Lam Chi Kin David v Deutsche Bank AG: Breach of Contract & Promissory Estoppel in FX Trading

Lam Chi Kin David appealed against the decision of the Judicial Commissioner in Suit No 834 of 2008, dismissing his claim against Deutsche Bank AG, Singapore branch, for damages for breach of contract and granting judgment for the bank on its counterclaim. The Court of Appeal allowed the appeal, finding that Deutsche Bank breached its obligations by closing out Lam's foreign exchange positions prematurely and was estopped from resiling on its promise to allow a grace period to respond to a margin call.

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

Appeal regarding breach of contract and promissory estoppel in foreign exchange trading. Court of Appeal allowed the appeal, finding Deutsche Bank in breach.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Deutsche Bank AGRespondentCorporationJudgment for Defendant reversedLost
Lam Chi Kin DavidAppellantIndividualAppeal AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeYes
Andrew Phang Boon LeongJustice of the Court of AppealNo
V K RajahJustice of the Court of AppealNo

4. Counsels

Counsel NameOrganization
Ang Cheng HockAllen & Gledhill LLP
Nakul DewanAllen & Gledhill LLP
Paul OngAllen & Gledhill LLP
Goh Zhuo NengAllen & Gledhill LLP
Kelvin TeoMPillay
Christopher ChongMPillay
Jasmine KokMPillay

4. Facts

  1. Lam Chi Kin David became a private banking client of Deutsche Bank AG in November 2007.
  2. Lam Chi Kin David signed a Master Agreement and Service Agreement with Deutsche Bank AG.
  3. Deutsche Bank AG granted Lam Chi Kin David a credit line of USD 200,000,000.
  4. Lam Chi Kin David engaged in foreign exchange contracts under a Carry Trade Investment Strategy.
  5. In early October 2008, the foreign exchange market became volatile.
  6. Deutsche Bank AG sent letters to Lam Chi Kin David regarding collateral shortfalls.
  7. Deutsche Bank AG closed out Lam Chi Kin David's foreign exchange contracts on 10 October 2008.
  8. Mr. Linke promised the appellant a Grace Period to respond to any margin call.

5. Formal Citations

  1. Lam Chi Kin David v Deutsche Bank AG, Civil Appeal No 41 of 2010, [2010] SGCA 42

6. Timeline

DateEvent
Lam Chi Kin David became a private banking client of Deutsche Bank AG.
Deutsche Bank Master Agreement for Foreign Exchange Transactions and Derivatives Transactions signed.
Risk Disclosure Statement signed.
Security Agreement signed.
Meeting between Mr Linke and the appellant where the Grace Period was promised.
Short Term Facilities/Foreign Exchange Facility signed.
Declaration of Pledge (First Party) signed.
Deutsche Bank faxed a letter to Lam Chi Kin David informing him of a collateral availability shortfall.
Deutsche Bank faxed a letter to Lam Chi Kin David informing him of a shortfall in his account.
Deutsche Bank faxed a letter to Lam Chi Kin David requesting immediate steps to restore the collateral value.
Deutsche Bank closed out Lam Chi Kin David's foreign exchange contracts.
Deutsche Bank faxed a summary of transactions to Lam Chi Kin David.
Deutsche Bank sent a letter of demand to Lam Chi Kin David.
Judgment reserved.
Decision Date

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that Deutsche Bank breached its contract with Lam Chi Kin David by failing to provide one business day's notice before closing out his foreign exchange positions.
    • Category: Substantive
    • Sub-Issues:
      • Failure to provide adequate notice before closing out foreign exchange positions
      • Improper termination of foreign exchange contracts
  2. Promissory Estoppel
    • Outcome: The court found that Deutsche Bank was estopped from resiling on its promise to allow Lam Chi Kin David a grace period to respond to a margin call.
    • Category: Substantive
    • Sub-Issues:
      • Detrimental reliance on a promise
      • Inequitable to resile from a promise
  3. Variation of Contract
    • Outcome: The court found that the promise of a grace period constituted a binding undertaking by the respondent to give the appellant 48 hours to meet any margin call, which varied the terms of the Master Agreement and the Service Agreement accordingly.
    • Category: Substantive
    • Sub-Issues:
      • Consideration for variation
      • Binding undertaking

8. Remedies Sought

  1. Damages

9. Cause of Actions

  • Breach of Contract
  • Promissory Estoppel

10. Practice Areas

  • Commercial Litigation
  • Banking Litigation
  • Financial Services Litigation

11. Industries

  • Banking
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Lam Chi Kin David v Deutsche Bank AGHigh CourtYes[2010] 2 SLR 896SingaporeThe decision from which this appeal arose.
Thomas Hughes v The Directors of the Metropolitan Railway CoHouse of LordsYes(1877) 2 App Cas 439United KingdomCited for the principle of promissory estoppel, specifically regarding the inequity of enforcing strict contractual rights after leading a party to believe they would be suspended.
Ong Chay Tong & Sons (Pte) Ltd v Ong Hoo EngHigh CourtYes[2009] 1 SLR(R) 305SingaporeCited for the principle that consideration is required to vary the terms of a contract.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealHigh CourtYes[2009] 2 SLR(R) 332SingaporeCited for the principle that consideration is required to vary the terms of a contract.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Foreign Exchange Contracts
  • Carry Trade Investment Strategy
  • Master Agreement
  • Service Agreement
  • Collateral Value
  • Total Exposure
  • Margin Call
  • Grace Period
  • Promissory Estoppel
  • Variation of Contract

15.2 Keywords

  • breach of contract
  • promissory estoppel
  • foreign exchange
  • margin call
  • grace period
  • banking
  • Singapore
  • Deutsche Bank

17. Areas of Law

Area NameRelevance Score
Banking Law80
Banking and Finance80
Contract Law75
Estoppel60
Wealth Management50
Financial Derivatives40
Agency Law30

16. Subjects

  • Contract Law
  • Banking
  • Finance
  • Foreign Exchange
  • Promissory Estoppel