Citibank NA v Lim Tiong Hee

• Jurisdiction: Singapore
• Judge: Amarjeet Singh JC
• Judgment Date: 29 April 1994
• Neutral Citation: [1994] SGHC 121
• Date: 29 April 1994
• Subject Matter: Banking,Overdrafts,Banker's duty of care,Whether conclusiveness clauses are applicable only to guarantors under guarantees,Proof of evidence,Applicability to principle debtor,Lending and security,Evidence,Onus of proof,Whether banker under duty to ensure that customer did not exceed credit limit,Conclusiveness clause
• Docket Number: Suit No 1683 of 1993 (Registrar's Appeal No 228 of 1993)
• Published date: 19 September 2003
• Defendant Counsel: Low Nam Kee (Yoong Leong & Pnrs)
• Court: High Court (Singapore)
• Plaintiff Counsel: Ho Woon Choon (Peter Moe & Pnrs)

This is an appeal by the defendant from my decision affirming the decision of the assistant registrar who ordered summary judgment in favour of the plaintiffs in the sum of $566,043.64, interest at 8%pa from 1 August 1993 until payment or judgment and costs on an indemnity basis as between solicitor and client to be taxed or alternatively, agreed upon.

The plaintiffs` action in respect of the claim being the judgment sum arose under an equity investment account No 0-560664-389 (`the account`) which the defendant operated with the plaintiffs. The account was opened and the facility accepted on 15 October 1992 by the defendant for the purpose of financing his purchases of stocks and shares under an agreement known as Equity Investment Finance executed by the plaintiffs and the defendant of the same date. Under the agreement, the defendant executed two further documents being letters dated 15 October 1992 and 18 October 1992. Under the first letter and by an appended document, the defendant required the plaintiffs to accept instructions from one Steven Lee Ngoh Boon of UOB Securities Pte Ltd in relation to the defendant`s share instructions and under the second letter from one Philip Ho Kan Poh of Phillip Securities Pte Ltd similarly. The share trading facility was for a maximum of $500,000 or such other amounts as may be specified from time to time against receipt and deposit of shares (70% value). The plaintiffs thereafter lent moneys extended credit and/or made advances to the defendant for the purpose of financing the defendant`s purchase of stocks and shares at the request of the defendant and/or his above stated agents subject to the terms and conditions stated in the documents referred to.

Between 31 October 1992 to 31 July 1993, the plaintiffs sent monthly statements of accounts to the defendant. The defendant had not challenged the correctness of the said statement of accounts. From 17 June 1993, the plaintiffs demanded through Ms Maureen Chong that the defendant pay to the plaintiffs the sums due and owing to the plaintiffs amounting to more than $500,000. On or about the 30 June 1993 the plaintiffs terminated the account. The defendant, by letter written through his solicitors on 24 July 1993, admitted the plaintiffs` demand and requested that he be allowed to repay the shortfall in his account by instalments of $10,000 per month with effect from 1 August 1993 until full payment. The proposal by payment of instalments was rejected by the plaintiffs .

By a letter dated 4 August 1993, the plaintiffs, through their solicitors sent a letter of demand to the defendant`s solicitors claiming the sum outstanding. A certificate dated 20 August 1993 signed by one John Tan, its assistant manager, Risk Management Unit as follows was also sent to the defendant:

I do hereby certify that the sum of five hundred sixty-six thousand forty-three dollars and sixty-four cents ($566,043.64) was due and owing to the plaintiffs by the defendant as at 1 August 1993 under the above equity investment account.

The above sum took into account the proceeds of the defendant`s stocks and shares provided as security for the banking facilities.

The defendant denied liability on the following main grounds:

(i) The plaintiffs were in breach of duty of care to the defendant in the monitoring and evaluation of the defendant`s share transactions so as not to allow it to be in huge excess of the credit limit.

(ii) The plaintiffs agreed to rectify the statements of accounts.

(iii) That the letter of 24 July 1993 from the defendant`s solicitors to the plaintiffs seeking to settle did not constitute an admission of the debt.

(iv) The conclusiveness clause in the certificate issued by the bank was inapplicable.

The details of the above submissions may now be dealt with.

Breach of duty of care

The defendant`s contention in respect of this argument was that the breach occurred when the plaintiffs advanced up to $1,317,337 and the credit limit of $500,000 was exceeded without prior notice to the defendant. The defendant submitted that the plaintiffs picked up the following shares without prior notice which was not in accordance with the practice of the plaintiffs resulting in making an advance in excess of the credit limit:

Advance Date Quantity Shares

$412,488

31 May 1993

150,000

Guthrie Ropel shares

$349,810

4 June 1993

100,000

KL Kepong shares

$185,013

8 June 1993

50,000

AM Corp shares

$370,026

8 June 1993

100,000

AM Corp shares

$1,317,337

The defendant further submitted:

(a) that although the advance took place on or before 8 June, some 17 days after the first advance which exceeded the credit limit, the plaintiffs only thought it fit to raise it on 17 June 1993;

(b) that Steven Lee Ngah Boon, the remiser, was only authorized to give instructions for and on the behalf of the defendant to the plaintiffs concerning the defendant`s share transactions and not to apply for his credit limit to be extended under his account and there was no evidence that the said Steven Lee had ever applied for an increase of the credit limit on behalf of the defendant. It was therefore wrong for the plaintiffs to allow the credit limited to be...