Acute Result Holdings v CGS-CIMB: Resulting Trusts, Negligence & Duty of Care

Acute Result Holdings Limited sued CGS-CIMB Securities (Singapore) Pte Ltd in the General Division of the High Court of Singapore, alleging breach of trust, dishonest assistance, and negligence related to the misappropriation of shares by Lioncap Global Management Limited. Acute Result sought compensation for losses incurred. Justice Vinodh Coomaraswamy dismissed Acute Result's action in its entirety, finding no basis for the claims in equity or negligence.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Plaintiff's action dismissed in its entirety.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Plaintiff's claim against CGS-CIMB for misappropriated shares dismissed. The court addressed resulting trusts, negligence, and duty of care.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Acute Result Holdings LimitedPlaintiffCorporationClaim DismissedLost
CGS-CIMB Securities (Singapore) Pte Ltd (formerly known as CIMB Securities (Singapore) Pte Ltd)DefendantCorporationJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Foo Yuet MinDrew & Napier LLC
Tan Yi FanDrew & Napier LLC
Adwyn ChuangDrew & Napier LLC
Wilson KohDrew & Napier LLC
Emmanuel AwDrew & Napier LLC
Vincent LeowAllen & Gledhill LLP
Nicholas KamAllen & Gledhill LLP
Melissa MakAllen & Gledhill LLP

4. Facts

  1. Plaintiff transferred shares to defendant's customer, Lioncap Global, as security for a loan.
  2. Lioncap Global misappropriated the shares.
  3. Plaintiff claimed defendant was liable for Lioncap Global's actions.
  4. Plaintiff alleged Lioncap Global held shares on resulting or express trust.
  5. Plaintiff claimed defendant knew of breach of trust or was negligent.
  6. Plaintiff sought compensation for losses.
  7. Lioncap Asia extended a HK$120m loan facility to the plaintiff.

5. Formal Citations

  1. Acute Result Holdings Ltd v CGS-CIMB Securities (Singapore) Pte Ltd (formerly known as CIMB Securities (Singapore) Pte Ltd), Suit No 129 of 2019, [2022] SGHC 45

6. Timeline

DateEvent
Lioncap Asia extended a HK$120m loan facility to the plaintiff.
Plaintiff created a security interest in 130m Cabbeen shares in favour of Lioncap Global.
Lioncap Global directed the plaintiff to open a dedicated brokerage account with PT CIMB Securities Indonesia.
Plaintiff opened the dedicated brokerage account with CIMB Indonesia.
Plaintiff transferred 144m shares from its account with CMS into its account with CIMB Indonesia.
Lioncap Global presented to the plaintiff a draft letter of instructions.
Plaintiff informed Lioncap Global that it would not sign the draft.
Lioncap declared an event of default under the November 2016 agreements.
Plaintiff instructed CIMB Indonesia to transfer 30m of the shares back to its account with CMS.
Plaintiff and Lioncap executed an addendum.
Plaintiff signed a letter addressed to CIMB Indonesia instructing it to transfer 47.08m shares.
Plaintiff and Lioncap Global signed a joint letter of instructions addressed to CIMB Indonesia instructing it to transfer 56.92m shares.
CIMB Indonesia transferred the 56.92m shares back to the plaintiff’s account with CMS.
Plaintiff issued a revised letter instructing CIMB Indonesia to transfer 47.08m shares.
CIMB Indonesia transferred the 47.08m shares to Lioncap Global.
Defendant opened 30m CFD positions on the shares with Lioncap Global as counterparty.
Defendant bought 30m out of the 57.08m shares from Lioncap Global for HK$79.08m.
Lioncap Asia credited HK$45m to the plaintiff’s bank account.
Plaintiff signed and issued a second instruction letter to CIMB Indonesia.
CIMB Indonesia transferred 10m shares to Lioncap Global.
Defendant delivered 17.08m Cabbeen shares to Five T Investment Management Ltd against Five T’s payment of HK$11.6m.
Defendant transferred 10m shares to Five T free of payment.
Plaintiff failed to receive dividends which Cabbeen had declared on the 57.08m shares.
Lioncap Global returned 2.26m shares to the plaintiff.
Plaintiff commenced action against Lioncap Global in Hong Kong to recover the missing shares.
Plaintiff secured a default judgment against Lioncap Global.
Plaintiff stopped paying interest to Lioncap Asia.
Plaintiff commenced action against both Lioncap Global and Lioncap Asia to have the November 2016 agreements rescinded.
Plaintiff secured a default judgment in the second Hong Kong action against Lioncap Global and Lioncap Asia.
Trial began.
Judgment reserved.
Judgment issued.

7. Legal Issues

  1. Resulting Trust
    • Outcome: The court held that no resulting trust arose because the plaintiff intended to confer a benefit on Lioncap Global by improving its security interest.
    • Category: Substantive
    • Sub-Issues:
      • Intention to benefit transferee
      • Creation of security interest
    • Related Cases:
      • [2008] 2 SLR(R) 108
      • [2014] 3 SLR 1048
  2. Negligence
    • Outcome: The court held that the defendant did not owe the plaintiff a duty of care and that the defendant's actions did not cause the plaintiff's loss.
    • Category: Substantive
    • Sub-Issues:
      • Duty of care
      • Causal proximity
      • Circumstantial proximity
      • Causation
    • Related Cases:
      • [2007] 4 SLR(R) 100
  3. Breach of Contract
    • Outcome: The court held that Lioncap Global had the plaintiff's authority to operate the plaintiff's account and that the conclusive evidence clause precluded the plaintiff from alleging breach of contract.
    • Category: Substantive
    • Sub-Issues:
      • Authority to operate account
      • Conclusive evidence clause
    • Related Cases:
      • [2003] 1 SLR(R) 747
      • [2015] 1 SLR 338

8. Remedies Sought

  1. Order declaring defendant holds shares on trust for plaintiff
  2. Order that defendant account for shares as constructive trustee
  3. Order that defendant account for all profits earned attributable to the shares
  4. Order that defendant pay damages or compensation for losses

9. Cause of Actions

  • Breach of Trust
  • Dishonest Assistance
  • Knowing Receipt
  • Negligence
  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Securities Litigation
  • Trust Litigation

11. Industries

  • Financial Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
George Raymond Zage III and another v Ho Chi Kwong and anotherSingapore Court of AppealYes[2010] 2 SLR 589SingaporeCited for the principle that without an underlying fiduciary duty, a third party cannot be held personally liable for knowing receipt or dishonest assistance.
Lin Chao-Feng v Chuang Hsin-YiSingapore High CourtYes[2010] 4 SLR 427SingaporeCited for the principle that a pleader's duty is to plead facts not law.
Lau Siew Kim v Yeo Guan Chye TerenceSingapore Court of AppealYes[2008] 2 SLR(R) 108SingaporeCited for the definition of a resulting trust and the circumstances in which it arises.
Chan Yuen Lan v See Fong MunSingapore Court of AppealYes[2014] 3 SLR 1048SingaporeCited for the definition of a resulting trust and the circumstances in which it arises.
Moh Tai Siang v Moh Tai Tong and anotherSingapore High CourtYes[2018] SGHC 280SingaporeCited for the factual elements which give rise to a resulting trust.
Neo Hui Ling v Ang Ah SewSingapore High CourtYes[2012] 2 SLR 831SingaporeCited for the principle that the court should not resort to the presumption of resulting trust if there is evidence which can prove the transferor’s intention or from which that intention can be inferred.
Qilin World Capital Ltd v CPIT Investments LtdSingapore Court of AppealYes[2018] 2 SLR 1SingaporeCited for the principle that shares in a Singapore company cannot be the subject of a pledge.
Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd and anotherChancery DivisionYes[1985] Ch 207England and WalesCited for the definition of a charge and a mortgage.
Re Lin Securities (Pte) LtdSingapore High CourtYes[1988] 1 SLR(R) 220SingaporeCited for the principle that a charge gives the chargee a right to have recourse to the shares in the event the plaintiff defaulted on its debt.
MKC Associates Co Ltd v Kabushiki Kaisha Honjin and others (Neo Lay Hiang Pamela and another, third parties; Honjin Singapore Pte Ltd and others, fourth parties)Singapore High CourtYes[2017] SGHC 317SingaporeCited for the principle that the relationship between the grantor and the grantee of a security interest is fundamentally and conceptually distinct from the relationship between a beneficiary and a trustee under a trust.
Yuanta Asset Management International Ltd and another v Telemedia Pacific Group Ltd and another and another appealSingapore Court of AppealYes[2018] 2 SLR 21SingaporeCited for the principle that a transfer of shares can give rise to a trust in favour of the transferor.
The State-Owned Company Yugoimport SDPR (also known as Jugoimport-SDPR) v Westacre Investment Inc and other appealsSingapore Court of AppealYes[2016] 5 SLR 372SingaporeCited for the three certainties which must be established to constitute an express trust.
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology AgencySingapore Court of AppealYes[2007] 4 SLR(R) 100SingaporeCited for the elements required to succeed in a claim in negligence and the test for duty of care.
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming EricSingapore Court of AppealYes[2007] 3 SLR(R) 782SingaporeCited for the but-for test for factual causation.
Tjoa Elis v United Overseas Bank LtdSingapore High CourtYes[2003] 1 SLR(R) 747SingaporeCited for the principle that a bank may rely on a conclusive evidence clause in its contract with its customer even if the bank has acted on an instruction without the customer’s authority.
Telemedia Pacific Group Ltd v Credit Agricole (Suisse) SASingapore Court of AppealYes[2015] 1 SLR 338SingaporeCited for the principle that a bank may rely on a conclusive evidence clause in its contract with its customer even if the bank has acted on an instruction without the customer’s authority.
Jiang Ou v EFG Bank AGSingapore High CourtYes[2011] 4 SLR 246SingaporeCited for the principle that a bank may rely on a conclusive evidence clause in its contract with its customer even if the bank has acted on an instruction without the customer’s authority.
Pertamina Energy Trading Limited v Credit SuisseSingapore Court of AppealYes[2006] 4 SLR(R) 273SingaporeCited for the principle that a bank may rely on a conclusive evidence clause in its contract with its customer even if the bank has acted on an instruction without the customer’s authority.

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

  • Resulting trust
  • Equitable charge
  • Duty of care
  • Negligence
  • Breach of trust
  • Dishonest assistance
  • Knowing receipt
  • Security interest
  • Loan facility
  • Share transfer
  • Constructive trust
  • Conclusive evidence clause

15.2 Keywords

  • Trusts
  • Negligence
  • Duty of Care
  • Shares
  • Misappropriation
  • Security Interest
  • Breach of Contract

17. Areas of Law

Area NameRelevance Score
Trust Law75
Resulting Trust70
Negligence60
Express Trust60
Constructive Trust50
Breach of Contract40
Equitable Charge30
Contract Law30
Equitable Mortgage30
Knowing Receipt25
Dishonest assistance25
Misrepresentation20
Unjust Enrichment15
Fiduciary Duties15

16. Subjects

  • Trust Law
  • Tort Law
  • Contract Law
  • Securities Law
  • Financial Institutions