Cheng William (administrator of the estate of Cheng Louise, deceased) v DBS Bank Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 29 January 2010
• Neutral Citation: [2010] SGHC 34
• Court: High Court (Singapore)
• Docket Number: Suit No 37 of 2008
• Published date: 11 February 2010
• Year: 2010
• Hearing Date: 30 June 2009,01 July 2009,02 July 2009,29 June 2009,03 July 2009
• Plaintiff Counsel: Anna Oei Ai Hoea and Chen Weiling (Tan, Oei & Oei LLC)
• Subject Matter: Banking,cheques,forged,mandate
• Citation: [2010] SGHC 34

Lai Siu Chiu J:

This was a claim by William Cheng (“the plaintiff”) in his capacity as the sole remaining administrator (as well as a beneficiary) of the estate of Louise Cheng (“the estate”) his late mother, against DBS Bank Ltd (“the defendant”). The plaintiff claimed compensation arising from allegedly unauthorised transfers of moneys out of the estate’s bank account maintained with the defendant. The plaintiff had a co-administrator in his brother Robert Cheng (“Robert”) until 11 May 2006, when Robert was adjudged a bankrupt. Robert met an untimely death on or about 4 April 2009 after he was involved in a road accident in Malaysia.

The facts

Louise Cheng (“the deceased”) passed away on 1 September 1984. On or about 10 May 1986, in their capacities as joint administrators of the estate, the plaintiff and Robert opened an account with the defendant for the estate under account number 001-XXXXXX-X (“the account”). Both administrators were signatories to the account and the mandate to the defendant was that both signatures were required to operate the account. However, because the plaintiff was then working in Taiwan, it was agreed between the siblings that Robert would be responsible for managing the estate and monitoring the account.

According to the instructions received by the defendant when the account was opened, the bank statements for the account were to be sent to No 17 Jalan Senandong (“the property”) which was then Robert’s residence. The property was also the main asset of the estate.

Although the deceased died intestate, the two administrators as well as their four sisters were aware of her wishes, which she had written out in Mandarin in a document dated 28 August 1984. Essentially, it was the intention of the deceased that the estate was to be divided into three shares with one share each going to the plaintiff and Robert while the remaining share was to be used for the funeral expenses of the deceased and the cost and upkeep of her gravesite.

In or about October 2001, the property was sold for $4.3m and the net sale proceeds less expenses amounting to $3,874,681.77 (“the sale proceeds”) were deposited into the account. After the sale was completed, Robert moved to Block 12,Toh Yi Drive #02-389, Singapore 590012 (“Robert’s house”). On or about 9 October 2001, Robert instructed the defendant to change the mailing address of the account from the property to Robert’s house. The defendant complied with his instructions.

On 22 October 2001, DBS cheque no. 243341 for $1m was drawn in favour of the plaintiff as part of the plaintiff’s one-third entitlement (equivalent to $1.3m) to the sale proceeds of the property. On 23 October 2001, DBS cheque no. 243343 dated 22 October 2001 for $1m was drawn in favour of Madam Long Lee Choo (“Robert’s wife”) representing part of Robert’s one-third share of the sale proceeds. Robert made a gift of the sum to his wife.

In December 2001, Robert and the plaintiff discussed the balance $1.3m of the sale proceeds. It far exceeded what was required to maintain their parents’ temporary gravesite in Taipei. Robert decided to and did consult a lawyer. He was verbally advised by a solicitor (OSH) that neither he nor the plaintiff were legally bound to hold the sum of $1.3m to maintain their parents’ temporary gravesite. OSH subsequently rendered a written opinion to both brothers on 12 March 2002 (at 1AB561-564) to confirm his views. Robert duly conveyed OSH’s oral advice to the plaintiff and after discussion, the plaintiff and Robert agreed that $1m from the balance one-third share would be shared equally between them leaving $300,000 for maintenance of their parents’ gravesite.

On 6 January 2002, the plaintiff and his wife visited Robert’s house. Robert suggested to the plaintiff that $1m from the one-third share for the gravesite maintenance be placed in a fixed deposit account in Malaysia as the sum was lying idle in the account. Moreover, the interest earned on Malaysian Ringgit (“MR”) deposits would be higher than the interest rates offered by Singapore banks for fixed deposits. The plaintiff agreed to Robert’s suggestion. The plaintiff signed DBS cheque no. 243346 for $1m (“the first cheque”) in favour of the estate. A separate DBS cheque no. 243347 for $50,000 (“the second cheque”) was issued in favour of the plaintiff who claimed (according to Robert’s affidavit of evidence-in-chief [“AEIC”]), to have incurred expenses for the maintenance of their parents’ temporary gravesite in Taiwan.

Robert had previously been informed by a Malaysian bank officer that there could be certain issues with regard to using a cheque to transfer a large sum of money from a Singapore bank account to an account in Malaysia. After discussing these issues, the plaintiff signed DBS cheque no. 243348 (“the third cheque”) in blank as a contingency method of payment to effect the transfer of monies from the account to a MR account in Malaysia should Robert encounter problems in the transfer. The date, payee, amount and Robert’s signature were missing from the third cheque. The plaintiff returned to Taiwan on the following day.

The conversion of $1m into MR was to be arranged by Robert’s daughter (Vivienne) who worked as a finance director for a Malaysian public listed company.

On 8 January 2002, Robert forwarded to the plaintiff a fax that Robert had received from Vivienne on the then prevailing exchange rate between the MR and the Singapore dollar applicable to $1m. Subsequently, Robert forwarded to the plaintiff another fax he had received from Vivienne on 14 January 2002 wherein Vivienne advised that a person called Robert Yong (“Yong”) wanted US$542,000 (equivalent to S$995,112) in exchange for MR2,059,600. Yong wanted a draft in the sum of US$542,000 to be handed to his Singapore private banker Jessie Heng in exchange for MR2,059,600. Robert deposed in his AEIC that he had discussed Yong’s offer with the plaintiff who agreed to accept the same and that Robert should carry out the transaction.

Accordingly, Robert visited the Bukit Timah Plaza branch of the defendant (“the branch”) on the morning of 21 January 2002 to purchase a draft for US$542,000. Robert was handed a demand draft application form (“the application form”) which he completed, signed and presented to the branch’s staff for processing. He was told the application form was not acceptable as the same only had one signature whereas the mandate also required the plaintiff’s signature. In response, Robert showed to the staff the third cheque and said he would be using the same to pay for the draft. He filled in the blanks in the third cheque, signed it and handed the same to the staff. Shortly thereafter, Robert received the draft for US$542,000 (“the first draft”).

Robert proceeded to Jessie Heng’s office and handed her the first draft. However, Jessie Heng informed him that the first draft was not in order as the beneficiary should be Yong and not herself. Robert informed her he would rectify the mistake.

Robert rushed back to the branch. He explained to a staff of the branch that the beneficiary should be Yong and not Jessie Heng. A member of the staff then crossed out Jessie Heng’s name in the application form and inserted Yong’s name. Robert was then asked to initial and verify the amendment which he did. Robert then received a new draft no. 00160D2004017 (“the second draft”) in Yong’s name for US$542,000. He returned to Jessie Heng’s office and handed the second draft to her.

On the same day, the estate received RM2,059,600 into its Malaysian account maintained with Hong Leong Bank Berhad (“the HL account”) which sum was placed in fixed deposit (“the fixed deposit”). It subsequently transpired that the third cheque was not used to purchase the first or second drafts. Instead, the defendant debited the account with the sum of $995,112 together with administrative charges of $100 and $10.

In his AEIC, Robert said he subsequently received the balance of $300,000 of his $1.3m share of the sale proceeds by a DBS cheque no. 300052 dated 15 April 2002 (“the fourth cheque”). Robert deposed the fourth cheque was jointly signed by him and the plaintiff and issued in favour of Robert’s wife. Although the plaintiff also sued the defendant in relation to the fourth cheque, the plaintiff did not refer to the fourth cheque at all either in his AEIC or in his supplemental AEIC. The first mention by the plaintiff of the fourth cheque (admitted by him in court) was in his statement of claim (infra[30]). I will return to this observation when I look at the evidence adduced from the plaintiff in cross-examination (at N/E 106-107).

On 6 May 2002, the plaintiff sent a fax to Robert containing the following message:

The amount from the Estate that was paid in Ringgit deposit was for 3 months only. Please give me an update and have the amount returned to the Estate account right away.

In his AEIC (at para 21), the plaintiff explained that he scribbled the above note out of extreme anger with Robert because Robert had sent him a fax about title to their parents’ gravesite, amongst other things.

After his return to Singapore for good in June 2002, the plaintiff started familiarising himself with the estate’s matters as well with the estate of his sister Daisy. The plaintiff alleged that Robert was not cooperative in this respect as which result he wrote to the defendant on 3 March 2003 with a request that monthly statements of the account be sent to his address (No. 25 Kew Drive).

On 13 May 2003, the plaintiff received the March 2003 statements from the defendant. He wrote to the defendant on 15 May 2003 to request for future statements of the account to be sent to him.

On 22 May 2003, the plaintiff received the defendant’s letter informing him that his request for a change of mailing address in [18] could not be processed because Robert’s signature was required.

...