Sheila Kazzaz v Standard Chartered Bank

CourtHigh Court (Singapore)
JudgeAnselmo Reyes IJ
Judgment Date14 October 2019
Docket NumberSuit No 4 of 2018
Date14 October 2019

[2019] SGHC(I) 15

Singapore International Commercial Court

Anselmo Reyes IJ

Suit No 4 of 2018

Sheila Kazzaz and another
Standard Chartered Bank and others

Chia Voon Jiet, Koh Choon Min, Sim Bing WenandGrace Lim Rui Si (Drew & Napier LLC) for the plaintiffs;

Tan Xeauwei, Melissa Mak, Daniel SeowandMarrissa Karuna (Allen & Gledhill LLP) for the defendants.

Case(s) referred to

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (folld)

JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391 (refd)

RBC Properties Pte Ltd v Defu Furniture Pte Ltd [2015] 1 SLR 997 (folld)

Rickshaw Investments Ltd v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377; [2007] 1 SLR 377 (folld)

Royscot Trust Ltd v Rogerson [1991] 2 QB 297 (folld)

Legislation referred to

Misrepresentation Act (Cap 390, 1994 Rev Ed) s 2(1)

Dubai International Financial Centre Law No 1 of 2004 Arts 41(1), 42(3), 94

Banking — Advice — Negligent — Bank arranging investment portfolio for client — Whether bank negligent in failing to ensure suitability of investment portfolio for client's needs

Contract — Misrepresentation Act — Alleged misrepresentations occurring outside Singapore territory — Whether Misrepresentation Act (Cap 390, 1994 Rev Ed) intended to regulate conduct or protect classes of persons outside Singapore territory — Misrepresentation Act (Cap 390, 1994 Rev Ed)

Tort — Misrepresentation — Negligent misrepresentation — Alleged misrepresentations occurring outside Singapore territory — Whether double actionability test satisfied

Tort — Misrepresentation — Negligent misrepresentation — Bank allegedly representing that investment portfolio suitable for client's needs — Whether actionable representation


The first and second plaintiffs, Sheila and Ahmed Kazzaz, were mother and son. They were UK citizens, but have resided in Dubai since 2004. The ASK Group was the Kazzaz family business. It was largely engaged in business in Iraq, including property investments and duty-free retail shops. Ahmed was chairperson of the ASK Group. The first defendant, Standard Chartered Bank (“SCB”), was a UK-incorporated multinational bank with branches in Singapore and the Dubai International Financial Centre (“DIFC”). The second defendant, Laurence Black (“Laurence”), was SCB DIFC's head of fiduciary services for Middle East and North Africa until December 2012. The third defendant, Harish Phoolwani (“Harish”), was (and remained) an SCB DIFC director. He was Ahmed's and Sheila's relationship manager when they were private banking clients of SCB's DIFC branch between October 2010 and August 2012. The fourth defendant, Naushid Mithani (“Naushid”), was SCB DIFC's head of relationship management and investment advisory from May 2010 until March 2011, when he became head of private banking.

Ahmed first met Harish on 27 April 2010. On 28 April 2010, Harish introduced Laurence to Ahmed through e-mail, stating that SCB would be “creating value add” for Ahmed “step by step”, and that Laurence would be dealing with the fiduciary aspects of the Kazzaz family's wealth. On 5 August 2010, Ahmed e-mailed Harish and requested for a meeting to discuss with Harish how best he could invest the proceeds from the sale of Ducie Court (one of the Kazzaz family's properties in Manchester) in an investment portfolio with SCB. The e-mail also attached information on Ahmed's business activities in Iraq, including an investment licence (“the Licence”) issued by the Iraqi authorities in favour of a company within the ASK Group as investor. Ahmed subsequently met with Harish to discuss how he might exit the existing trusts of the Kazzaz family property in France and Iraq and set up a private banking account to receive the Ducie Court sale proceeds. He sent Harish the trust deeds for the existing trusts and asked if Harish could arrange an appointment for him to open a private banking account with SCB's Jersey branch. Eventually, on 8 September 2010, Ahmed met Clive Harrison (“Clive”), a senior fiduciary specialist in the private banking division of SCB's London branch in Jersey, to discuss his concerns and evaluate the Kazzaz family's financial objectives.

On 22 September 2010, Ahmed met Harish and Laurence over lunch. Laurence explained the difficulties that Ahmed would face in passing his assets to his two daughters under shari'a and French inheritance laws. After lunch, Ahmed and Harish met with Jyotsna Pandey (“Jyotsna”) from IPG Financial Services Pte Ltd (“IPG”) so as to find out more about how Ahmed could take an insurance policy over his life, since he was the breadwinner for some ten dependents. The reason for the meeting was that SCB could not sell or advise on life insurance policies.

In October 2010, Harish and Laurence met Ahmed to sign the account opening documents, namely the “Client Agreement”, “Client Declaration”, “Memorandum of Charge” and “Letter of Indemnity”. These documents stipulated that Ahmed would be a “Professional Client” of SCB, as opposed to a “Retail Client”. By this stage, it was apparent that Sheila, not Ahmed, would be insured under the envisaged universal life policy (“the Policy”), which had an initial death benefit of US$21.5m guaranteed until Sheila turned 100. Harish and Laurence met Sheila accordingly for her to sign the Client Agreement, Client Declaration and the “Client Investment Questionnaire”. As Sheila was to be the settlor of the trust that would hold the Policy (“the SAHLK Trust”), she also signed documents for the setting up of that trust. The SAHLK Trust was set up on 1 November 2010. Separately, the “ASK Star Trust” and “ASK Trust” were set up on 19 May 2011 and 19 August 2011 respectively to hold the Kazzaz family's assets. The trustees of the various trusts were Standard Chartered Trust (Guernsey) Limited (“SCTG”) and Standard Chartered Trust (Cayman) Limited (“SCTC”).

On 2 February 2011, Ahmed e-mailed Harish to express his difficulty with understanding the various financial arrangements that SCB had come up with for Ahmed. Ahmed authorised his personal friend Walid Fattah (“Walid”) to act as his financial adviser and for SCB to explain the mechanics of the investment portfolio to Walid so that Walid could relay the information to Ahmed. SCB's representatives met with Walid on 6 February 2011, following which Walid sent an e-mail to Ahmed explaining the essentials of the portfolio (the “Property Financing Arrangement”, or “PFA”). In essence, Ahmed would take out a loan from SCB to pay the premium for the Policy (“the premium loan”) as well as a mortgage for a property (“the Westchester Property”) where his daughter Lana resided while studying in London. The proceeds from the sale of Ducie Court would, in this way, be freed up for investment in a portfolio that would generate sufficient returns to meet the interest payments arising from the premium and mortgage loans. Various offshore trusts and companies would also be set up to hold assets of the Kazzaz family, including the Westchester Property and the Policy. Walid also informed Ahmed in this e-mail that come 28 February 2011, the insurer Manulife would stop offering universal life policies on terms that would guarantee a death benefit until Sheila turned 100.

The Policy was issued on 11 March 2011. Between March and June 2011, Ahmed withdrew a total of US$4m in loans against the value of the portfolio for use in his Iraqi business. On 12 May 2011 after Ahmed's request for a further transfer of US$1m, Harish replied that this would lead to a margin call. Ahmed responded and expressed disbelief. On 26 June 2011, Ahmed e-mailed Harish purporting to file a formal complaint about the manner in which SCB and its representatives have given Ahmed documents to sign without fully explaining the implications.

On 28 July 2011, Harish e-mailed Ahmed to inform him of the precise terms of the mortgage. Ahmed sought Walid's advice before accepting the terms on the same day. On 11 September 2011, Harish wrote to Ahmed to give him updates on his investment portfolio, and concluded that no further cash could be withdrawn without affecting the portfolio's ability to generate sufficient returns so as to cover the interest rates on the mortgage and premium loans.

From February 2012 onwards, Ahmed became increasingly unhappy with the defendants (“the Defendants”). On 23 July 2012, Rohit Sharma (“Rohit”), SCB DIFC's head of investment advisory, e-mailed Ahmed to inform him that the portfolio has been reduced by withdrawals such that it could no longer generate sufficient income to meet the premium financing and other loan interest costs. Harish responded in similar fashion a week later. However, Ahmed became frustrated with SCB. On 28 August 2012, at Ahmed's request, Harish was replaced as Ahmed's relationship manager.

On 14 November 2013, SCB closed Ahmed's personal accounts. In June 2014, Ahmed asked SCB to reduce the interest rate on his loans, which it did from 1% to 0.8% over cost of funds. By letters dated 20 September 2015 and 23 November 2015, SCB terminated Sheila's account. Various credit facilities were also terminated and on 8 December 2016, Ahmed was notified that SCB had surrendered the Policy for a value of about US$12.8m, with a shortfall of about US$1.2m recovered through enforcement of a pledge over the assets of one of the Kazzaz family's companies.

The plaintiffs (“the Plaintiffs”) brought suit and alleged that they were induced to enter into the PFA as a result of three misrepresentations by SCB. First, they claim that from April 2010 to February 2011, SCB (acting through Laurence, Harish and Naushid) misrepresented to Ahmed that the PFA was a self-funding arrangement so that investments made using the Ducie Court sale proceeds would generate sufficient returns to meet the interest payments arising from the premium and mortgage loans and Ahmed would not have to provide further funds as security for the premium or mortgage loans (“Alleged...

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3 cases
  • Hai Jiao 1306 Ltd and others v Yaw Chee Siew
    • Singapore
    • International Commercial Court (Singapore)
    • 13 July 2020
    ...3 SLR 1 (refd) Sheffield District Railway Co v Great Central Railway Co (1911) 27 TLR 451 (refd) Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1 (refd) Singapore Tourism Board v Children's Media Ltd [2008] 3 SLR(R) 981; [2008] 3 SLR 981 (refd) Sudha Natrajan v The Bank of East Asia L......
  • Sheila Kazzaz and another v Standard Chartered Bank and others
    • Singapore
    • International Commercial Court (Singapore)
    • 31 August 2020
    ...plaintiffs' claims against the defendants in the substantive matter (see Sheila Kazzaz and another v Standard Chartered Bank and others[2020] 3 SLR 1) but deferred the determination on costs pending the appeal. Subsequently, the Court of Appeal dismissed the plaintiffs' appeal (see Sheila K......
  • Sheila Kazzaz and another v Standard Chartered Bank
    • Singapore
    • Court of Three Judges (Singapore)
    • 13 July 2020
    ...Misrepresentation (1) and Alleged Misrepresentation (3). [Editorial note: The decision from which this appeal arose is reported at [2020] 3 SLR 1.] Held, dismissing the appeals: (1) The appellants' criticism of the trial judge's use of the term “withdrawals” in reference to Ahmed's loans ta......
4 books & journal articles
  • Banking Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2020, December 2020
    • 1 December 2020
    ...evidence of loss of such amount that would justify its claim on the bond.114 1 [2021] 1 SLR 1. 2 Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1. 3 Cap 390, 1991 Rev Ed. In Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1, the relevant events took place outside Singapore and th......
  • Securities and Financial Services Regulation
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2020, December 2020
    • 1 December 2020
    ...Act (Cap 110, 2007 Rev Ed), including the suitability rule in s 27. This rule was at issue in Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1 which involved the suitability rules of Dubai where Anselmo Reyes IJ found that no damage had been proven even if there were a breach. 62 Cap ......
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2019, December 2019
    • 1 December 2019
    ...[2019] SGHC 22 28. Saimee bin Jumaat v IPP Financial Advisers Pte Ltd [2019] SGHC 159 29. Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1 30. Sim Miew Fee v Pau Tong Lye [2019] SGMC 29 31. Sim Tee Meng v Haw Wan Sin David [2020] 1 SLR 82 32. Singapore Rifle Association v Singapore Sh......
  • Banking Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2019, December 2019
    • 1 December 2019
    ...Laundering and Countering the Financing of Terrorism (24 April 2015; revised 30 November 2015). 30 [2019] SGHC 82. 31 [2019] SGHC 165. 32 [2020] 3 SLR 1. 33 Cap 390, 1991 Rev Ed. 34 Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1 at [142]. 35 Sheila Kazzaz v Standard Chartered Bank [......

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