SINGAPORE - Negligence suits taken out by private banking clients are hardly unusual these days; but a case being heard before the High Court today comes with a couple of twists.
At the heart of the matter are losses of $2.6 million suffered by a father and son on account of trades entered into by the son - who had not turned 21 then.
Credit Suisse, one of the two defendants, is claiming that Swiss law rather than Singapore law governs its relationship with its clients, the plaintiffs. And that, as such, the younger plaintiff, who was 19 years old at the time, is considered an adult under Swiss law and that the trades he entered into - which resulted in the losses - are valid and binding.
The lawsuit has been brought by Ow Weng Fye (WF Ow) and his son, Ian Ow, against the Singapore branch of Credit Suisse AG (CS) - which was formerly known as Clariden Leu - and their relationship manager Aaron Chwee, who was with Clariden Leu. Clariden Leu, owned by the Credit Suisse group, subsequently merged completely with the banking giant.
The Ows, represented by Adrian Tan of Drew & Napier, are claiming that CS and Mr Chwee failed to exercise the duty of care owed to them, and breached their contractual and statutory duties; the Ows are claiming damages amounting to $2.606 million, the losses which they claim were suffered by them as a result of the defendants' actions.
In their statement of claim, the Ows said they opened a joint private banking account with CS (then, Clariden) in 2006. Father and son are alleging that Mr Chwee advised Mr Ian Ow, without the knowledge of his father, to trade in Singapore MSCI (SiMSCI) futures contracts.
They claim that Mr Chwee "falsely and/or inaccurately informed Ian Ow that the SiMSCI tracked the Straits Times Index (STI) when in fact the SiMSCI tracked the Singapore MSCI Free Index".
They also said that Mr Chwee "negligently and/or falsely represented to Ian Ow that Clariden had in place systems that would be able to tell when exactly to make trades such that the trades would be profitable and risk free so as to induce Ian Ow to act on the advice" when Clariden did not have such systems in place.
The Ows are also claiming that the trades are invalid given that they were made without Mr WF Ow's knowledge and that Mr Ian Ow was, at the material time, a minor - the first time the issue of minority has been raised in a legal suit involving the operation of bank accounts and futures trading. Under Singapore law, a minor is a person under the age of 21.
CS, which is represented by Senior Counsel Alvin Yeo of WongPartnership, has in its defence denied the claims made by the Ows that Clariden did not have the said systems in place and has asked the plaintiffs to prove their claim.
CS also claims that the accounts opened by the Ows and the relevant trades that took place are governed by Swiss law, as per the agreements signed by the Ows. "Under Swiss law, the age of majority is 18 years. Ian Ow was 19 years old at the time the accounts were opened. . . All of the trades were instructed by Ian Ow after he had reached 18 years of age, and are hence valid and binding," the bank said in its defence.
This is believed to be the first time the issue of whether a foreign law applies in place of Singapore law over a banking transaction here is being heard.
CS goes on to say that Mr Ian Ow's conduct, in continuing to instruct Mr Chwee to carry out the futures trades even after he turned 21, "amounts in any event to a ratification of the trades which he instructed before he reached 21".
And, given that both father and son had opened a joint account, in which they were to be jointly and severally liable, "even if (which is denied) the trades are not binding on Ian Ow as alleged, the trades are nevertheless binding on WF Ow, who is jointly and severally liable for the trades which Ian Ow instructed", CS claims.
Mr Chwee, who is represented by Simon Jones of A C Fergusson Law Corporation, claims in his defence that the only advice he gave to the Ows on the SiMSCI futures was that it was the only futures contract relating to the STI which Clariden had at the time and that its constituent stocks rendered the SiMSCI futures contract highly correlated though not identical to the STI.
He said that the futures trading account was set up with the full knowledge and written consent of Mr WF Ow. He said Mr WF Ow even instructed him on various occasions to take instructions from Mr Ian Ow on their SiMSCI trades. He is also disputing the actual amount being claimed by the Ows as the losses they suffered.
The case will be heard by Justice Andrew Ang.
Get The Business Times for more stories.