Banque Nationale v Tan Nancy: Unauthorized Trading & Authority in Forex Transactions

In Banque Nationale De Paris v Tan Nancy and Tan Shee Chin, the Court of Appeal of Singapore heard an appeal regarding the High Court's dismissal of claims by Banque Nationale De Paris (BNP) against Tan Nancy and Tan Shee Chin for sums of money resulting from transactions carried out in their accounts by Gary Hew, an employee of BNP. The primary legal issue was whether the respondents had authorized Gary to conduct share and forex transactions in their accounts. The Court of Appeal allowed the appeal, finding that the respondents had authorized Gary to trade in their accounts, reversing the High Court's decision.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

BNP's claim against Tan Nancy and Tan Shee Chin for losses from unauthorized forex transactions by their employee, Gary Hew, was initially dismissed. The Court of Appeal reversed the decision, finding that the respondents had authorized Gary to trade in their accounts.

1.7 Decision Date

20 November 2001

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Banque Nationale de Paris	Appellant	Corporation	Claims Allowed	Won	Herman Jeremiah of Helen Yeo & Partners Christopher Anand Daniel of Helen Yeo & Partners Michael Hwang of Helen Yeo & Partners
Tan Nancy	Respondent	Individual	Claims Allowed	Lost	Jenny Chang of Harry Elias Partnership Philip Fong of Harry Elias Partnership
Tan Shee Chin	Respondent	Individual	Claims Allowed	Lost	Simon Jones of Wee Swee Teow & Co Chiah Kok Khun of Wee Swee Teow & Co

3. Judges

Judge Name	Title	Delivered Judgment
Chao Hick Tin	Judge of Appeal	Yes
L P Thean	Judge of Appeal	No
Yong Pung How	Chief Justice	No

4. Counsels

Counsel Name	Organization
Herman Jeremiah	Helen Yeo & Partners
Christopher Anand Daniel	Helen Yeo & Partners
Michael Hwang	Helen Yeo & Partners
Jenny Chang	Harry Elias Partnership
Philip Fong	Harry Elias Partnership
Simon Jones	Wee Swee Teow & Co
Chiah Kok Khun	Wee Swee Teow & Co

4. Facts

Gary Hew, an employee of BNP, carried out share and forex transactions in the accounts of Nancy Tan and Shee Chin.
Nancy Tan and Shee Chin claimed the transactions were unauthorized and without their knowledge.
Gary opened forex trading accounts in Nancy's and Shee Chin's names without their express authorization.
Confirmations and statements for the transactions were sent to Nancy and Shee Chin.
Nancy signed instructions to transfer profits from her forex account to Shee Chin's account.
Shee Chin signed an acceptance for a loan/facility proposal from BNP.
Shee Chin and Nancy deposited shares as security for Shee Chin's account.

5. Formal Citations

Banque Nationale De Paris v Tan Nancy and Another, CA 168/2000, [2001] SGCA 76

6. Timeline

Date	Event
1988-05-23	Gary Hew Keong Chan employed by Banque Nationale De Paris
1991-01-01	Nancy Tan married Gary Hew Keong Chan
1994-05-09	Tan Shee Chin opened a Singapore dollar current account with Banque Nationale De Paris
1994-01-01	Gary Hew Keong Chan transferred to Banque Nationale De Paris' Private Banking Department
1995-01-01	Nancy Tan and Gary Hew Keong Chan ceased to live as husband and wife
1996-04-16	Tan Shee Chin opened a nominee account with Banque Nationale De Paris nominee company
1996-04-16	Tan Shee Chin opened a Singapore dollar current account for settling share transactions
1996-04-16	A Malaysian Ringgit current account was opened in Tan Shee Chin's name
1996-05-01	Tan Shee Chin deposited 50,000 shares in United Overseas Bank Ltd with Banque Nationale De Paris
1996-06-10	A loan of S$238,000 was drawn down in Tan Shee Chin's name
1996-12-26	Nancy Tan opened a Singapore dollar current account with Banque Nationale De Paris
1996-12-26	Nancy Tan signed a memorandum of charge/deposit of securities as security for the account of Tan Shee Chin
1997-04-01	Banque Nationale De Paris made a margin call on Tan Shee Chin
1997-04-01	Tan Shee Chin deposited further 219,613 United Overseas Bank shares with Banque Nationale De Paris
1997-04-29	Nancy Tan deposited 10,000 shares in United Industrial Corporation Ltd and 55,588 United Overseas Bank shares with Banque Nationale De Paris
1997-05-26	A loan in the sum of MYR3,965,351.23 was obtained by Gary Hew Keong Chan in Tan Shee Chin's name
1997-06-01	Tan Shee Chin's Malaysian Ringgit account went into overdraft
1997-06-01	A further loan of MYR73,740 was obtained by Gary Hew Keong Chan in Tan Shee Chin's name
1997-06-26	Two Malaysian Ringgit loans were converted into a loan in Swiss Franc in the sum of CHF2,316,406.15
1997-06-26	The Swiss Franc loan was converted into Malaysia Ringgit in the sum of MYR5,051,571.84
1997-07-10	Gary Hew Keong Chan put up a credit proposal for Tan Shee Chin to Banque Nationale De Paris
1997-08-13	Banque Nationale De Paris wrote to Tan Shee Chin offering certain facilities
1997-10-20	Tan Shee Chin signed the acceptance and returned it to Banque Nationale De Paris
1997-10-22	The loan of S$238,000 taken in June 1996 together with interest was converted by Gary Hew Keong Chan into a MYR loan amounting to MYR538,204.04
1998-01-22	Gary Hew Keong Chan repaid the loan of MYR538,204.04 and the other loan of MYR5,051,571.84
1998-01-22	Gary Hew Keong Chan drew down two further loans of MYR2,500,000 and MYR2,812,767.76 in Tan Shee Chin's name
1998-04-01	Gary Hew Keong Chan opened an account in Tan Shee Chin's name for trading in forex transactions
1998-04-01	Gary Hew Keong Chan opened an account in Nancy Tan's name for trading in forex transactions
1998-07-01	Two loans were merged and converted by Gary Hew Keong Chan into a loan in Japanese Yen yielding a total sum of 169,307,681
1998-07-29	Telephone conversation between Gary Hew Keong Chan and Tan Shee Chin
1998-07-29	Draft letter was faxed to Tan Shee Chin who approved it; he signed and sent it by fax to Banque Nationale De Paris
1998-09-29	Gary Hew Keong Chan informed Nancy Tan of the forex transactions he made in her name
1998-10-02	This loan was repaid by a drawdown of two new Japanese Yen loans, one in the sum of 100,000,000 and the other in the sum of 60,000,000
1998-10-08	Gary Hew Keong Chan entered into large forex transactions amounting to some US$9m
1998-10-08	Gary Hew Keong Chan informed Tan Nancy and Tan Shee Chin of the forex transactions
1998-10-08	Tan Shee Chin made two telephone calls to Mr Hamery
1998-10-09	Mr Billy Au-Yeung telephoned Nancy Tan
1998-10-12	Tan Shee Chin spoke to Mr Billy Au-Yeung
1998-10-13	Tan Shee Chin instructed Banque Nationale De Paris to stop all transactions in his account
1998-10-13	Nancy Tan wrote to Banque Nationale De Paris disputing liability for the loss incurred
1998-10-14	Tan Shee Chin faxed a letter to Banque Nationale De Paris
1998-10-15	Nancy Tan faxed a letter to Banque Nationale De Paris
1998-10-17	Nancy Tan lodged a police report
1999-07-08	Gary Hew Keong Chan pleaded guilty to the charges and was sentenced to imprisonment for a term of 12 months
2000-01-01	Banque Nationale De Paris initiated proceedings against Tan Shee Chin and Nancy Tan
2001-11-21	Decision Date

7. Legal Issues

Authority to Transact
- Outcome: The court held that the respondents had authorized Gary to trade in their accounts, either through actual or apparent authority.
- Category: Substantive
- Sub-Issues:
  - Implied Authority
  - Apparent Authority
  - Ratification of Unauthorized Transactions
- Related Cases:
  - [1967] 3 All ER 98
  - [1968] 1 QB 549
  - [1993] 3 SLR 393
  - [1964] 4 All ER 630
  - [1964] 2 QB 480

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract
Breach of Fiduciary Duty
Inducement of Breach of Contract
Conspiracy to Injure

10. Practice Areas

Commercial Litigation
Banking Litigation
Financial Services Litigation

11. Industries

Banking
Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Hely-Hutchinson v Brayhead Ltd and Anor	Court of Appeal	Yes	[1967] 3 All ER 98	England and Wales	Cited for the principle of implied actual authority inferred from the conduct of the parties and the circumstances of the case.
Hely-Hutchinson v Brayhead Ltd and Anor	Court of Appeal	Yes	[1968] 1 QB 549	England and Wales	Cited for the principle of implied actual authority inferred from the conduct of the parties and the circumstances of the case.
SPP Ltd v Chew Beng Gim and Anor	Court of Appeal	Yes	[1993] 3 SLR 393	Singapore	Cited as an example of a case where the court found implied actual authority based on the conduct of the parties.
Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd and Anor	Court of Appeal	Yes	[1964] 4 All ER 630	England and Wales	Cited for the principle of apparent authority, where a principal represents that an agent has authority to act on their behalf.
Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd and Anor	Court of Appeal	Yes	[1964] 2 QB 480	England and Wales	Cited for the principle of apparent authority, where a principal represents that an agent has authority to act on their behalf.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Securities Industry Act (Cap 289)	Singapore
Futures Trading Act (Cap 116)	Singapore
Evidence Act (Cap 97, 1997 Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Unauthorized Transactions
Forex Transactions
Share Transactions
Implied Authority
Apparent Authority
Ratification
Margin Call
Overdraft Facility
Credit Advices
Debit Advices
Risk Disclosure Statement

15.2 Keywords

Unauthorized Trading
Forex
Agency
Authority
Banking
Singapore

17. Areas of Law

Area Name	Relevance Score
Forex Transactions	80
Banking and Finance	75
Share Transactions	70
Contract Law	60
Agency Law	50
Estoppel	40
Fiduciary Duties	30
Company Law	25
Arbitration	10

16. Subjects

Agency
Banking
Finance
Securities
Foreign Exchange