Koh Kim Teck v Credit Suisse: Negligence, Duty of Care & Banking
In Koh Kim Teck and Smiling Sun Limited v Credit Suisse AG, Singapore Branch, the Singapore High Court dismissed the plaintiffs' claim against the defendant, Credit Suisse, for losses arising from investments made during the 2007-2008 financial crisis. The plaintiffs alleged that the bank owed them a duty of care in contract and tort to provide suitable investment advice and properly manage their account. The court found that the bank owed no such duty and dismissed the claims.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Plaintiffs' claims dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court dismisses Koh Kim Teck's claim against Credit Suisse for investment losses, finding no duty of care in contract or tort.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Koh Kim Teck | Plaintiff | Individual | Claim Dismissed | Lost | |
| Smiling Sun Limited | Plaintiff | Corporation | Claim Dismissed | Lost | |
| Credit Suisse AG, Singapore Branch | Defendant | Corporation | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Aedit Abdullah | Judge | Yes |
4. Counsels
4. Facts
- Mr. Koh opened an account with Credit Suisse in 2003.
- Smiling Sun Limited was incorporated to facilitate Mr. Koh’s investments.
- Mr. Koh purchased KODAs and DCIs through the account in 2007 and 2008.
- The account was a non-discretionary account.
- Investments were funded primarily by credit.
- The global financial crisis in 2008 caused the AUD to depreciate against the JPY.
- The depreciation resulted in a substantial collateral shortfall in the account.
- The Bank closed out the account after Mr. Koh failed to provide a top-up of US$5.7m.
- Mr. Koh suffered losses of US$26m as a result of the close out.
5. Formal Citations
- Koh Kim Teck and anothervCredit Suisse AG, Singapore Branch, Suit No 942 of 2013 and 1123 of 2014, [2019] SGHC 82
- Koh Kim Teck and anothervCredit Suisse AG, Singapore Branch, , [2018] SGHC 82
6. Timeline
| Date | Event |
|---|---|
| Mr. Koh became a client of the Bank. | |
| Smiling Sun Limited was incorporated. | |
| Mr. Koh began to trade more heavily through the account. | |
| Credit facility procured for the account. | |
| Mr. Koh purchased first KODA. | |
| Mr. Koh purchased first DCI. | |
| Mr. Koh purchased last KODA. | |
| Global financial crisis began. | |
| Mr. Koh purchased last DCI. | |
| Close out notice received from the Bank. | |
| Bank closed out all of the account’s open investment positions. | |
| Suit No 942 of 2013 commenced. | |
| Suit No 1123 of 2014 commenced. | |
| Trial began. | |
| Hearing regarding time bar. | |
| Judgment issued. |
7. Legal Issues
- Duty of Care
- Outcome: The court held that the Bank did not owe a duty of care to the plaintiffs in contract or tort.
- Category: Substantive
- Sub-Issues:
- Voluntary assumption of responsibility
- Reliance
- Scope of duty
- Related Cases:
- [2013] 4 SLR 886
- [2011] 4 SLR 559
- [2007] 4 SLR(R) 100
- Breach of Contract
- Outcome: The court held that there was no implied term in the contract requiring the Bank to provide a reasonable period to furnish additional collateral.
- Category: Substantive
- Sub-Issues:
- Implied term
- Reasonable period to furnish additional collateral
- Related Cases:
- [2013] 4 SLR 193
- Time Bar
- Outcome: The court indicated that substantial parts of the plaintiffs' claims were time-barred.
- Category: Procedural
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Negligence
10. Practice Areas
- Commercial Litigation
- Banking Litigation
- Financial Services Litigation
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Deustche Bank AG v Chang Tse Wen and another appeal | Court of Appeal | Yes | [2013] 4 SLR 886 | Singapore | Cited as the leading authority on duty of care in respect of investment advisory or wealth management. |
| Go Dante Yap v Bank Austria Creditanstalt AG | High Court | Yes | [2011] 4 SLR 559 | Singapore | Cited to distinguish from the present case, as the Court of Appeal observed that a duty of care arose despite the client having the final say in deciding what products to purchase or sell. |
| Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency | Court of Appeal | Yes | [2007] 4 SLR(R) 100 | Singapore | Cited as the controlling authority on duty of care in tort. |
| Animal Concerns Research & Education Society v Tan Boon Kwee | Court of Appeal | Yes | [2011] 2 SLR 146 | Singapore | Cited for the proposition that the court is not prohibited from having due regard to the presence of policy considerations militating in favour of the imposition of a duty of care. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the three-step process for implying terms in fact. |
| Cheong Soh Chin and others v Eng Chiet Shoong and others | High Court | Yes | [2018] SGHC 131 | Singapore | Cited for the proposition that the case was decided on issues of either fact or law, which are matters within the province of the court. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Limitation Act (Cap 163, Rev Ed 1996) | Singapore |
| Limitation Act (Cap 163, Rev Ed 1996) s 6 | Singapore |
| Limitation Act (Cap 163, Rev Ed 1996) s 24A | Singapore |
| Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Knock-out discount accumulators
- KODA
- Dual currency investments
- DCI
- Collateral shortfall
- Close out notice
- Non-discretionary account
- Credit facility
- Leveraged trading
- Wealth preservation
15.2 Keywords
- Negligence
- Duty of care
- KODA
- DCI
- Credit Suisse
- Investment losses
- Financial crisis
- Non-discretionary account
17. Areas of Law
16. Subjects
- Banking
- Investments
- Financial Markets
- Derivatives
- Structured Products