Zillion Global Ltd and another v Deutsche Bank AG, Singapore Branch

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 12 July 2019
• Neutral Citation: [2019] SGHC 165
• Plaintiff Counsel: Chong Chi Chuin Christopher, Corinne Taylor Lai Sze Huei, Tan Lee Jane, Chan Ying Ling and Josh Samuel Tan Wensu (cLegal LLC)
• Docket Number: Suit No 716 of 2014
• Date: 12 July 2019
• Hearing Date: 19 March 2018,22 March 2018,01 March 2018,09 March 2018,06 March 2018,16 March 2018,15 March 2018,13 March 2018,28 February 2018,21 March 2018,27 March 2018,14 March 2018,07 March 2018,08 March 2018,27 February 2018,20 March 2018,02 March 2018,18 June 2018,23 March 2018
• Subject Matter: Contract,Negligence,Breach of duty,Misrepresentation,Causation,Misrepresentation Act,Contractual terms,Implied terms,Breach,Tort,Duty of care
• Year: 2019
• Defendant Counsel: Yeo Khirn Hai Alvin SC, Sim Bock Eng, Aw Wen Ni, Chua Sin Yen, Jacqueline, Tan Kia Hua, Ho Wei Jie, Vincent and Quay Li Yun, Valerie (WongPartnership LLP)
• Court: High Court (Singapore)
• Citation: [2019] SGHC 165
• Published date: 17 July 2019

Woo Bih Li J: Introduction

The plaintiffs, Zillion Global Limited and Fields Pacific Limited (“Zillion” and “Fields” respectively, and “the Plaintiffs” collectively), are companies incorporated in the British Virgin Islands. At all material times, the beneficial owner of the Plaintiffs was Mr Pan Fang-Jen (“Pan”), and their purpose was to hold his assets. The Plaintiffs were customers of the Private Wealth Management (“PWM”) division of the defendant, Deutsche Bank AG, Singapore Branch (“DB”).¹ The Plaintiffs had opened both discretionary accounts and advisory accounts (also known as non-discretionary accounts) with DB. The key difference between these two types of accounts was that for a discretionary account, the bank exercised its own discretion in deciding which transactions to enter into, but for an advisory account, the client made the decision as to which transactions to enter into. This suit is concerned primarily with the advisory accounts the Plaintiffs had with DB, ie, (i) Zillion’s advisory account; (ii) a foreign exchange margin trading account (“FX GEM account”) which was linked to Zillion’s advisory account; and (iii) Fields’ advisory account. These three accounts will be referred to as “the Accounts”.

I make a preliminary point (on which I elaborate at [13] below) that in advancing their respective cases in their pleadings and submissions to this court, the parties generally did not draw a distinction between the Plaintiffs, or between the Accounts, should there be any distinction to draw. Since the parties chose to advance their cases as such, I will proceed on the basis that the arguments advanced by the Plaintiffs and by DB respectively applied to the Plaintiffs and the Accounts without distinction. I will also refer to Pan and the Plaintiffs interchangeably unless the context requires a distinction to be drawn between them.

The Plaintiffs filed the writ of summons on 3 July 2014 against DB. They had four main heads of claim against DB, namely, for: (a) breach of an implied term of the relevant contracts generally; (b) negligence generally; (c) misrepresentation on 30 July 2008 and 31 July 2008; and (d) breach of contract on 13 October 2008.

DB relied on contract terms in its defence to exclude or restrict its liability. DB also pleaded that the Plaintiffs’ actions founded on contract and on tort in respect of and/or relating to any matter in the Accounts that had arisen prior to 3 July 2008 had accrued more than six years before the time the Plaintiffs filed the writ of summons, and were barred by virtue of s 6(1)(a) of the Limitation Act (Cap 163, 1996 Rev Ed).

The trial for this suit was bifurcated. I heard the trial on liability over the course of 18 days, and reserved judgment.

Dramatis personae

I set out a table of dramatis personae of some of the persons involved at the material time and/or in these proceedings for easy reference:

Abbreviation	Individual
For the Plaintiffs
Campana	Mr Bruno Campana, a Senior Managing Director in the Economic & Financial Consulting Practice of FTI Consulting LLP, and an expert witness at the trial
Chang	Ms Chang Hsu Fen (who is also known as Grace), an employee of Pan’s businesses, and a factual witness at the trial
Chen	Ms Chen Chin Tzu (who is also known as Judy), an employee of Pan’s businesses, and a factual witness at the trial
Pan	Mr Pan Fang-Jen, the beneficial owner of the Plaintiffs, and a factual witness at the trial
Walford	Dr Thomas Walford, a Director and Chief Executive of Expert Evidence International Limited, and an expert witness at the trial
For DB
Beloreshki	Mr Tsevetan N Beloreshki, a Managing Director in Berkeley Research Group’s Finance and Securities Litigation group, and an expert witness at the trial
Chan	Ms Chan Pui Kwan (who is also known as Kanas), then-Director and Fixed Income Specialist of the PWM division in Deutsche Bank Hong Kong (“DB HK”), and a factual witness at the trial
Chiu	Mr Chiu Chi Ming (who is also known as Dennis), then-Head of Credit Risk Management for Wealth Management, North Asia, and a factual witness at the trial
Juan	Ms Melanie Hsiao-Mei Juan, then-Assistant Vice-President of the PWM division in DB HK and Relationship Manager for the Accounts, who has left the employ of DB
Kwok	Mr Terry Kwok, then-Assistant Vice-President and Foreign Exchange Advisor of the PWM division in DB HK, who has left the employ of DB
Raju	Mr Ravi Raju, then-Head of the PWM division in the Asia Pacific, who has left the employ of DB
Sze	Mr Sze Siu Fung (who is also known as Patrick), then-Director and Head of Investment Advisory in DB HK, and a factual witness at the trial
Tang	Mr Masson Tang, then-Vice-President and member of the Investment Advisory team in DB HK, who has left the employ of DB
Tsang	Mr Bill Tsang, Ching Blu, then-Senior Investment Advisor of the PWM division in DB HK, and a factual witness at the trial
Yim	Mr Lok Yim, then-Managing Director and Head of the Fixed Income and Equities team in the Asia Pacific, and a factual witness at the trial

Facts Background and the opening of accounts with DB and other banks

Pan was born in the People’s Republic of China in 1941. He emigrated to the Republic of China (“Taiwan”) with his parents when he was about seven years old. At all material times, he was a citizen and resident of Taiwan. He graduated from junior middle school in Taiwan but did not do well enough to progress to senior middle school. He enrolled in a vocational institute named World College of Journalism. As an adult, he was involved in many different business ventures. However, it was his coal business and property-related investments that made him his wealth.² At the material time, he was a retired businessman and a high net worth individual.³ The Plaintiffs averred that Pan was not proficient in English and could not read, speak or understand English save for simple words;⁴ DB disputed this and averred that while Pan preferred to converse in Mandarin, he was able to converse in English.⁵

Before November 2006, Pan had both discretionary and advisory accounts with other banks, namely, Citigroup Private Bank (“Citibank”) and JP Morgan, and he invested substantial sums with each of these banks.⁶ These accounts were opened in his name and in the names of companies of which he was the beneficial owner and which included the Plaintiffs.⁷

On or about 14 November 2006, DB approached Pan in Taipei, Taiwan to introduce its PWM services to him.⁸ DB was represented by, inter alia, Juan and Tsang who were both conversant in Mandarin.⁹

In the following months, Pan opened both discretionary and advisory accounts with DB in the names of the Plaintiffs. A total of five accounts were opened (including the Accounts as mentioned at [1] above). Juan became the Relationship Manager for all five accounts.¹⁰ The five accounts opened were: an advisory account in Fields’ name opened on or around 20 December 2006;¹¹ an advisory account in Zillion’s name opened on or around 22 March 2007,¹² and the linked FX GEM account in Zillion’s name opened on 24 May 2007;¹³ and two discretionary accounts in Zillion’s name opened on 22 March 2007.¹⁴

Although the Plaintiffs had pleaded that their claims were in relation to all five accounts,¹⁵ Pan agreed during cross-examination that the Plaintiffs’ claims were in fact in relation to only three of these accounts: the advisory accounts and the linked FX GEM account, which are those listed at [10(a)] and [10(b)] above.¹⁶ As mentioned at [1] above, these three accounts will be referred to as “the Accounts”. The Plaintiffs’ claims were not in relation to the two discretionary accounts listed at [10(c)] above.

When opening the Accounts, the Plaintiffs executed, inter alia, the following contractual documents:¹⁷ Service Agreement: executed by Zillion on 22 March 2007 and by Fields on 20 December 2006;¹⁸ Risk Disclosure Statement: executed by Zillion on 22 March 2007 and by Fields on 20 December 2006;¹⁹ DB Master Agreement for Foreign Exchange Transactions and Derivatives Transactions (“Master Agreement”): executed by Zillion on 26 February 2008;²⁰ and Risk Disclosure Statement (Foreign Exchange and Derivative Transactions) (“Risk Disclosure Statement (FX)”): executed by Zillion on 26 February 2008.²¹

As I mentioned at [2] above, I observe that in advancing their respective cases in their pleadings and submissions to this court, the parties generally did not draw a distinction between the Plaintiffs, or between the Accounts, should there be any distinction to draw. This lack of precision is odd, considering how some of the contractual documents were executed by Zillion only and not by Fields, like the Master Agreement and the Risk Disclosure Statement (FX). By way of another example, the three margin call letters which will be discussed later were also addressed to Zillion and not to Fields. However, since the parties chose to advance their cases as described, I will proceed on the basis that the arguments advanced by the Plaintiffs and by DB respectively applied to the Plaintiffs and the Accounts without distinction. Accordingly, I will proceed on the basis that the contractual documents and all other matters in question also applied to the Plaintiffs and the Accounts without distinction.

Returning to the chronology, around December 2006 and in 2007, Pan also opened both discretionary and advisory accounts in his name and in the Plaintiffs’ names with another bank, the Union Bank of Switzerland (“UBS”).²²

Pan’s relationship with DB and his investment objective

In relation to the Accounts, DB introduced financial products to Pan and/or the Plaintiffs as part of its PWM services.²³ DB and Pan had almost weekly meetings,²⁴ and from December 2006...