Abdul Razak Valibhoy v Keppel Investment Management Ltd: Breach of Contract and Fiduciary Duty in Investment Management

In the High Court of Singapore, Abdul Razak Valibhoy sued Keppel Investment Management Ltd (KIML) for breach of contract, breach of fiduciary duty, negligence, and breach of trust related to the management of his investment fund between July 1995 and December 2000. Valibhoy claimed losses of S$4,253,538.30 and US$2,107,014, alleging unauthorized investments, failure to timely dispose of investments, failure to tax plan, and improper purchase of Ciputra Notes. The court dismissed Valibhoy's action, finding that KIML acted within its discretionary authority under the Investment Agreement and that Valibhoy had not proven his claims.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's action is dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Abdul Razak Valibhoy sues Keppel Investment Management Ltd for breach of contract and fiduciary duty regarding investment management, claim dismissed.

1.7 Decision Date

10 October 2002

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Abdul Razak Valibhoy	Plaintiff	Individual	Claim Dismissed	Lost	Peter Gabriel of Gabriel Peter & Partners K Muralitherapany of Gabriel Peter & Partners
Keppel Investment Management Ltd	Defendant	Corporation	Judgment for Defendant	Won	Ang Wee Tiong of Allen & Gledhill Stanley Lai of Allen & Gledhill K Shanmugam SC of Allen & Gledhill Candace Ler of Allen & Gledhill

3. Judges

Judge Name	Title	Delivered Judgment
Belinda Ang Saw Ean	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Peter Gabriel	Gabriel Peter & Partners
K Muralitherapany	Gabriel Peter & Partners
Ang Wee Tiong	Allen & Gledhill
Stanley Lai	Allen & Gledhill
K Shanmugam SC	Allen & Gledhill
Candace Ler	Allen & Gledhill

4. Facts

Abdul Razak Valibhoy appointed KIML as the Investment Manager of the Valibhoy Prosperity Fund in July 1995.
The Investment Agreement granted KIML discretionary authority over investments.
Valibhoy claimed KIML made unauthorized investments and exceeded its mandate.
Valibhoy alleged KIML failed to timely dispose of investments and failed to tax plan.
Valibhoy claimed KIML breached its fiduciary duty in the purchase of Ciputra Notes.
The Investment Plan was an undated and unsigned document.
Valibhoy received weekly and monthly statements detailing the Fund's investments.

5. Formal Citations

Abdul Razak Valibhoy v Keppel Investment Management Ltd, Suit 693/2001/G, [2002] SGHC 236

6. Timeline

Date	Event
1962-01-01	Abdul Razak Valibhoy began managing his father's business.
1983-01-01	Abdul Razak Valibhoy ceased managing his father's business.
1993-01-01	Keppel Investment Management Ltd was established.
1995-06-01	Abdul Razak Valibhoy inherited S$33m.
1995-07-06	Abdul Razak Valibhoy met with representatives of KIML and Keppel Bank.
1995-07-10	Abdul Razak Valibhoy met with KIML representatives; KIML presented an investment proposal.
1995-07-12	Abdul Razak Valibhoy met with KIML representatives and was handed an Investment Plan.
1995-07-12	Abdul Razak Valibhoy and KIML signed the Investment Agreement.
1995-07-24	Abdul Razak Valibhoy was allocated and issued US$2m worth of Ciputra Notes.
1996-01-03	Written mandate of S$1m was given to KIML to invest in Hong Kong equities.
1997-09-01	Abdul Razak Valibhoy added RM 10m to the Fund.
2000-05-09	KIML sent a letter regarding liquidation of investments in Hong Kong.
2000-05-31	Alleged deadline for KIML to liquidate investments in Hong Kong.
2000-12-14	KIML’s appointment was terminated.
2001-01-01	Ciputra Notes were not redeemed.
2001-01-01	Abdul Razak Valibhoy filed Suit 693/2001/G against Keppel Investment Management Ltd.
2002-02-01	Amendments to the Further & Better Particulars were filed.
2002-06-03	Trial commenced.
2002-10-11	Judgment was delivered.

7. Legal Issues

Breach of Contract
- Outcome: The court found that KIML did not breach the Investment Agreement, as the Investment Plan was not a binding instruction and KIML acted within its discretionary authority.
- Category: Substantive
- Sub-Issues:
  - Unauthorised Investments
  - Excess of Mandate
  - Failure to Timely Dispose of Investments
Breach of Fiduciary Duty
- Outcome: The court found no real likelihood of conflict of interest and that KIML did not breach its fiduciary duty in purchasing the Ciputra Notes.
- Category: Substantive
- Sub-Issues:
  - Conflict of Interest
  - Failure to Disclose
- Related Cases:
  - [1967] 2 AC 46
Negligence
- Outcome: The court found that the Plaintiff did not plead that no reasonable fund manager would have purchased the Notes and did not plead the damage resulting from the breach of duty of care.
- Category: Substantive

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract
Breach of Fiduciary Duty
Negligence
Breach of Trust

10. Practice Areas

Commercial Litigation
Investment Management Disputes

11. Industries

Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Kleinworth Benson Ltd v Malaysian Mining Corporation Berhad	Unknown	Yes	[1989] 1 All E.R. 785	England and Wales	Cited for the principle that the party seeking to rely on a collateral contract bears the burden of establishing that both parties intended to create a legally binding contract.
Banque Nationale de Paris v Tan Nancy & Anor	Court of Appeal	Yes	[2002] 1 SLR 29	Singapore	Cited for the principle that receiving statements has the effect intended and serves the purpose for which they were sent, even if unread.
Ong & Co Pte Ltd v Foo Sae Heng	Unknown	Yes	[1990] SLR 186	Singapore	Cited regarding the detriment of not protesting, complaining, or querying about unauthorized transactions.
RHB-Cathy Securities Pte Ltd v Ibrahim Khan & Ors	Unknown	Yes	[1999] 3 SLR 464	Singapore	Cited regarding the detriment of not protesting, complaining, or querying about unauthorized transactions.
Boardman & Anor v Phipps	House of Lords	Yes	[1967] 2 AC 46	England and Wales	Cited for the definition of 'real likelihood of conflict of interest'.
Perestrello E Companhia Limitada v United Paint Co Ltd	Unknown	Yes	[1969] 3 All ER 479	England and Wales	Cited for the principle that where the amount claimed could be calculated, the claimant must give particulars of how the item is calculated.
Mount Elizabeth Health Centre Pte Ltd v Mount Elizabeth Hospital Ltd	Unknown	Yes	[1993] 1SLR 1021	Singapore	Cited for the principle that the Plaintiff’s claims are in the nature of special damages and they must be pleaded with sufficient particularity.
Brown v KMR Services Ltd	Unknown	Yes	[1995] 4 All ER 598	England and Wales	Cited regarding set-off or credit was given against losses in underwriting years.
Hong Leong Finance Ltd v Famco (S) Pte Ltd	Unknown	Yes	[1992] 2 SLR 1108	Singapore	Cited for the principle that the court is normally slow to allow amendments at the trial stage in respect of matters apparent to the Plaintiff a long time ago.
Goh Kim Hai v Pacific Can Investment Holdings Ltd	Unknown	Yes	[1996] 2 SLR 109	Singapore	Cited for the principle that the Plaintiff has had many opportunities to put forward his case so much so that he must be held strictly to what has been previously stated.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Investment Agreement
Investment Plan
Valibhoy Prosperity Fund
Discretionary Authority
Ciputra Notes
Unauthorised Investments
Breach of Fiduciary Duty
Collateral Contract
Mandate
Tax Planning

15.2 Keywords

investment management
breach of contract
fiduciary duty
unauthorized investments
Ciputra Notes
Keppel Investment Management
Abdul Razak Valibhoy

17. Areas of Law

Area Name	Relevance Score
Fund Management	95
Investments	90
Fiduciary Duties	85
Contract Law	80
Banking and Finance	75
Commercial Disputes	70
Trust Law	60
Damages Assessment	50
Company Law	40

16. Subjects

Investment Management
Contract Law
Fiduciary Duty
Financial Services