Sheila Kazzaz and another v Standard Chartered Bank and others

JurisdictionSingapore
JudgeAnselmo Reyes IJ
Judgment Date14 October 2019
Neutral Citation[2019] SGHC(I) 15
Plaintiff CounselChia Voon Jiet, Koh Choon Min, Sim Bing Wen and Grace Lim Rui Si (Drew & Napier LLC)
Date14 October 2019
Docket NumberSuit No 4 of 2018
Hearing Date25 February 2019,21 February 2019,18 February 2019,27 February 2019,01 March 2019,22 February 2019,24 February 2019,28 February 2019,29 March 2019,26 February 2019,19 February 2019,20 February 2019,23 February 2019,22 April 2019
Subject MatterMeasure of damages,Life insurance policies,Breach of duty,Credit and Security,Mortgage of personal property,Tort,Negligence,Inducement,Duty of care,Misrepresentation,Negligent,Contract,Banking,Misrepresentation Act,Advice,Damages,Negligent misrepresentation
Year2019
Citation[2019] SGHC(I) 15
Defendant CounselTan Xeauwei, Melissa Mak, Daniel Seow and Marrissa Karuna (Allen & Gledhill LLP)
CourtInternational Commercial Court (Singapore)
Published date17 October 2019
Anselmo Reyes IJ: Introduction

The first and second plaintiffs, Sheila and Ahmed Kazzaz (“Sheila” and “Ahmed”) are mother and son (collectively, “the Kazzaz family” or “the Plaintiffs”). They are UK citizens, but have resided in Dubai since 2004. The ASK Group is the Kazzaz family business. Sarchil Kazzaz (“Sarchil”), who was Sheila’s husband and Ahmed’s father, established the ASK Group. Ahmed succeeded Sarchil as chairperson of the ASK Group upon the latter’s passing away in 2007. Between 2010 and 2014, when the events that are the subject of these proceedings took place, the ASK Group was largely engaged in business in Iraq, including property investments and duty-free retail shops.

The first defendant, Standard Chartered Bank (“SCB”), is a UK-incorporated multinational bank with branches in Singapore and the Dubai International Financial Centre (“DIFC”). The Kazzaz family became private banking clients of SCB’s DIFC branch (“SCB DIFC”) in October 2010. 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 remains) an SCB DIFC Director. He was Ahmed’s and Sheila’s Relationship Manager until 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. Naushid was introduced to Ahmed in February 2011. Laurence, Harish and Naushid are sued in their personal capacities. Collectively, SCB, Laurence, Harish and Naushid will be referred to here as “the Defendants”.

During the course of the Plaintiffs’ private banking relationship with SCB, trust structures with SCB’s affiliated trust companies (Standard Chartered Trust (Guernsey) Limited (“SCTG”) and Standard Chartered Trust (Cayman) Limited (“SCTC”)) were set up to hold various assets, and accounts were opened with SCB’s Singapore branch (“SCB Singapore”). Ahmed took out a loan from SCB to pay (1) the premium (“the premium loan”) for a universal life insurance policy (“the Policy”) on Sheila’s life and (2) a mortgage (“the mortgage”) for a property (“the Westchester Property”) where his daughter Lana resided while studying in London. Ahmed also decided to invest the proceeds from the sale of Ducie Court (“Ducie Court”) (one of the family’s properties in Manchester) in an investment portfolio with SCB.

Ducie Court was owned by two Liberian companies, Financial Links Limited and Norley International Limited, which Sarchil had set up with Rathbone Trustees Jersey Limited in the 1980s. Rathbone Trustees later became Hawksford Trustees (“Hawksford”). In January 2008 Ahmed set up a trust called the St. Bernard Trust to hold the Liberian companies. This was to remove Dana (Ahmed’s sister) from the trust following a dispute with her. Hawksford was also trustee of the ASK Trust, which had been established by Sarchil to hold the licence to operate duty free shops in Iraq. Ahmed was unhappy with what he regarded as Hawksford’s opaque billing practices and planned to terminate the St. Bernard Trust on the sale of Ducie Court.

SCB is sued as being vicariously liable for the acts of Laurence, Harish and Naushid. More specifically, the Plaintiffs allege that the Defendants are liable to them for (1) negligent misrepresentation under the common law or the Misrepresentation Act (Cap 390, 1994 Rev Ed) (“the MA”), (2) breaches of the common law duty of care, and (3) breaches of the DIFC Regulatory Law (DIFC Law No.1 of 2004).

On negligent misrepresentation, the Plaintiffs’ case is that the Defendants wrongfully induced Ahmed and Sheila to enter into a Property Financing Arrangement (“PFA”) that was unsuited to their financial needs. Under the alleged PFA, SCB was to provide or arrange for the following financial products and services: the mortgage to fund the purchase of Westchester Property and thereby enable the proceeds from the sale of Ducie Court to be used for an investment portfolio. the Policy, with financing for the Policy’s premium being made available through the premium loan. offshore trusts and companies to hold assets of the Kazzaz family, including the Westchester Property and the Policy.

The plaintiffs complain that they were induced to enter into the PFA as a result of three representations by SCB: Alleged Misrepresentation (1): 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 (a) 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 (b) Ahmed would not have to provide further funds as security for the premium or mortgage loans. Alleged Misrepresentation (2): From April to October 2010, SCB (acting through Harish and Laurence) misrepresented to Ahmed that Sheila and he need not be concerned with reviewing, understanding or seeking professional advice on the documents to be executed under the PFA as SCB would ensure that the documents would be in the best interests of Ahmed and his family. Alleged Misrepresentation (3): From April 2010 to February 2011, SCB (acting through Laurence, Harish and Naushid) misrepresented to Ahmed that the PFA was suitable for the Kazzaz family.

On breaches of the common law duty of care, the Plaintiffs contend as follows: Alleged Breach (1): The Defendants did not explain, highlight or make known to Ahmed the true and full extent of his liabilities to SCB in relation to the repayment of the premium loan. Alleged Breach (2): The Defendants failed to highlight the currency risk inherent in the PFA to Ahmed. Alleged Breach (3): The Defendants failed to highlight that the guaranteed death benefit under the Policy was only until Sheila turned 86. Alleged Breach (4): The Defendants failed to explain the rationale or necessity for the Policy to be purchased and held by SCTG. Alleged Breach (5): The Defendants failed to ensure that the Kazzaz family had the means to meet their obligations under the PFA. Alleged Breach (6): The Defendants failed to advise the Kazzaz family sufficiently or properly about the suitability of the PFA. Alleged Breach (7): The Defendants failed to explain the significance of being a “Professional Client” to the Plaintiffs and to assess their suitability of being classified as such.

On breaches of the DIFC Regulatory Law, the Plaintiffs make the following complaints: Alleged DIFC Law Breach (1): SCB failed to ensure that its financial recommendations were suitable for the Kazzaz family. Alleged DIFC Law Breach (2): SCB failed to ensure that the financial information that it provided was clear, fair and not misleading. Alleged DIFC Law Breach (3): SCB breached its regulatory duty of care. Alleged DIFC Law Breach (4): SCB failed to carry out a proper client classification of the Kazzaz family as “Professional Clients”. Alleged DIFC Law Breach (5): SCB breached the prohibition in Article 94 of the DIFC Regulatory Law by operating as an insurance intermediary.

The Plaintiffs say that Laurence, Harish and Naushid are individually liable under the DIFC Regulatory Law as they provided financial services to the Kazzaz family personally of their own accord.

It is the Plaintiffs’ case that, by reason of the negligent misrepresentations, breaches of the common law duty of care, and breaches of the DIFC Regulatory Law identified above, the Plaintiffs suffered loss and damage. By this action they claim compensation for such loss and damage.

Factual analysis

In this section I consider the factual matters in dispute between the two sides. By way of preface, I make three comments.

First, following the substantive hearing of the evidence, the proceedings were adjourned for the parties to file two rounds of closing submissions. Just before the exchange of the first round of closing submissions, the Plaintiffs advised that they were dropping the allegations of fraudulent misrepresentation and undue influence that they had raised in their pleadings and pursued through the substantive hearing of the evidence. I gave leave to the Plaintiffs to abandon their cases on fraud and undue influence, as in my view there was no evidence whatsoever that the Defendants, whether individually or collectively, had acted in a fraudulent manner or had exerted undue influence on either of the Plaintiffs. In their closing submissions, the Defendants have argued that the Plaintiffs should be made to bear the costs of and occasioned by their abandoned case on fraud and undue influence on an indemnity basis. However, I think that the question of how such costs should be handled (including their incidence, basis and taxation), are best left to be dealt with at a later stage, along with all other outstanding issues of costs in this action.

Second, many of the events that these proceedings are concerned with happened many years ago. Some matters took place nearly a decade ago. In those circumstances, I have exercised caution when assessing parties’ recollection of events. I have reminded myself that, given the effluxion of time, parties are bound to have false memories, that is, apparently remembering clearly that something did or did not occur, when the reality was very different. Thus, I have attempted to test parties’ recollection of events against contemporaneous or near contemporaneous documents in the trial bundle. In some instances, where supporting documents were sparse or non-existent, I have had to come to conclusions based on the balance of probability and common sense. The Plaintiffs in particular have urged me to conclude, because something was not recorded in an SCB contact report as having been said, that no such statement was made. But the...

To continue reading

Request your trial
2 cases
  • Hai Jiao 1306 Ltd and others v Yaw Chee Siew
    • Singapore
    • International Commercial Court (Singapore)
    • 13 July 2020
    ...plaintiff to prove the existence of a duty of care owed by the defendant to the plaintiff (see Sheila Kazzaz v Standard Chartered Bank [2020] 3 SLR 1 at As for the requirement of reliance: The lack of reasonable reliance is irrelevant to the plaintiffs’ claims based upon fraudulent misrepre......
  • Sheila Kazzaz and another v Standard Chartered Bank
    • Singapore
    • Court of Appeal (Singapore)
    • 13 July 2020
    ...background is based upon findings by the trial judge in his judgment, Sheila Kazzaz and another v Standard Chartered Bank and others [2019] SGHC(I) 15 (“the Judgment”). The appellants are citizens of the United Kingdom, resident in Dubai. Sheila’s late husband, Ahmed’s father, Sarchil Kazza......
4 books & journal articles
  • Banking Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 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......
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 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......
  • Securities and Financial Services Regulation
    • Singapore
    • Singapore Academy of Law Annual Review No. 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 ......
  • Banking Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 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 [......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT