Asia-American Investments Group Inc v UBS AG (Singapore Branch) and another [2017] SGHC 113

This is an action by an investment-holding corporation, Asia-American Investments Group Inc. (the “Plaintiff”), a private banking client, against its banker, UBS AG (Singapore Branch) (the “Bank”), and its relationship manager, Amy Tee (“Amy”) (collectively, the “Defendants”). Amy was a director and employee of the Bank who was the client adviser assigned to the Plaintiff. Amy is no longer working with the Bank.

I delivered my oral judgment on 23 March 2017. I dismissed all of the claims of the Plaintiff against the Defendants. The Plaintiff has appealed and I now set out the reasons for my decision.

Introduction

Given the limited documentary evidence in this Suit, which was brought by the Plaintiff approximately six years after the disputed accumulator transactions that form its subject matter, the Plaintiff’s case turned primarily on the veracity of witnesses.

Lenny

(a) First, Lenny asserted that she only found out about the disputed accumulator transactions on or around 6 May 2016, subsequently claimed that she had learnt of them by January 2008, but later backtracked:

(b) Secondly, Lenny accepted that she had signed many documents in her capacity as an authorised representative of the Plaintiff. However, she insisted that she had simply signed those documents on Lucas’ instructions. Nevertheless, she eventually agreed that when she had signed those documents, she did so “on behalf of the [P]laintiff”:

Finally, Lenny insisted that one Erlina Ong (“Erlina”), whose name appeared as a sender and a recipient on emails between the Plaintiff and the Defendants, was just a mere “helper” who assisted only in the personal affairs of Lucas and herself. She claimed that all that Erlina did was “carrying documents, picking up mails.” However, Lucas gave evidence that Erlina was a “clerk” to Lenny and himself and helped in matters connected with the bank accounts of the Plaintiff. As Lucas testified, such assistance entailed “Erlina helping Ms Lenny in personal affairs, in relation to matters connected to bank accounts. For example, there is a document to be signed, Erlina would collect, she would prepare, and for Lenny to sign.”

Lucas

Lucas claimed in support of his allegation of a conspiracy between Erlina and Amy that Robin, his brother who assisted him with matters concerning the Account, had told him not to ever trust Erlina and Amy. Lucas added that Robin, who was a trained accountant, had cautioned him that accumulators were dangerous investments. Lucas thus maintained that there was no way he could have agreed to commit the Plaintiff to accumulator transactions. However, this conversation between Robin and Lucas was not mentioned in Lucas’ AEIC. When questioned on this omission, Lucas testified that notwithstanding Mr Gabriel’s advice, he had made a conscious decision not to include all of his evidence in his AEIC, and that “[l]ater I will explain more.”

Bajaj

I found it difficult to accept Bajaj’s opinion. In cross-examination, Bajaj confirmed that the disputed accumulators had been purchased in a non-discretionary management account, in relation to which investments were ultimately decided by the Plaintiff. However, Bajaj appeared to have prepared his opinion on the basis that the Account was a discretionary management account, where “the [B]ank could decide for itself what products to purchase on behalf of the [P]laintiff.” This was evident from the numerous references to “discretionary management” in his expert report. During his oral examination-in-chief, Bajaj attempted to correct his expert report during his oral examination-in-chief but did so only to the extent of deleting the word “discretionary” from some (but not all) the references to a “discretionary management” account. This was a belated retraction, and one that I could not accept as a mere oversight or a mistake. Bajaj had at other segments of his report referred expressly to “non-discretionary accounts”, as distinct from discretionary management accounts. More importantly, Bajaj went on to suggest in his report that the Plaintiff had entered into accumulators in an account the operation of which appeared to be a discretionary account (with the reference to a “discretionary management agreement” not corrected by Bajaj during his oral examination-in-chief):

Further undermining the credibility of Bajaj’s evidence were the many other errors and omissions in his report. I set out a few examples:

(a) Bajaj took as the basis of his opinion an accumulator transaction where the investor was to purchase the leveraged number of shares on every observation date once the market price fell below the Forward Price, rather than simply on every observation date where the market price fell below the Forward Price. The latter, in fact, was the basis of the disputed accumulator transactions between the Plaintiff and the Bank.

(b) Bajaj used an interbank interest rate of 8% to illustrate (hypothetically) the large potential losses on an accumulator transaction. When questioned, he explained that he had used the US Dollar rate. However, it was undisputed that the disputed accumulator transactions were all denominated in Singapore Dollars, and the relevant rate was that of the Singapore Dollar interbank rate of approximately 3% at the material time. In any event, the US Dollar interbank rate was only 5–6% at the material time. The use of these lower rates would have produced smaller (hypothetical) losses than those arrived at by Bajaj.

(c) Bajaj failed to state various sources of information on which he claimed at trial to have relied on in the preparation of his report. This was in breach of O 40A r 3(2)(b) of the Rules of Court (R5, Cap 322, 2014 Rev Ed) (“Rules of Court”), which requires an expert to “give details of any literature or other material which the expert witness has relied on in making the report”.

Given these errors, I accorded little, if any, weight to the report of Bajaj.

More importantly, the Plaintiff received confirmations, advices, and statements of account reflecting the 2 November ATs as early as on 2 November 2007, and raised no objection to them until the market turned and a margin call was made on the Account on 16 January 2008.

For the reasons above, I dismissed the Plaintiff’s claims against the Defendants.