AmFraser Securities Pte Ltd v Goh Chengyu

• Jurisdiction: Singapore
• Judge: Colin Seow AR
• Judgment Date: 29 July 2014
• Neutral Citation: [2014] SGHCR 14
• Court: High Court (Singapore)
• Hearing Date: 20 June 2014
• Docket Number: Suit No 88 of 2014 (Summons No 2025 of 2014)
• Plaintiff Counsel: Low Chai Chong, Zulkarnain Abdul Rahim, Alvin Liong and Ian Ong (Rodyk & Davidson LLP)
• Defendant Counsel: Philip Fong and Nicklaus Tan (Harry Elias Partnership LLP)
• Subject Matter: Contract,Contractual Terms,Conclusive Evidence Clauses,Civil Procedure,Summary Judgment
• Published date: 07 August 2014

Colin Seow AR: Introduction

This is a summary judgment application taken out by AmFraser Securities Pte Ltd (“the Plaintiff”) for final judgment to be entered against Mr Goh Chengyu (“the Defendant”) in Suit No 88 of 2014. At the end of the hearing for the application, I reserved judgment as interesting questions of law pertaining to the use of conclusive evidence clauses in a securities trading context which merit closer analysis were raised in the course of submissions by counsel. I now give my decision with grounds attached.

Background of the dispute

The Plaintiff is a company which provides inter alia stockbroking services in retail and institutional securities. On 18 January 2013, by way of an account opening document (the “application form”) entitled “Application for Opening of Trading Account (Individual)”,¹ the Defendant applied to the Plaintiff requesting the opening of a securities trading account under which the Plaintiff was to provide trading and dealing services to the Defendant. Pursuant to paragraph 10 of the application form, the Defendant agreed to be bound by inter alia the Plaintiff’s standard terms and conditions contained in a separate document entitled “Terms and Conditions for Operation of Securities Trading Account” (hereafter “the OSTA Terms and Conditions”). In the application form, one Mr Heng Gim Teoh (“HGT”) was named as the “trading representative” under the proposed securities trading account. Following the Plaintiff’s approval of the Defendant’s application, the Defendant’s securities trading account (“the trading account”) was opened on 22 January 2013.

Following a dispute between the parties, the Plaintiff filed Suit No 88 of 2014 on 22 January 2014 against the Defendant claiming inter alia a sum of $1,888,954.60 which the Plaintiff avers was outstanding as at 13 December 2013 (hereafter “the sum claimed”). According to the Plaintiff, the sum claimed accrued as a result of “various dealings in investments and transactions made by the Plaintiff on behalf of the Defendant”.² It is not disputed that the “investments and transactions” referred to were purchases of shares in Blumont Limited, Asiasons Capital Limited and International Healthway Corporation Limited on or around 2 October 2013 (hereafter “the Disputed Investments”). With respect to the Disputed Investments, the Plaintiff claims that they had been properly carried out on behalf of the Defendant.

The Defendant denies the Plaintiff’s claim. In his Defence and Counterclaim, the Defendant avers inter alia that the Disputed Investments were carried out without his prior knowledge and authority.³ In particular, the Defendant claims that he only came to know about the Disputed Investments on 5 October 2013 when he was perusing a contract note which he received from Singapore Exchange Limited (SGX) indicating that purchases of shares in Blumont Limited, Asiasons Capital Limited and International Healthway Corporation Limited have been booked under the trading account on or around 2 October 2013.⁴ Following the Defendant’s alleged discovery of the Disputed Investments, the Defendant arranged for a meeting (“the First Meeting”) with HGT to take place on 7 October 2013 at the Defendant’s office, allegedly for the purpose of making inquiries regarding the Disputed Investments.

The First Meeting was attended by the Defendant, HGT, one Mr Goh Yee Gee (the Defendant’s uncle) (“GYG”) and one Mr Goh Rong Cheng (the Defendant’s paternal cousin, who is also known as Lucas Goh) (“GRC”). According to the Defendant, HGT admitted during the First Meeting that (a) he had increased the trading account limit without the Defendant’s authorisation, instruction or knowledge and (b) he had without the Defendant’s authority or instructions used the trading account to book the Disputed Investments on behalf of one Mr Lim Lin Ken (“LLK”). HGT also allegedly assured the Defendant during the First Meeting that the Defendant would not have to be responsible for the losses which have been incurred under the Disputed Investments.

After the First Meeting, the Defendant arranged for another meeting (“the Second Meeting”) to take place – this time at the Plaintiff’s office premises on 10 October 2013 – to “discuss” the Disputed Investments.⁵ The Second Meeting was attended by the Plaintiff’s executive director Mr Lim Wing How (“LWH”), one of the Plaintiff’s compliance officers Mr Chen Moh Yong (“CMY”), the Defendant, GYG, GRC and HGT. At the Second Meeting, the Defendant informed LWH that the Disputed Transactions were entered into without the Defendant’s authority, and HGT allegedly admitted once again that he had carried out the Disputed Investments for LLK without the Defendant’s knowledge.⁶ The Defendant further avers that at one point during the Second Meeting, HGT was cut off by LWH while he (HGT) was making his admission, because LWH did not want HGT to finish giving his explanation.⁷

The Plaintiff does not appear to deny that the First Meeting and the Second Meeting did in fact take place. However, the Plaintiff disputes the Defendant’s account that HGT had made admissions in relation to the Disputed Investments. At this juncture, I pause to observe that HGT has since the time the dispute has arisen between the Plaintiff and the Defendant formally affirmed a statutory declaration pursuant to the Oaths and Declarations Act (Cap 211, 2001 Rev Ed) stating that at no point in time has he ever admitted to carrying out the Disputed Investments without the Defendant’s prior authorisation. In his statutory declaration, HGT stated as follows:⁸

…

4 … I wish to state that I have never stated that the [Disputed Investments] were carried out without the explicit authorisation of [the Defendant]. As is the case with all my clients, I will verify the caller’s name and NRIC number whenever a client calls me and requests that I execute a transaction on his behalf. 5 Practically speaking, I will definitely require the caller’s full name and NRIC number in order to know which trading account the client is talking about. 6 In fact, on previous occasions, I have obtained similar instructions from [the Defendant] via telephone as well.

…

For completeness, it should be pointed out that HGT’s statutory declaration, which was tendered before this court in the hearing, was affirmed on pain of potentially severe criminal penalties should it ever transpire that he has made a false statutory declaration (see section 14(1) of the Oaths and Declarations Act (Cap 211, 2001 Rev Ed)).

The Plaintiff also disputes the Defendant’s account of what had actually transpired during the Second Meeting. LWH, for instance, has deposed in an affidavit denying having cut off HGT during the Second Meeting.⁹ In fact, LWH categorically refutes the Defendant’s allegation that HGT has admitted to carrying out the Disputed Investments without the Defendant’s knowledge and authority.¹⁰ In this last regard, I should also add that CMY has also deposed in an affidavit corroborating the position taken by LWH.¹¹

At the hearing before me, there was nothing on record which objectively confirms or denies the existence of LLK.

The case theories and arguments

In the course of the hearing, two competing case theories emerged from counsel’s arguments. The Plaintiff’s case theory, simply put, paints the Defendant as a bad client who is trying to evade his contractual obligations to pay the Plaintiff for its services by disclaiming investments which although were properly made on his behalf, had gone south. In support of this case theory, Plaintiff’s counsel drew this court’s attention to the trading account statements showing that the Defendant has been investing profitably in shares in Blumont Limited, Asiasons Capital Limited and International Healthway Corporation Limited for several months before the Disputed Investments were made.¹² It was pointed out to this court that no issues of knowledge and authority in respect of those investments were raised by the Defendant when those investments were making gains; by contrast, the Disputed Investments which the Defendant is complaining about are investments that have suffered severe losses.¹³ By raising this point to the court, I take Plaintiff’s counsel to be suggesting that the Defendant’s complaints regarding the lack of his knowledge and authorisation in respect of the Disputed Investments are an afterthought.

The Defendant’s case theory, as can already be gleaned from above, is principally that the Disputed Investments were entered into by HGT without the Defendant’s prior knowledge or authorisation. Regarding the Plaintiff’s suggestion that the Defendant is now complaining about the Disputed Investments only because those investments have made severe losses, Defendant’s counsel countered by alluding to parts of the trading account statements showing that the Defendant has previously on occasion also made some losses that were not insubstantial in the months preceding the Disputed Investments. Yet, the Defendant did not raise any issue over his knowledge and authorisation in respect of those other loss-making investments. Defendant’s counsel argues that if the Defendant is indeed a client whose motive is that ascribed by the Plaintiff, why would the Defendant not also have complained about those other investments as well? This – so the argument goes – together with HGT’s alleged admissions in the First Meeting and Second Meeting raise issues which ought to be tried before a judge. Accordingly, Defendant’s counsel submits that summary judgment should not be granted in favour of the Plaintiff.

Admittedly, the application before me could have been much more straightforward if not for the reliance placed by the Plaintiff on inter alia several contractual provisions found in OSTA Terms and Condition which sparked a rather spirited debate between Plaintiff’s counsel and...