Case Update: Major Shipping & Trading Inc v Standard Chartered Bank (Singapore) Ltd [2018] SGHC 04 – Claim against bank for making unauthorised transactions by fraudster fails

Significance: Singapore High Court construes “good faith” in banking standard terms in the context of unauthorised fund transfers, finds that circumstances were not sufficient to put a reasonable banker on suspicion regarding unauthorised transfers, and finds on reasonableness of exclusion clauses under the unfair contract terms act.

Summary: The plaintiff sued Standard Chartered Bank for remitting monies in four transactions totalling US$1.8 million it claims were not authorised, but were instructed by some third party fraudster who had presumably hacked into the plaintiff’s personnel’s email (possibly through a phishing attack) and sent instructions to the bank. The plaintiff sued the bank for breach of contract–making remittances without authorisation when the bank could not have believed in good faith that the payment instructions were sent by authorised persons, given the suspicious circumstances surrounding their receipt. The plaintiff also claimed the bank breached its duty to use reasonable care and skill under the contract, and also some duty to take steps or systems to prevent unauthorised fund transfers.

The Court (Kannan Ramesh J) first considered the issue of the definition of “good faith” and held, relying on HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte Ltd [2012] 4 SLR 738 (CA), and construing the bank account opening documents, that the concept of good faith incorporated a subjective requirement of acting honestly, and the objective element of a lack of gross negligence or recklessness by the bank: at [53].

The Court examined the evidence and found on the facts that on balance of probabilities, the plaintiff’s authorised personnel did not issue the payment instructions to the bank: at [64].

The Court then considered whether the bank was grossly negligent in believing that the plaintiff’s authorised personnel had issued the payment instructions. The plaintiff relied on expert evidence to argue that there were various red flags in the circumstances of the bank’s receipt of the payment instructions which would have given rise to enough suspicion to warrant further investigations of the payment instructions before they were executed. The red flags were (at [68]):

(a) Irregularities concerning the content of the Four Instructions:
(i) The frequency and quantum of the payment instructions were “extremely high” and unprecedented.
(ii) The instructions were to remit monies to beneficiaries and countries to which the plaintiff had not remitted monies before.
(iii) The plaintiff’s name was misspelt as “Major Shipping & Tagging”.
(iv) The purposes of the Four Instructions were not stated on the Four Instructions.
(v) The date of the 3rd and 4th Instructions was erroneously stated.

(b) Irregularities concerning the manner in which the payment instructions were sent to the Bank:
(i) The payment instructions were sent to the Bank by email before being faxed thereto, contrary to the plaintiff’s usual practice.
(ii) The payment instructions were faxed via eFax, which the plaintiff had not used before.
(iii) The payment instructions were sent by email and fax to the Bank notwithstanding that plaintiff’s authorised personnel had learnt to use the S2B Platform as a more efficient way of transferring funds.

(c) Miscellaneous irregularities:
(i) one of the bank’s relationship managers (“RM”) was asked by email for the balance of the Account
(ii) on another occasion, the plaintiff’s authorised personnel purportedly sent the Health Problems email to another RM.

The Court considered the evidence concerning these purported red flags and found that individually and collectively were not sufficient to put the bank on suspicion to question the payment instructions: at [90]-[91]. Accordingly, the Court found that the bank was not negligent in not obtaining call-back information on the payment instructions: at [92]. Thus, the Court found that the bank had believed in good faith that the instructions were sent by the plaintiff: at [94].

In addressing the plaintiff’s arguments on whether the bank could rely on exclusion of liability clauses, the Court also found that it was not unreasonable for the bank to exclude liability for negligence simpliciter under the Unfair Contract Terms Act given that the plaintiff was a commercial entity who entered into a contractual relationship with the bank in the course of its business, the banking experts’ view that such clauses were commonly found in account opening documents and standard terms of Singapore banks, and the volume of transactions banks handle for various customers.

Finally, the Court held that the plaintiff was to pay costs to the bank on an indemnity basis under the bank’s standard terms. Costs amounted to S$384,375.


Case Update: Ang Thiam Swee v Low Hian Chor [2013] SGCA 11

Ang Thiam Swee v Low Hian Chor [2013] SGCA 11commencement of statutory derivative action – good faith requirement.[1]


The Court of Appeal clarified and articulated several principles on the good faith requirement (under section 216A(3)(b) of the Companies Act) in respect of commencing statutory derivative actions under section 216A of the Companies Act.


The Court of Appeal clarified that while the motivations of the applicant should be assessed, it is not the motivations per se that constitute bad faith; instead, bad faith will only be established where the applicant’s motivations amounted to a personal purpose (where the applicant’s judgment becomes “clouded by purely personal considerations”) which indicated that the company’s interest would not be served: at [12]-[17].


There is no presumption that every party with a reasonable and legitimate claim was acting in good faith. Instead, the onus was upon the applicant to demonstrate that he was or may be genuinely aggrieved. (At [18]-[23]). (This overturned existing Singapore case law which stated that there was a presumption.)


Drawing from Canadian and Australian jurisprudence, the Court of Appeal applied a test for good faith which looked at (at [24]-[31]):

  • whether the applicant had an honest belief in the merits of the proposed derivative action; and
  • whether the applicant’s collateral purpose is sufficiently consistent with the purpose of doing justice to a company such that he is not abusing the statute, amounting to abuse of process, or abusing the company as a vehicle for his own personal interests.


Further, considerations of legal merit should not be factored into the assessment of good faith and may more appropriately be dealt with under s 216A(3)(c), which looked to the prima facie interests of the company (at [58]).

[1] See also Supreme Court Note- Ang Thiam Swee v Low Hian Chor [2013] SGCA 11 (s 216A of the Companies Act) Supreme Court Note, Supreme Court, Mar 2013 (1).