Poh Chiak Ow v United Overseas Bank Ltd

• Jurisdiction: Singapore
• Judge: Andre Maniam JC
• Judgment Date: 30 December 2020
• Neutral Citation: [2020] SGHC 275
• Court: High Court (Singapore)
• Docket Number: Suit No 762 of 2019
• Published date: 05 January 2021
• Year: 2020
• Hearing Date: 14 August 2020,12 August 2020,23 October 2020,13 August 2020
• Plaintiff Counsel: Tan Li-Chern Terence (Robertson Chambers LLC) and Thangavelu (Trident Law Corporation) (instructed)
• Defendant Counsel: Ng Yeow Khoon and Ho Wei Liang Sherman (Shook Lin & Bok LLP)
• Subject Matter: Contract,Misrepresentation,Fraudulent,Tort,Negligence,Duty of care,Vicarious liability
• Citation: [2020] SGHC 275

Andre Maniam JC: Introduction

“Fraud unravels everything …” declared Denning LJ (as he then was) in Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712 (recently cited in Facade Solution Pte Ltd v Mero Asia Pacific Pte Ltd [2020] 2 SLR 1125 at [22]).

The central issue in the present case is whether the plaintiff (“Mr Poh”) had sufficiently pleaded and proved his allegation of fraud.

In 2017, Mr Poh invested US$500,000 in a company (or group of companies) named “PixelTrade”. The money came from Mr Poh’s account with the defendant bank (“UOB”). He instructed UOB to transfer the money to PixelTrade (UK) Ltd (which also had a UOB bank account then): a sum of US$200,000 in October 2017, and a further sum of US$300,000 in December 2017. From 2018 onwards, Mr Poh tried to recover his investment from PixelTrade, but he did not get any of his money back.

Mr Poh blamed the investment in PixelTrade on his UOB relationship manager (“Mr Wong”). He claimed Mr Wong had defrauded him by making various false representations about investing in PixelTrade.

Mr Poh did not, however, sue Mr Wong. Instead, he sued UOB on the basis that it was vicariously liable for Mr Wong’s alleged fraud. He also claimed that UOB had been negligent in not protecting him against the loss of the money that he had transferred to PixelTrade.

Background

Mr Wong was Mr Poh’s relationship manager for the period of February 2017 to August 2018, when Mr Wong left UOB (as he was going for a medical procedure the following month). They grew to become friends.

With Mr Wong’s involvement, Mr Poh made three bond investments through UOB, before the PixelTrade investment.

On the day Mr Poh made the first transfer to PixelTrade, he made a fourth bond investment through UOB.

The four bonds Mr Poh invested in were issued by financial institutions, but they were not risk-free: Mr Poh was still taking a risk on the creditworthiness of the issuer. Neither were the bonds guaranteed by UOB.

Mr Poh, however, claims that he was completely risk-averse, unwilling to put the amounts he invested through UOB at any risk whatsoever.¹ Mr Poh says he informed Mr Wong of this, which Mr Wong denies.

Mr Poh’s pleadings The alleged Representations

Mr Poh claims that he was induced to invest in PixelTrade because Mr Wong had made the following representations:² One of UOB’s approved investment products was a product called PixelTrade (the “PixelTrade Product”) (the “1st Representation”). PixelTrade was an established company that loaned monies to institutions (the “2nd Representation”). The PixelTrade Product had, over the preceding seven years, garnered good yields and/or returns on investment averaging 7–8% per annum for UOB’s privilege banking clients who had invested in the PixelTrade Product (the “3rd Representation”). UOB guaranteed the return and/or repatriation of any principal amounts invested in the PixelTrade Product, and that upon a request by Mr Poh for the return and repatriation of any principal amounts, such principal amounts would be returned and/or repatriated to him within a calendar month (the “4th Representation”). UOB was then actively recommending the PixelTrade Product to its privilege banking customers (the “5th Representation”). Even Mr Wong’s colleagues were investing in the PixelTrade Product (the “6th Representation”).

Mr Poh claims that his further investment in PixelTrade in December 2017 was also made on Mr Wong’s recommendation, with Mr Wong saying that “[UOB] was of the view that the PixelTrade Product was continuing to garner handsome yields and returns on investment” (the 7th Representation).³ I shall refer to the 1st to 7th Representations collectively as “the Representations”.

UOB and Mr Wong deny that any of the seven Representations was made.

The alleged fraud

Mr Poh accuses Mr Wong of fraud.⁴ As such, he needs to prove (among other things) that the Representations were false.

UOB acknowledged that there was no “PixelTrade Product” among UOB’s approved investment products. As such, the 1st Representation would be false (if Mr Wong had made it), and as a corollary, the 4th, 5th and 7th Representations would also be false.

It was also UOB’s position that Mr Poh’s investment in PixelTrade was never guaranteed by UOB. The 4th Representation would thus be false (if Mr Wong had made it).

However, the 2nd, 3rd and 6th Representations could well be true, even if there were no UOB-approved PixelTrade investment product (contrary to the 1st Representation), or even if UOB was not guaranteeing Mr Poh’s investment in PixelTrade (contrary to the 4th Representation). Indeed, Mr Poh made no attempt to prove that the 2nd, 3rd and 6th Representations were false. Absent proof of falsity, even if Mr Wong had made these three representations, that would not amount to fraud. The fact that Mr Poh did not seek to prove that three of the seven Representations were false casts doubt on his claim that he was defrauded.

The 5th Representation (that UOB was recommending PixelTrade to its customers) and the 7th Representation (that UOB had a view on PixelTrade) are essentially dependent on there being a UOB-approved PixelTrade investment product in the first place (which is the subject of the 1st Representation).

The 4th Representation (that UOB guaranteed the return of any money invested in PixelTrade) is also dependent on there being a UOB-approved PixelTrade investment product, since UOB would not have guaranteed an investment that it had not approved in the first place.

The 1st Representation (that there was a UOB-approved PixelTrade investment product) is thus of prime importance to Mr Poh’s fraud case.

His pleaded case on fraud reinforced this:⁵

In the event that the PixelTrade Product was not one of the Defendant’s approved investment products, the Plaintiff will aver that [the Representations] were made by Mr Wong with no honest belief, and/or no reasonable grounds to believe, and/or no bona fide intention that they were true. In the alternative, [the Representations] were made by Mr Wong fraudulently, with Mr Wong well knowing that they were false and untrue; or made recklessly, not caring whether they were true or false. [emphasis added]

If there were a UOB-approved PixelTrade investment product, it follows from Mr Poh’s pleaded case that he would have no claim for fraud at all.

In evaluating Mr Poh’s claim for fraud, I will thus focus particularly on the 1st Representation, ie, that there was a UOB-approved PixelTrade investment product.

Mr Poh’s claims against UOB

Mr Poh says that UOB is vicariously liable because Mr Wong was UOB’s employee⁶ or agent.⁷ Alternatively, Mr Poh claims against UOB in negligence. According to Mr Poh, UOB owed a duty of care to him “to act with reasonable care, or ordinary care and skill, in handling remittance monies and to protect such monies from pure economic loss. This duty arose when [Mr Poh] remitted monies to the PixelTrade Account, and [UOB] processed and handled such remittances”.⁸ He says that UOB breached that duty of care “in failing to take reasonable care … to ensure that its clients’ monies, including [Mr Poh’s] monies, were properly and adequately protected, or … to ensure that its clients’ monies might not be misappropriated or entirely lost, as in this instance.”⁹

Mr Poh does not assert a claim in contract on the basis that UOB guaranteed the return of any money invested in PixelTrade, even though that was the subject of the 4th Representation. Mr Poh never called upon UOB to honour any such guarantee.

The evidence The shift in Mr Poh’s case at trial

None of the Representations was in writing or evidenced in writing. The contemporaneous WhatsApp messages between Mr Poh and Mr Wong do not refer to any of the Representations. Mr Poh’s case thus rested on his own assertion that the Representations had been made,¹⁰ which Mr Wong denied.

There was, however, a sea change in Mr Poh’s case between what was pleaded and stated in his affidavit of evidence-in-chief (“AEIC”), and what was advanced in his opening statement and at trial.

Mr Poh’s pleaded case (which he sought to support in his AEIC) was that Mr Wong had made the 1st Representation that there was a UOB-approved PixelTrade investment product.

In his opening statement and at trial, however, this appeared to shift to an allegation that Mr Wong had not corrected Mr Poh’s mistaken belief that his PixelTrade investment was UOB-approved.

Mr Poh’s opening statement states at paras 22–23:

Mr Wong made various representations in relation to the PixelTrade Product which led [Mr Poh] to believe that the PixelTrade Product was [UOB’s] approved investment product. …

If the PixelTrade Product was not [UOB’s] approved investment product, Mr Wong neglected and failed to inform [Mr Poh] of the same, whether in writing or otherwise.

[emphasis added]

The assertion that Mr Wong neglected or failed to correct Mr Poh’s belief that his PixelTrade investment was UOB-approved has not been pleaded. Moreover, it is an allegation of negligence, rather than of fraud.

The line of cross-examination taken by Mr Poh’s counsel with Mr Wong made the shift in Mr Poh’s case even more obvious:¹¹ Q … essentially, he had thought it was a UOB-approved investment because you’d never mentioned otherwise …

The shift was complete: instead of saying that Mr Wong had fraudulently represented that there was a UOB-approved PixelTrade investment product, Mr Poh was instead saying that that was what he had believed, and that Mr Wong did not correct that mistaken belief. Mr Poh thus appeared to have abandoned his allegation that Mr Wong had fraudulently made the 1st Representation, even though that was the lynchpin of his pleaded allegation of fraud. Be that as it may, I will go on to consider whether Mr Poh’s pleaded allegation of fraud is made out on the evidence.

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