Orient Centre Investments Ltd and Another v Societe Generale
Jurisdiction | Singapore |
Judge | Chan Sek Keong CJ |
Judgment Date | 09 May 2007 |
Neutral Citation | [2007] SGCA 24 |
Court | Court of Appeal (Singapore) |
Published date | 04 July 2007 |
Year | 2007 |
Plaintiff Counsel | N Sreenivasan (Straits Law Practice LLC) and Edwin Seah Li Ming (Edwin Seah & K S Teo) |
Defendant Counsel | Suresh Nair and Victoria Xue (Allen & Gledhill) |
Citation | [2007] SGCA 24 |
9 May 2007 |
Judgment reserved. |
1 In this appeal, the appellants are Orient Centre Investments Ltd (“Orient”) and Teo Song Kwang @ 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 Investment Account was very active during its lifetime. The appellants have claimed that they had transferred a total of about US$7.2m into the account and had invested a total of about US$9.6m, but had suffered a loss in excess of US$1m in investing in the following types of financial products, viz: (a) equities and warrants; (b) options; (c) certain structured financial products (“the structured products”); (d) foreign exchange transactions; and (e) derivatives. The banking relationship between Orient and SG was terminated by a notice from SG expiring 45 days from 26 April 2002.
5 On 11 August 2004, the appellants commenced an action claiming damages against SG and Goh for losses suffered by Orient in the Investment Account. The writ, endorsed with a statement of claim, was served on SG on 16 December 2004. SG applied to strike out the statement of claim, following which Orient amended it. The appellants did not file the amended statement of claim until 31 January 2005. On 22 March 2005, SG again applied, this time, to strike out Teo as a party to the action and also the appellants’ claim relating to the investments made after Goh had left SG’s employment and had been made Orient’s signatory of the Investment Account. The appellants reacted to this application by filing an extensively re-amended statement of claim to withdraw their claim against SG with respect to investments made after Goh had left the employment of SG, and to plead that Teo was the nominee or alter ego of Orient in its relationship with SG. This led SG to withdraw its striking out application.
6 The appellants’ claims as pleaded in the amended statement of claim were as follows:
Against SG
(a) an account of all transactions, investments, loans, purchases, sales on the Investment Account from 18 May 1998 till the date the said account was closed, showing the actual gain/losses;
(b) damages for losses arising from breach of mandate prior to 17 July 2000;
(c) damages for losses arising from breach of SG’s duty of care prior to 17 July 2000;
(d) damages for unreasonable termination of the Investment Account;
(e) interest on such sums found to be due to the appellants from such periods and at such rates as the Court shall decide;
(f) costs; and
(g) such further and other relief as this honourable Court deems fit.
Against SG and Goh jointly and severally
(a) damages for misrepresentation in respect of losses prior to 17 July 2000;
(b) damages for breach of fiduciary duties and duty of care prior to 17 July 2000;
(c) interest on such sums found to be due to the appellants from such periods as this honourable Court deems fit;
(d) costs; and
(e) such further and other relief as this honourable Court deems fit.
Against Goh
(a) damages for misrepresentation, breach of fiduciary duties and breach of duty of care in respect of losses that occurred after 17 July 2000;
(b) interest on such sums found to be due to Orient and at such rates and for such periods as this honourable Court deems fit;
(c) costs; and
(d) such further and other relief as this honourable Court deems fit.
7 SG found Orient’s claims to be “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 beginning on 20 May 2005 and ending on 23 January 2006. On 1 March 2006, SG applied to court to strike out the appellants’ claims in their entirety on the ground that the pleadings, read with the particulars, did not disclose any cause of action against SG. The assistant registrar (“AR”) struck out those portions of the appellants’ claims which were based on (a) the alleged absence of mandate in relation to the structured products, the spot or forward exchange contracts and loans in the Investment Account; and (b) the alleged wrongful termination of the Investment Account. However, the AR refused to strike out the appellants’ claims against SG based on Goh’s alleged breach of representations, fiduciary and common law duties as an investment adviser in relation to the other types of investments in the Investment Account. The appellants did not appeal against the AR’s order.
8 However, SG appealed against the AR’s order refusing to strike out the appellants’ claims in their entirety, or, in the alternative, certain specific paragraphs of the re-amended statement of claim relating to (a) misrepresentation as to the nature of the account that led to the appellants’ alleged losses; (b) breach of mandate or authority in relation to equities and warrants transactions; and (c) breach of fiduciary duties or duties as financial adviser in respect of the same. The Judge allowed the appeal partially and struck out the appellants’ claim for losses arising from its investments in the structured products. The Judge did so, on two grounds: (a) that the appellants’ pleaded causes of action contradicted Orient’s own written representations and warranties made to SG in relation to the structured products; and (b) Goh’s representations, which were alleged to have been made orally, were not admissible to contradict the written terms by reason of s 94 of the Evidence Act (Cap 97, 1997 Rev Ed). The Judge ordered that the re-amended statement of claim be amended further to remove the references to such claims, leaving intact the other pleaded causes of action.
Grounds of appeal relating to structured products
9 This appeal is only concerned with the appellants’ claim for losses in relation to the structured products. The appellants have contended that the Judge was wrong in striking out their claims with respect to the structured products on the following grounds:
(a) Ground 1 – in reaching a finding on the structured products before the underlying facts common to all causes of action have been adjudicated upon;
(b) Ground 2 – in reaching the conclusion that since the transactions carried out were authorised, it negated the plea of negligence;
(c) Ground 3 – in reaching the finding that the Investment Account was a non-discretionary account 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) Ground 4 – in not considering that the clauses relied on by SG to exclude liability and to exclude a fiduciary relationship are actually non-reliance clauses;
(e) Ground 5 – in allowing SG to make the application to strike out so late in the day; and
(f) Ground 6 – in holding that SG has satisfied the principles justifying a striking out at this stage of the proceedings.
10 Except for the first ground, the other five grounds of appeal do not need any elaboration as they are clear and specific. However, the first ground as advanced by counsel for the appellants requires some elaboration in order that the essential elements of the appellants’ case on appeal can be appreciated. There is a certain degree of obfuscation in the reference to “the underlying facts common to all causes of action” which the Judge is alleged to have failed to adjudicate upon. The thrust of those words appear to be this: the appellants’ claims for losses in the Investment Account included losses in relation to the structured products, and are based on Orient’s reliance on Goh’s representations or misrepresentations and/or as a result of Goh’s misconduct and/or negligence as Orient’s investment adviser. These are the common causes of action in relation to all the investments in the Investment Account, and until these common causes are adjudicated, ie, until it is determined whether or not Goh had committed the alleged breaches, it is premature and wrong for the Judge to decide that the appellants had no claim with respect to the structured products. To reinforce this argument, the appellants have pointed out that Goh, who was responsible for the losses suffered by the appellants, has not filed an affidavit to deny the allegations of the appellants on these matters. Because of the way counsel for the appellants has put his clients’ case, it is necessary that we examine what these common underlying facts were, and to this task we now turn.
Common facts relating to claims of appellants
Alleged representations by Goh inducing opening of account
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