Major Shipping & Trading Inc v Standard Chartered Bank: Unauthorized Fund Transfers & Bank's Duty of Care
In Major Shipping & Trading Inc v Standard Chartered Bank (Singapore) Ltd, the High Court of Singapore dismissed Major Shipping & Trading Inc's claim against Standard Chartered Bank for US$1,838,720.51, which was allegedly transferred out of the plaintiff's account without authorization. The court, presided over by Kannan Ramesh J, found that while the bank acted on fraudulent instructions, it did so in good faith and was not grossly negligent. The court also addressed issues of contributory negligence and the applicability of exclusion clauses. The judgment was delivered on January 4, 2018.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Claim Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court dismisses claim against Standard Chartered Bank for unauthorized fund transfers, finding no breach of duty or gross negligence by the bank.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Major Shipping & Trading Inc | Plaintiff | Corporation | Claim Dismissed | Lost | Kelly Yap, Chan Cong Yen Lionel, Jade Chia |
| Standard Chartered Bank (Singapore) Limited | Defendant | Corporation | Judgment for Defendant | Won | Teo Chun-Wei Benedict, Lim Mei Yee Elaine |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Kannan Ramesh | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Kelly Yap | Oon & Bazul LLP |
| Chan Cong Yen Lionel | Oon & Bazul LLP |
| Jade Chia | Oon & Bazul LLP |
| Teo Chun-Wei Benedict | Drew & Napier LLC |
| Lim Mei Yee Elaine | Drew & Napier LLC |
4. Facts
- Standard Chartered Bank executed four fund transfers totaling US$1,838,720.51 from Major Shipping & Trading Inc's account.
- The transfers were made based on Outward Telegraphic Transaction instructions received via email and fax.
- The instructions bore signatures consistent with Mr. Majnu's specimen signature in the Bank’s records.
- The bank attempted to call the plaintiff’s representatives to confirm the instructions, but was largely unsuccessful.
- The bank did not obtain confirmation of the Four Instructions from the plaintiff’s representatives by telephone.
- The bank did not execute the 5th and 6th Instructions because there were insufficient funds in the Account to do so.
- Mr. Majnu sent an email instructing the Bank not to execute any fund transfer requests except those made through the S2B platform.
5. Formal Citations
- Major Shipping & Trading Inc v Standard Chartered Bank (Singapore) Ltd, Suit No 435 of 2014, [2018] SGHC 04
6. Timeline
| Date | Event |
|---|---|
| Account Opening Meeting | |
| Mr. Alam became one of the Authorised Persons | |
| Mr. Majnu gave instructions for transactions through the S2B platform | |
| Bank received the 1st Outward Telegraphic Transaction instruction | |
| Mr. Majnu received two text messages containing Yahoo! verification codes | |
| Bank executed the 1st instruction | |
| Bank received and executed the 2nd Outward Telegraphic Transaction instruction | |
| Bank received and executed the 3rd and 4th Outward Telegraphic Transaction instructions | |
| Bank received the 5th and 6th instructions | |
| Mr. Majnu logged onto the S2B platform and sought to transfer funds | |
| Mr. Majnu sent an email stating that he had discovered the Four Transactions | |
| Mr. Alam and Mr. Ali met with Ms. Poh and Mr. Scully to discuss the Four Transactions | |
| Mr. Majnu sent an email instructing the Bank not to execute any fund transfer requests except those made through the S2B platform | |
| Mr. Majnu made a police report concerning the Four Transactions | |
| Claim dismissed with detailed oral grounds | |
| Full grounds of decision issued |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the bank did not breach its contractual duties to the plaintiff.
- Category: Substantive
- Sub-Issues:
- Failure to exercise reasonable care and skill
- Breach of implied terms
- Good Faith
- Outcome: The court defined 'good faith' as encompassing both honesty and a lack of gross negligence or recklessness.
- Category: Substantive
- Sub-Issues:
- Honest belief
- Absence of gross negligence or recklessness
- Related Cases:
- [2012] 4 SLR 738
- Exclusion of Liability
- Outcome: The court held that the exclusion clauses in the Standard Terms and the Letter of Indemnity were applicable and did not contravene the Unfair Contract Terms Act.
- Category: Substantive
- Sub-Issues:
- Applicability of exclusion clauses
- Reasonableness under the Unfair Contract Terms Act
- Contributory Negligence
- Outcome: The court found that the bank did not establish that the plaintiff was contributorily negligent.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Interest
- Costs
9. Cause of Actions
- Breach of Contract
- Negligence
10. Practice Areas
- Commercial Litigation
- Banking Litigation
11. Industries
- Banking
- Shipping
- Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte Ltd | Court of Appeal | Yes | [2012] 4 SLR 738 | Singapore | Cited for the definition of 'good faith', encompassing both honesty and observing accepted commercial standards of fair dealing. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the three-stage test for the implication of terms in a contract. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Outward Telegraphic Transfer
- Remittance Application Form
- Authorized Person
- Good Faith
- Gross Negligence
- Exclusion Clause
- S2B Platform
- Call-back Confirmation
- Yahoo Account
- Standard Terms
- Letter of Indemnity
15.2 Keywords
- unauthorized fund transfer
- banking negligence
- good faith
- exclusion clause
- Standard Chartered Bank
- Major Shipping & Trading
- Singapore High Court
16. Subjects
- Banking
- Contract Law
- Fraud
- Commercial Law
17. Areas of Law
- Banking Law
- Contract Law
- Civil Procedure