SINGAPORE - In what could be one of the biggest legal victories to date in Singapore for the financially inexperienced investor, the High Court awarded Taiwanese scientist Chang Tse Wen US$49 million (S$59 million) in damages plus interest and full legal costs for losses he suffered as a result of Deutsche Bank's negligent advice.
In a 71-page judgment released yesterday, High Court Justice Philip Pillai found that the bank and Dr Chang's former relationship manager, Johnny Wan Fan Ting, had assumed a duty of care to Dr Chang, but that both "failed to take reasonable care in advising Dr Chang on managing his new wealth".
Significantly, Justice Pillai found that the duty of care to Dr Chang arose pre-contractually before he signed the service agreement and derivative agreement with the bank, and that "all the losses that (he) suffered were caused in fact and in law by (Mr Wan) and (Deutsche Bank's) breach of duty of care".
"It is my finding that the derivative agreement does not affect (Deutsche Bank's) liability for any assumption of a duty of care which had arisen previously," Justice Pillai wrote.
The High Court awarded Dr Chang US$49 million in damages plus simple interest starting from Nov 21, 2008 until the date of full payment by the bank.
Furthermore, in light of the bank's liability for damages for breach of duty of care to Dr Chang, Justice Pillai also ruled that he need not pay US$1.8 million sought by the bank in a lawsuit against him.
That amount represents the shortfall in his bank account after he suffered losses from so-called Discounted Share Purchase Programmes (DSPPs), or high-risk derivative investments known as accumulators.
Deutsche Bank said in a statement yesterday that it will appeal the court's decision and believes it "has strong grounds to do so".
Dr Chang, who lost nearly half of a US$118 million windfall from his lifetime's work on the asthma drug Xolair, accused the bank of breaching its duty of care to him when it failed to warn him of substantial risks involved in high-risk derivative products, such as DSPPs, and risks involved in margin financing in relation to these products.
Specifically, Mr Wan failed to tell Dr Chang "the potential loss or liability" that he might incur under a DSPP if the underlying share price fell below "strike price" over the life of the contract was "unlimited", or that "as a counterparty to a DSPP transaction, Deutsche Bank would stand to profit at (his) expense".