Case Details
- Citation: [2012] SGCA 43
- Title: Als Memasa and another v UBS AG
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 15 August 2012
- Civil Appeal No: Civil Appeal No 8 of 2012
- Coram: Chan Sek Keong CJ; Andrew Phang Boon Leong JA; V K Rajah JA
- Appellants: Als Memasa and another
- Respondent: UBS AG
- Legal Areas: Civil Procedure; Pleadings; Amendment; Striking out; Contractual terms; Non-reliance clauses
- Procedural History: Appeal from the High Court decision in [2012] SGHC 30, which affirmed the Assistant Registrar’s decision to strike out the action and dismiss the application to amend the Statement of Claim
- High Court Reference: [2012] SGHC 30
- Assistant Registrar’s Orders: (i) Strike out of the Appellants’ action in Suit No 935 of 2010; (ii) Dismissal of amendment application in Summons No 2942 of 2011
- Key Applications: Originating Summons No 1358 of 2009 (pre-action discovery) dismissed on 8 March 2010; Summons No 613 of 2011 (strike out) allowed on 19 July 2011; Summons No 2942 of 2011 (leave to amend) dismissed on 19 July 2011
- Counsel for Appellants: N. Sreenivasan and Sujatha Selvakumar (Straits Law Practice LLC)
- Counsel for Respondent: Hri Kumar Nair SC, Teo Chun-Wei Benedict and Chiu Rouwei Charmaine (Drew & Napier LLC)
- Judgment Length: 7 pages; 3,503 words
- LawNet Editorial Note: Appeal from the High Court decision in [2012] SGHC 30
- Cases Cited (as provided): [2012] SGCA 43; [2012] SGHC 30
Summary
Als Memasa and another v UBS AG concerned a dispute arising from the Appellants’ investment relationship with UBS AG, including margin calls and losses linked to Russian bonds. The Appellants sued UBS and sought to amend their pleadings after receiving disclosure in a strike-out application. Both the Assistant Registrar and the High Court struck out the action and dismissed the amendment application, and the Appellants appealed to the Court of Appeal.
The Court of Appeal upheld the lower courts’ decisions. Central to the outcome was the court’s assessment that the Appellants had advanced a case that was not pleaded honestly and had effectively tailored their claims to match evidence disclosed by UBS. In addition, the court relied on contractual non-reliance and risk-allocation clauses in UBS’s account and risk disclosure documentation, which precluded the Appellants from relying on alleged misrepresentations in relation to the Russian bonds transaction. The appeal therefore failed at the pleadings stage.
What Were the Facts of This Case?
The second Appellant, Tjo Bun Khai (“Tjo”), was a wealthy retired Indonesian businessman aged 95. He neither spoke nor wrote English. The first Appellant, Als Memasa (“AM”), was Tjo’s daughter. She worked in the family business for many years but was also unfamiliar with English. Their limited English proficiency formed part of the factual background against which they later alleged that UBS misrepresented the nature and risk of the investments.
For over 40 years, the Appellants were customers of OCBC. Their accounts were handled by a banker, Gary Yeo (“Gary”), and a colleague, Donna Teo (“Donna”). In or around 2005, Gary and Donna informed the Appellants that they would be leaving OCBC to join UBS. Over the following months, Gary and Donna visited the Appellants in Jakarta to persuade them to move their funds and investments to UBS.
On 30 November 2006, the Appellants opened three non-discretionary accounts with UBS through Gary: two joint accounts between the Appellants and a sole account in Tjo’s name. From the opening of the accounts until September 2008, various transactions and investments were executed under these accounts. A significant transaction occurred on 3 September 2008 when Russian bonds with a face value of US$4 million were purchased for one of the Appellants’ accounts at a cost of about US$3.8 million.
In late September 2008, the Appellants were informed that the market value of their investments had fallen and that their accounts had entered margin call situations, primarily because the Russian bonds’ price had dropped sharply. In October 2008, they were told their accounts had lost over US$2 million and that they needed to top up collateral. Although they provided various assets and payments as collateral, they could not meet all margin calls. As the Russian bonds continued to decline, UBS liquidated a large portion of the Appellants’ investments in February 2009.
Afterwards, the Appellants travelled to Singapore in April 2009 to discuss the situation with Gary and Donna, but were met by UBS staff member Ling-Ly Loh (“Ling-Ly”). At the end of the meeting, Ling-Ly indicated she would raise the Appellants’ unhappiness with UBS management. Further margin calls were made, and the Appellants did not receive an explanation that satisfied them.
Procedurally, the Appellants first sought pre-action discovery via Originating Summons No 1358 of 2009, which was dismissed on 8 March 2010. They then filed Suit No 935 of 2010 on 17 December 2010. UBS applied to strike out the Statement of Claim (“SOC”) on 14 February 2011 (Summons No 613 of 2011). On 5 July 2011, the Appellants sought leave to amend the SOC (Summons No 2942 of 2011), particularly to focus on the Russian bonds transaction after disclosure in the strike-out application.
What Were the Key Legal Issues?
The first key issue was whether the Appellants’ SOC should be struck out. This required the court to consider whether the pleadings disclosed a genuine and honest case or whether they were advanced in a manner that abused the court’s process. The lower courts found that the Appellants had pleaded that they had not given instructions for transactions and did not understand why margin calls were issued, but the evidence disclosed by UBS suggested that the Appellants had authorised some transactions and had some understanding of the margin calls.
The second key issue was whether the Appellants should be permitted to amend their pleadings. The amendment was sought after UBS’s disclosure in the strike-out application, and the courts below treated this as an attempt to obtain evidence first and then tailor the claim to fit what emerged. The legal question was whether such an amendment should be allowed, particularly where it would not cure the fundamental defects in the pleaded case.
The third issue concerned contractual non-reliance and risk-allocation clauses. Even if there was some evidence that UBS might have purchased the Russian bonds without prior instructions, the courts had to determine whether the Appellants could rely on alleged misrepresentations. The High Court held that the Appellants were precluded by contractual terms, including clauses in the account mandate and risk disclosure statement, which allocated risks to the client and stated that the bank was not responsible for losses and that the client relied on its own judgment.
How Did the Court Analyse the Issues?
The Court of Appeal’s analysis proceeded from the pleadings stage and the court’s supervisory role in preventing abuse of process. The High Court had affirmed the Assistant Registrar’s finding that the Appellants advanced a false case. In particular, the SOC alleged that the Appellants had not given instructions for transactions and did not understand why their accounts entered margin call situations. However, UBS’s disclosure in the strike-out application showed that the Appellants had authorised some transactions and had some understanding of the margin calls. The courts treated this mismatch between pleaded assertions and disclosed evidence as a serious defect.
In addition, the courts below were concerned with the timing and substance of the amendment application. The Appellants sought to amend their SOC to plead their claim relating to the Russian bonds transaction more specifically only after a telephone transcript was disclosed by UBS. The transcript suggested that UBS might have purchased the Russian bonds without the Appellants’ authority and that UBS might have misrepresented the nature and risk of the bonds to AM. The High Court concluded that the Appellants were hoping to obtain evidence first and then tailor their claim accordingly. The Court of Appeal, in upholding the lower courts, endorsed the view that such conduct undermined the integrity of the pleading process.
On the Russian bonds transaction itself, the High Court had made a nuanced factual assessment. It accepted that there might have been some evidence that UBS purchased the Russian bonds without prior instruction and that AM then affirmed the purchase after a discussion with a UBS officer. The court recognised that representations might have been made during that discussion. However, the legal effect of these representations was constrained by the contractual framework governing the accounts and transactions.
The Court of Appeal therefore focused on the contractual non-reliance clauses. The High Court held that it did not matter whether consent was given before the purchase or was an affirmation after the purchase, because the Appellants were precluded from relying on misrepresentation due to the contractual terms. The relevant clauses included provisions in the Account Terms and Conditions and the Risk Disclosure Statement. These clauses stated, in substance, that the client accepted all risks arising from opening and maintaining the account and from entering into investment and trading transactions; that the client acknowledged reading and understanding the risk disclosure documents; that the client made its own assessment and relied on its own judgment; and that the bank was not obliged to give advice or make recommendations and would not be responsible for losses arising from transactions.
Although the Appellants argued that the Russian bonds might have been purchased without instruction, and that representations were made to AM, the courts treated the contractual terms as decisive. The non-reliance clauses were drafted broadly and applied to the relevant transaction types, including bonds and structured products. The court’s reasoning reflects a common approach in Singapore contract litigation: where sophisticated parties have signed account documentation containing risk allocation and non-reliance provisions, the court will give effect to those provisions unless a recognised vitiating factor is established.
The Appellants also raised a defence of non est factum, seeking to avoid the effect of the contractual clauses on the basis that they did not understand or were not bound by the documents. The High Court rejected this defence, and the Court of Appeal upheld that rejection. The reasoning, as reflected in the extract, indicates that the courts were not persuaded that the Appellants could escape contractual responsibility for the non-reliance and risk clauses merely by pointing to their lack of English proficiency or their asserted misunderstanding. The practical implication is that non est factum is not a general escape route; it requires a strong evidential basis to show that the document was fundamentally not the one signed or that the signatory was misled in a manner that meets the strict requirements of the doctrine.
What Was the Outcome?
The Court of Appeal dismissed the appeal. It upheld the Assistant Registrar’s decision to strike out the Appellants’ action and the dismissal of their application to amend the SOC. The effect was that the Appellants’ claims did not proceed to trial.
Practically, the decision underscores that where pleadings are found to be dishonest or abusive, and where contractual non-reliance clauses bar reliance on misrepresentation, the court may dispose of the matter at an early stage rather than allowing a full trial.
Why Does This Case Matter?
Als Memasa v UBS AG is significant for two interlocking reasons. First, it illustrates the court’s willingness to strike out pleadings that are inconsistent with disclosed evidence and that appear to have been formulated in a manner that abuses the court’s process. For litigators, the case is a reminder that pleadings must be grounded in the client’s knowledge and evidence at the time they are filed, and that amendments sought after disclosure must not be used as a substitute for proper pleading discipline.
Second, the case reinforces the enforceability and breadth of contractual non-reliance and risk-allocation clauses in financial services documentation. Even where there is some evidence that a transaction may have been executed without prior instructions and that representations were made, the court may still hold that the client is contractually precluded from relying on misrepresentation if the contract allocates risk and disclaims reliance. This is particularly relevant in investment disputes involving non-discretionary accounts and standard-form account terms.
For practitioners, the decision has practical implications for both claimants and defendants. Claimants must carefully plead misrepresentation and causation in a way that survives contractual defences, and they must anticipate that non-reliance clauses may be treated as dispositive. Defendants, meanwhile, can take comfort that well-drafted contractual terms, coupled with evidence undermining the pleaded narrative, can lead to early termination of claims through strike-out and refusal of amendments.
Legislation Referenced
- (Not specified in the provided judgment extract.)
Cases Cited
- [2012] SGCA 43 (Als Memasa and another v UBS AG)
- [2012] SGHC 30 (Als Memasa and another v UBS AG)
Source Documents
This article analyses [2012] SGCA 43 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.