Ng Giap Hon v Westcomb Securities Pte Ltd and Others

JudgeChao Hick Tin JA
Judgment Date29 April 2009
Neutral Citation[2009] SGCA 19
Citation[2009] SGCA 19
Subject MatterWhether entire agreement clause precluded implication of terms into contract,Whether there was implied duty of good faith between stockbroking firm and remisier,Whether terms ought to be implied into agency agreement in favour of remisier,Terms implied in law and in fact,Commission contracts,Implied duty of good faith,Whether terms ought to be implied into contracts,Whether there was implied duty of good faith in Singapore,Whether duty of good faith could be implied in law into agency agreement,Agent and principal,Contract,Whether entire agreement clause precluded implication of terms into agency agreement,When term would be implied in favour of agent so as to entitle it to claim commission,Implied terms,Contractual terms,Entire agreement clause
Defendant CounselDavid Chan, Koh Junxiang and Lum Baoling Georgina (Shook Lin & Bok LLP)
Plaintiff CounselKelvin Lee Ming Hui (Lee Shergill Partnership)
Published date04 September 2009
CourtCourt of Three Judges (Singapore)

29 April 2009

Judgment reserved.

Andrew Phang Boon Leong JA (delivering the judgment of the court):


1 Although the issues in the present appeal are deceptively simple, they belie important issues of principle centring around the inherently problematic doctrine of the implied term. On the one hand, we will need to consider the relationship between implied terms and what are commonly called “entire agreement clauses”. On the other, we will need to consider whether or not a term based on the doctrine of good faith can be implied into a contract. In this last-mentioned regard, there has – as we shall see – been significant controversy in other jurisdictions (in particular, Australia). Indeed, in so far as the Singapore context is concerned, this issue appears to have been raised squarely for the first time in the present appeal.

2 More specifically, this is an appeal against the decision of the High Court judge (“the Judge”) in Suit No 193 of 2007, in which he dismissed the claim by the appellant, Mr Ng Giap Hon, for commission due in respect of placement shares in initial public offerings (“IPOs”) that were allocated to two customers of the first respondent, Westcomb Securities Pte Ltd (see Ng Giap Hon v Westcomb Securities Pte Ltd [2008] SGHC 101 (“the Judgment”)). The appellant is licensed under the Securities and Futures Act (Cap 289, 2006 Rev Ed) to deal in securities. He was, at the material time, a remisier with the first respondent and is presently a remisier with UOB Kay Hian Private Limited. The first to the third respondents form what is known as “Westcomb Financial Group” in Singapore, while the fourth respondent, Mr Choo Chee Kong, and the fifth respondent, Mr Tan Kah Koon, were, at all material times, the chief executive officer (“CEO”) of the second respondent, Westcomb Financial Group Ltd, and the executive director of the third respondent, Westcomb Capital Pte Ltd, respectively. The fifth respondent has also been a director of the first respondent since 21 June 2004.

3 The appellant averred that he was entitled to “the remuneration that remisiers [were] customarily allowed in Singapore or, if there was no customary practi[c]e, reasonable remuneration taking into account all the aspects of the transaction [concerned]”.[note: 1] He argued that “the customary rate of commission for remisiers, where [p]lacement [s]hares [were] dealt by or through the remisier, [was] 1% of the value of the [p]lacement [s]hares”.[note: 2] He also argued, inter alia, that there was “an implied duty of good faith between [him] and [the first respondent] as between agent and principal”[note: 3] [underlining in original omitted] and that “it was an implied term of the agency agreement that the [first respondent] would not do anything to deprive [him] from earning his commission”.[note: 4] The appellant further claimed that the second to the fifth respondents had wrongfully conspired with the first respondent to breach the agency agreement entered into between him (ie, the appellant) and the first respondent (“the Agency Agreement”), with the intention of causing loss to him by unlawful means.[note: 5]

4 Given that the trial was bifurcated, the only issue that arose for consideration before the Judge was the question of liability. As mentioned at [2] above, the Judge found in favour of the respondents.

The facts

5 The first respondent is a well-known stockbroking company and holds a capital market services licence which permits it to deal in securities and provide custodial services for securities. The second respondent, an investment holding company listed on the Singapore Exchange Ltd (“SGX”), is the parent company of both the first and the third respondents. The third respondent deals in securities as well as provides corporate finance advisory services. As mentioned earlier (at [2] above), the first to the third respondents form what is known as “Westcomb Financial Group” in Singapore; this group has been involved in the launch of numerous IPOs in Singapore as manager, underwriter and placement agent.

6 The appellant has been working as a remisier in Singapore since 2000. As Prof Walter Woon observed in his article, “The Legal Position of a Remisier” (1992) 4 SAcLJ 346, the position of remisiers in Singapore and Malaysia is unique (at 346):

A remisier is basically a self-employed person whose job is to buy and sell shares on behalf of clients. Remisiers function at the retail end of the market. They do not get [Central Provident Fund] contributions from any employer, even though they are affiliated to stockbroking companies. They are not in any sense employed by the stockbroking companies. Rather, they are allowed to use the facilities of the stockbroking companies … in return for payment of a fee. A remisier is remunerated through commission on transactions, a proportion of which is taken by the stockbroking firm for [giving the remisier] the privilege of using [its] facilities. As far as the remisier is concerned, the people who trade through him are his clients, not the firm’s.

7 However, the learned author also clarified, as follows (ibid):

In the light of the above practice, one might conclude that remisiers are in business for themselves and insofar as they act as agents, they are agents of the clients rather than of the stockbroking firms. This conclusion is in fact misleading.

If one looks at a remisier’s agreement with a stockbroking firm, one is immediately struck by the fact that it is titled an “Agency Agreement”. Paragraph 1 [of the sample agreement set out in Appendix IV of the Bye-Laws of the Stock Exchange of Singapore Ltd] provides that “the Company [ie, the stockbroking firm] hereby appoints the remisier … as agent of the Company to trade and deal in … securities … in the name of the Company …”[.] Paragraph 12 again repeats that the remisier is an agent. The Stock Exchange’s Bye-Laws also provide that remisiers are agents of the broking firms: see Bye-Law V, clauses 2 and 3. The legal result of all these provisions is that remisiers are agents of the stockbroking firms with which they are affiliated, rather than of the client (as one might expect if one examine[s] the way [in which] remisiers conduct their affairs).

[emphasis added]

8 On 3 May 2005, the appellant and the first respondent entered into the Agency Agreement, which was precisely the type of agreement described by Prof Woon above. In particular, the first respondent appointed the appellant as its agent to trade and deal in stocks, shares and other marketable securities (hereinafter collectively referred to as “securities”). The Agency Agreement, a six-page document, set out, inter alia, the duties of the remisier (ie, the appellant), the rights and duties of the stockbroking firm (ie, the first respondent) as well as the remisier’s liability in respect of transactions dealt by or through the remisier in the name of the stockbroking firm. The salient clauses in the Agency Agreement (particularly relevant for our purposes) include the following:[note: 6]

6. Commission

The Company [ie, the first respondent] shall pay the Remisier [ie, the appellant] a commission equivalent to 40% of the commission charged by the Company to clients on transactions that are dealt by or through the Remisier in the name of [the] Company during the period twelve months from the date of commencement of this Agreement. Thereafter, the commission rate will be adjusted to 50% of the commission charged by the Company to clients on transactions that are dealt by or through the Remisier in the name of [the] Company.

12. Relationship with Remisier

12.1 The Remisier shall at all times be an agent of the Company in dealing in securities. Nothing in this Agreement shall be construed as creating an employer-employee relationship between the Company and the Remisier and accordingly the Remisier shall not be entitled to or [shall not] claim any employment benefits whatsoever.

18. Entire Understanding

This Agreement embodies the entire understanding of the parties and there are no provisions, terms, conditions or obligations, oral or written, expressed or implied, other than those contained herein. All obligations of the parties to each other under previous agreements ([if] any) are hereby released, but without prejudice to any rights which have already accrued to either party.

9 The events that arose in 2006 (and which are relevant in the context of the present appeal) were of considerable dispute. The appellant contended in his second amended statement of claim filed on 16 November 2007 (“the Statement of Claim”) that, on or around 8 February 2006, he met one Julian Lionel Sandt (“Sandt”), the CEO of Orchid Capital Limited (“Orchid Capital”), an Australian listed company, during a networking event.[note: 7] The appellant submitted that, at the networking event, Sandt got along with him very well and revealed that he was looking for investment opportunities with a “particular interest in taking up … [p]lacement [s]hares”.[note: 8] After the appellant indicated that he was a representative of the first respondent, Sandt agreed to be the appellant’s client in his personal capacity and further confirmed that Orchid Capital and/or its subsidiaries would eventually be clients of the appellant. The appellant further alleged that Sandt informed him during this networking event that he (Sandt) was the representative of an Austrian fund investment company known as AG (“Aktieninvestor”), but did not specify whether he was a formal representative of that company or only had informal connections with it. The appellant claimed that Sandt represented on or around March 2006 that Aktieninvestor would be the appellant’s client as well. The respondents, on the other hand, denied that Sandt and the appellant had as close a relationship as the appellant averred. The respondents contended, firstly, that Sandt’s relationship with the fourth and the...

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