Jurisdiction - Singapore
Singapore – Importance Of Recordings In Banking Disputes.

13 May, 2012


Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution


Crédit Industriel et Commercial v Teo Wai Cheong [2012] SGHC 94




The Singapore High Court has granted judgment to Crédit Industriel et Commercial (“CIC”) for its claim against Teo Wai Cheong (“Teo”) for payment for shares that were acquired under certain “accumulator” transactions carried out in 2007.


In its decision, the High Court made an important observation that many of the difficulties that arose at trial could have been avoided if the relevant phone calls between Teo and his relationship manager, Ng Su Ming (“Ng”), had been recorded.


The High Court also provided guidance on practices that banks can adopt to prevent similar issues from arising.




The dispute arose out of five accumulator transactions carried out in 2007 (“Disputed Accumulators”).


CIC claimed that Teo had instructed Ng to purchase the Disputed Accumulators on his behalf, while this was denied by Teo.




There were several conversations between Teo and Ng relating to the purchase of the Disputed Accumulators that were not recorded, as Ng carried out these conversations through her mobile phone, and not from a phone within CIC’s office.


Without the benefit of recordings, the High Court had to consider the other available evidence in order to decide whether Teo had given instructions to purchase the Disputed Accumulators during these unrecorded conversations.


The evidence that the High Court considered included:


(a) SMSes and conversations between Teo and Ng before and after the unrecorded conversations;

(b) Teo’s inaction for more than a month after the date when the Disputed Accumulators were carried out;

(c) Teo’s issuance of a cheque for S$160,000 to CIC for shares delivered to Teo under the Disputed Accumulators;

(d) An email showing that Teo’s complaint with respect to the Disputed Accumulators related to the size of the exposure under the Disputed Accumulators and not that the Disputed Accumulators were unauthorised;

(e) Teo’s equivocal position in relation to the Disputed Accumulators, until more than two months after the Disputed Accumulators were purchased, when Teo finally began to state his position that the Disputed Accumulators were unauthorised in “very clear terms”; and

(f) Teo’s trading pattern prior to the purchase of the Disputed Accumulators.


After considering the totality of the evidence, the High Court held that CIC had proved on a balance of probabilities that Teo had instructed Ng to purchase the Disputed Accumulators. The High Court also noted that Teo’s version of events was “just too remarkably coincidental and too fortuitous”.


Teo was ordered to pay CIC for the shares acquired pursuant to the terms of the Disputed Accumulators.




Due to the lack of recordings of key conversations, the High Court considered all other available evidence in arriving at its decision as to what was likely to have been said during these conversations.


Needless to say, the High Court observed that “the difficulties encountered in this case could have been easily obviated through the recording of the phone calls between Ng and Teo.” [Emphasis added.]


The High Court suggested that banks adopt the practice of making recordings of their clients’ investment instructions “in order to avoid disputes of this kind”.


The High Court also suggested that even if there is no opportunity to record the conversations due to the relationship manager being outside of the office and the transactions being done over mobile phone, arrangements can be easily made by the relationship manager for an officer within the bank, having a phone recording facility, to call the client back immediately and repeat the terms of the agreed transactions for them to be recorded.


The High Court suggested, in the alternative, for transactions to be confirmed via SMS.


Given that it is not uncommon for banking disputes to involve a great number of different transactions, having recordings of the clients’ instructions will lend clarity to disputes as to whether transactions were authorised by a client.


Such recordings would also capture other forms of communication between the bank and its clients. For example, time-sensitive calls by the bank to the client informing the client that the collateral earmarked for a margin trading account requires topping-up, or that the bank is closing-out the account. Indeed, recordings of conversations between a bank’s relationship manager and a client played a key role in the recent case of UBS AG v Ng Kok Keong & Yow Sin May (Suit No. 349 of 2009/V. In this case, the successful plaintiff bank was represented by Drew & Napier LLC).


In that case, the defendants withdrew their defence and counterclaim (for more than S$10 million) after being shown transcripts of recordings that refuted their allegations that they were inexperienced investors who had been misled by the bank with respect to their account.


Finally, there may well be situations where the court does not have the benefit of contemporaneous evidence which shed light on what was said during unrecorded conversations between the relationship manager and client. This would make it very difficult for the court to decide what is more likely than not to have transpired during the conversations.


The possibility of such situations arising heightens the need for banks to ensure that they have a proper recording system in place.




The High Court’s observations in this case merit careful study by banks in Singapore.


Banks that do not already have a recording system may wish to consider putting one in place.


Banks that already have such a system may wish to consider putting in place a procedure, as suggested by the High Court, where clients’ instructions that are not recorded at the point in time that they are given are subsequently repeated to the client by a bank officer who has access to a phone recording facility, so that there is a proper record of the client’s confirmation of the transaction.


Such recording systems and confirmation procedures will help prevent the difficulties that arose during this case by leaving little room for debate as to what was communicated during conversations between bank’s relationship managers and their clients, thereby saving time and costs.



For further information, please contact:
Yarni Loit, Director, Drew & Napier
Adam Maniam, Drew & Napier


Leave a Reply

You must be logged in to post a comment.