Hsu Ann Mei Amy (personal representative of the estate of Hwang Cheng Tsu Hsu, deceased) v Oversea-Chinese Banking Corp Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 21 January 2011
• Neutral Citation: [2011] SGCA 3
• Plaintiff Counsel: Michael Khoo SC and Josephine Low (Michael Khoo & Partners) and Andrew Ee Chong Nam (Andrew Ee & Co)
• Docket Number: Civil Appeal No 100 of 2010
• Date: 21 January 2011
• Hearing Date: 20 October 2010
• Subject Matter: Banking
• Year: 2011
• Citation: [2011] SGCA 3
• Defendant Counsel: Adrian Wong Soon Peng, Jansen Chow and Nelson Goh (Rajah & Tann LLP)
• Court: Court of Appeal (Singapore)
• Published date: 10 February 2011

Chan Sek Keong CJ (delivering the grounds of decision of the court): Introduction

This was an appeal by Hsu Ann Mei Amy (“Amy” or “the appellant”) as the litigation representative of Mdm Hwang Cheng Tsu Hsu (“Mdm Hwang”) against the decision of the High Court judge (“the Judge”) in Hwang Cheng Tsu Hsu (by her litigation representative Hsu Ann Mei Amy) v Oversea-Chinese Banking Corp Ltd [2010] SGHC 160. The Judge had dismissed Mdm Hwang’s action for damages against Oversea-Chinese Banking Corporation Limited (“the respondent”).

The proceedings concerned the nature and extent of a bank’s duty to carry out the mandate of a customer. Mdm Hwang was a long established customer of the respondent, and had been accorded the status and privileges of a private banking client. She had Singapore dollar deposits with the respondent in excess of $8 million. When Mdm Hwang, accompanied by Amy, instructed the respondent to open a new Joint Account in the joint names of Mdm Hwang and Amy (“the Joint Account”) and to transfer all the deposits held in her accounts with the respondent to the Joint Account, the respondent was hesitant about carrying out her “instructions” as its officers were concerned that she might not have fully understood the legal consequences of her instructions. Subsequently, when Amy told the respondent that Mdm Hwang would be closing all her accounts with the respondent (because of the respondent’s failure to open the Joint Account), the respondent became more anxious for Mdm Hwang’s sake and took certain steps to satisfy itself that Amy’s instruction reflected Mdm Hwang’s real intention. The respondent’s actions culminated in Mdm Hwang commencing these proceedings to claim damages against the respondent for breaching its duties as her banker by refusing to carry out the said instructions. The respondent denied liability on the ground that it had acted reasonably in trying to protect the interest of Mdm Hwang.

In our view, these proceedings could have been avoided or resolved earlier if the dispute between the parties had been properly identified at its early stages, or if it had been referred to mediation. It seemed to us that Mdm Hwang was poorly advised and had been led to believe that the respondent had decided that she was mentally incompetent and unable to look after her affairs. Mdm Hwang’s dismay and apparent unhappiness as to what was happening was, in our view, exacerbated by Amy’s aggressive attitude towards the respondent in harbouring doubts about her own integrity. This miscomprehension resulted in Mdm Hwang’s solicitor, Andrew Ee (“Ee”), seeking to prove that she had mental capacity and that the respondent was wrong not to act on her instructions. He had in his possession medical reports on Mdm Hwang which certified that although Mdm Hwang was suffering from incipient dementia and short-term memory loss, her cognitive ability was not impaired and her testamentary capacity was not affected by her medical condition. Inexplicably, these reports were not shown to the respondent until court proceedings had commenced. Mdm Hwang failed to obtain summary judgment against the respondent and a court-appointed psychiatrist was brought in to examine her mental capacity. The action proceeded to its desired end, and a total of five medical professionals (comprising two psychiatrists, two geriatric specialists and one clinical psychologist) were called to give evidence on Mdm Hwang’s mental capacity, and all were cross-examined in turn by counsel for both parties.

This part of the proceedings (which occupied nearly five days of trial) was a complete waste of the court’s time as the crucial issue in the case, as framed by the Judge after the medical evidence was given, was not whether Mdm Hwang had the mental capacity to manage her financial affairs or operate her bank accounts, but whether, given the respondent’s knowledge of the circumstances surrounding Mdm Hwang’s instructions, the respondent had acted reasonably in not carrying out these instructions. In the event, the Judge held that the respondent had acted reasonably and dismissed Mdm Hwang’s claim.

At the conclusion of the hearing of the appeal, we affirmed the Judge’s decision and dismissed Amy’s appeal with costs to be paid by Mdm Hwang’s estate. We now give our reasons for our decision.

The Facts Background

Mdm Hwang adopted Amy, then two years old, as her daughter in 1967. Amy lived with Mdm Hwang until 2007, when Amy moved into her own home following her marriage. Mdm Hwang and Amy were close to each other and in the later years of Mdm Hwang’s life, Amy looked after Mdm Hwang. In 1999, Mdm Hwang executed a will (“the 1999 Will”) in the presence of Dr Teo Sek Khee (“Dr Teo”), a consultant and head of the geriatric unit at Raffles Hospital. The 1999 Will was later altered by a codicil executed in 2007. In March 2008, Amy requested that Dr Teo certify Mdm Hwang’s testamentary capacity so that she could change the 1999 Will, but Dr Teo declined to do so as he was concerned that Mdm Hwang’s constipation problem might have clouded her cognitive functions. Nevertheless, Mdm Hwang executed a new will on 24 March 2008 (“the 2008 Will”), which was later altered by two codicils executed by Mdm Hwang in May 2008 and August 2008. Under the 2008 Will and the two subsequent codicils, Amy was appointed the sole executrix and the sole beneficiary of Mdm Hwang’s estate. Mdm Hwang died on 11 May 2010. Probate of the 2008 Will was granted to Amy on 18 October 2010, two days before the hearing of this appeal.

On 7 February 2008, Mdm Hwang suffered a fall and fractured her hip. She underwent hip replacement surgery. Amy informed Chen Ching Ling, Mdm Hwang’s relationship manager in the respondent’s private banking division at that time, that Mdm Hwang had difficulty issuing her own cheque to pay the hospital’s bill. In mid-February 2008, Lim Sar Lee (“Sar Lee”), the respondent’s regional marketing manager, visited Mdm Hwang in hospital and asked her to sign on a piece of paper. The signature was consistent with the specimen signature kept by the respondent.

Prior to the events leading to the present dispute, Mdm Hwang had consulted four medical professionals on medical issues such as her memory disorders and her mental capacity. We have earlier mentioned (at [6] above) Dr Teo’s decision in March 2008 not to certify Mdm Hwang’s testamentary capacity. On 28 March 2008, Dr Lim Hsin Loh (“Dr Lim”), a consultant psychiatrist in private practice at Mount Elizabeth Medical Centre, examined Mdm Hwang and opined that she had deficits in short-term memory and orientation, and recommended that she be further examined by Dr Zena Kang (“Dr Kang”), a clinical psychologist. Dr Kang examined Mdm Hwang on 1 and 3 April 2008, conducting brief neuropsychological tests to assess Mdm Hwang’s mental status and cognitive functions. These tests were not designed to diagnose dementia, and were only indicative of general levels of cognitive impairment. Dr Kang concluded that Mdm Hwang’s deficits were mainly in her short-term memory, which adversely affected her ability to learn new information. After receiving Dr Kang’s report, Dr Lim examined Mdm Hwang again on 12 May 2008 and opined that Mdm Hwang had testamentary capacity, although she was suffering from mild dementia. Between 8 April 2008 and 28 July 2009, Mdm Hwang was examined by Dr Sitoh Yih Yiow (“Dr Sitoh”), a specialist in geriatric medicine. He made general assessments which were not intended to reflect Mdm Hwang’s mental competence, and found that Mdm Hwang faced both physical and mental difficulties. He opined that Mdm Hwang’s dementia was of moderate severity.

The events of May 2008

On 13 May 2008, Amy accompanied Mdm Hwang to the respondent’s premises to open the Joint Account. Kang Eu Jin (“Eu Jin”), a client services officer of the respondent, attended to Mdm Hwang and Amy. Eu Jin observed that Mdm Hwang appeared dazed and was “staring into blank space”. Amy gave the instructions for the opening of the Joint Account. As Eu Jin became concerned that Mdm Hwang might not understand what opening of the Joint Account entailed (ie, that Amy would have access to the deposits in the Joint Account), he left the room and consulted Sar Lee on what to do. Following Sar Lee’s directions, Eu Jin returned to the room and proceeded to fill in the account opening forms, although he informed Amy that the opening of the Joint Account would be subject to management approval. When Eu Jin tried to explain to Mdm Hwang the details about the opening of the Joint Account, Amy cut him off and said to Mdm Hwang “Qin Meng!” (which means “sign your name” in the Cantonese dialect) in a forceful tone. Eu Jin observed that Mdm Hwang appeared unsure about what she was supposed to do, but she signed the forms.

On 15 May 2008, Sar Lee and Chua Eng Leong (“Chua”), Mdm Hwang’s new relationship manager, visited Mdm Hwang at her home to verify her instructions. When Mdm Hwang was asked about her earlier visit to the bank on 13 May 2008 to open the Joint Account, she could not recall the visit, and stated that she had no intention to open the Joint Account. She initially also said that she did not have a daughter, but later said she had a daughter who was overseas on vacation. Sar Lee and Chua reported the events of 13 May 2008 and 15 May 2008 to Olivier Denis (“Denis”), the respondent’s head of private banking. Denis subsequently held internal meetings with Sar Lee, Chua, as well as the respondent’s legal and operational risk management and compliance departments on how to deal with the situation.

On 20 May 2008, Amy called Chua about the Joint Account, and upon learning that it had not been opened, told Chua that she would bring Mdm Hwang to the respondent’s premises on 22 May 2008 to close all of Mdm Hwang’s accounts with the respondent. Chua informed Denis of what Amy had said and Denis decided that...