Raffles Money Change Pte Ltd (formerly known as Honest Money Changer Pte Ltd) v Skandinaviska Enskilda Banken AB (Publ) (formerly known as Skandinaviska Enskilda Banken AB)

JudgeChan Sek Keong CJ
Judgment Date17 February 2009
Neutral Citation[2009] SGHC 37
Citation[2009] SGHC 37
Defendant CounselChew Ming Hsien Rebecca and Nigel Pereira (Rajah & Tann LLP)
Published date19 February 2009
Plaintiff CounselN Sreenivasan and Palaniappan Sundararaj (Straits Law Practice LLC) and Lin Ming Khin (Donaldson & Burkinshaw)
Date17 February 2009
Docket NumberDistrict Court Appeal No 33 of
CourtHigh Court (Singapore)
Subject MatterCheques,When paid funds might be debited by bank on discovery of fraud,Relevance of change in position by recipient of mistaken payment,Forged,Banking,What constituted "complete and irreversible payment" by bank

17 February 2009

Judgment reserved

Chan Sek Keong CJ:


1 This was an appeal by Raffles Money Change Pte Ltd (“the Appellant”) against the decision of the District Judge (“the DJ”) in District Court Suit No 1465 of 2006 (see Raffles Money Change Pte Ltd v Skandinaviska Enskilda Banken AB (Publ) [2008] SGDC 70 (“the GD”)). The DJ had dismissed the Appellant’s claim against Skandinaviska Enskilda Banken AB (Publ) (“the Respondent”) for repayment of €39,982.71 which the Appellant claimed had been wrongfully debited against its account by the Respondent.

Facts of the case

2 The Appellant operated a foreign currency account with the Respondent subject to the Respondent’s general terms and conditions for operating such accounts (“the General Terms”), the relevant clauses of which are as follows:


1.23 Cheques, financial instruments received for collection will be credited after the Bank receives payment provided the Bank may, however at its sole discretion give immediate credit for cheques, provided that the Bank reserves the right to debit such credited amount from the account if the cheques are dishonoured.


13.1 The Bank has the right to debit the customer’s account with drafts, cheques or similar instruments previously negotiated for the customer’s account, in case of their non-payment. Pending the settlement of the debit balance arising out of such debit entries, the bank retains a claim for payment of the face amount of the instrument plus related expenses against any party to the instrument.

3 On 23 September 2005, the Appellant presented a bank draft dated 1 September 2005 (“the Euro Draft”) drawn on the Bank of Ireland, Glassen Dublin, in the sum of €40,000 to the Respondent for collection. The Respondent sent the Euro Draft to its wholly-owned subsidiary, SEB AG Merchant Banking in Frankfurt (“the Frankfurt subsidiary”), for clearance and collection. On 6 October 2005, Ms Chua Mui Suan (“Ms Chua”), an employee of the Respondent, called the Appellant’s managing director, one Mr Lim Joo Boon (“Lim”), and informed him that the Respondent would be crediting the Appellant’s account with the value of the draft, less bank charges (ie, the net amount of €39,982.71) on 7 October 2005. This was done. Subsequently, on 12 October 2005, the Respondent informed the Appellant that the Euro Draft was counterfeit and that the drawee bank would not be paying the draft. The Respondent accordingly debited the Appellant’s account in the sum of €39,982.71.

4 The Appellant then commenced these proceedings against the Respondent to recover the amount of €39,982.71 on the ground that the Respondent had wrongfully debited its account. The Respondent relied on cll 1.23 and 13.1 of the General Terms. The Appellant’s arguments before the DJ were as follows:

(a) Clauses 1.23 and 13.1 of the General Terms were exclusion clauses and infringed the Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) (“UCTA”) as they were unfair and unreasonable.

(b) The Respondent misrepresented to the Appellant the nature of the payment made to the Appellant on 7 October 2005 and was thereby estopped from relying on cll 1.23 and 13.1 of the General Terms.

(c) The Respondent breached its contractual duty (as well as its duties under the law of torts) to act with reasonable skill and diligence.

(d) The Respondent had debited the Appellant’s account wrongfully.

The DJ’s decision

The Appellant’s arguments

5 The DJ rejected all the Appellant’s arguments. As the Appellant has not appealed against the DJ’s ruling that cll 1.23 and 13.1 of the General Terms were not exclusionary clauses and therefore did not infringe UCTA, this judgment will deal only with the remaining three grounds which the Appellant has raised before me.

Misrepresentation giving rise to estoppel

6 On the issue of misrepresentation giving rise to an estoppel, the DJ stated that the law required such a representation to be “unambiguous” or “unequivocal” (see the GD at [16]). The DJ found on the evidence that, on 6 October 2005, Ms Chua had merely informed Lim that the sum of €39.982.71 would be credited to the Appellant’s account and that she had not informed Lim that the Respondent would not be relying on its contractual rights under cll 1.23 and 13.1. This was also not the first time this “standard operating procedure” had been followed by the Respondent in calling the Appellant to inform it of the clearance of foreign currency cheques and bank drafts whenever funds were being credited to its account. The DJ also found that, on 7 October 2005, the Respondent had sent an online statement to the Appellant saying that the amount credited on the same day was “subject to final payment”, which Lim confirmed having received. Accordingly, the DJ held that there was no misrepresentation giving rise to an estoppel.

7 The DJ also held that, in any event, even if there was a misrepresentation on 6 October 2005, the Appellant did not rely on it to make payment of the said amount to its customer on 7 October 2005 as Lim also admitted that he relied not only on oral communications from the Respondent but also on online statements. In the present case, the online statement had contained a caution that the crediting was subject to final payment.

Breach of duty in contract and tort

8 With respect to the allegations of breach of duty by the Respondent in contract and tort, the DJ dismissed them on the ground that they were no different from the allegation of misrepresentation giving rise to estoppel.

Wrongful debiting of account

9 The DJ considered argument (d) (see [4] above) as the key plank of the Appellant’s case. It was argued by the Appellant that since the Frankfurt subsidiary had sent a SWIFT (Society for Worldwide Interbank Financial Telecommunication) message to the Respondent’s Singapore branch (“the Singapore branch”) crediting its account with €40,000, it meant that the crediting was a payment to the Singapore branch that was “complete and irreversible”, and therefore the resulting payment by the Respondent to the Appellant was also “final and irrevocable”. It was also argued that the Respondent had adduced no evidence that the Frankfurt subsidiary was entitled to reverse the payment to the Singapore branch, and for this reason cll 1.23 and 13.1 of the General Terms were not applicable, and that the caution “subject to final payment” in the online statement sent by the Respondent to the Appellant was meaningless as a unilateral contractual term.

10 The Respondent objected to this argument on the ground that it was not pleaded, which the DJ upheld. But, in any event, the DJ was of the view that the Appellant’s arguments relied heavily on the interpretation, effect and implication of the SWIFT message sent by the Frankfurt subsidiary on which the Appellant had led no evidence. The DJ distinguished the New Zealand Court of Appeal case of Dovey v Bank of New Zealand [2000] 3 NZLR 328 (“Dovey”) (which involved SWIFT transactions) on the ground that both parties there had led expert evidence on the effect of a message sent under SWIFT. Furthermore, the Appellant had adduced no evidence as to what it meant by a payment being “complete and irreversible” or “final and irrevocable”. The DJ also held that the decisions relied upon by the Appellant to support its argument, viz, Momm v Barclays Bank International Ltd [1977] QB 790 (“Momm”) (payment from one customer’s account to another customer’s account within the same bank) and Royal Products Ltd v Midland Bank Ltd and Bank of Valletta Ltd [1981] 2 Lloyd’s Rep 194 (transfer of money between separate bank accounts at separate banks), were not relevant.

Remaining issues

11 The Appellant also argued that cll 1.23 and 13.1 did not apply unless the Respondent had made immediate payment, which it had not done in the present case. The DJ rejected this argument on the ground that, under cl 1.23, it was not mandatory for the Respondent to give immediate credit as the giving of such credit for cheques was clearly expressed to be discretionary. The DJ also rejected, as illogical and irrational, the Appellant’s argument that, as cl 13.1 was expressed to be applicable to negotiable instruments, it could not apply to the Euro Draft which was a forgery and therefore not a negotiable instrument.

12 Finally, the DJ held that, even if she were to accept the arguments of the Appellant (which she did not), its claim would still fail as it had not produced any evidence that it had paid the sum of €39,982.71 to its customer. Under cross-examination, Lim admitted that the Appellant had no documentary evidence to show that it had paid €39,982.71 to its agent in Kuala Lumpur for onward transmission to its customer or its customer’s beneficiary, as the Appellant had alleged. The Appellant’s internal documents also did not show that payment had in fact been made or that its customer had received such payment.

13 For all the foregoing reasons, the DJ dismissed the Appellant’s claim with costs.

Issues in this appeal

14 In this appeal, the Appellant has argued that the DJ was wrong in holding that the Respondent was entitled to debit the Appellant’s account in the sum of €39,982.71 on the following grounds:

(a) Clauses 1.23 and 13.1 of the General Terms had no application to the facts of the case.

(b) The Respondent had made a misrepresentation of fact (that the payment made by the Respondent into the Appellant’s account was final and irreversible), which led the Appellant to rely on it to its detriment (by paying the funds to its customer). Accordingly, the Respondent was estopped from reversing the payment to the Appellant.

(c) A SWIFT message received by the Respondent from the Frankfurt subsidiary on 6 October 2005 (“the SWIFT message”) was proof that the Respondent had received payment from the Frankfurt subsidiary and the Respondent had failed to disprove that the payment was not complete...

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