Successful lawsuit against bank in Singapore but appeal due
In Deutsche Bank AG v Chang [2012] SGHC 248, the Singapore High Court has upheld a retail investor's claim that the bank owed a pre-contractual duty of care to advise him as to (among other things) the preservation of his new wealth, despite contractual disclaimer and estoppel points arising out of a subsequently signed service agreement with the bank.
The facts are unusual. The judgment is substantial - US$49 million, plus interest.
The bank has filed an appeal. If the case does not settle, the appeal ruling by Singapore's Court of Appeal should be of considerable interest with respect to (among other things): (i) whether the bank did owe a pre-contractual "advisory duty" and (ii) contractual estoppel points arising out of standard disclaimers that one comes across in bank customer service agreements.
The Chang case comes after the English Court of Appeal judgment in Rubenstein v HSBC Bank Plc [2012] EWCA Civ 1184, in which a "one-off" investor wanted to invest the sale proceeds of his home in an investment that was "the same as cash". The investor was advised by the bank's financial adviser that an investment based bond product was just that. Following the financial crisis in 2008, the investor lost a good part of his investment. Ultimately, the bank was found to be in breach of a duty to protect the investor from exposure to the volatile market forces of 2008, given that he had wanted an investment that was without any risk.
For further details of the Rubenstein case, please visit Ben Gold's Professional & Financial Risks Blog of 20 September 2012 ("When a financial adviser will be liable for the full extent of a client's losses") and see RPC's briefing dated 19 September 2012 (by Simon Greenley and James Wickes - link).
The appeal in the Chang case is awaited with interest in Singapore and in other financial centres that apply common law principles, such as Hong Kong.
This article may be of relevance or interest in other common law jurisdictions. This article should not be regarded as a substitute for advice in a particular case or transaction or with respect to Singapore laws. Specific circumstances require specific advice from a suitably qualified lawyer.