The Singapore Court of Appeal has issued its decision in Deutsche Bank AG v Chang Tse Wen  SGCA 49. In a judgment delivered by the Honourable Chief Justice Sundaresh Menon, the Court of Appeal overturned the High Court’s decision to allow a counterclaim against Deutsche Bank AG ("the bank") by Dr Chang Tse Wen ("the customer") for damages in the sum of US$49 million.
The High Court had found that a pre-contractual duty of care had arisen as a result of certain representations made at an initial marketing presentation to the customer (please see LawWatch 1/2013 for our update on the High Court decision). The Court of Appeal disagreed. It held that the bank owed no tortious duty of care to the customer to render investment or wealth management advice as the threshold requirement of factual foreseeability for imposing a duty of care was not satisfied.
The Court of Appeal also held that no duty of care arose at any later stage, and if any such duty had arisen, it had not been breached. The customer's case was that the bank owed him a duty to give him sound or appropriate strategic investment advice as to the management and structuring of his portfolio as a whole. However, the Court of Appeal held that the entire factual matrix instead showed that the customer was in fact relying on his own views as to what investments to enter into and on the state of the market.
The Court of Appeal also held that statements made at the initial marketing presentation to the customer were not misrepresentations and upheld the dismissal of the customer's claim for misrepresentation against the bank.
Finally, the Court of Appeal observed that non-reliance and non-representation clauses may be caught by the Unfair Contract Terms Act, although it declined to rule definitely on this point given that it was not necessary for it to decide the issue.
The Court of Appeal’s decision is a welcome clarification on the law and reflects a careful understanding of commercial realities in which banks operate, particularly in relation to the solicitation of potential clients and the recommendation of investment products in the context of private banking. It should settle any uncertainties arising from the High Court's judgment with respect to the legal issues which commonly arise in banking litigation, particularly with its rejection of the High Court’s finding that a "pre-contractual duty of care" had arisen. The decision here should therefore make it fairly clear that where there are no exceptional factual circumstances (for example, facts which give rise to a voluntary assumption of duty), an additional advisory duty of care is unlikely to be found by a Singapore court to arise in a banking relationship where the bank’s role is contractually defined.