Tan Poh Leng Stanley v UBS AG: Contractual Terms, Negligence, & Equity Accumulators

In 2016, the High Court of Singapore heard the case of Stanley Tan Poh Leng v UBS AG, regarding the unwinding of equity accumulators during the 2008 financial crisis. Stanley Tan, a private wealth client of UBS AG, claimed damages for breach of contract and negligence, alleging that UBS AG unlawfully terminated and unwound his equity accumulators without proper notice, resulting in substantial financial losses. UBS AG argued that Tan had authorized the unwinding and that it acted within its contractual rights. The court, presided over by Justice Belinda Ang Saw Ean, ruled in favor of UBS AG, finding that Tan had indeed given instructions to unwind the accumulators, thus negating the need for the ISDA notice. The court dismissed Tan's claim.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Defendant

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Stanley Tan sued UBS AG over equity accumulators unwound during the 2008 crisis. The court found for UBS, holding Tan authorized the unwinding.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Stanley Tan Poh LengPlaintiffIndividualClaim DismissedLostNg Lip Chih, Jennifer Sia
UBS AGDefendantCorporationJudgment for DefendantWonHri Kumar Nair, James Low, Harsharan Kaur Bhullar, Ben Tan

3. Judges

Judge NameTitleDelivered Judgment
Belinda Ang Saw EanJudgeYes

4. Counsels

Counsel NameOrganization
Ng Lip ChihNLC Law Asia LLP
Jennifer SiaNLC Law Asia LLP
Hri Kumar NairDrew & Napier LLC
James LowDrew & Napier LLC
Harsharan Kaur BhullarDrew & Napier LLC
Ben TanDrew & Napier LLC

4. Facts

  1. Stanley Tan invested in 16 equity accumulators on a margin trading basis with UBS AG.
  2. Tan's account held equity stocks with a combined market value exceeding S$100 million.
  3. During the 2008 financial crisis, UBS AG issued a margin call to Tan.
  4. Tan failed to remedy the margin shortfall, leading UBS AG to liquidate his account.
  5. UBS AG terminated the accumulators and sold shares pledged as collateral.
  6. After liquidation, a shortfall of US$6.7 million remained, along with S$25,461,800 in unwinding costs.
  7. Tan later paid off his total liabilities to UBS AG under a work out agreement.

5. Formal Citations

  1. Tan Poh Leng Stanley v UBS AG, Suit No 124 of 2013, [2016] SGHC 17

6. Timeline

DateEvent
Stanley Tan signed account opening documents with UBS AG.
Account opened with UBS AG.
Stanley Tan accepted the ISDA Master Agreement.
Stanley Tan began investing in equity accumulators.
UBS AG revised the account agreement.
UBS AG issued a margin call letter to Stanley Tan.
UBS AG unwound eight of the accumulators.
UBS AG unwound the remaining eight accumulators.
Work Out Agreement was signed.
Stanley Tan filed for pre-action discovery against UBS AG.
Pre-action Discovery Application was dismissed.
Stanley Tan repaid his total liabilities to UBS AG.
Stanley Tan commenced proceedings against UBS AG.
Trial began.
Trial concluded.
Judgment reserved.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that there was no breach of contract because the plaintiff had given exit instructions to the defendant.
    • Category: Substantive
    • Sub-Issues:
      • Failure to provide ISDA notice
      • Unauthorised unwinding of accumulators
  2. Negligence
    • Outcome: The court held that the defendant was not negligent in the manner it unwound the accumulators.
    • Category: Substantive
    • Sub-Issues:
      • Duty of care in unwinding accumulators
      • Negligent manner of unwinding accumulators
  3. Interpretation of ISDA Master Agreement
    • Outcome: The court interpreted the ISDA Master Agreement in light of other agreements and arrangements between the parties, finding that the defendant was entitled to unwind the accumulators without issuing a notice.
    • Category: Substantive
    • Sub-Issues:
      • Applicability of ISDA notice requirements
      • Relationship between ISDA and other agreements
  4. Incorporation of clauses by reference
    • Outcome: The court found that the Accumulator Confirmations incorporated the termination rights arising from the failure to maintain margin requirements under the Credit Services Notification Letter.
    • Category: Substantive
    • Sub-Issues:
      • Incorporation of CSNL terms into Accumulator Confirmations
      • Hierarchy of clauses in different agreements

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract
  • Negligence

10. Practice Areas

  • Commercial Litigation
  • Banking Litigation
  • Financial Disputes
  • Contract Disputes

11. Industries

  • Finance
  • Banking

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
International Research Corp PLC v Lufthansa Systems Asia Pacific Pte LtdCourt of AppealYes[2014] 1 SLR 130SingaporeCited for the general approach that the court should take in deciding whether a clause from one contract had been incorporated by reference into another contract.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the approach that the court should have regard to the context and the objective circumstances attending the entry into the contract.
Habaş Sinai Ve Tibbi Gazlar Isthisal Endüstri AŞ v Sometal SALEnglish High CourtNo[2010] Bus LR 880EnglandCited to give context to what is meant by “one contract” and “two contract” cases.
Rainy Sky SA v Kookmin BankUK Supreme CourtYes[2011] 1 WLR 2900United KingdomCited for the role of business common sense in construing the intention of the parties as reflected in the terms of the contract.
Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd)Court of AppealYes[2015] SGCA 55SingaporeCited for the approach to the construction of a bond and that the task of the court in interpreting a provision in a contract is to determine what the parties meant by the language used.
Yien Yieh Commercial Bank Ltd v Kwai Chung Cold Storage Co LtdPrivy CouncilYes[1989] 2 HKLR 639Hong KongCited for the principle that to reject one clause in a contract as inconsistent with another involves a rewriting of the contract which can only be justified in circumstances where the two clauses are in truth irreconcilable.
Geys v Société Générale, London BranchUnited Kingdom Supreme CourtYes[2013] 1 AC 523United KingdomCited for the approach that should be taken by a court when a contract or a series of contracts provide alternative means/rights to terminate a contract.
Pagnan SpA v Tradax Ocean Transportation SAN/AYes[1986] 2 Lloyd’s Rep 646N/ACited for the court's duty to reconcile seemingly inconsistent provisions in a contract.
United Overseas Bank Ltd v The Asiatic Enterprises (Pte) LtdN/AYes[1999] 2 SLR(R) 671SingaporeCited for the question of whether a clause in a contract in unusual is a question of fact.
Sembcorp Marine Ltd v PPL Holdings Pte LtdN/AYes[2013] 4 SLR 193SingaporeCited for the principle that a term is only implied in the face of “necessity” and not “sensibility”.

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

  • Equity Accumulators
  • Margin Trading
  • Margin Call
  • Liquidation
  • Collateral Shares
  • ISDA Master Agreement
  • Unwinding Costs
  • Credit Services Notification Letter
  • Exit Instructions
  • Mark-to-Market Losses

15.2 Keywords

  • Equity Accumulators
  • Margin Call
  • ISDA Master Agreement
  • UBS AG
  • Stanley Tan
  • Financial Crisis
  • Negligence
  • Contract Law
  • Singapore High Court

16. Subjects

  • Contractual Disputes
  • Financial Services
  • Derivatives
  • Banking
  • Negligence

17. Areas of Law

  • Contract Law
  • Tort Law
  • Banking Law
  • Derivatives Law
  • Financial Law