Banque Nationale de Paris v Hew Keong Chan Gary and Others

CourtHigh Court (Singapore)
JudgeLai Kew Chai J
Judgment Date20 November 2000
Neutral Citation[2000] SGHC 239
Citation[2000] SGHC 239
Defendant CounselChiah Kok Khun and Simon Jones (Wee Swee Teow & Co),Philip Fong and Chua Sui Tong (Harry Elias Partnership)
Plaintiff CounselHerman Jeremiah and Roger Foo (Helen Yeo & Partners)
Published date19 September 2003
Docket NumberSuit No 1936 of 1998
Date20 November 2000
Subject MatterDishonest accessory liability,Whether incriminating statements admissible,Equity,Evidence,Conspiracy to injure by unlawful means,Matters admissible under s 45A Evidence Act (Cap 97),Estoppel,Whether defendants party to agreement to injure by unlawful means,Elements to be proved,Inducement of breach of contract,Whether customer induces employee to breach employment contract with bank,Accessory liability,Admissibility of evidence,Tort,Whether claim made out,Duty of customer,Whether evidence given in criminal proceedings,Whether specific or general authority given by customer to bank employee to enter into banking transactions,Conspiracy,Construction of agent’s authority,Whether customer under duty to inform bank of unauthorised transactions which customer becomes aware of,Trusts,Test of dishonesty,Estoppel by representation,Banking,Whether doctrine of estoppel applicable,Agency,Whether defendants dishonest,ss 32(c) & 45A Evidence Act (Cap 97),Accounts

: Introduction

Lord Nicholls of Birkenhead in the seminal case of Royal Brunei Airlines Sdn Bhd v Tan (Philip Kok Ming) [1995] 2 AC 378 at p 392 laid down the rule that `(a) liability in equity to make good resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation.
` This case raises issues generally about the elements of this rule. In particular, the specific question of law raised in this case is whether a third party, without receiving and mishandling any trust property, is liable to account for a loss sustained by a principal as a result of a third party inducing or assisting a fiduciary in the commission of a breach of fiduciary duty. In the factual context of this case, which initially involved share transactions and later foreign exchange contracts, three important issues of fact are raised, namely, (1) whether the two third parties in question had `assisted` the fiduciary in breaches of his fiduciary obligations; (2) if so, whether the assistance caused the losses in question; and (3) subject to the answers to questions (1) and (2) being in the affirmative, whether they had assisted the fiduciary dishonestly. There are, however, other causes of action and they raise important issues of fact and law which will later emerge in this judgment.

The plaintiff is a multinational bank incorporated in France.
At all material times, it carried out banking business but was restricted to operate only a branch in Singapore. It has a substantial presence in Singapore. Its Private Banking Department (`PBD`) was staffed by private banking officers or OICs, who were all headed at the material time by Mr Pierre Michel Hamery (`Hamery`). He was posted out of Singapore long before the hearing of this case and though still in its employ he was not called to give evidence on behalf of the bank.

The first defendant, Gary Hew Keong Chan (`Hew`) was an employee of the plaintiff from 23 May 1988 until his dismissal in the latter part of October 1998.
Prior to his dismissal he was holding the position of an Assistant Vice President in the plaintiff`s PBD. Hew was not called by any of the three parties in these proceedings to give evidence.

The second and third defendants named in this action were not in any way concerned with the matters in issue in this case.
Judgment has been entered by the plaintiffs against them on entirely separate transactions. Though they were the private banking clients of the plaintiff and were attended to by Hew, it was common ground that they did not know and had nothing to do with either the fourth or fifth defendant in relation to the transactions in question in this case.

In 1991 Hew married the fourth defendant (`Nancy`) but to all intents and purposes they ceased living as husband and wife from 1995.
At all material times, they did not live together and, apart from interacting with each other over private banking transactions from 26 December 1996, they were not in communication with each other. They led separate lives. Nancy, 37 years old, is a university graduate with a degree of Bachelor of Science (Estates Management) from the National University of Singapore. Since her graduation in 1986 she has been working in the property management line of business. She is a senior manager with a property developer`s section on Corporate Affairs. An executive and a secretary work under her.

The fifth defendant (`Tan`) is 40 years old and is the elder brother of Nancy.
He was at all material times a businessman. From 1995 to 1998 he made many trips to Hong Kong, running the business of a printing company known as Oriental Sincere Printing Ltd in which he had invested HK$10m. That business and another company, known as Panasia Holdings Limited which was registered in the British Virgin Islands, suffered considerable losses. He was therefore no longer actively involved in the affairs of either company. When he gave evidence before me, he was employed by a company owned by his cousin to perform general clerical and messenger duties. His salary was $1,200 per month. He is married with 3 children whose ages ranged from 8 months to 5 years.

Tan became a customer of the plaintiff on 9 May 1994.
Initially, he carried out some ordinary banking transactions. I will come to the controversial and hotly disputed transactions later on. On 26 December 1996 Nancy also opened her Singapore dollar current account with the plaintiff at the request of Hew. Hew had also informed Nancy that the purpose was to use the account and the securities she had placed in her account as a third party pledge for her brother, Tan`s account. It should be pointed out that by the end of September 1998 Hew had handled the accounts of both Nancy and Tan so badly that they were owing the plaintiff substantial sums of money. Tan`s liabilities, without taking into account his assets, was US$1,253,854.46. Nancy`s `contingent` liabilities on forward foreign exchange was quite high: see 5AB1209.

In the first week of October 1998 Hew entered into speculative foreign exchange transactions amounting to US$9m in the names of the second defendant, third defendant, Nancy and Tan in the respective amounts of US$2m, US$2m and US$5m respectively.
In the belief, which was popularly held at the material times, that the Japanese Yen would weaken, Hew sold JYP short against the US$9m. He therefore anticipated that a huge profit would be made by entering into nine contracts to reverse the earlier contracts when the Japanese Yen weakened. Obviously, and here admittedly I am inferring that Hew thought that this was an opportunity not to be missed to recoup the losses sustained in the accounts of both Nancy and Tan. Hew entered into those highly volatile exchange transactions without the authorisation of Nancy and Tan. In fact, Tan was completely unaware of the disputed transactions until after Hew informed him on the evening of 8 October 1998 that substantial losses had been incurred and the plaintiff was about to close out the positions. Hew had also informed Nancy about the disputed transactions.

A dramatic strengthening of the Japanese Yen against the US dollar took place starting on 6 October 1998 when the average rate was JPY 132.
By 8 October 1998 it took only JPY 116 to exchange for US$1. At about 6:43pm on 8 October 1998 the plaintiff closed out all positions taken out by Hew regarding the US$9m disputed transactions. In consequence, the heavy losses incurred in the names of the second to fifth defendants were crystallised.

On 15 October 1998 Nancy faxed a letter to the plaintiff formally informing it that she was not aware and had not authorised Hew to enter into the disputed transactions in her name.
Two days later, she lodged a report to the police.

Following investigations by the Commercial Affairs Department (`CAD`) Hew was charged with seven offences relating to his authorised trading in breach of s 102(b) of the Securities Industry Act (Cap 289) and s 54(b) of the Futures Trading Act (Cap 116).
The prosecution proceeded with three charges, and four others were taken into consideration for sentencing.

On 8 July 1999 Hew pleaded guilty and was sentenced to a term of 12 months` imprisonment.
The statement of facts admitted by him included summaries of the three types of unauthorised transactions he had entered into. They were (1) authorised securities transactions in the name of Tan, (the second charge); (2) unauthorised forex transactions in the name of Tan, (the fifth charge); and (3) unauthorised Forex transactions in the name of Nancy (the seventh charge). Hew in open court admitted to the sentencing district judge that he had entered into the disputed transactions in the names of Tan and Nancy without their authorisations.

The plaintiff`s claims

According to the plaintiff`s re-amended statement of claim and the plaintiff`s opening, the plaintiff claims that Nancy and Tan had given express and specific authority or general authority to Hew to enter into the forex transactions and that Tan had done so in respect of the share transactions. Alternatively, it claims that they had by their respective conduct ratified or adopted Hew`s unauthorised acts in respect of the disputed transactions.

It should be noted that the plaintiff by paras 17 to 19 of the re-amended statement of claim has pleaded together the tort of procuring a breach of contract and the equitable wrong of dishonest assistance.
Those paragraphs were preceded by the caption `Procuring breach of contract/Accessory Liability`. In short, it asserts that Nancy and Tan had procured Hew to breach the term in his contract of employment with the plaintiff under which that he, Hew, was not permitted to enter into foreign exchange transactions in the name and for the account of a customer of the plaintiff without authorisation from the customer. By those paragraphs, the plaintiff also avers that both Nancy and Tan knew that Hew could not transact for his own purposes and benefit using the name of a customer as it would breach his fiduciary duties of good faith and fidelity owed to the plaintiff. At the commencement of the hearing, counsel for the plaintiff focussed on the specific allegation that Nancy and Tan dishonestly assisted Hew in breaches of his fiduciary obligations owed to the plaintiff.

Alternatively, by para 20 of the re-amended statement of claim the plaintiff avers that `from in or about the period between 26 January 1996 to 8 October 1998 and/or thereafter each of ... (Nancy) and (Tan) unlawfully conspired with (Hew) separately or alternatively together to injure the plaintiff by unlawful means ...`.
The unlawful means relied on are the alleged procurement of a breach of contract and dishonest assisting a fiduciary in breaching his fiduciary duties. The plaintiff alleges that Nancy and Tan did the following overt acts. The first act was allowing Hew to conduct foreign exchange transactions or enter into purchase and...

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10 cases
8 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2001, December 2001
    • 1 December 2001
    ...judicial review; on administrative law generally, see supra, Chapter 1); agency (see eg, Banque Nationale de Paris v Hew Keong Chan Gary[2001] 1 SLR 300 and Re Sogo Department Stores (S) Pte Ltd[2001] 2 SLR 556, affirmed, Hinckley Singapore Trading Pte Ltd v Sogo Department Stores (S) Pte L......
  • Equity, Trust and Restitution
    • Singapore
    • Singapore Academy of Law Annual Review No. 2001, December 2001
    • 1 December 2001
    ...of inequitable conduct. Dishonest assistance 12.23 The High Court”s decision of Banque Nationale de Paris v Hew Keong Chan Gary[2001] 1 SLR 300 was reviewed last year (see (2000) SAL Ann Rev 165—168). The plaintiff bank”s vice president Gary Hew misused his estranged wife”s and brother-in-l......
  • Equity and Trust
    • Singapore
    • Singapore Academy of Law Annual Review No. 2000, December 2000
    • 1 December 2000
    ...liability In Banque Nationale de Paris v Hew Keong Chan Gary & Ors[2001] 1 SLR 300, the High Court was confronted with the issue of the liability of an accessory to a breach of fiduciary duty. The plaintiff was a French bank with a substantial presence in Singapore. One of its vice-presiden......
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2000, December 2000
    • 1 December 2000
    ...judgment in the Panatron case, his Honour was called upon to deliver a judgment in Banque Nationale de Paris v Hew Keong Chan Gary & Ors[2001] 1 SLR 300, where the claim again involved the tort of conspiracy to injure. Gary Hew was the Assistant Vice-President of the plaintiff”s private ban......
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