Budhrani v INTL FCStone: Margin Trading, Broker-Dealer Agreements & Investor Claims

In Rajesh Harichandra Budhrani v INTL FCStone Pte Ltd, the Appellate Division of the High Court of Singapore dismissed Mr. Budhrani's appeal against the first instance decision. The case concerned a margin trading account Mr. Budhrani held with INTL FCStone for trading silver futures contracts. After a significant drop in silver prices, FCStone liquidated Mr. Budhrani's positions, leading to a claim by Mr. Budhrani alleging breach of contract, duress, undue influence, and misrepresentation. FCStone counterclaimed for the outstanding deficit. The court upheld the original judgment, finding that FCStone was entitled to liquidate the positions and that Mr. Budhrani's instructions were not needed for those sales.

1. Case Overview

1.1 Court

Appellate Division of the High Court

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding margin trading account dispute. Court dismissed investor's claims against broker-dealer, upholding liquidation of silver futures contracts.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Rajesh Harichandra BudhraniAppellant, Plaintiff, Defendant in counterclaimIndividualAppeal DismissedLost
INTL FCStone Pte LtdRespondent, Defendant, Plaintiff in counterclaimCorporationCounterclaim AllowedWon
Chandrawati AlieRespondent, DefendantIndividualJudgment in favour of RespondentWon
Song Oi LanRespondent, DefendantIndividualJudgment in favour of RespondentWon

3. Judges

Judge NameTitleDelivered Judgment
Woo Bih LiJudge of the Appellate DivisionNo
Debbie Ong Siew LingJudge of the Appellate DivisionNo
Philip JeyaretnamJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Nandwani Manoj PrakashGabriel Law Corporation
Quah Chun En JoelGabriel Law Corporation
Sameer bin Amir MelberGabriel Law Corporation
Sim Jek Sok DisaRajah & Tann Singapore LLP
Jodi Siah Be KoenRajah & Tann Singapore LLP

4. Facts

  1. Mr. Budhrani had a margin trading account with FCStone for trading silver futures contracts.
  2. The Agreements allowed Mr. Budhrani to borrow from FCStone when purchasing silver futures contracts.
  3. FCStone had the power to sell Mr. Budhrani’s futures contracts if the equity fell below the Maintenance Margin.
  4. On 13 March 2020, Mr. Budhrani was informed that his account was in margin deficit.
  5. On 16 March 2020, the price of silver fell further, and Mr. Budhrani sold his contracts.
  6. Mr. Budhrani claimed he was wrongly pressured, influenced, or misled into selling his contracts.
  7. FCStone counterclaimed for the loss and damages Mr. Budhrani owed following the liquidation of his contracts.

5. Formal Citations

  1. Rajesh Harichandra Budhrani v INTL FCStone Pte Ltd and others, Civil Appeal No 9 of 2024, [2024] SGHC(A) 29

6. Timeline

DateEvent
Bullion Margin Trading Agreement dated
Client Agreement dated
Agreements novated to FCStone
Mr Budhrani informed his account was in margin deficit
FCStone sent Mr Budhrani two e-mails attaching his daily statement for 13 March 2020
Price of silver fell further; Mr Budhrani sold seven contracts
Mr Budhrani gave instructions to sell the 66 Contracts in tranches
Sum of US$80,000 received by FCStone
Mr Budhrani commenced claim against FCStone, Ms Alie and Ms Song
Lee Lian Tuck’s 2nd Supplementary AEIC dated
Appellant’s Case dated
Respondents’ Case dated
Appeal heard and dismissed
Grounds of Decision delivered

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that the Respondents did not breach the Agreements.
    • Category: Substantive
    • Sub-Issues:
      • Breach of Margin Trading Agreement
      • Breach of Client Agreement
      • Breach of Collateral Contract
      • Breach of Oral Contract
  2. Duress
    • Outcome: The court found that the Respondents did not subject Mr Budhrani to illegitimate pressure.
    • Category: Substantive
    • Sub-Issues:
      • Illegitimate pressure
      • Compulsion of will
  3. Undue Influence
    • Outcome: The court found that the Respondents did not have the capacity to influence Mr Budhrani and did not exercise any undue influence over him.
    • Category: Substantive
  4. Misrepresentation
    • Outcome: The court found that the Respondents did not make the representations as alleged by Mr Budhrani.
    • Category: Substantive
    • Sub-Issues:
      • Fraud and deceit
      • Negligent misrepresentation
  5. Duty of Care
    • Outcome: The court held that the Respondents did not owe Mr Budhrani a duty of care to inform him of the true value of his losses.
    • Category: Substantive

8. Remedies Sought

  1. Damages for breach of contract
  2. Rescission of contract
  3. Compensation for losses due to misrepresentation
  4. Reversal of unauthorized transactions

9. Cause of Actions

  • Breach of Contract
  • Duress
  • Undue Influence
  • Misrepresentation
  • Breach of Duty of Care

10. Practice Areas

  • Commercial Litigation
  • Arbitration
  • Financial Regulation
  • Contract Disputes

11. Industries

  • Finance
  • Commodities Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Rajesh Harichandra Budhrani v INTL FCStone Pte Ltd and othersHigh CourtYes[2024] SGHC 18SingaporeThe decision of the lower court which was appealed against in the current judgment.
Braganza v BP Shipping Ltd and anotherN/AYes[2015] 1 WLR 1661N/ACited for the principle that courts interpret discretionary powers conferred by contract carefully and evaluate the exercise of the power against the purpose for which it was conferred.
Lam Chi Kin David v Deutsche Bank AGCourt of AppealYes[2011] 1 SLR 800SingaporeCited to distinguish the case where the court held that two letters were not margin calls in view of the description in that case that the letters were “for discussion purposes only”.

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

  • Margin trading account
  • Silver futures contracts
  • Margin call
  • Maintenance Margin
  • Liquidation
  • Margin ratio
  • Execution service only contract
  • Illegitimate pressure
  • Undue influence
  • Misrepresentation

15.2 Keywords

  • Margin trading
  • Silver futures
  • Broker-dealer
  • Liquidation
  • Breach of contract
  • Duress
  • Undue influence
  • Misrepresentation

17. Areas of Law

Area NameRelevance Score
Contractual terms80
Breach of Contract75
Misrepresentation65
Fraud and Deceit50
Negligent misrepresentation45
Undue Influence40
Duress35

16. Subjects

  • Contract Law
  • Financial Law
  • Margin Trading
  • Commodities Trading
  • Civil Litigation