Crédit Industriel v Teo Wai Cheong: Accumulator Agreements & Private Banking
In Crédit Industriel et Commercial v Teo Wai Cheong, the Singapore High Court addressed a dispute between Crédit Industriel et Commercial (CIC), a Singapore branch of a French bank, and Mr. Teo Wai Cheong, a private banking client, concerning the purchase of certain accumulators. CIC claimed S$2,782,803.66 for the balance due on China Energy shares under five accumulator agreements, or alternatively, S$3,625,393.11 for closing out costs, or S$6,408,196.77 for loans extended. The court found that Mr. Teo had instructed CIC to purchase the accumulators and ruled in favor of CIC.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for the plaintiff.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment reserved
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case concerning a dispute over accumulator agreements between Crédit Industriel and private banking client Teo Wai Cheong.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Crédit Industriel et Commercial | Plaintiff | Corporation | Judgment for Plaintiff | Won | Manoj Sandrasegara, Sheryl Wei, Mohamed Nawaz Kamil, Nuraisah Ruslan |
| Teo Wai Cheong | Defendant | Individual | Claim Dismissed | Lost | Chelva R Rajah, Sean Lim, Gong Chin Nam |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Philip Pillai | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Manoj Sandrasegara | Drew & Napier LLC |
| Sheryl Wei | Drew & Napier LLC |
| Mohamed Nawaz Kamil | Drew & Napier LLC |
| Nuraisah Ruslan | Drew & Napier LLC |
| Chelva R Rajah | Hin Tat Augustine & Partners |
| Sean Lim | Hin Tat Augustine & Partners |
| Gong Chin Nam | Hin Tat Augustine & Partners |
4. Facts
- The plaintiff, Crédit Industriel et Commercial (CIC), is a Singapore branch of a French bank engaged in private banking.
- The defendant, Mr. Teo Wai Cheong, was a private banking client of the plaintiff.
- The dispute concerned the purchase of certain accumulators, complex over-the-counter structured equity products.
- The plaintiff claimed S$2,782,803.66 for the balance due on China Energy shares under five accumulator agreements.
- Alternatively, the plaintiff claimed S$3,625,393.11 for closing out costs, or S$6,408,196.77 for loans extended.
- The defendant denied instructing the plaintiff to purchase the disputed accumulators.
- The defendant had previously purchased fourteen accumulators through the Relationship Manager between July and September 2007.
5. Formal Citations
- Crédit Industriel et Commercial v Teo Wai Cheong, Suit No 626 of 2008, [2010] SGHC 155
- Crédit Industriel et Commercial v Teo Wai Cheong, Civil Appeal No 99 of 2010, [2011] SGCA 13
6. Timeline
| Date | Event |
|---|---|
| Account Opening and Custodian Agreement signed | |
| Banking Facility Letter issued | |
| Charge Agreement signed | |
| Trade Date of Accumulator on China Energy Ltd | |
| Effective Date of Accumulator on China Energy Ltd | |
| Telephone calls between Relationship Manager and defendant | |
| Telephone calls between Relationship Manager and defendant | |
| Defendant raised an objection to the Relationship Manager | |
| Defendant issued a cheque for S$160,000 to the plaintiff | |
| Plaintiff sold 180,000 China Energy shares | |
| Meeting between defendant, Mr. Paul Kwek, and the Relationship Manager | |
| Meeting between defendant, Mr. Jean Luc Anglada, and Mr. Kwek | |
| Defendant requested the plaintiff to provide him with the estimated costs of closing out the Disputed CE Accumulators | |
| Plaintiff's solicitors demanded payment of S$4,125,745.00 | |
| Plaintiff closed out the Disputed CE Accumulators | |
| Plaintiff closed out the Disputed CE Accumulators | |
| Plaintiff issued a conclusive certificate of indebtedness | |
| Decision Date | |
| Court of Appeal set aside the High Court judgment and ordered a new trial |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the defendant had instructed the plaintiff to purchase the disputed accumulators, thus establishing a breach of contract when the defendant failed to meet his obligations under the agreements.
- Category: Substantive
- Authority to Transact
- Outcome: The court determined that the defendant had given the Relationship Manager authority to purchase the accumulators on his behalf.
- Category: Substantive
- Obligations under Accumulator Agreements
- Outcome: The court ruled that the defendant was obligated to fulfill the terms of the accumulator agreements he entered into.
- Category: Substantive
- Role of Private Bank as Trusted Advisor
- Outcome: The court held that the private bank was not acting as a trusted advisor, as the contractual documents highlighted the client's responsibility for risks and recommended independent advice.
- Category: Substantive
8. Remedies Sought
- Payment of outstanding balance
- Payment of closing out costs
- Payment of loans extended
- Interest on the sum owed
9. Cause of Actions
- Breach of Contract
- Debt Recovery
10. Practice Areas
- Commercial Litigation
- Banking Litigation
- Financial Services Litigation
11. Industries
- Banking
- Financial Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| J.P. Morgan Bank (formerly Chase Manhattan Bank) & Others v Springwell Navigation Corporation | English High Court | Yes | [2008] EWHC 1186 | England and Wales | Cited for its discussion of common law and statutory causes of action in financial crisis litigation. |
| L’Estrange v F Graucob Limited | Court of King's Bench | Yes | [1934] 2 KB 394 | England and Wales | Cited for the principle that a person is bound by the terms of a contract they have signed, even if they have not read or understood them. |
| Consmat Singapore (Pte) Ltd v Bank of America National Trust & Savings Association | Singapore Court of Appeal | Yes | [1992] 2 SLR(R) 195 | Singapore | Cited for the principle that a person is bound by the terms of a contract they have signed, even if they have not read or understood them. |
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
- Accumulator
- Forward Price
- Initial Price
- Knock-out Event
- Share Accumulation
- Observation Period
- Settlement Date
- Maximum Obligation
- Risk Disclosure Statement
- Banking Facility Letter
- Charge Agreement
- Private Banking
15.2 Keywords
- accumulator
- private banking
- financial crisis
- contract
- credit industriel
- teo wai cheong
16. Subjects
- Banking
- Finance
- Contract Law
- Financial Derivatives
17. Areas of Law
- Banking Law
- Contract Law
- Financial Derivatives
- Private Banking