Teo Wai Cheong v Crédit Industriel et Commercial: Unauthorized Equity Accumulators & Bank's Discovery Obligations

Teo Wai Cheong appealed against the High Court's decision in favor of Crédit Industriel et Commercial ("the Bank") regarding unauthorized equity accumulators. The Court of Appeal allowed the appeal, finding that the Bank failed to prove that Teo had authorized the disputed transactions. The court also found that the Bank had breached its discovery obligations by failing to disclose relevant documents during the initial trial. The court dismissed the Bank's claims against Teo and allowed Teo's counterclaim for wrongful liquidation of assets and wrongful set off of monies.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal allowed in Civil Appeal No 59 of 2012. Appeal allowed in Civil Appeal No 94 of 2012.

1.3 Case Type

Civil

1.4 Judgment Type

Written Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding unauthorized equity accumulators. Court of Appeal found the bank failed to prove authorization and breached discovery obligations.

1.7 Decision Date

16 May 2013

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Teo Wai Cheong	Appellant	Individual	Appeal allowed	Won	Chelva Rajah, Tham Lijing, Sean Lim Thian Siong, Gong Chin Nam
Crédit Industriel et Commercial	Respondent	Corporation	Claims dismissed	Lost	Manoj Sandrasegara, Smitha Menon, Aw Wen Ni, Mohamed Nawaz, Daniel Chan, Jonathan Tang, Edmund Koh

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	Yes
Chao Hick Tin	Justice of the Court of Appeal	No
V K Rajah	Justice of the Court of Appeal	No

4. Counsels

Counsel Name	Organization
Chelva Rajah	Tan Rajah & Cheah
Tham Lijing	Tan Rajah & Cheah
Sean Lim Thian Siong	Hin Tat Augustine & Partners
Gong Chin Nam	Hin Tat Augustine & Partners
Manoj Sandrasegara	WongPartnership LLP
Smitha Menon	WongPartnership LLP
Aw Wen Ni	WongPartnership LLP
Mohamed Nawaz	WongPartnership LLP
Daniel Chan	WongPartnership LLP
Jonathan Tang	WongPartnership LLP
Edmund Koh	WongPartnership LLP

4. Facts

Teo was a private banking client of the Bank.
Ng was Teo's relationship manager at the Bank.
Teo entered into twenty equity accumulators between July and October 2007.
The dispute concerned five China Energy (CE) accumulators established on 2 and 3 October 2007.
The Bank claimed S$2,782,803.66 for CE shares and S$3,625,393.11 for closing out the accumulators.
Teo claimed he did not authorize the disputed accumulators.
Ng used her personal handphone for calls, which were not recorded.
The Bank failed to disclose relevant documents during the first trial.
Ng was unavailable to testify at the retrial.
Ng lied to her colleagues from the credit department on several occasions.

5. Formal Citations

Teo Wai Cheong v Crédit Industriel et Commercial and another appeal, Civil Appeals Nos 59 and 94 of 2012, [2013] SGCA 33
Crédit Industriel et Commercial v Teo Wai Cheong, , [2010] 3 SLR 1149
Teo Wai Cheong v Crédit Industriel et Commercial, , [2011] SGCA 13
Crédit Industriel et Commercial v Teo Wai Cheong, , [2012] 3 SLR 287

6. Timeline

Date	Event
2004-01-01	Relationship between Teo and Ng started at Citibank Singapore.
2006-01-01	Ng left Citibank for the Bank and persuaded Teo to transfer his business.
2007-06-01	Teo was introduced to equity accumulators.
2007-07-20	First equity accumulator was purchased.
2007-10-03	Last of twenty equity accumulators was purchased.
2007-10-03	Date after which there was a complete absence of communication between Ng and Teo until 10-11-2007.
2007-10-16	Teo learned about the Disputed Accumulators and the Sembcorp Accumulator.
2007-11-07	Teo issued a cheque for $160,000 to the Bank.
2009-01-01	Teo filed an affidavit in response to the Bank’s application for summary judgment.
2010-01-01	First Trial Judge found in favour of the Bank.
2011-01-01	Court of Appeal ordered a new trial.
2012-01-01	Retrial Judge found in favour of the Bank.
2013-05-17	Judgment reserved by Court of Appeal.
2013-05-17	Court of Appeal allowed the appeal.

7. Legal Issues

Authorization of Financial Transactions
- Outcome: The Court of Appeal found that the Bank failed to prove that Teo had authorized the disputed equity accumulator transactions.
- Category: Substantive
- Sub-Issues:
  - Lack of authorization
  - Breach of mandate
Breach of Discovery Obligations
- Outcome: The Court of Appeal found that the Bank had breached its discovery obligations by failing to disclose relevant documents during the initial trial, materially impairing the opportunity for cross-examination.
- Category: Procedural
- Sub-Issues:
  - Non-disclosure of relevant documents
  - Redaction of material portions of documents
- Related Cases:
  - [1940] AC 282
  - [1987] 1 WLR 428
Admissibility of Evidence under Section 33 of the Evidence Act
- Outcome: The Court of Appeal held that Ng’s evidence in her affidavits of evidence in chief and oral testimony at the First Trial relating to facts which are disputed between the parties, are not admissible under s 33 of the EA and are thus to be excluded.
- Category: Procedural
- Sub-Issues:
  - Inability to locate witness
  - Right and opportunity to cross-examine
Estoppel by Representation
- Outcome: The Court of Appeal rejected the Bank's argument that Teo was estopped from claiming that the Disputed Accumulators were unauthorized.
- Category: Substantive
- Sub-Issues:
  - Representation by conduct
  - Detriment to representee

8. Remedies Sought

Monetary Damages
Account of Profits

9. Cause of Actions

Breach of Contract
Breach of Statutory Duty
Unauthorised Transactions

10. Practice Areas

Commercial Litigation
Banking Litigation
Financial Services Litigation

11. Industries

Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Crédit Industriel et Commercial v Teo Wai Cheong	High Court	Yes	[2010] 3 SLR 1149	Singapore	The decision from which this appeal arose.
Teo Wai Cheong v Crédit Industriel et Commercial	Court of Appeal	Yes	[2011] SGCA 13	Singapore	The Court of Appeal set aside the judgment of the First Trial Judge and ordered a new trial after reviewing newly disclosed evidence.
Crédit Industriel et Commercial v Teo Wai Cheong	High Court	Yes	[2012] 3 SLR 287	Singapore	The judgment of the Retrial Judge, which was appealed against in this case.
Chainchal Singh v Emperor	Privy Council	Yes	AIR 1946 PC 1	United Kingdom	Cited for the principle that the requirements of Section 33 of the Evidence Act must be strictly satisfied before it may be invoked.
Wright v Doe d Tatham	N/A	Yes	(1834) 1 Ad & El 3	England and Wales	Cited as one of the origins of Section 33 of the Evidence Act.
The Attorney General v Davison	N/A	Yes	(1825) M’Cel & Y 160	England and Wales	Cited for the rationale behind the importance of cross-examination.
Vernon v Bosley (No 2)	N/A	Yes	[1997] 3 WLR 683	England and Wales	Cited for the principle that a litigant remains responsible for breaches of discovery obligations, even if the breaches result from incorrect advice from its solicitors.
Davies v Eli Lilly & Co and Others	N/A	Yes	[1987] 1 WLR 428	England and Wales	Cited for the principle that litigation is conducted 'cards face up on the table'.
Naylor v Preston Area Health Authority	N/A	Yes	[1987] 1 WLR 958	England and Wales	Cited for the principle that the just and efficient disposal of litigation can only be achieved by ensuring that parties disclose the relevant evidence before any hearing of the matter.
Myers v Elman	House of Lords	Yes	[1940] AC 282	United Kingdom	Cited for the principle that solicitors owe a special duty to the court to properly explain to their clients what their discovery obligations are.
Public Trustee and another v By Products Traders Pte Ltd and others	High Court	Yes	[2005] 3 SLR(R) 449	Singapore	Cited for the principle that it remains incumbent on solicitors, in good conscience, to act in diligent compliance with their duty to the court.
Woods v Martins Bank Ltd	N/A	Yes	[1959] 1 QB 55	England and Wales	Cited for the principle that a solicitor is duty bound, as an officer of the court, to carefully go through the documents disclosed by the client in order to ensure that, as far as possible, no relevant documents have been omitted.
Koh Teck Hee (trading as Mui Teck Heng Garments & Trading Co) v Leow Swee Lim (trading as Meyoung Trading)	High Court	Yes	[1991] 2 SLR(R) 328	Singapore	Cited for the principle that the solicitor’s duty extends to ensuring that knowledge and appreciation of the scope of the discovery obligations are passed on to any in the corporation who might be affected by it.
Rockwell Machine Tool Co Ltd v E P Barrus (Concessionaires) Ltd and Others	N/A	Yes	[1968] 1 WLR 693	England and Wales	Cited for the principle that the solicitor’s duty extends to ensuring that knowledge and appreciation of the scope of the discovery obligations are passed on to any in the corporation who might be affected by it.
Pertamina Energy Trading Limited v Credit Suisse	Court of Appeal	Yes	[2006] 4 SLR(R) 273	Singapore	Cited for the conditions that must prevail for estoppel to succeed.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)	Singapore
Financial Advisers Act (Cap 110, 2007 Rev Ed)	Singapore
Evidence Act (Cap 97, 1997 Rev Ed)	Singapore
Banking Act (Cap 19, 2008 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Equity Accumulators
Strike Price
Knock-Out Price
Maximum Obligation
Doubling Effect
S-Chip
Discovery Obligations
Authorisation
Estoppel
Under-margined Account

15.2 Keywords

Equity Accumulators
Unauthorised Transactions
Discovery
Banking
Financial Products
Estoppel

16. Subjects

Banking
Finance
Civil Litigation
Discovery
Evidence

17. Areas of Law

Banking Law
Contract Law
Civil Procedure
Financial Law
Discovery
Evidence Law
Estoppel