Tat Lee Securities Pte Ltd v Tsang Tsang Kwong and another action

• Jurisdiction: Singapore
• Court: Court of Three Judges (Singapore)
• Judge: Chao Hick Tin JA
• Plaintiff Counsel: Woo Bih Li and Tan Hui Teng (Bih Li & Lee)
• Subject Matter: Whether summary procedure appropriate,Securities,Summary judgment,Financial and Securities Markets,Whether stockbroker liable for remisier's fraudulent misappropriation of client's shares,Civil Procedure,Whether respondents' claims should be dismissed,Whether liability can be determined by construction of client's letter of authority,O 14 r 12 Rules of Court 1996,Whether liable under agency law or negligence,Construction of letter of authority
• Docket Number: Civil Appeals Nos 50 and 51
• Defendant Counsel: Harry Wee and Leong Why Kong (Braddell Brothers)
• Published date: 19 September 2003
• Date: 23 October 1999

(delivering the judgment of the court): These two appeals arise from a judgment of the High Court setting aside a decision of the deputy registrar who granted an order striking out the claim of the plaintiffs-respondents made in two separate actions, in terms of two similar applications made by the appellant-defendant under O 14 r 12 of the Rules of Court 1996.

The facts

The appellant is a firm of stockbrokers. The respondents in both appeals (the plaintiffs in the actions below) were clients of the appellant. The respondents dealt with Koh Lik Jin (Koh), a remisier in the firm. At the time when they opened their trading accounts with the appellant, each of the respondents had also executed a letter of authority (LA). As the contents of this LA is central to the actions and the appeals, we shall set it out in full:

Dear Sirs

Re: (1) SES Bye-Law III, Clause 11:

Communication through/to third party

- Para (a) - ADDRESSING & MAILING

Communication through/to third party

- Para (b) - TAKING DELIVERY

(2) CHEQUE OFFSETTING

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(1) I hereby authorise you to release:

Debit Notes

Credit Notes

Statement of Accounts

Scrips

to the undersigned Dealer/Remisier ... (Koh) ... for transactions executed on my account.

(2) I hereby authorise the undersigned Dealer/Remisier/and/or/the abovenamed to take delivery on my cheque(s) which is/are due to me from the proceeds of my sales(s) and contra gain(s) and that the said cheque(s) is/are to be used for the purpose of offsetting against the amount which may arise from time to time due to you for my purchase(s) and contra loss(es) and interest payable out of my share transactions with you.

In consideration of the above, I will not hold you, your directors, and/or officers responsible for any losses that may result therefrom.

This letter of authority will remain in force until your receipt of a notice of revocation in writing from me.

The respondents averred that by virtue of the bye-laws of the Stock Exchange of Singapore (SES), Koh was an agent of the appellant. Clause 1(a) of bye-law V of SES provides that a remisier is an agent of his stockbroking firm and cl 3(b) provides that:

Every remisier shall, upon appointment by a Member Company enter into an agency agreement with the Member Company, as principal. Such agreement must embody the main substance of the standard agreement at appendix VA.

Shares were purchased on the respondents` behalf by Koh. The scrips of the shares bought were kept in the appellant`s custody. Koh subsequently obtained delivery of the scrips of some of the shares bought by the respondents through him and sold those shares off without the knowledge of the respondents through...