Soon Kok Tiang v DBS: High Notes 5 Voidance Claim Over Lehman-Linked Notes
Soon Kok Tiang and others sued DBS Bank Ltd in the High Court of Singapore, seeking a declaration that the DBS High Notes 5 were void and repayment of their investments following the collapse of Lehman Brothers. The plaintiffs argued that inconsistent definitions of the Credit Event Redemption Amount (CERA) created contractual uncertainty. Lee Seiu Kin J dismissed the claim, finding that the third CERA description was the operative one and that an obvious clerical error in the fourth CERA description could be corrected by construction.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Claim dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Investors sued DBS, seeking to void High Notes 5 after Lehman Brothers' collapse. The court dismissed the claim, finding no contractual uncertainty.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Soon Kok Tiang | Plaintiff | Individual | Claim dismissed | Lost | Siraj Omar, Dipti Jauhar |
| DBS Bank Ltd | Defendant | Corporation | Claim dismissed | Won | Davinder Singh, Khng Una |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lee Seiu Kin | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Siraj Omar | Premier Law LLC |
| Dipti Jauhar | Premier Law LLC |
| Davinder Singh | Drew & Napier LLC |
| Khng Una | Drew & Napier LLC |
4. Facts
- 21 plaintiffs sued DBS on behalf of themselves and 194 other individuals.
- The plaintiffs invested in DBS High Notes 5 (HN5), a Lehman-linked structured investment instrument.
- HN5 were issued by DBS under a US$3,000,000,000 structured note programme.
- Lehman Brothers filed for Chapter 11 bankruptcy on 15 September 2008.
- Lehman's bankruptcy triggered the termination of the HN5, resulting in investors losing their principal.
- The plaintiffs sought a declaration that the HN5 were void at the time of their issuance.
- The plaintiffs argued that the Pricing Statement contained inconsistent definitions of the Credit Event Redemption Amount (CERA).
5. Formal Citations
- Soon Kok Tiang and others v DBS Bank Ltd and another matter, Originating Summons No 774 of 2009 & Summons No 4834 of 2009, [2010] SGHC 360
6. Timeline
| Date | Event |
|---|---|
| Original base prospectus dated | |
| Supplementary base prospectus dated | |
| DBS High Notes 5 launched | |
| Offering made open to the public | |
| Closing date of the HN5 offering | |
| HN5 issued to investors | |
| Global financial markets began | |
| Investors received quarterly payments | |
| Final version registered with Monetary Authority of Singapore | |
| Investors received quarterly payments | |
| Lehman filed for Chapter 11 bankruptcy | |
| Notices of credit event | |
| Defendant wrote to the HN5 investors | |
| Notice of CERA dated | |
| Defendant wrote again to the investors | |
| Credit event redemption date | |
| MAS provided an update on the resolution of conflicts relating to Lehman-linked structured investment instruments | |
| Plaintiffs filed this originating summons | |
| Judgment reserved |
7. Legal Issues
- Contractual Uncertainty
- Outcome: The court held that there was no contractual uncertainty, finding that the third CERA description was the operative one and that an obvious clerical error in the fourth CERA description could be corrected by construction.
- Category: Substantive
- Sub-Issues:
- Inconsistent contract terms
- Clerical error in contract
- Contractual Interpretation
- Outcome: The court interpreted the contract to determine which documents and clauses were incorporated as terms.
- Category: Substantive
- Sub-Issues:
- Incorporation of terms by reference
- Contextual interpretation
8. Remedies Sought
- Repayment of principal amounts invested
- Costs of proceedings
- Declaration that the HN5 were void at the time of their issuance
9. Cause of Actions
- Breach of Contract
- Declaration that contract is void
10. Practice Areas
- Commercial Litigation
- Banking Litigation
11. Industries
- Banking
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | Court of Appeal | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the contextual approach to contractual interpretation. |
| Investors Compensation Scheme Ltd v West Bromwich Building Society | N/A | Yes | [1998] 1 WLR 896 | England and Wales | Cited for the principles of contractual interpretation. |
| East v Pantiles (Plant Hire) Ltd | N/A | Yes | [1982] 2 EGLR 111 | N/A | Cited for the conditions for correcting an obvious clerical mistake by the process of construction. |
| Ng Swee Hua v Auston International Group Ltd and another | High Court | Yes | [2008] SGHC 241 | Singapore | Cited for the application of the principles for correcting clerical errors in contracts. |
| Chartbrook Ltd and another v Persimmon Homes Ltd and another | House of Lords | Yes | [2009] 1 AC 1101 | England and Wales | Cited for the application of the principles for correcting clerical errors in contracts. |
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
- DBS High Notes 5
- HN5
- Lehman Brothers
- Credit Event Redemption Amount
- CERA
- Pricing Statement
- Base Prospectus
- Reference Notes
- Constellation Investment Limited
- Reference Obligation
- Charged Assets Adjustment Amount
- Hedging Costs
15.2 Keywords
- DBS High Notes 5
- Lehman Brothers
- Contractual Uncertainty
- Structured Notes
- Singapore
- Financial Crisis
16. Subjects
- Contract Law
- Securities
- Structured Notes
- Financial Crisis
17. Areas of Law
- Contract Law
- Financial Law
- Securities Law