s investment preferences and risk appetite, and must necessarily consider any other objective facts relating to Mr Ivanishvili’s likely behaviour: [95]–[96].

15 The departures from the Judge’s decision pertain to instances where the expert evidence preferred by the Judge was found to have been against the weight of the factual evidence, or where the point was not expressly addressed by the Judge in the decision below: [96].

A summary of the various specifications relating to the quantification of damages which were reversed on appeal

16 Mr Ivanishvili had admitted under cross-examination that he was generally involved in authorising hedge fund investments. His broad concession clearly called for clarification during re-examination but this was not done. The starting point was thus that all hedge fund investments ought to be prima facie excluded from the Whole Portfolio Model, unless the respondents are able to show otherwise. CS Trust accepts that the respondents ought to be compensated for the hedge fund investments that were fraudulent, unsuitable or overconcentrated: [101]–[108].

17 Ms Mayr’s (CS Trust’s expert) asset allocation of including alternative investments for the CS Life Meadowsweet Benchmark Portfolio is to be preferred over Mr Morrey’s (the respondents’ expert) allocation which did not include alternative investments, which the Judge had adopted. This was consistent with Mr Ivanishvili’s investment risk appetite that included alternative investments in his portfolios: [119]–[128].

18 Ms Mayr’s approach of choosing the alternative investment indices should have been preferred over Mr Morrey’s approach. Ms Mayr’s approach is true to the index specified in the Soothsayer mandate, unlike Mr Morrey’s which relies on an index which has incomplete data: [129]–[136].

19 Ms Mayr’s approach of using one global benchmark to achieve geographical diversity of equities indices should have been preferred over Mr Morrey’s approach of using three regional total return benchmarks: [137]–[142].

20 The Judge’s acceptance of Mr Morrey’s exclusion of any fees payable for portfolio management of assets in his alternative Benchmark Portfolios that were invested in exchange traded funds (“ETFs”) was incorrect. The fact that the ETFs were reported to be net of fees was only relevant in a situation where a customer invested directly into the ETF, bypassing the use of a discretionary mandate. This did not accord with the facts of the present case where the experts were to assess what would have happened to the value of the Trust Assets assuming that there was an active manager: [154]–[158].

Conclusion

21 The appeal was allowed in part in respect of quantification of the respondents’ loss. The Judge’s award of US$742.73m in compensation was to be adjusted based on changes made to the specifications of the Whole Portfolio Model and Benchmark Portfolios: [159].

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

What did the Court of Appeal decide in Credit Suisse Trust Limited v Ivanishvili [2024] SGCA(I) 5?

In [2024] SGCA(I) 5, the Court of Appeal addressed the consequences of a decade-long fraud by a Credit Suisse AG relationship manager. CS Trust did not dispute breaching its duty to safeguard the Trust Assets, and the court held the analysis depended on the nature of that breach.

Who were the parties in Credit Suisse Trust Limited v Ivanishvili [2024] SGCA(I) 5?

The appellant was Credit Suisse Trust Limited; the respondents were Bidzina Ivanishvili, Ekaterine Khvedelidze, Tsotne Ivanishvili, Gvantsa Ivanishvili and Bera Ivanishvili, who had deposited the Trust Assets. The judgment was delivered by Steven Chong JCA on 5 July 2024.

What legal principles were considered in [2024] SGCA(I) 5?

The Court of Appeal in [2024] SGCA(I) 5 considered equitable compensation, fiduciary relationships and the duty to act in good faith, and the principles governing expert evidence on appeal, in the context of a breach of CS Trust's duty to safeguard the Trust Assets.

Cases Cited (16)

SLR (13)

[2010] 1 SLR 1129 [2012] 4 SLR 339 [2014] 3 SLR 329 [2016] 2 SLR 944 [2017] 1 SLR 654 [2017] 2 SLR 592 [2018] 1 SLR 180 [2020] 1 SLR 1199 [2022] 1 SLR 1240 [2022] 1 SLR 302 [2023] 1 SLR 1648 [2023] 5 SLR 59 [2024] 3 SLR 78

UK (3)

[1997] 1 AC 191 [1998] Ch 1 [2021] 3 WLR 81