Crédit Industriel et Commercial v Teo Wai Cheong

Philip Pillai JC:

[1] The 2008 international financial crisis, like previous financial crises, has been followed in Singapore by regulatory actions (see eg Monetary Authority of Singapore: Investigation Report on the Sale and Marketing of Structured Notes linked to Lehman Brothers, (7 July 2009)) and civil litigation. The financial products in each successive financial crisis have become more complex, in tandem with the financial institutions, their discrete services and the varying capacities, sometime proprietary, sometimes agency, in which they transact with their clients. The outcome in each civil litigation case, however, remains to be determined by the applicable common law or statutory causes of action and the evidence adduced. The implications of the common law and statutory causes of actions available and the hurdles to be overcome have been extensively canvassed in the recent English case J.P. Morgan Bank (formerly Chase Manhattan Bank) & Others v Springwell Navigation Corporation [2008] EWHC 1186 (“J.P. Morgan”) (see also Melanie Ryan & Andrew Yong, “Springwell – are the English courts the venue of last resort for complex investor claims?” (2009) 24(1) Journal of International Banking Law and Regulation 54, Christa Band, “Selling complex financial products to sophisticated clients: J.P. Morgan Chase v Springwell: Part I” (2009) 24(2) Journal of International Banking Law and Regulation 71, and Christa Band & Karen Anderson, “Selling complex financial products to sophisticated clients: J.P. Morgan Chase v Springwell: Part II” (2009) 24(5) Journal of International Banking Law and Regulation 233).

[2] The present case raises a core question of law about private banking and sophisticated clients. When is a private bank acting as a trusted advisor of its client and when is it not? The answer to this question of law falls to be determined by the particular contractual documentation and conduct adduced in evidence in each case.

[4] The heart of this dispute is as follows: It is the plaintiff’s case that the defendant instructed the plaintiff’s relationship manager, Ms Ng Su Ming (“Relationship Manager”), to purchase the Disputed CE Accumulators during their telephone calls on 2 and 3 October 2007. The defendant, whilst acknowledging the telephone calls, disputes that he gave instructions or authority to the Relationship Manager to purchase the Disputed CE Accumulators.

[6] In contrast to J.P. Morgan, this dispute turns on a much simpler issue. Nevertheless, even in this trial, there was some degree of complexity relating to accumulators and the private banking processes. These were expressed in the asymmetry of understanding between the defendant’s counsel and the plaintiff’s witnesses, particularly the Relationship Manager. There was evident asymmetry relating to the meaning and effects of the terms of Disputed CE Accumulators. There was also evident asymmetry relating to evidence concerning the order taking process and the communications between the defendant and the Relationship Manager that was compounded by the different interpretations put on the evidence relating to the backroom order execution process including the transcripts of recordings of the PBA. These asymmetries often resulted in disconnects in cross-examination which I took into account in weighing the credibility of the witnesses.

[7] Because of the complexity and asymmetries, it becomes useful to first examine the contractual documents that govern this private bank and client relationship in order to more clearly set out and evaluate the evidence adduced within its contractual context.

[8] The contractual relationship between the plaintiff and the defendant is set out in a number of standard printed forms. These are standard form contracts, which private banking clients do not normally read, and if read, are not fully understood and rarely negotiated. Nevertheless, in the absence of fraud or misrepresentation, a person is bound by the express contractual terms of the documents which he has signed even though he has not read their content nor understood their language (see L’Estrange v F Graucob Limited [1934] 2 KB 394 and Consmat Singapore (Pte) Ltd v Bank of America National Trust & Savings Association [1992] 2 SLR(R) 195).

[9] The defendant’s contractual private banking relationship with the plaintiff was governed by the following overarching contractual documents:

[10] The function of the Account Opening and Custodian Agreement is to set out the terms and conditions which are to govern the plaintiff’s general and specific financial facilities to the defendant.

[11] It starts out with a one page Preamble which reads:

[12] The account opening agreement is framed as a request by the defendant, to the plaintiff, to open accounts with the plaintiff and to hold in such accounts cash, term deposits, securities, deeds, documents and other properties deposited with or transferred to the plaintiff or any third party nominated by the plaintiff. There is an acknowledgement that the defendant has read and understood the Terms and Conditions annexed to the form, that he has not found any provisions confusing or objectionable, that he agrees to be bound by them and that charges are payable to the plaintiff for its services. The defendant signed this document and the Relationship Manager witnessed his signature.

[13] Some of the material terms and conditions of the Account Opening and Custodian Agreement are as follows:

[14] The Risk Disclosure Statement is set out in Appendix A of the Terms and Conditions. It is highlighted and the client’s particular attention is drawn to it by requiring the client to additionally sign off a separate acknowledgement against this statement. The Risk Disclosure Statement sets out in general terms the risks involved in financial transactions including (but not limited to) foreign exchange, currency swaps and options transactions, interest rate swaps, caps, floors, collars, non-deliverable forwards and other financial derivative transactions. It states:

[15] The above is followed by a description of some of the specific risks which may arise with respect to the following products: derivatives, structured and over-the-counter deals, options, dual currency investments, contracts for differences, foreign markets/off-exchange transactions, margin trading, emerging markets, liquidation of position, suspension of restriction on trading and electronic trading, credit characteristics, pricing relationships, currency risks, and risk of counterparties and brokers. In particular, the paragraph relating to “margin trading” reads:

The Risk Disclosure Statement ends with the following:

[16] The Acknowledgment of the Risk Disclosure Statement which was separately signed by the defendant, reads as follows:

[17] Appendix B, which sets out the Terms and Conditions for Treasury Services, inter alia, reads:

[18] In short, the signed Risk Disclosure Statement highlights and allocates the risks to the client as follows:

[19] To drive this home, the Risk Disclosure ends with the following:

[20] The plaintiff does not by these terms purport to be its client’s trusted advisor. The client is to make his own risk assessments and is recommended to seek financial advice elsewhere should he require it. The plaintiff does not hold itself out to be offering advice or recommendations.

[21] The purpose and function of the Banking Facility Letter is to provide leverage for the defendant, subject to the terms and up to the limits set out therein. Under this Banking Facility Letter, the plaintiff confirms granting to the defendant pursuant to his request, a loan facility of up to USD 5m, an amount of up to USD 5m to facilitate his entering Treasury Contracts and an amount up to USD 5m to facilitate his entering margin trading transaction against his entering a Charge Agreement.

[22] The Banking Facility Letter sets out the interest rates, the margin requirements for treasury contracts and its availability subject to the plaintiff receiving a duly executed charge agreement and such further security as it may require from time to time. Whilst the plaintiff does not charge a fee for providing the facility and actual utilisation depends on suitable investment opportunities, the plaintiff anticipates that the defendant will make reasonable use of the facility. Clause 1 reads:

[23] The Charge Agreement provides the plaintiff with a first fixed charge and lien against the defendant’s deposits and investment portfolio as a continuing security for the due and punctual payment of all moneys owed to the bank.

[24] The economic substance of the above contractual documents can be distilled as follows: The client places some deposits with the bank. The bank provides interest bearing loans to enable him to leverage his investments. The client provides a charge over all deposits and investments with the bank. The client makes his investment decisions, within these financial risk limits and his own risk appetite. The bank executes his investment decisions either as principal or as agent. The bank’s economic interests arise from interest on the facilities, but principally from the receipts of agency fees or principal gains, arising from the volume of his leveraged investment decisions within the financial risk limits.

[25] In addition to the overarching contractual documents above, it is necessary to examine the particular terms of the investment product. Such examination also helps to clarify the interplay between the evidence adduced within this context.

[26] Turning first then to the nature of accumulators in general, it ought to be pointed out that the accumulators are not standard exchange-traded products; they are customised over-the-counter products. Exchange traded derivatives are products like options and futures which are traded on an exchange. Over-the-counter products, like accumulators, are derivatives which are not traded on an exchange. The terms of each accumulator are set out in its particular term sheet. The form and content of each accumulator, however, follows a standard industry format. Each accumulator confirmation or term sheet is expressed to incorporate by reference and to be construed by the International Swaps and Derivatives Association Master Agreement and the 2002 International Swaps and Derivatives Association Equity Derivative Definitions.

[27] The following is an extract of the principal terms of one of the term sheets of the Disputed CE Accumulators and is typical of the terms of the other Disputed CE Accumulators as well:

[28] In short, pursuant to the abovementioned term sheet, the defendant contracted to purchase 1,500 China Energy shares per week at a price of S$1.5981(“Forward Price”) representing a discount of 9% to the current share market price then of S$1.6701 (“Initial Price”). In exchange for this discount, he contracted to purchase 1,500 China Energy shares per week for about 52 weeks. During these 52 weeks, he contracted to double his weekly purchases, when the market price of the share fell below the Forward Price. However, during these 52 weeks, in the event that the market price of the shares were to rise beyond S$1.7202 (103% of the Initial Price), the accumulator was automatically knocked-out. An accumulator upon knock-out automatically releases both the defendant from any further obligation to buy, and the plaintiff from any further obligation to sell, any China Energy shares for the rest of the 52 weeks. The settlement process involves the purchaser making weekly payments for shares delivered during the term of the accumulator and the seller being obliged to deliver either the shares or the cash equivalent.

[29] Turning now to the dispute between the parties, I shall at the outset deal with the defendant’s additional averments in [5] which can be disposed of briefly.

[30] The defendant first averred that his instructions to the Relationship Manager was to ensure his “total exposure” to equity accumulators at any one time should not exceed S$1m and was to be confined to “blue chip” shares. However, the defendant provided no substantiating evidence as to his instructions. Second, he did not define what he meant by “total exposure”. He did make several allusions to the “maximum obligation” under the Disputed CE Accumulators being beyond S$1m. However, it was clarified in court by the plaintiff’s witnesses that “maximum obligation” means the purchaser’s obligation to purchase double the number of shares, in the worst case scenario, where the market price of the share drops and remains below the forward price, for the entire duration of the accumulator. This is quite different from “total exposure” which is the estimated normal risk at any one time. In any event, the defendant had on record purchased accumulators whose maximum obligation far exceeded S$1 million. As for “blue chip” shares, these remained undefined in the evidence and his previous accumulator purchases included a wider range of shares than might commonly be regarded as “blue chip”.

[31] His second averment is that he was never told, prior to 19 November 2007, that he would be obliged to acquire double the number of shares in each of the Disputed CE Accumulators for the duration when the market price of the shares fell below the Forward Price. However, the term sheets of the relevant Disputed CE Accumulators expressly set out that where the closing price of the shares exceeds the strike price, the number of shares to be accumulated per day doubles. This ex facie puts paid to this averment.

[33] The defendant’s other averment is that of his surprise at the magnitude of the realised losses and his expectation that his losses, if any, could not exceed the amount of his deposits with the plaintiff. However, considering that he had signed and accepted banking facilities for up to USD 15m, which was several times the amount of his deposits, this has little merit.

[35] The undisputed evidence regarding the telephone calls is as follows:

[36] It is the plaintiff’s case, and the Relationship Manager’s evidence, that the defendant instructed the Relationship Manager to purchase the Disputed CE Accumulators and one SembCorp Accumulator during the telephone conversations on 2 October 2007 (the 09:34:06 call) and 3 October 2007 (the 10:27:27 call).

[37] Under cross-examination, the defendant stated that whilst he did not remember the details of the telephone calls, the calls were not about purchasing the Disputed CE Accumulators. When questioned further on the purpose of his calling the Relationship Manager on 2 October 2007 at 09:34:06 (just six seconds after he received the SMS), the defendant claimed that he had called the Relationship Manager to enquire about the status of shares which he had previously purchased under earlier undisputed accumulators. He gave evidence under cross-examination that these shares would have been Neptune Orient Line (“NOL”) shares, Cosco shares and China Energy shares and that he had instructed the Relationship Manager to sell off the NOL shares and Cosco shares but to retain the China Energy shares. When asked to explain why he would call the Relationship Manager again on 3 October 2007 when he no longer had shares in his account, save for the China Energy shares which he had already instructed her to retain, he responded that he could not recall what was discussed during the 3 October 2007 conversation.

[38] In my view, it can be reasonably inferred that since the defendant called the Relationship Manager just six seconds after receiving her 2 October 2007 morning SMS, he was responding to the contents of her SMS, in which she had clearly asked him if she could purchase more accumulators in 3 named shares including China Energy. The defendant’s testimony under cross-examination does not negate this. He admitted making these calls and I did not accept his evidence that the calls had nothing to do with the Disputed CE Accumulators.

[39] The Relationship Manager, in her Affidavits in Evidence in Chief (“AEIC”) (at paras 40 – 42) describes the communications between herself and the defendant and the typical lead up to instructions to purchase an accumulator as follows (this process hereinafter described as the “AEIC Order Process Narrative”):

[40] The Relationship Manager’s AEIC Order Process Narrative (see [39]) provides a narrative of the nature of the running communications and conversations between her and the defendant over a period of time which would culminate in the defendant’s oral instructions to purchase an accumulator.

[41] The defendant’s counsel laid considerable store by his cross-examination of the Relationship Manager on what she had stated in her AEIC. The defendant’s counsel sought to demonstrate that her AEIC Order Process Narrative could not possibly gel with the content of the SMS and the short telephone conversations on 2 and 3 October 2007. By so doing, he sought to discredit the witness in order that her evidence be disbelieved.

[42] It was however evident during cross-examination that the defendant’s counsel and the Relationship Manager were often at cross-purposes. There was a lack of clarity and consistency of usage of the technical expressions. An illustration of the dissonance between the Relationship Manager’s AEIC Order Process Narrative and her answers under cross-examination, in relation to the content of the critical telephone conversations on 2 and 3 October 2007 is as follows:

(a) The Relationship Manager stated under cross-examination that the defendant had given her a range of spot or initial prices of between S$1.75 to S$1.82 which the China Energy Accumulator could be established. When the defendant’s counsel pointed out to the Relationship Manager that she had not mentioned that she had discussed any alleged range of spot price with the defendant in her AEIC, she could not explain the omission. She then asserted that the forward price was given at a range of between 89.25% and 91%.

[43] The Relationship Manager appeared to be conflating two quite separate processes. One was the typical flow of communications and conversations between the defendant and her which would culminate in an oral instruction to purchase a particular accumulator which she described in her AEIC Order Process Narrative. The other was the precise contents of the short morning telephone conversations with the defendant the 2 and 3 October 2007. As a result of conflating the two, she often tripped up under cross-examination in explaining how she could have managed to provide all the detailed information she purports to have provided as described in her AEIC Order Process Narrative, in the course of the short telephone conversations, quite apart from the additional matter of ranges which she also said under cross-examination that she provided.

[44] The defendant had sight of the transcripts of recordings of the backroom conversations between the Relationship Manager and the plaintiff’s PBA and their conversations with the accumulator counterparty. In relation to those, he made the following closing submissions in support of his case that he did not instruct the Relationship Manager to purchase the Disputed CE Accumulators during the telephone calls on 2 and 3 October 2007:

[45] The plaintiff responded as follows:

[46] The defendant, who is external to these processes, has postulated that there does not appear to be a direct match between each of the defendant’s alleged accumulator orders and the orders executed by the bank backroom. This, he submits, further corroborates his defence that he did not make these purchases. However I accepted the plaintiff’s explanations for three reasons. First, the plaintiff’s explanation is consistent with the transcript of the recordings of the backroom execution – that there was consolidation of orders. Second, the backroom execution process is the plaintiff’s own. It is accordingly in the best position to explain how its own process works including the consolidation of other client orders. Finally, the mismatch between the defendant’s alleged order and the orders placed by the Relationship Manager with PBA is answered by her explanation of her consolidating the defendant’s orders with the orders of her other customers. The defendant’s observation of exceeding his price range was made in abstract without taking into account the market practice of execution averaging described by the plaintiff. I am accordingly, unable to accept the defendant’s submission that the transcripts support the defendant’s case that he did not instruct the Relationship Manager to purchase the Disputed CE Accumulators during the telephone calls on 2 and 3 October 2007.

[47] In considering the evidence relating to the content of the critical telephone calls on 2 and 3 October 2007, what I find most significant is the defendant’s inability to explain satisfactorily his version of the contents of the telephone conversation, as he disputes that they were about instructions to purchase the Disputed CE Accumulators (see [37] above).

[48] The only two participants to these two telephone calls were the defendant and the Relationship Manager. Evaluating their evidence, I find the Relationship Manager’s evidence on her understanding of the product terms and her order taking process to have gaps, and thus unhelpful. Notwithstanding this shortcoming, I find her evidence that the defendant instructed her to purchase the Disputed CE Accumulators during the telephone calls on 2 and 3 October 2007 to be credible. This is supported by her having initiated the SMS query which led to the defendant’s almost immediate telephone call in response. By contrast I do not find the defendant’s evidence on the content of the telephone calls to be credible. He appeared to me to be evasive and when challenged under cross-examination he was obliged to fall back on the response that he could not recall.

(b) The defendant’s experience with accumulators and his earlier purchases of China Energy shares and undisputed CE Accumulators

[49] I next test the consistency of my findings and inferences of fact against the defendant’s prior experience with accumulators and his purchases of undisputed CE Accumulators and retention of China Energy shares.

[50] The defendant had between July 2007 and September 2007 purchased through the Relationship Manager, fourteen accumulators involving Cosco, DBS, Noble and China Energy shares. Starting with USD328,263.00 in his account in July 2007, the defendant’s account recorded USD393,521.00 by the end of September 2007. Over two months, the defendant realised a profit of USD65,258.00 (about a 20% return) from accumulators.

[51] Closer to the date of the Disputed CE Accumulators, on 26 September 2007, the Relationship Manager informed the defendant that he had realised a profit of S$37,000 when the DBS shares acquired under three DBS Accumulators (approximately S $5.7m Maximum Obligation) were sold and that he could make an additional profit of S$17,000 if the defendant chose to sell the Cosco shares acquired that day under a Cosco Accumulator with a maximum obligation of approximately S$2.35m.

[52] It was the defendant’s evidence that on or around 2 October 2007, he had requested the Relationship Manager to sell his Cosco shares but to keep the China Energy shares previously acquired under the undisputed First and Second China Energy Accumulators, even though he would have realised an immediate profit had he then sold them. Under cross-examination, the defendant could not explain why he chose to keep the China Energy shares, stating initially that he forgot why he did so, and then finally conceding that it could be because he had thought the prices of the China Energy shares would go up further.

[53] The defendant’s prior profitable experience with accumulators and his retention of the China Energy shares are consistent with my findings and inferences of fact that he had instructed the Relationship Manager to purchase the Disputed CE Accumulators during the telephone calls on 2 and 3 October 2007. His preceding profitable experience with accumulators and his recent retention of China Energy shares explain his likely purchase of the Disputed CE Accumulators and his ambiguous behaviour in not promptly and unequivocally rejecting them.

[54] Having considered the witnesses’ evidence relating to the content of the telephone calls on 2 and 3 October 2007, the defendant’s experience with accumulators and his earlier purchases of CE share and undisputed CE Accumulators, I now turn to examine the evidence relating to the conduct of the plaintiff and the defendant after the purchase of the Disputed CE Accumulators for consistency with my findings and inferences of fact.

(i) The plaintiff despatched the Disputed CE Accumulators term sheets, China Energy share confirmation notes and monthly statements to the defendant and requested further security

[55] The plaintiff despatched Disputed CE Accumulators term sheets, China Energy share confirmation notes and monthly statements to the defendant and the defendant does not dispute that he had received them in the ordinary course.

[56] The plaintiff also sent to the defendant his October 2007 monthly statement of account, which inter alia, stated:

[57] Notwithstanding this, the defendant did not promptly contact or query the plaintiff about either the Disputed CE Accumulators term sheets or the China Energy shares acquired thereunder. Neither did he contact the plaintiff nor make queries about his October 2007 monthly statement of account. He also did not return these documents to the plaintiff. All that he claimed he did was raise an objection to the Relationship Manager on 16 October 2007 and that he had given her one month to resolve the matter.

[58] According to the Relationship Manager, from 16 October 2007 to around 13 November 2007, she made repeated requests to the defendant to bring in the additional funds required to acquire the China Energy shares which he was obliged to acquire under the Disputed CE Accumulators. This included requests by the plaintiff to the defendant to provide more security, by taking steps such as mortgaging his house or transferring more funds from his trading account in another financial institution.

[59] The evidence adduced reveals that save for a telephone conversation on 18 October 2007, there were no communications between the defendant and the Relationship Manager until 5 November 2007. The defendant did not contact the Relationship Manager for any status update. On 2 November 2007, which was the scheduled settlement date for the China Energy shares acquired under three of the Disputed CE Accumulators, the Relationship Manager called the defendant twice but the defendant did not answer her calls. On 5 November 2007, the Relationship Manager called the defendant three times. The defendant once again did not answer her calls. The defendant returned the Relationship Manager’s telephone calls on the afternoon of 5 November 2007. It was a call which lasted for 27 minutes.

[60] Were the defendant to have given the Relationship Manager one month from 18 October 2007 to resolve the issue of the Disputed CE Accumulators, it might be expected that he would have called her or responded to her repeated telephone calls of 2 and 5 November 2007. He does not appear to have done so.

(iii) The defendant paid S$160,000 by cheque to the plaintiff and his previously acquired China Energy shares were sold to pay for China Energy shares to be acquired under the Disputed CE Accumulators

[61] It is not disputed that two separate payments were subsequently made in connection with the Disputed CE Accumulators from funds provided by the defendant and from the proceeds of liquidation of his previously acquired China Energy shares.

[62] On 7 November 2007 the defendant issued a cheque for S$160,000 to the plaintiff. The cheque was used to pay for the China Energy shares acquired under the Disputed CE Accumulators.

[63] The defendant’s explanation of this payment is that he had issued this cheque as the Relationship Manager had told him that the money was for the payment of shares acquired under the undisputed First and Second CE Accumulators and under the SembCorp Accumulator. Consequently, this cheque was not payment for the Disputed CE Accumulators. It is difficult to accept the defendant’s explanation for the following reasons: first, the shares acquired under the First and Second CE Accumulators had already been paid for on or around 2 October 2007 and would have been reflected in the statements received by the time he issued this cheque. Second, as he had given the Relationship Manager one month from 18 October 2007 to resolve the matter and it had yet to be resolved, it is difficult to understand why he would nevertheless on 7 November 2007 deliver a S$160,000.00 cheque to her without reserving his rights or position.

[64] On 16 November 2007 the plaintiff sold 180,000 China Energy shares. It claims it did so under the defendant’s instructions. 60,000 of the 180,000 China Energy shares were acquired by the defendant under the undisputed First and Second China Energy Accumulators and the remaining 120,000 shares were acquired by the defendant under the Disputed CE Accumulators. The sale proceeds were then used to pay for the new China Energy shares acquired under the Disputed CE Accumulators.

[65] The defendant avers that he did not know that the proceeds of sale of his previously acquired China Energy shares were to be used for the payment of new China Energy shares acquired under the Disputed CE Accumulators. He avers that the plaintiff had unilaterally applied the sale proceeds to these new China Energy shares acquired under the Disputed CE Accumulators. By this averment he attests only that he did not know how the plaintiff applied these sale proceeds. However, confirmation notes reflecting the sale of the China Energy shares (including those under the Disputed CE Accumulators) were sent to and received by the defendant. He did not raise any query at the time.

[66] In these circumstances, I am of the view that contrary to the defendant’s averment, he knew that he was making payment or he acquiesced with knowledge in the sale of the abovementioned China Energy shares. He would not have made the cheque payment had the Disputed CE Accumulators, in the first place, not been purchased under his instructions. Neither would he have made the cheque payment without reserving his position had he been waiting for the resolution of the Disputed CE Accumulators.

[67] On 20 November 2007, the defendant met with the plaintiff’s Mr Paul Kwek (“Mr Kwek”) and the Relationship Manager. The note of the meeting prepared by Mr Kwek, records, inter alia:

[68] Under cross-examination by the defendant’s counsel, Mr Kwek stated that at the meeting on 20 November 2007, he specifically asked the defendant whether the latter was denying liability for the Disputed CE Accumulators and the defendant had replied “no”.

[69] However, according to the defendant, Mr Kwek’s contemporaneous note of their meeting on 20 November 2007 is not an accurate reflection of what transpired at the meeting. Under cross-examination, the defendant challenged Mr Kwek’s evidence as follows:

[70] However, when the plaintiff’s counsel showed the defendant that the contents of his own emails of 21 November 2007 and 23 November 2007 were similar to Mr Kwek’s contemporaneous note of 20 November 2007, the defendant changed his evidence. The defendant admitted that the issue of funds to acquire the China Energy shares was addressed at the meeting but that he had told Mr Kwek that he did not want to acquire the shares. The defendant further admitted that it was possible that parties had spoken on the margin requirements for the Disputed CE Accumulators:

[71] Critically, when I questioned the defendant regarding whether Mr Kwek had asked him whether he was denying the Disputed CE Accumulators, the defendant changed his mind and claimed that he could not recall whether this statement was made by him at the meeting on 20 November 2009. This contradicted the defendant’s earlier position in the affidavits he filed in these proceedings where he clearly denied that the statement was made at the 20 November 2007 meeting.

[72] The defendant’s evidence about the meeting on 20 November 2007 is contradictory. The defendant’s own emails of 21 November 2007 and 23 November 2007 support the plaintiff’s version of the events which took place at the meeting on 20 November 2007. Under cross-examination, the defendant suggested that Mr Kwek may have lied in his contemporaneous note of the meeting of 20 November 2007, in order to cover up for his employee. The bare assertion was not supported by any evidence.

[73] On 28 November 2007, the defendant attended a second meeting, this time with the plaintiff’s General Manager, Mr Jean Luc Anglada (“Mr Anglada”) and Mr Kwek. It is their evidence that the defendant also did not, at this meeting, deny that he gave instructions to the Relationship Manager to purchase the Disputed CE Accumulators. The defendant disputes this but in light of the evidence adduced, I accepted their account. There was no evidence to establish that Mr Anglada would, in addition to Mr Kwek, cover up for the Relationship Manager.

[77] In the light of Mr Anglada’s evidence as to the two available risk decisions, how is the defendant’s equivocation in the face of a declining China Energy share price consistent with my finding and decision? There were produced in evidence, some market analysts’ recommendations between October and December 2007 which projected a target price of the China Energy shares which was significantly higher than the Disputed China Energy Accumulators Knock-Out price. There was also evidence of the defendant’s prior decision with another earlier accumulator, the Second Noble Accumulator. The market price of Noble shares had fallen below the Second Noble Accumulator Forward Price for a number of days during which the defendant was obliged to double up his share acquisitions. However, thereafter the market price of Noble shares recovered and the Second Noble Accumulator was knocked-out some two months after it was established. The defendant had made a significantly larger profit when he later sold the Noble shares, including the doubled acquisitions during the Noble market share price downturn. If the defendant remained bullish about China Energy shares notwithstanding its share price decline in October 2007, this would explain his equivocation in neither clearly rejecting the Disputed CE Accumulators nor terminating them.

[79] He appears thereafter to have taken no further actions. Sometime in or around March 2008, the market price of the China Energy shares declined sharply. By way of a letter dated 14 March 2008, the plaintiff’s solicitors demanded that the defendant make payment to the plaintiff of the outstanding sum of S$4,125,745.00 which was due and owing to the plaintiff as of 6 March 2008 pursuant to the terms of the Disputed CE Accumulators.

[80] As the defendant had not made any payment, the plaintiff exercised its rights under the contractual documents and closed out the Disputed CE Accumulators from 10 April to 21 April 2008 and set-off the funds in the defendant’s account towards payment of the outstanding sum due under the Disputed CE Accumulators.

[81] On or around 27 May 2009, the plaintiff issued a conclusive certificate of indebtedness (see [22] above) certifying that the outstanding sum (including interest) due and owing from the defendant to the plaintiff as of 29 August 2008 was S$6,459,519.83. This sum consisted of:

The plaintiff then brought the present action claiming these amounts against the defendant (see above at [3]).

[82] In the light of the evidence and my findings, and in the totality of the prior and subsequent consistent conduct of the parties in relation to the Disputed CE Accumulators, I find that the defendant did instruct the Relationship Manager to purchase the Disputed CE Accumulators during the telephone conversations on 2 and 3 October 2007. It is not necessary to further deal with the plaintiff’s alternative submissions as to estoppel.

[83] I now return to the core question of law about private banking and sophisticated clients raised in [2] in the light of the relevant contractual documents and the evidence adduced in this dispute:

[84] A private bank is not acting as a trusted advisor of its client when (a) its account opening form and Risk Disclosure Statement highlight to the client that he is responsible for the risks in his transactions and recommends that he takes advice from other professional advisers, including his accountants, lawyers and tax advisors, and further that the bank does not make recommendations or give advice and (b) this is borne out by the evidence of conduct.