Banque Nationale De Paris v Tan Nancy and Another

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 21 November 2001
• Neutral Citation: [2001] SGCA 76
• Court: Court of Appeal (Singapore)
• Published date: 08 April 2013
• Year: 2001
• Plaintiff Counsel: Michael Hwang SC, Christopher Anand Daniel (instructed) and Herman Jeremiah (Helen Yeo & Partners)
• Defendant Counsel: Philip Fong and Jenny Chang (Harry Elias Partnership),Chiah Kok Khun and Simon Jones (Wee Swee Teow & Co)
• Citation: [2001] SGCA 76

Judgment

GROUNDS OF DECISION

1. This appeal arises from the decision of the High Court dismissing the claims of the appellants, Banque Nationale De Paris (BNP), against the two respondents, Ms Tan Nancy (Nancy) and Mr Tan Shee Chin (Shee Chin), for sums of money as a result of transactions carried out in their respective accounts with BNP. The transactions in question were carried out by one Gary Hew Keong Chan (Gary), who at all material times was an employee of BNP. The claim was dismissed on the ground that the transactions in these accounts were carried out by Gary without the knowledge and authority of Nancy and Shee Chin respectively, and that they did not dishonestly assist Gary in carrying out the transactions.

Facts

2. The facts giving rise to this appeal are briefly these. Nancy is a senior manager in charge of corporate affairs of a large development and holding company in Singapore. She holds a degree of Bachelor of Science (Estate Management) from the National University of Singapore. Nancy was married to Gary in 1991, but they had ceased to live as husband and wife since 1995.

3. Shee Chin is Nancys elder brother and is a businessman. He holds a degree of Master of Business Administration. Until 1998, he ran the businesses of two companies, Oriental Sincere Printing Ltd, a company incorporated in Hong Kong, and Panasia Holdings Ltd, a company incorporated in the British Virgin Islands. Both companies unfortunately suffered considerable losses during the economic crisis in 1998, and were forced out of their businesses.

Share transactions in Shee Chins account5. Shee Chin first became a customer of BNP on 9 May 1994, when he opened a Singapore dollar current account (Account No. 1) with BNP through Gary. In November 1994, Shee Chin applied for and was granted overdraft facilities up to S$123,000 to finance the activities of his companies, which were secured by his fixed deposit of S$250,000. On 16 April 1996, he opened a nominee account with BNP nominee company (BNP Nominees) for the purpose of his share transactions and another Singapore dollar current account (Account No. 2) for the purpose of settling his share transactions. A Malaysian Ringgit current account (MYR Account) was also opened on the same day in Shee Chins name by Gary for the purpose of settling the share transactions. One month later, in May 1996, Shee Chin deposited 50,000 shares in United Overseas Bank Ltd (UOB) with BNP as security for his accounts

6. Following the opening of these accounts, between April and July 1996 numerous share purchases were made by Gary in Shee Chins nominee account. These purchases were paid for by debiting the requisite sums to Shee Chins MYR current account, which eventually resulted in the account being overdrawn. Debit advices and acknowledgements of shares held by BNP Nominees for each share transaction were sent to Shee Chins residence at Toh Tuck Place. On 10 June 1996, a loan of S$238,000 was drawn down in Shee Chins name in Account No. 1 to repay the overdrafts in Account No. 2 and the MYR account.

7. According to Shee Chin, upon checking the statements sent to him by BNP, he discovered in July 1996 that Gary had entered into various share transactions in his name without his authorization. He therefore confronted Gary on these transactions and Gary assured him that he would sell the shares purchased and cease to enter into further unauthorised transactions. Notwithstanding that, Gary continued to enter into further share transactions in Shee Chins name. In respect of these further share transactions, credit or debit advices, as the case may be, for each transaction were sent to Shee Chin at his address in Toh Tuck Place by BNP. In the case of share purchases, acknowledgements of the shares purchased by BNP Nominees were sent to Shee Chin by BNP. Shee Chin did not disclaim any of these transactions or make any complaint to BNP about them.

8. On 26 December 1996, Nancy opened a Singapore dollar current account with BNP. Her purpose of opening the account was to use it to secure the account of Shee Chin with BNP. Hence, on the same day, Nancy also signed a memorandum of charge/deposit of securities as security for the account of Shee Chin. No securities, however, were then deposited with BNP pursuant to the memorandum9. On April 1997, BNP made a margin call on Shee Chin by a letter stating that the amount of the loan drawn down on his overdraft account had gone up to 90% of the market value of the deposited shares and requiring him to regularise his position by either reducing the outstanding amount owing to 60% of the market value of the shares or depositing additional shares. Shee Chin claimed that as a result of this letter he discovered that Gary had continued to trade in shares in his name without his authorization. According to Shee Chin, when he confronted Gary the latter assured him once again that the unauthorised trading would cease and that he would sell off the shares. No complaint or protest, however, was made by Shee Chin to BNP. Instead, Shee Chin complied with the margin requirements by depositing further 219,613 UOB shares with BNP. On 29 April 1997, Nancy also in response to the margin call deposited 10,000 shares in United Industrial Corporation Ltd (UIC) and 55,588 UOB shares with BNP to secure Shee Chins account

10. As a result of the transactions entered into by Gary in Shee Chins account, the latters MYR account went into overdraft. On 26 May 1997, a loan in the sum of MYR3,965,351.23 was obtained by Gary in Shee Chins name to repay the overdraft, thus regularising the MYR account. Credit and debit advices relating to this loan were sent by BNP to Shee Chin. No complaint or query was forthcoming from Shee Chin to BNP. Shee Chins MYR account went into overdraft yet again in June 1997 as a result of interest adjustments, and a further loan of MYR73,740 was obtained by Gary in Shee Chins name to repay the overdraft and regularise the account. Credit and debit advices relating to this loan were sent to Shee Chin by BNP. Again, Shee Chin did not disclaim the transactions or complain about any of the credit and debit advices.

11. On 26 June 1997, these two MYR loans were converted into a loan in Swiss Franc (CHF) in the sum of CHF2,316,406.15 by Gary who subsequently converted the CHF loan into Malaysia Ringgit in the sum of MYR5,051,571.84. Confirmations of these two foreign exchange conversions were sent to Shee Chin by BNP. Again, no complaint or protest was made by Shee Chin about these transactions.

12. Further share transactions were entered into by Gary in Shee Chins account from July 1997. In addition to the monthly statements, credit or debit advice for each transaction, as the case may be, were sent to Shee Chin by BNP. In the case of share purchases, acknowledgements of the share purchased by BNP Nominees were also sent to Shee Chin by BNP. No query, protest or complaint was made by Shee Chin. Nor was any intimation given by him to BNP that any of these transactions was unauthorised.

13. On 10 July 1997, Gary put up a credit proposal for Shee Chin to BNP proposing, inter alia, an increase of the short term loan/overdraft facility to US$2,000,000. That proposal was approved and on 13 August 1997, BNP wrote to Shee Chin a letter offering certain facilities for general investment purposes acceptable to BNP, and that letter appeared to have been sent by registered post to his address at Toh Tuck Place. Shee Chin himself accepted the proposal: he signed the acceptance on 20 October 1997 and returned it to BNP. As of that date, the outstanding amount of the short term loan/overdraft facility owing to BNP in Shee Chins account was US$1,792,000 14. On 22 October 1997, the loan of S$238,000 taken in June 1996 together with interest was converted by Gary into a MYR loan amounting to MYR538,204.04. On 22 January 1998, Gary repaid this loan of MYR538,204.04 and the other loan of MYR5,051,571.84 by drawing down two further loans of MYR2,500,000 and MYR2,812,767.76 in Shee Chins name. Confirmation of these transactions were sent to Shee Chin, who raised no complaint about them. Then in July 1998, these two loans were merged and converted by Gary into a loan in Japanese Yen yielding a total sum of 169,307,681. This loan was repaid on 2 October 1998 by a drawdown of two new Japanese Yen loans, one in the sum of 100,000,000 and the other in the sum of 60,000,000. The credit and debit advices of all these transactions as well as the confirmations of these foreign conversions loans were sent to Shee Chin by BNP, and again no query or complaint was made by Shee Chin to BNP at any one time

15. As of 31 March 1999, the outstanding amount on the short term loan/overdraft facility comprising the two loans denominated in Japanese Yen plus the interest amounted to a total sum of 161,033,593, which BNP is now claiming from Shee Chin. It is not disputed that this balance in Shee Chins account arose largely as a result of the share transactions and foreign exchange transactions. Shee Chin claims that these transactions were entered into by Gary solely for his own benefit and account and without Shee Chins authorization.

Forex transactions

16. We now turn to the trading in foreign exchange (forex) transactions. The account for trading in forex transactions was opened by Gary in Shee Chins name in or around April 1998. The form for such account was signed by Gary on Shee Chins behalf. There was no evidence that it was opened with the express authority of Shee Chin, verbal or in writing, or with his consent or knowledge. After the account was opened, Gary used the account for dealing in forex transactions. Again, there was no evidence that Shee Chin expressly authorised such transactions, verbally or in writing. The forex transactions started in February 1998 even before the account was opened and continued to early October 1998.

17. Similarly, Gary opened an account...