Orient Centre Investments Ltd v Société Générale

• Jurisdiction: Singapore
• Judgment Date: 09 May 2007
• Date: 09 May 2007
• Docket Number: Civil Appeal No 62 of 2006
• Court: Court of Appeal (Singapore)

Orient Centre Investments Ltd and another

Plaintiff

and

Société Générale

Defendant

[2007] SGCA 24

Chan Sek Keong CJ

and

Andrew Phang Boon Leong JA

Civil Appeal No 62 of 2006

Court of Appeal

Civil Procedure–Pleadings–Striking out–Principles to be applied in striking out application–Whether too late in proceedings to order striking out–Contract–Contractual terms–Warranties and representations–Whether express terms in bank account opening documents binding on parties hence negating account holders' allegations against bank

Orient Centre Investments Ltd (“Orient”) and Teo Song Kwang alias Richard (“Teo”) (“the appellants”) brought the present appeal against the decision of Lai Siu Chiu J (“the Judge”) in striking out their claim against the respondent, Société Générale (“SG”), for damages for breach of representations, breach of fiduciary duties and other duties and for negligence in relation to investments in certain structured financial products. The claim in question was part of a larger claim for damages the appellants alleged they had suffered in relation to a multitude of investments undertaken through an investment account (“the Investment Account”) they opened with SG in May 1998. They alleged that they had been induced to do so by certain representations made by one Kenneth Goh Tzu Seoh (“Goh”), their investment advisor and an employee of SG at the material time. The representations were that: (a) SG was rated one of the top five banks in the world; and (b) SG had a special strategy that would ensure: (i) preservation of Teo's capital; and (ii) a guaranteed return of 10% per annum on Teo's deposits.

The present appeal was only concerned with the structured products and more specifically the first four (the Bangkok Bank Equity Linked Deposit, the Tiger Note 2, the Tokyo Deposit and the Tokyo Plus Deposit) as the fifth (the USD/4 Funds Deposit) was purchased after Goh left SG's employment (in May 2000). In this regard, there were clauses both in the general agreements executed by Orient when opening the Investment Account as well as the specific agreements governing the acquisition of the individual products which contained essential representations and warranties from Orient to SG that: (a) it had not relied upon any representations other than those explicitly set forth in the relevant documents; (b) it was not in any fiduciary relationship with SG; (c) it had concluded the transaction after having carried out analysis of the transaction, particularly in the light of its financial capacity and objectives; and (d) it was aware that the products were not capital guaranteed.

In August 2004, the appellants commenced an action against SG and Goh for losses suffered by Orient in the Investment Account. Soon after, SG made two applications to strike out the statement of claim, but withdrew them after the appellants made extensive amendments therein. However, despite this, SG found Orient's claims “studiedly broad and impossibly vague” and, as a result, had to apply to court for further and better particulars and discovery on four separate occasions, from May 2005 to January 2006. Finally, in March 2006, SG applied to court to strike out all the appellants' claims on the ground that the pleadings read with the particulars, did not disclose any cause of action against SG. The assistant registrar granted SG's application in part. SG appealed against this order. The Judge allowed the appeal partially and struck out the appellants' claim for losses arising from its investments in the structured products.

On appeal, the appellants had contended that the Judge was wrong in striking out their claims with respect to the structured products on the following grounds: (a) in reaching a finding on the structured products before the underlying facts common to all causes of action had been adjudicated upon; (b) in reaching the conclusion that since the transactions carried out were authorised, it negated the plea of negligence; (c) in reaching the finding that the Investment Account was a non-discretionary one by reason solely of the specific agreements (relating to the Investment Account and the structured product transactions) and not by any weight on the manner in which the transactions had been carried out by Goh; (d) in not considering that the clauses relied on by SG to exclude liability and to exclude a fiduciary relationship were actually non-reliance clauses; (e) in allowing SG to make the application to strike out so late in the day; and (f) in holding that SG had satisfied the principles justifying a striking out at this stage of the proceedings.

Held, dismissing the appeal:

(1) The combined effect of the express general and specific terms and conditions applicable to the structured products provided an insuperable obstacle to any claim by the appellants against SG based on the alleged breach of representations or duties, fiduciary or contractual, or on negligence on the part of Goh. In the face of Orient's own representations and warranties with respect to each of the structured products, it was not possible for the appellants to argue that Orient had relied on any alleged representation on the part of Goh that he would ensure that the appellants' capital would be preserved and that it would earn a return of 10% per annum on each deposit. It was therefore unnecessary for the Judge to determine the factual merits of the appellants' other causes of action in relation to the structured products before determining the legal merits of SG's defence: at [50].

(2) Even if Goh had made the representation concerning capital preservation and income return, it would not have assisted the appellants in relation to the structured products, as they had represented and warranted that they did not rely on any representation given by any of SG's officers: at [51].

(3) The delay in SG making its application for striking out was due to the generality and vagueness of the appellants' claim which were such that SG had to make seven interlocutory applications for discovery and further and better particulars. In the premises, it was not too late for SG to make its striking-out application on 1 March 2006: at [60] and [61].

(4) SG had satisfied the threshold requirements of O 18 r 19 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), having regard to the representations and warranties made by the appellants for the benefit of SG and also the fact that the appellants had not been able to show any loss arising from its investment in the structured products: at [63].

(5) In relation to the structured products, the appellants were unable to particularise any such loss. Given the specific terms of Goh's alleged representation of capital preservation and a 10% return on capital, the failure or inability of the appellants to particularise their losses supports the conclusion that they had suffered no loss at all. For this reason alone, the appellants' claim must fail: at [66].

Bottin International Investments Limited v Venson Group plc [2006] EWHC 3112 (Ch) (folld)

Chok Boon Hock v Great Eastern Life Assurance Co Ltd [1998] 2 SLR (R) 878; [1999] 1 SLR 344 (folld)

Connell v National Companies and Securities Commission (1989) 15 ACLR 75 (folld)

E A Grimstead & Son Ltd v Francis Patrick McGarrigan (27 October 1999) (Court of Appeal, UK) (refd)

Gabriel Peter & Partners v Wee Chong Jin [1997] 3 SLR (R) 649; [1998] 1 SLR 374 (folld)

Kim Hok Yung v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2000] 2 SLR (R) 455; [2000] 4 SLR 508 (folld)

Lowe v Lombank Ltd [1960] 1 WLR 196 (refd)

Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] 2 Lloyd's Rep 511 (refd)

Tapematic SpA v Wirana Pte Ltd [2002] 1 SLR (R) 44; [2002] 4 SLR 953 (folld)

Valse Holdings SA v Merrill Lynch International Bank Ltd [2004] EWHC 2471 (refd)

Evidence Act (Cap 97,1997 Rev Ed)s 94

Rules of Court (Cap 322,R 5, 2006 Rev Ed)O 18r 19

Unfair Contract Terms Act (Cap 396, 1994 Rev Ed)

Misrepresentation Act 1967 (c 7) (UK)ss 2, 3

Unfair Contracts Act 1977 (c 50) (UK)

N Sreenivasan (Straits Law Practice LLC) and Edwin Seah Li Ming (Edwin Seah & K S Teo) for the appellants

Suresh Nair and Victoria Xue (Allen & Gledhill) for the respondent.

Judgment reserved.

Chan Sek Keong CJ

(delivering the judgment of the court):

1 In this appeal, the appellants are Orient Centre Investments Ltd (“Orient”) and Teo Song Kwang alias Richard (“Teo”). They have appealed against the decision of Lai Siu Chiu J (“the Judge”) in striking out their claim against the respondent, Société Générale (“SG”), for damages for breach of representations, breach of fiduciary and other duties and for negligence in relation to investments in certain structured financial products.

2 This claim is part of a larger claim for damages which the appellants have allegedly suffered in a multitude of investments which they had made whilst relying on the advice of the second defendant, Kenneth Goh Tzu Seoh (“Goh”), their investment adviser and an employee of SG at the material time. The direct customer of SG was Orient but Teo has claimed that Orient was his nominee and alter ego.

Background

3 Orient opened an investment account (“the Investment Account”) with SG on 18 May 1998. The appellants have alleged that Orient was induced to do so by certain representations made to Teo by Goh, who was then an assistant vice-president of SG and a client relationship manager in SG's private banking division. Goh resigned from SG on 4 May 2000. Subsequently, on 17 July 2000, he was appointed by Orient as its authorised signatory of the Investment Account after he had represented to Teo that if he remained as Orient's investment adviser he would be able to recover the losses then suffered by Orient. He is not a party to this appeal, but in his defence he has denied all the said allegations of the appellants against him.

4 The...