Bank of America National Trust and Savings Association v Herman Iskandar and Another

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 30 March 1998
• Neutral Citation: [1998] SGCA 22
• Date: 30 March 1998
• Subject Matter: Whether a requirement that time certificate of deposit be produced before renewal of deposit,Whether notification must be in writing,Deposits,Whether money held by bank as trustee,Renewal on banker's usual terms and interest rates,Whether instructions for renewal ambiguous,Whether appellant is under duty to take reasonable steps to inform respondents on maturity of fixed deposit,Limitation of Actions,Failing to renew a deposit on maturity,Banking,Whether failure to give notice amounts to breach of contract and giving rise to an estoppel,Whether respondents have right to extend limitation period under s 29 of the Limitation Act (Cap 163, 1996 Ed),Failing to take reasonable steps to seek out account holder,Fixed deposits,Whether separate deposits into account constitute separate contracts or one continuous contract with bank,Accounts,When begins to run time br,Extension of limitation period,Whether customer's cause of action against the bank arise after customer's demand for repayment has been refused by bank,Whether bank has breached duty of exercising reasonable care and skill in the discharge of his duties to customer,Whether bank under implied duty to notify account holder of its refusal to renew deposit unless time certificate of deposit presented,Failing to obtain account holder's instructions,Separate deposits into bank,s 29 Limitation Act (Cap 163, 1996 Ed),Whether deliberate and fraudulent concealment on bank's part,Whether respondents have acted with reasonable diligence within s 29,Demand for repayment of monies and compounded interest
• Docket Number: Civil Appeal No 151 of 1997
• Published date: 19 September 2003
• Defendant Counsel: Steven Chong SC and Philip Tay (Rajah & Tann)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Michael Hwang SC, K Shanmugam SC and Maria Ho (Allen & Gledhill)

Judgment:

KARTHIGESU JA

Cur Adv Vult

(delivering the judgment of the court): This is an appeal against the decision of judicial commissioner CR Rajah made on 30 June 1997 in which he granted judgment to the respondents and ordered the appellants to pay the respondents compound interest for the period between 1979 to 1991 in respect of moneys placed in two fixed deposit accounts with the appellants. His judgment is reported at [1998] 1 SLR 37. The facts in this appeal are most unusual and unfortunate, and it is necessary to set them out in great detail.

2.The respondents are brothers and are Indonesian citizens. The first respondent, Herman Iskandar (Herman) is the executor of the estate of his late father Lugito Surjo Kusno (Lugito) who died on 21 November 1978, as well as the co-executor of the estate of his late mother Lily Iskandar (Lily) who died on 17 September 1983. Lily was Lugito`s second wife. The second respondent Willy Iskandar (Willy) is the co-executor of Lily`s estate. Herman brought this action in his personal capacity as the sole surviving joint account-holder, as an executor of the estate of Lugito and as a co-executor of Lily`s estate. Willy brought this action in his capacity as a co-executor of Lily`s estate. The appellants are a bank with a branch in Singapore.

3.Lugito was a very wealthy Indonesian businessman who left substantial assets in Singapore on his death. He had two families, one from the first marriage and the second from his marriage to Lily. When he died, he left a will appointing Lily and Herman as his executors. Probate proceedings took place between the two families. Eventually probate of the immovable properties in Singapore was granted to Lily and Herman, and probate of the movable properties was granted to Herman and Willy.

The facts

(1) The large account

4.Prior to Lugito`s death, he had two current accounts and a fixed deposit account with the appellants` Singapore branch. Lugito was a valued customer of the appellants. We shall call this fixed deposit account the `large account`. The large account was a time deposit account No 71096-016 reference No 202831 opened with the appellants on 31 May 1973. This account was later reconstituted as account No 71096-024 on 28 August 1991. Lugito, Lily and Herman were the joint account-holders of the large account. Any one of the three joint holders could give instructions to the appellants to deal with the money in the large account. Lugito attended to all the formalities in establishing the account. Neither Herman nor Lily knew that he or she was a joint account-holder. Herman only discovered it in 1991 and Lily never discovered it. The learned judicial commissioner found that Lugito had, from time to time, asked Lily and Herman to sign the documents in blank without telling them what they were for. The correspondence address provided by Lugito for the large account was initially in Medan. This was later changed to No 111, Cairnhill Circle, Singapore 0922.

5.At the time a fixed deposit such as the large account was opened with the appellants, the appellants would issue the account-holder with a fixed deposit receipt known as a time certificate of deposit (TCD). A TCD was issued by the appellants in respect of the large account but had been lost. The TCD would set out the customer`s fixed deposit number, the principal sum, the date of issue, value date, maturity date, the period of the deposit and the rate of interest payable.

6.Although the original TCD was lost, the appellants used a standard form of the certificate of deposit until December 1988 for all fixed deposits in Singapore dollars, including the large account. There is no dispute as to the express terms of the TCD. This TCD would have set out the principal sum received from the customer, the period for which the principal sum was to be placed on deposit, and the principal sum together with the interest which would be payable at the end of maturity period upon presentation of the receipt, subject to the following rules: (a). interest will cease on due date;

(b). the receipt must be duly stamped upon repayment;

(c). if the receipt is lost, written notice should be given to the bank immediately;

(d). before maturity of this receipt, the depositor is not allowed to withdraw the principal or interest.

7.Lugito had made a number of renewals, withdrawals and further deposits into the large account in his lifetime. When the large account was opened $5m was deposited into it on 31 May 1973 for a period of one year. All the subsequent withdrawals and renewals were set out in great detail by the learned judicial commissioner. Before 1975, all the moneys were transferred out of the large account.

8.On 24 January 1975, a fresh deposit of $1.2m was paid into the large account and instructions were given to place the money on fixed deposit for 12 months. Upon maturity, the principal and accrued interest were rolled over into another fixed deposit for 12 months. This was repeated for another 12 months and then another six months expiring on 24 July 1978. When the six-month period expired on 24 July 1978, the appellants did not receive any instructions for renewal until 18 October 1978 when they received instructions to renew for another six months. However the appellants treated the principal and accrued interest as being rolled over into a new deposit with effect from 24 July 1978. This was the last renewal prior to Lugito`s death.

9.Lugito passed away on 21 November 1978. At the time of his death, the amount standing to the credit of the large account was $1,490,399.54 with a maturity date on 24 January 1979. On maturity, the sum of $44,140.33 was credited to the account as accrued interest and the principal sum in the large account stood at $1,534,539.87.

(2) The small account

10.The two current accounts, account Nos 10425-018 and 10425-042, were maintained by Lugito. These two accounts were opened in his sole name. On the date of Lugito`s death, account No 10425-018 had $3,885.38 standing to its credit, and current account No 10425-042 had US$309.87 standing to its credit.

(3) Lui`s instructions

11.When Lugito passed away, the appellants received two letters from Phang & Co dated 4 December 1978 and 6 December 1978 which informed the appellants of Lugito`s death and instructed the appellants to hold all his moneys until proper legal representation was obtained. Phang & Co were the solicitors acting for Lugito`s son from his first marriage.

12.Lui Boon Poh & Co (Lui) were appointed by Herman and Lily to act for Lugito`s estate. On 26 December 1978, Lui wrote to the appellants on behalf of the executors to inquire whether Lugito had maintained any accounts with them and, if so, for a statement of the accounts which he had held in his lifetime. The appellants replied by a letter dated 18 January 1979, stating the reference numbers of the accounts maintained by Lugito, the amounts standing to the credit of the accounts and highlighting the fact that the large account was to mature on 24 January 1979. This letter of 18 January 1979 was never received by Lui and Lui wrote two reminders to the appellants before the latter replied on 8 June 1979 to inform them that the information requested had been given previously and repeated the contents of the 18 January 1979 letter.

13.By a letter dated 23 June 1979, Lui gave instructions to the appellants. This letter is important and we set out the material portions:

We refer to your letter of 8 June, 1979 and shall be pleased if you will kindly transfer the balances of S$3,885.38 and US$309.87 in current accounts No 10425-018 and No 10425-042 respectively to fixed deposit accounts for a period of one year each and let us have the fixed deposit receipts thereof.

Further, as for the fixed deposit account No 202831 for S$1,490,399.54 which matured on 24 January 1979, please renew the same for a further period of one year and keep us informed.

14.The appellants did carry out the instructions in relation to the current accounts. The money in the second current account (that was in US dollars) was converted to Singapore dollars and combined with the first current account to constitute a single fixed deposit No 72801-018 reference No 205104 (the `small account`) in the name of the estate of Lugito. The moneys in this account totalled $4,563.07. The small account was opened on 29 June 1979 and a TCD for the amount was received by Lui on 14 July 1979. The small account matured on 30 June 1980, one year having expired, and the amount standing in its credit was $4,855.56. This account was re-constituted as account No 72801-026 on 28 August 1991 on the instructions of Haridass Ho & Partners, who later acted for Lugito`s estate.

15.The appellants failed to carry out the instructions in respect of the large account nor did they keep Lui informed. It should be noted, however, that the evidence disclosed that on receipt of Lui`s letter dated 23 June 1979 a clerk with the appellants did telephone Mr Lui Boon Poh`s secretary and ask for the return of the original TCD. There was no follow-up by either. This evidence is dealt with in detail later in this judgment at [para ] 40 and 41. The unfortunate outcome was that the money in the large account laid dormant from 24 January 1979 to 28 August 1991. It sat there without earning any interest. While the appellants sent reminders to Lugito at the address of the Cairnhill property, the reminders never reached the respondents. The appellants posted a final reminder by registered mail on 22 January 1981 but the letter was returned unclaimed. The Cairnhill property was in fact occupied by Lugito`s adopted son and his first wife who were in the opposite camp from the respondents with regard to the Lugito estate. At all material times, the appellants never sent the reminders to Lui.

16.In 1983, Lui were winding down their law practice and handed the file to LAJ Smith & Co. In the years...