Chien Chung Ming v Kay Hian & Co Pte and Another

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 30 November 1991
• Neutral Citation: [1991] SGHC 174
• Date: 30 November 1991
• Subject Matter: Agency,Agency by estoppel,Trading,Receipt by principal of proceeds of fraudulent disposal -Liability of principal for agent's fraud,Financial and Securities Markets,Fraudulent disposal of assets by agent,Status and authority of remisier,Securities,Liability of stockbroker for remisier's fraud
• Docket Number: Suit No 5490 of 1985
• Published date: 19 September 2003
• Defendant Counsel: Karan Nair and Antony Lee (Ong Tan & Nair)
• Court: High Court (Singapore)
• Plaintiff Counsel: Anthony Lee (Allen & Gledhill)

Cur Adv Vult

The first defendant is a company incorporated in Singapore and is a stockbroker and a `dealer` under s 2 of the Securities Industry Act (Cap 289) (`the Act`) which defines `dealer` as `a person who carries on a business of dealing in securities as a body corporate ...`. The second defendant was at all material times a remisier and therefore a dealer`s representative under the Act. Section 2 of the Act defines a `dealer`s representative` as `a person, by whatever name described, in the direct employment of, or acting for, or by arrangement with, a dealer, who performs for that dealer any of the functions of a dealer (other than work ordinarily performed by accountants, clerks or cashiers) whether his remuneration is by way of salary, wages, commission or otherwise; ...`.

On 3 May 1983, the second defendant entered into a remisier`s agreement with the first defendant. By cl 1 of the said agreement she agreed and undertook to

carry on the business of the sale and purchase of stocks, shares or other marketable securities in the name of the said companysubject to the rules and byelaws of the Stock Exchange of Singapore Ltd ... (Emphasis added.)

The second defendant was therefore an agent of the first defendant.

The plaintiff was serviced by the second defendant while she was a remisier with Alfa-Pacific Securities Pte (`Alfa-Pacific`). He became a client of the first defendant when the second defendant resigned from Alfa-Pacific and became a remisier with the first defendant. Through the recommendation of the second defendant the plaintiff became the holder of an ordinary and a margin account with the first defendant. Under the margin account, the plaintiff was given facilities up to the limit of $300,000 with a deposit either of cash or shares to the value of thirty percent (30%) of the said limit.

The plaintiff`s claims are for the return or alternatively damages for the loss of the certificates for 12 lots of shares totalling 90,000 shares which certificates were handed over to the second defendant or the first defendant in circumstances hereinafter set out.

A(i) 5 [times ] 1,000 Highlands and Lowlands Bhd shares

These shares had been bought by the plaintiff through Alfa-Pacific whilst the second defendant was with Alfa-Pacific. When the second defendant became a remisier with the first defendant the certificates for these shares were collected by one Chung Boon Hoe (`DW1`) from Alfa-Pacific on behalf of the plaintiff on the instructions of the second defendant. DW1 was then an administrative officer employed by the first defendant. These shares were then lodged with the first defendant as security for the plaintiff`s margin account on 3 June 1983. DW1 was `deceived` by the second defendant `into releasing` the certificates to her on 18 July 1983 purportedly for transmission to the plaintiff. They were subsequently sold under the account of the second defendant and the proceeds paid by the first defendant to the second defendant.

(ii) 5 [times ] 1,000 Malayan United Industries Bhd shares

These shares had also been bought by the plaintiff through Alfa-Pacific whilst the second defendant was with Alfa-Pacific. They were similarly collected by DW1 from Alfa-Pacific on 3 June 1983. They were then lodged with the first defendant as security for the plaintiff`s margin account. DW1 was `deceived` by the second defendant `into releasing` the share certificates to her on 18 July 1983 purportedly for transmission to the plaintiff. They were subsequently sold on 19 August 1984 under the second defendant`s account and the proceeds paid to her by the first defendant.

(iii) 5 [times ] 1,000 Selangor Coconuts Bhd shares

These shares were bought by the plaintiff through the first defendant on 2 June 1983 and payment made on 15 June 1983. The certificates were never handed to the plaintiff as the plaintiff had given instructions to the second defendant to have them lodged with the first defendant as security for his margin account. At the request of the second defendant on 2 August 1983 they were withdrawn from the plaintiff`s margin account and released to her by the first defendant purportedly for transmission to the plaintiff. They were later relodged by the second defendant with the first defendant under the account of one Ng Yong Choh who is the second defendant`s niece. The shares were then sold under the said Ng Yong Choh`s account and the proceeds paid into the said Ng Yong Choh`s account with the first defento reduce the amount due to the first defendant from the said Ng Yong Choh.

(iv) 10 [times ] 1,000 Banda Raya Development Bhd shares

The plaintiff bought these shares on 7 June 1983 through the first defendant. The plaintiff paid for the shares on 15 June 1983. They were then lodged with the first defendant as security for the plaintiff`s margin account. DW1 was subsequently `deceived` by the second defendant into `releasing` the certificates for these shares to her on 5 August 1983. They were then relodged under the margin account of one Francis Wong and sold under his account by the second defendant and the proceeds credited into the account of the said Francis Wong with the first defendant which was then in debit. The said Francis Wong was another client of the first defendant serviced by the second defendant.

(v) 10 [times ] 1,000 United Overseas Land Ltd shares

The plaintiff bought through the first defendant 15,000 of these shares. There was a bonus issue of one for five. So the plaintiff had 18,000 shares, 8,000 of which were sold on his instructions leaving 10,000 with the first defendant as security for his margin account. DW1 admitted to releasing the certificates for 5,000 shares held as security to the second defendant on 2 August 1983. These 5,000 shares were relodged with the first defendant by the second defendant under the account of the said Francis Wong on 4 October 1983 and then sold under his account and the proceeds set off against the debit balance due from him to the first defendant. The first defendant is unable to account for the other 5,000 shares. But from the acknowledgement PB6 dated 1 October 1983, the first defendant had confirmed that these 15,000 shares amongst others were `in safe custody` of the first defendant. Therefore the 5,000 shares unaccounted for by the first defendant would also have been lost or released by the first defendant to the second defendant without the knowledge of the plaintiff.

(vi) 5 [times ] 1,000 United Overseas Bank Ltd shares

These shares were bought by the plaintiff through the first defendant on 28 July 1983. The plaintiff`s wife Oey Bie Lan (`PW2`) made payment on 12 August 1983 with a cheque postdated to 18 August 1983. The second defendant was instructed to lodge them with the first defendant as security for the plaintiff`s margin account. They were later released by the first defendant to the second defendant on 23 December 1983 and were then sold by the second defendant through M/s EG Tan & Co Pte.

(vii) 5 [times ] 1,000 P Pelangi A shares

These shares were bought by the plaintiff through the first defendant. Payment was made by PW2 on 8 August 1983 at the office of the first defendant and the certificates were handed by PW2 to the second defendant to be lodged with the first defendant as security. But they were subsequently sold by the first defendant under the account of the said Francis Wong and the proceeds set off against the debit balance due from the said Francis Wong to the first defendant.

(viii) 5 [times ] 1,000 George Kent (M) Bhd shares

The plaintiff bought these shares through the first defendant on 28 July 1983. PW2 made payment for them at the office of the first defendant on 8 August 1983. She took delivery of the certificates and handed them over to the second defendant to effect the instructions given by the plaintiff to the second defendant to have them lodged with the first defendant as security. These shares were...