Ri Jong Son v Development Bank of Singapore Ltd

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 27 March 1998
• Neutral Citation: [1998] SGHC 84
• Docket Number: Suit No 982 of 1996
• Date: 27 March 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: Palaniappan Sundararaj and Valerie Ang (Derrick Ravi & Partners)
• Citation: [1998] SGHC 84
• Defendant Counsel: Leslie Chew, Lionel Tay and Ng Yeow Khoon (Khattar Wong & Partners)for the defendants
• Court: High Court (Singapore)
• Subject Matter: Whether invalid under Unfair Contract Terms Act,ss 2(2), 11(1) Unfair Contract Terms Act (Cap 396, 1994 Ed),Whether exemption clause reasonable,Whether customer's signature on remittance form forged,Contract,Banking,Whether bank negligent in verification of customer's signature,Terms and conditions governing accounts,Whether duty unduly onerous on bank,Negligence,Whether bank absolved from liability under exemption clause,Remittance of funds from joint fixed deposit account,Whether reasonable inference that customer had knowledge of existence of operating conditions,Tort,Opening of account,Whether bank liable to customer,Whether terms unclear or ambiguous,Duty of care,Whether customer received copy of terms and conditions governing accounts,Whether bank acted without customer's mandate in debiting account,Whether bank owed duty to bring significance of terms and conditions to customer's notice,Banker and customer,Whether bank at fault

Judgment:

KAN TING CHIU J

Cur Adv Vult

The plaintiff Ri Jong Son is a North Korean national and is the general manager of the Korea Daesong Bank (KDB) in Pyongyang. The plaintiff met Tatsuo Yoshinaga (Yoshinaga) a Japanese. Yoshinaga was a director and major shareholder of Hitaka Shoji (S) Pte Ltd (Hitaka Shoji), a company incorporated in Singapore.

2.They had discussions which led to an agreement that the KDB and Hitaka Shoji would engage in a joint venture to deal in precious metals in Singapore.

3.In furtherance of the agreement, a joint fixed deposit account in the names of the plaintiff and Yoshinaga was opened with the defendants on 1 August 1994. The account required the signatures of the plaintiff and Yoshinaga for its operation. The mailing address for the account was Yoshinaga`s address in Tokyo. The KDB made a payment of [yen ]100m through the Ashikaga Bank Ltd of Tokyo into the account on 9 February 1994. The [yen ]100m was placed into the joint account from 10 February to 13 February.

4.On 10 February 1994, the defendants received remittance instructions purportedly signed by the plaintiff and Yoshinaga to transfer the [yen ]100m and accrued interest into an account Hitaka Shoji had with the defendants (DB12). The defendants complied with the instructions and transferred the [yen ]100m and accrued interest into Hitaka Shoji`s account on 13 February. The money was subsequently transferred out from Hitaka Shoji`s account.

5.In this action the plaintiff says that his signature on the remittance instructions was forged and he only learnt of the transfer in July 1995. He seeks a declaration that the withdrawal of [yen ]100m was without authority and is of no effect. He claims that the defendants had debited the account without his instructions, and alternatively, that they were negligent in debiting the account.

6.In their defence, the defendants did not address the issue of authority except by the standard denial of each and every allegation in the statement of claim. The defendants referred to the exemption clause and presumption clause in cll 7(b)(iii) and 16(a) of the terms and conditions governing accounts (amended defence paras 3.4, 3.6, 3.7 and DB77-80) and contended that they are absolved from liability by these provisions. I will refer to the effect and application of these provisions later.

7.The plaintiff`s reply (paras 3-6) is that the Terms and Conditions did not govern the account because they were not furnished to him or brought to his notice, because the clauses were unclear and ambiguous, and because they were inoperative under the Unfair Contract Terms Act (Cap 396, 1994 Ed) as they were unfair and unreasonable.

8. Opening of the account

The parties` versions of the opening of the joint account on 1 August differed. According to the plaintiff, he and another officer of the KDB went to the defendants` offices in Shenton Way with Yoshinaga, Yoshinaga`s employee Mohamed Faruk, another Korean Bang Ryung Gu and another employee of Yoshinaga. At the bank, he handed his passport for his particulars to a bank officer to be recorded. The officer requested him and Yoshinaga to sign an application form and a signature verification card. He knew that the mailing address for the joint account was Yoshinaga`s address in Japan (notes of evidence p 10E-F) and did not speak to the bank officer beyond ensuring that his signature and Yoshinaga`s signature were needed to operate the account. After the account was opened, he was given a copy of the account application form and a cheque book, and no other documents.

9.The plaintiff added that he did not know about any terms and conditions for the operation of the account, and that he did not ask Yoshinaga or the bank officers about them (notes of evidence pp 18E-19B). He did not know that there would be such terms and conditions (notes of evidence pp 4E-5A) and had not given thought to that (notes of evidence p 5E) although there would be such conditions when an account is opened in North Korea (notes of evidence p 4C).

10.However he also said (notes of evidence p 19B-D)

I thought if someone opens an account, the bank must explain the terms and conditions before opening the account.

and

At that time, I did not know if DBS had this kind of terms and conditions, so I did not ask for the bank to explain the terms and conditions. If some terms are not so good, I would take some action.

This showed that he knew or expected that there would be conditions for the operation of the account that he opened with Yoshinaga.

11.When asked if he thought about asking for the terms and conditions so that he can forward them to the KDB, he evaded the question and said

DBS is one of the world`s biggest banks. I never expected this to happen - that someone withdraw my money with a fake signature (notes of evidence p 20B-C).

12.Goh Rong Kai was the officer who attended to the opening of the account. He claimed he can remember that event specifically because the plaintiff was and continued to be the only North Korean that he had dealt with (affidavit of evidence-in-chief of Goh Rong Kai, para 5), but he showed himself to be an unsatisfactory witness.

13.His evidence was that the plaintiff and Yoshinaga went with Mohamed Faruk to open the account. He deposed in his affidavit of evidence-in-chief (para 6) that Mohamed Faruk `identified himself as being an associate of both the plaintiff and Tatsuo and also an employee of Hitaka Shoji ` In court, he said that Mohamed Faruk did not state his relationship to them, and that he had obtained it from his computer (notes of evidence pp 109D-110A). He then changed his evidence in re-examination and said that Mohamed Faruk told him he was an associate of the plaintiff and Yoshinaga (notes of evidence p 114B-C), further underlining his inconsistency and undermining his credibility.

14.His evidence on the circumstances in which the Japanese mailing address was recorded also varied. He deposed in his affidavit of evidence-in-chief (para 11) that

I remember that I had at the material time found it to be very unusual for the plaintiff to instruct the defendants to send all mail/correspondence to an address in Japan when the plaintiff was himself a North Korean. I had, in fact, checked with the plaintiff to ascertain that he wanted all the mail/correspondence to be sent to Japan. The plaintiff confirmed the aforesaid position and I remember the plaintiff telling me that it would be inconvenient for him if the defendant were to send any mail/correspondence to him in North Korea.

15.He agreed with the plaintiff`s counsel that the plaintiff did not speak to him, and explained that

When I told him Mr Ri the mail would be sent to Japan, I will take it no mail will be sent to Korea. I take it as the norm - that a foreigner does not want mail to be sent to his address (notes of evidence p 107E-F).

16.He also deposed (affidavit of evidence-in-chief para 14) that he handed to the plaintiff and Yoshinaga each a copy of the defendants` terms and conditions governing accounts (DB77-80). This part of his affidavit evidence was not contradicted by his evidence in court that he handed over the terms and conditions without explaining them to the plaintiff and Yoshinaga (notes of evidence pp 111B-C, 112A-B).

17.Were the Terms and Conditions handed to the plaintiff? The defendants say they were, relying on the evidence of Goh Rong Kai. Although his evidence on this point was consistent, his evidence generally was unsatisfactory.

18.The plaintiff`s evidence that he did not receive the Terms and Conditions has to be examined. He has been employed by the KDB since 1976 (notes of evidence p 3E) and is the general manager of the bank. He was in Singapore to open a bank account to facilitate the joint venture between his employers and Hitaka Shoji, and his employers had deposited [yen ]100m into the account. That was not his own money, and was a substantial sum by any standard. He would be answerable to his employers for the money in the account. As a bank officer of long standing, he could hardly have thought that the account was not governed by any operating conditions. His own evidence suggested that he knew or expected that there would be conditions. It is reasonable to infer that he had to report on the account that he had opened, and how it was to be operated. Even if he returned to Pyongyang without the information, his employers would want him to get them from the defendants, so that they would know how it is to be operated, but he never asked for them. He had been in contact with the defendants and could have brought that up. He communicated with them on 10 February 1995 (PB11) and 10 April 1995 (PB12-13). On 26 July 1995, after he had heard that Yoshinaga had transferred the [yen ]100m out of the joint account, he sent a telex (PB19) seeking information about the account. In all these communications, there was no request for the terms and conditions. The picture he sought to present was that even when he was anxious over the money in the account, he was not concerned that he did not have the rules for operating the...