Go Dante Yap v Bank Austria Creditanstalt AG

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 05 August 2010
• Neutral Citation: [2010] SGHC 220
• Plaintiff Counsel: Kannan Ramesh, Ng Ka Luon Eddee, See Chern Yang and Poon Ho Yen Claudia (Tan Kok Quan Partnership)
• Docket Number: Suit No 424 of 2003
• Date: 05 August 2010
• Hearing Date: 26 November 2009,15 May 2007,04 February 2010,14 May 2007,22 May 2007,02 December 2009,07 July 2008,25 February 2008,08 July 2009,17 May 2007,08 July 2008,23 May 2007,27 February 2008,14 July 2010,18 May 2007,23 February 2010,26 February 2008,16 May 2007,19 November 2009,21 May 2007
• Subject Matter: Banking
• Published date: 17 August 2011
• Citation: [2010] SGHC 220
• Defendant Counsel: Christopher Anand Daniel and Nicholas Jayaraj s/o Narayanan (Advocatus Law LLP)
• Court: High Court (Singapore)
• Year: 2010

Andrew Ang J: Introduction

The plaintiff, Dante Yap Go, is a businessman and a national of the Philippines. The defendant, Bank Austria Creditanstalt AG, is an Austrian-incorporated bank which formerly operated branches in Hong Kong and Singapore. This action was brought by the plaintiff against the defendant in respect of losses suffered on the plaintiff’s investment portfolio following the Asian financial crisis of 1997 and 1998.

On 3 June 1997, the plaintiff had opened two investment accounts with the defendant’s private banking department: one with the defendant’s Hong Kong branch (“the Hong Kong account”) and the other with its Singapore branch (“the Singapore account”). A credit facility of up to US$5m was granted by the defendant to the plaintiff via the Hong Kong account. Both accounts were handled by one Winnifred Natasha Tong Ching Laude (“Ms Ching”) who was, at that time, a vice-president in the defendant’s Hong Kong branch. Subsequently, a number of investments in emerging markets debt instruments were acquired under the Singapore account, some of which were financed using loans that were drawn down from the credit facility tied to the Hong Kong account.

A few of these investments were US Dollar (“USD”) denominated Indonesian corporate bonds or short-term notes that were issued by the Bakrie Group of companies (“the Bakrie Group”) and another company called Polysindo. These Indonesian notes were acquired in the month of July 1997.

What transpired within the following months in parts of Asia were events that became known as the Asian financial crisis. During this period of financial crisis, the value of the Indonesian rupiah depreciated substantially against the USD and, as a result, Indonesian companies that had borrowed in USD were suddenly faced with higher costs in servicing their debts. A number of Indonesian companies, one of them being the Bakrie Group, ended up defaulting on their bonds.

Also acquired under the Singapore account were Rossiyskiy Kredit 10.25% Interest Notes (“the Rossiyskiy Notes”) purchased on 25 September 2007. The Rossiyskiy Notes, also denominated in USD, were issued by a Russian bank, Rossiyskiy Kredit Bank, and were linked to Gosudarstvenniye Kratkosrochniye Beskuponniye Obligatsio (“GKOs”), which were short-term rouble-denominated bonds issued by the Russian Government. The Asian financial crisis triggered a knock-on effect in the global economy and, as a result, the Russian Government devalued the rouble against the USD and defaulted on its GKOs. Faced with circumstances similar to those faced by the Indonesian companies, Rossiyskiy Kredit Bank, too, ended up defaulting on its GKO-linked Rossiyskiy Notes.

After five years or so had lapsed, the plaintiff commenced this action against the defendant on 2 May 2003 claiming for, inter alia, losses suffered on the abovementioned investments. As the defendant had ceased its operations in Asia sometime in October 2001, the plaintiff applied for and was granted leave on 16 May 2003 to serve the writ of summons out of jurisdiction at the defendant’s registered place of business in Austria. However, the Singapore Consulate in Austria encountered difficulties in effecting service on the defendant, and it was only on 2 August 2005, more than two years after the action was commenced, that the defendant was finally served with the writ of summons.

The trial was then conducted over three tranches: from 14 to 23 May 2007 (“the first tranche”); from 25 to 27 February 2008 (“the second tranche”); and from 7 to 8 July 2008 (“the third tranche”). By the time parties appeared before me for the first tranche of the trial, a good ten years or so had already elapsed since the happening of the events that the witnesses were asked to testify on. This had a significant bearing on the quality of the evidence given by the witnesses of fact as will become apparent later in this judgment.

The plaintiff’s claims

The plaintiff claims that a total of 16 investments purchased under his Singapore account and the loans drawn down from his Hong Kong account to finance those investments were not authorised by him (“the unauthorised investments claim”).

The plaintiff then claims, in the alternative, that even if those investments and loans had been properly authorised, the defendant had breached its duty owed to the plaintiff, in contract and/or tort, by failing to advise him that it was imprudent to have maintained the portfolio that he was holding during the period of the Asian financial crisis (“the advisory claim”).

The witnesses Witnesses of fact

A total of six witnesses of fact testified and gave evidence. Four of them – the plaintiff, Ms Ching, Dr Michael Potyka (“Dr Potyka”), and Philippe Yin (“Yin”) – were cross-examined before me, whereas the remaining two – Eric Chin Yeung Yin (“Chin”) and Ms Lily Yeung (“Ms Yeung”) – were examined in October 2009 before an examiner appointed by the Hong Kong courts and they both gave evidence in the form of depositions.

The plaintiff

The plaintiff struck me as an especially unreliable witness over the four and a half days that he was cross-examined on the witness stand.

I observed that he would often ask for questions to be repeated needlessly despite having the benefit of those questions being displayed on a monitor screen in front of him. I also noticed that the plaintiff would take far too long to give direct answers or to agree to matters that would have been fairly obvious to any reasonable person. There were also occasions on which he would embellish his evidence by introducing new explanations for the first time whenever he felt it was advantageous to do so. Furthermore, some of his responses were simply incredible. Once, he adamantly persisted that he had not seen the words “Hong Kong Branch” which appeared, in large font, not only in the title heading but also directly above his signature in a written agreement of which he had initialled every single page.

I also took note of another incident which further diminished the plaintiff’s credibility in my view. On that occasion, counsel for the plaintiff, Mr Kannan Ramesh, was cross-examining Ms Ching in relation to a faxed document which the plaintiff had claimed was sent by him. The plaintiff had insisted that the handwriting on the fax note was his and that the name in the “From” field was his name. Notwithstanding the poor quality of the copy produced in court, I could discern that the name in the field appeared to be unlike the plaintiff’s name. It was only later, after it had become clear from the transmission report, that the fax was sent from a phone line in Singapore and could not have been sent from him that the plaintiff then performed a complete turnabout and conceded that the handwriting was actually not his.

Ms Ching

Ms Ching’s testimony was of obvious importance because the plaintiff had conducted his dealings with the defendant primarily through her. Ms Ching who had since returned to the Philippines to be a homemaker was, initially, reluctant to appear and the defendant had to take out an application for Ms Ching to be examined by way of foreign deposition in the Philippines. Ultimately, Ms Ching agreed to testify on the defendant’s behalf and appeared before this court for the first and third tranches of the trial for cross-examination.

On the witness stand, Ms Ching was oftentimes defensive, given the nature of the plaintiff’s allegations against her. As a result, some of her answers came across as being unnecessarily defiant and were somewhat unreasonable on occasion. She took issue with Mr Ramesh every time he used the word “advice” to describe her recommendations to the plaintiff. However, despite her failure at times to recall events or give precise answers, I did not think that she was lying on the essential point that the investments were authorised.

Dr Potyka

The defendant had originally scheduled for one Paul Francis Giles (“Giles”) to appear as a witness on its behalf. Giles was the head of the defendant’s Hong Kong branch at the material time and was in charge of overseeing the defendant’s private banking services for its Asian clients from 1997 until 2000. His testimony was important because he had corresponded directly with the plaintiff in the aftermath of the Asian financial crisis and was also present at a number of meetings with the plaintiff. However, about a month before the trial, the defendant lost contact with Giles. Leave was subsequently granted for the defendant to add Dr Potyka as a replacement.

At the material time in 1997, Dr Potyka was the head of the defendant’s main legal department based in Austria and he only became involved in this matter in early 2006. As a result, he had no personal knowledge of the events that took place. Dr Potyka was cross-examined before me during the first tranche of the trial and was also present throughout the proceedings as the defendant’s representative.

Yin

Yin was the senior vice-president “Operations” of the defendant at the material time between 1997 and 1998 and he appeared before me during the second tranche of the trial. He gave evidence as to the defendant’s internal procedures relating to the documenting and recording of instructions. Like Dr Potyka, Yin had no personal knowledge of the events that took place between the plaintiff and the defendant.

Ms Yeung

Ms Yeung was an assistant vice-president with the defendant at the material times and provided operational support to Ms Ching and other banking officers. Although Ms Yeung’s position with the defendant would naturally have made her an important witness, the evidence that resulted from her deposition, however, was of limited value as she conceded that she could only vaguely remember the events that had occurred nearly 12 years ago.

Chin

For the same reason, the evidence of Chin was of hardly any assistance. In fact, Chin’s...