Chandra Winata Lie v Citibank NA

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 03 December 2014
• Neutral Citation: [2014] SGHC 259
• Plaintiff Counsel: Mr Eddee Ng, Mr Michael Ng and Ms Alcina Chew (Tan Kok Quan Partnership)
• Docket Number: Suit No 370 of 2013 (Registrar’s Appeal Nos 407 and 412 of 2013)
• Date: 03 December 2014
• Hearing Date: 20 January 2014,11 March 2014
• Subject Matter: Pleadings,Civil procedure,Striking out
• Published date: 16 February 2015
• Citation: [2014] SGHC 259
• Defendant Counsel: Mr Hri Kumar Nair SC and Ms Uni Khng (Drew & Napier LLC)
• Court: High Court (Singapore)
• Year: 2014

Vinodh Coomaraswamy J:

A principal suspects that he did not authorise his agent to enter into certain transactions on his behalf, but his memory does not allow him to be certain that the agent acted without his authority. In his suit against the agent, the principal therefore stops short of asserting positively that he did not authorise the agent’s acts. Instead, he invites the court to draw from the surrounding circumstances the inference that the agent acted without his authority.

Do the principles of pleading permit the principal to plead his claim against his agent in this way? The Assistant Registrar held that they do not. He rejected the principal’s attempt to amend his pleadings and struck out this portion of the principal’s claim. I agreed with the Assistant Registrar and dismissed the principal’s appeal. There is to be a further appeal to the Court of Appeal. I therefore set out the reasons for my decision.

The background The parties

The defendant is a well-known international bank. Through its private banking arm in Singapore, it provides wealth management services for high net worth individuals resident in Singapore and in the region. The plaintiff is one such high net worth individual. He resides in Indonesia. He opened, maintained and operated¹ three investment accounts with the defendant’s private bank in Singapore. Two of his accounts are in his own name. The third account is in the name of his offshore personal investment trust company.

It is common ground that under the contract between the plaintiff and the defendant, all three of his accounts were advisory accounts. In other words, these accounts were not discretionary accounts: the plaintiff did not grant to the defendant any discretion to enter into a transaction on any of these accounts without his specific authority for each such transaction. Both parties accept also that the defendant was not contractually obliged to obtain the plaintiff’s authority for any given transaction in writing and was entitled to act on his authority even if given orally.²

The defendant’s practice in dealing with the plaintiff was to obtain his oral authority to transact on his behalf. It followed up by sending him two documents either shortly before or shortly after executing the transaction he had authorised.³ The first document was called a “tailored investment proposal”. This document described the transaction that the plaintiff had authorised the defendant to enter into on his behalf, its objectives and its associated risks. The second document was called a “trade confirmation”. The trade confirmation set out, amongst other things, the principal terms of the transaction and the plaintiff's confirmation that he: (i) had capacity to evaluate the transaction in question; (ii) understood the terms of the transaction; and (iii) was willing to assume the risks of the transaction. The plaintiff was expected to countersign and return the trade confirmation to the defendant.

It is common ground that, because the defendant was contractually entitled to act on the plaintiff's oral authority, neither the absence of a trade confirmation for a particular transaction nor the plaintiff’s failure to countersign a trade confirmation for a particular transaction is capable of suggesting that the defendant had no authority to enter into that particular transaction.

All of the plaintiff’s mail relating to his three accounts was held by the defendant at its office in Singapore for him to collect personally – as he did from time to time – pursuant to a hold-mail agreement between the parties. The mail so held included tailored investment proposals, trade confirmations and monthly statements intended for the plaintiff arising from his accounts.

Between May 2007 and October 2008, the plaintiff’s accounts saw significant activity in fairly sophisticated derivatives transactions in foreign exchange and equities. These transactions entailed substantial potential liability for the plaintiff. That potential liability became a reality when, as a result of the financial crisis of 2008/2009, the plaintiff’s accounts recorded significant losses on transactions entered into in or after March 2008.⁴

The plaintiff’s case in these proceedings is that the defendant is liable to compensate him for those losses.

The plaintiff seeks documents voluntarily from the defendant

In March 2010, the plaintiff engaged an expert with a view to commencing suit against the defendant to recover compensation for these losses. The expert analysed the documents in the plaintiff’s possession arising from his accounts. In August 2010, the expert informed the plaintiff that he had discovered a number of transactions on the plaintiff’s accounts which could not be matched to a trade confirmation.⁵ That led to the plaintiff asking the defendant for copies of all trade confirmations relating to all transactions on his accounts without limitation in time, as well also for documents in six other categories.⁶

The defendant initially took the position that it had already furnished all trade confirmations to the plaintiff.⁷ Eventually, however, the defendant relented and sent the plaintiff a CD-ROM said to contain copies of the trade confirmations for all transactions on his accounts for the period January 2007 to December 2008.⁸ The plaintiff’s expert reviewed these trade confirmations and discovered that there remained a number of transactions on the accounts which could not be matched to any trade confirmation.⁹

Mr Eddee Ng of Tan Kok Quan Partnership (“TKQP”) represents the plaintiff. TKQP wrote to the defendant in July 2011.¹⁰ Its letter noted that there were 14 transactions which still could not be matched to a countersigned trade confirmation nor indeed to any other supporting documents. It therefore asked the defendant for trade confirmations for these 14 transactions and also for other supporting documents to show that the plaintiff had authorised these 14 transactions, including recordings of telephone conversations and call reports. TKQP gave as the reason for seeking these documents the fact that the plaintiff did not remember authorising those transactions and therefore required the documents in order to “ascertain whether or not proceedings should be taken out” against the defendant for trading without authority on his accounts. TKQP concluded by informing the defendant that if the documents sought were not produced within two weeks, the plaintiff would apply for pre-action discovery to compel the defendant to produce them.

Mr Hri Kumar SC of Drew & Napier LLC (“D&N”) represents the defendant. D&N’s response to TKQP’s letter rejected the plaintiff’s allegation of unauthorised trading. It informed TKQP that the defendant declined to disclose voluntarily the tape recordings and call reports for the 14 transactions because they were the defendant’s property and because the defendant had no obligation to supply copies to the plaintiff. D&N did, however, enclose trade confirmations for 13 of the 14 transactions which TKQP had listed in its July 2011 letter. None of these 13 trade confirmations had been countersigned by the plaintiff.

The plaintiff seeks pre-action discovery from the defendant

Not satisfied with the defendant’s disclosure, the plaintiff applied in December 2011 for pre-action discovery against the defendant. As he explained in his affidavit in support of this application:¹¹

In or around August 2010, as the [plaintiff's] expert was studying the statements, he highlighted to me that there were many trades … which he could not match to trade confirmations sent to me by the Defendant. Unfortunately, I could not recall either giving the Defendant instructions to enter into or authorising many of these transactions. …

Because “the Defendant did not provide [him] with any further documents to prove that [he] had in fact given instructions for and had authorized the trades as alleged” by the defendant,¹² the plaintiff sought discovery of the defendant’s internal documents to “verify if [his] suspicions that these trades were unauthorised are correct”.¹³

The plaintiff’s application for pre-action discovery failed. At the primary hearing, the Assistant Registrar held that whether the plaintiff did or did not authorise the 14 transactions identified was a matter within the plaintiff’s own knowledge. She was therefore of the view that he was seeking pre-action discovery not because the documents he sought were necessary for him to know whether he had a claim against the defendant for unauthorised trading but because he wanted, impermissibly, to assess the chances of such a claim succeeding.¹⁴ The plaintiff’s appeal to a judge in chambers too failed. The plaintiff appealed further, to the Court of Appeal, but withdrew his appeal shortly after filing it.

The plaintiff commences suit against the defendant A summary of the plaintiff’s original statement of claim

On 23 April 2013, the plaintiff commenced this suit against the defendant. His original claim comprises his statement of claim filed on 23 April 2013 as amended on 14 August 2013. It asserts that the defendant is liable to compensate him for the losses which he suffered on transactions on his accounts on the basis of three causes of action: (i) the defendant’s culpable failure to advise; (ii) the defendant’s negligent misrepresentation; and (iii) the defendant’s unauthorised trading.

The plaintiff’s case on failure to advise is that the defendant breached a duty of care in tort or an obligation under the parties’ contract to advise the plaintiff when it failed to advise the plaintiff, even after the financial markets turned volatile in 2008, that: (i) the risk/reward profile of his existing positions and the further transactions entered into on his accounts were skewed against him and in favour of the defendant;¹⁵ (ii) that the scale of those positions and those further...