AmFraser Securities v Goh Chengyu: Unauthorized Trading & Agency in Securities Market
In 2016, the High Court of Singapore heard the case of AmFraser Securities Pte Ltd v Goh Chengyu, regarding outstanding losses from trades executed on Goh's account. AmFraser sued Goh to recover losses of approximately $1.9 million. Goh claimed the trades were unauthorized and counterclaimed for indemnity. The court found in favor of AmFraser, determining that Goh was liable for the trades because they were executed with his implied consent and knowledge through his trading representative, Heng Gim Teoh, who was taking instructions from Goh's cousin, Adrian Goh, and later, Adrian's friend, Lincoln Lee. The court dismissed Goh's counterclaim.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
AmFraser Securities sues Goh Chengyu for trading losses. Court examines agency, authority, and unauthorized trades in securities market.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| AMFRASER SECURITIES PTE LTD | Plaintiff | Corporation | Judgment for Plaintiff | Won | Danny Ong, Jansen Chow, Ong Kar Wei |
| GOH CHENGYU (WU CHENGYU) | Defendant | Individual | Counterclaims Dismissed | Lost | Philip Fong, Nicklaus Tan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| George Wei | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Danny Ong | Rajah & Tann LLP |
| Jansen Chow | Rajah & Tann LLP |
| Ong Kar Wei | Rajah & Tann LLP |
| Philip Fong | Harry Elias Partnership LLP |
| Nicklaus Tan | Harry Elias Partnership LLP |
4. Facts
- Defendant opened a trading account with Plaintiff, a stock-broking firm.
- Trades were placed in Defendant's account by Heng, his trading representative.
- Trades involved Blumont, Asiasons, and International Healthway Corporation Ltd.
- Share values of Blumont and Asiasons fell substantially on 4 October 2013.
- Plaintiff claimed Heng had an agreement to take instructions from Defendant's cousin, Adrian, and later, Adrian's friend, Lincoln.
- Defendant denied authorizing Adrian or Lincoln to issue trade instructions.
- Defendant had three other trading accounts with other firms.
5. Formal Citations
- AmFraser Securities Pte Ltd v Goh Chengyu, Suit No 88 of 2014, [2016] SGHC 278
6. Timeline
| Date | Event |
|---|---|
| Four disputed trades placed on Defendant's account. | |
| Share values of Blumont and Asiasons substantially fell; trading suspended. | |
| Suspension of trading in Blumont and Asiasons lifted. | |
| Defendant sold counters, resulting in significant losses. | |
| Plaintiff commenced Suit No 88 of 2014 against Defendant. | |
| Trial dates vacated to enable Plaintiff to subpoena two material witnesses. | |
| Trial took place over seven days. | |
| Judgment reserved. |
7. Legal Issues
- Unauthorized Trading
- Outcome: The court found that the trades were authorized due to the Defendant's implied consent and knowledge.
- Category: Substantive
- Agency
- Outcome: The court determined that Heng had actual or apparent authority to execute the trades on the basis of instructions from Lincoln.
- Category: Substantive
- Sub-Issues:
- Actual authority
- Apparent authority
- Implied Terms
- Outcome: The court rejected the Defendant's argument that certain terms should be implied into the contract.
- Category: Substantive
- Contra Proferentem Rule
- Outcome: The court held that the contra proferentem rule did not apply because the relevant clauses were clear and unambiguous.
- Category: Substantive
- Duty of Care in Tort
- Outcome: The court found that the Plaintiff did not owe a duty of care to the Defendant in tort.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Indemnity
- Declaration of Non-Liability
9. Cause of Actions
- Breach of Contract
- Negligence
10. Practice Areas
- Commercial Litigation
- Securities Litigation
11. Industries
- Financial Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Public Prosecutor v Singh Kalpanath | High Court | Yes | [1995] 3 SLR(R) 158 | Singapore | Cited for the principle that if a witness lied on some points, it does not necessarily follow that the whole evidence should be rejected. |
| Fraser Securities Pte Ltd v Seet Ai Kiang and others | High Court | Yes | [2004] SGHC 9 | Singapore | Cited as a case with similar clause in pari materia to Clause 23.1 of the OSTA 2012, regarding liability for trades executed with consent or authority. |
| Banque Nationale de Paris v Tan Nancy and another | Court of Appeal | Yes | [2001] 3 SLR(R) 726 | Singapore | Cited for the principles of actual and apparent authority in trading losses. |
| DBS Vickers Securities (Singapore) Pte Ltd v Chin Pang Joo and another | High Court | Yes | [2009] SGHC 248 | Singapore | Cited for the principle of implied authority arising from a prior arrangement. |
| Tay Eng Chuan v Ace Insurance Ltd | Court of Appeal | Yes | [2008] 4 SLR(R) 95 | Singapore | Cited for the application of the contra proferentem rule. |
| Tam Wing Chuen v Bank of Credit and Commerce Hong Kong Ltd | Unknown | Yes | [1996] 2 BCLC 69 | Hong Kong | Cited for explaining the basis of the contra proferentem principle. |
| Sandz Solutions (Singapore) Pte Ltd and others v Strategic Worldwide Assets Ltd and others | Court of Appeal | Yes | [2014] 3 SLR 562 | Singapore | Cited for the danger of over-emphasis on the demeanour of witnesses. |
| Kwek Hock Hee and another v Tat Lee Securities Pte Ltd and another | High Court | Yes | [1999] SGHC 143 | Singapore | Cited for the principle that Singapore courts are generally slow to allow financial institutions to shift the responsibility for any fraud by its own employee or remisier to its own customers. |
| RHB-Cathay Securities Pte Ltd v Ibrahim Khan and other actions | High Court | Yes | [1999] 1 SLR(R) 857 | Singapore | Cited for the principle that breaches of the Stock Exchange of Singapore rules would not render void or illegal contractual obligations validly entered into between the member company and the clients arising out of share trading transactions. |
| Bell Group Ltd v Herald and Weekly Times Ltd | Supreme Court of Victoria | Yes | [1985] VR 613 | Australia | Cited for the principle that if certain rules are meant for the protection of investors, such provisions form part of the duties owed by a broker to its customers as implied terms. |
| OCBC Securities Pte Ltd v Yeo Siew Huan | High Court | Yes | [1998] 1 SLR(R) 481 | Singapore | Cited for the principle that the customs and practices of the trade, including the by-laws, could be used as a basis to imply the terms. |
| Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency | Unknown | Yes | [2007] 4 SLR(R) 100 | Singapore | Cited for the framework to determine duty of care in tort. |
| Go Dante Yap v Bank Austria Creditanstalt AG | Unknown | Yes | [2011] 4 SLR 559 | Singapore | Cited for the application of the Spandeck framework. |
| United Overseas Bank Ltd v Sin Leong Ironbed & Furniture Manufacturing Co (Pte) Ltd and others | Unknown | Yes | [1988] 1 SLR(R) 76 | Singapore | Cited for the general principles applying to claims for indemnity costs under contractual provisions. |
| Abani Trading Pte Ltd v BNP Paribas and another appeal | Unknown | Yes | [2014] 3 SLR 909 | Singapore | Cited for the general principles applying to claims for indemnity costs under contractual provisions. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Rules of Court (Cap 322, 2014 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Trading Representative
- Unauthorized Trading
- Actual Authority
- Apparent Authority
- Contra Proferentem Rule
- OSTA 2012
- Penny Stocks
- Trading Account
- Remisier
- SGX
15.2 Keywords
- securities
- trading
- agency
- contract
- negligence
- stock market
- financial markets
16. Subjects
- Securities Trading
- Agency
- Contractual Obligations
- Stockbroking
17. Areas of Law
- Securities Law
- Agency Law
- Contract Law
- Tort Law
- Financial and Securities Markets