ZHANG HONG LI AND OTHERS v. DBS BANK (HONG KONG) LTD AND OTHERS

ZHANG HONG LI AND OTHERS v. DBS BANK (HONG KONG) LTD AND OTHERS

DBS Trustee and DHJ Management breached their supervisory/trustee or director duties by approving (i) substantial AUD purchases in the extremely adverse market conditions in late July–early August 2008 and (ii) purchases of decumulators that were inappropriate hedges and exposed the trust/underlying company to prolonged currency lock‑up; those failures amounted to gross negligence (serious or flagrant negligence) warranting equitable restitution/compensation and specific monetary orders directed at restoration of the trust/underlying company assets. Other claims against DBS Bank, DBS:PB, DBS Corporate and individual officers were dismissed because no fiduciary duties or dishonest...

Citation
ZHANG HONG LI AND OTHERS v. DBS BANK (HONG KONG) LTD AND OTHERS
Parties
1st Plaintiff: Zhang Hong Li; 2nd Plaintiff: Ji Zhengrong; 3rd Plaintiffs (trustees): Bruno Arboit and Roderick John Sutton (trustees); 4th Plaintiff (private Investment Company): Wise Lords Limited; 1st Defendant (bank): DBS Bank (Hong Kong) Limited; 2nd Defendant (former Trustee of the Amsun Trust): Nautilus Trustees Asia Limited (formerly DBS Trustee H.K. (Jersey) Limited); 3rd Defendant (corporate Services/agent): DBS Corporate Services (Hong Kong) Limited; 4th Defendant (nominee Director / PIC Director): DHJ Management Limited; 5th Defendant (dbs Executive): Lee Kwok Tai, Peter; 6th Defendant (dbs Executive): Lim Leung Yau, Edwin; 7th Defendant (relationship Manager): Liu Hiu Hong, Linda
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
13 April 2017
Case Number
HCCL2/2011
Procedural Posture
Commercial Action (trusts, Fiduciary and Banking) / Judgment Following Trial (judgment Dated 13 April 2017)
Outcome
Partial judgment for plaintiffs on trustee/director liability; other claims dismissed
Legal Topics
Breach of Trust, Equitable Compensation, Investment Advisory/suitability, Credit Facilities and Margin, Yield Enhanced Deposits (yeds) and Decumulators, Delegation and Agency, Knowing Assistance, Misrepresentation (redemption Restrictions)
Source Language
EN
Trusts Fiduciary Duty Banking Law Securities Regulation Equitable Restitution Agency Law Breach of Trust Equitable Compensation +6 more

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Parties

Zhang Hong Li

1st Plaintiff

Ji Zhengrong

2nd Plaintiff

Bruno Arboit and Roderick John Sutton (trustees)

3rd Plaintiffs (trustees)

Wise Lords Limited

4th Plaintiff (private Investment Company)

DBS Bank (Hong Kong) Limited

1st Defendant (bank)

Nautilus Trustees Asia Limited (formerly DBS Trustee H.K. (Jersey) Limited)

2nd Defendant (former Trustee of the Amsun Trust)

DBS Corporate Services (Hong Kong) Limited

3rd Defendant (corporate Services/agent)

DHJ Management Limited

4th Defendant (nominee Director / PIC Director)

Lee Kwok Tai, Peter

5th Defendant (dbs Executive)

Lim Leung Yau, Edwin

6th Defendant (dbs Executive)

Liu Hiu Hong, Linda

7th Defendant (relationship Manager)

Procedural Posture

Commercial Action (trusts, Fiduciary and Banking) / Judgment Following Trial (judgment Dated 13 April 2017)

Legal Issues

  1. 1 Whether DBS Trustee and DHJ Management breached trustee/directorial duties in approving large AUD purchases and decumulators
  2. 2 Whether DBS Corporate acted beyond administrative agency and created binding advisory duties
  3. 3 Whether Ji was validly appointed and due diligence of Investment Advisor appointment

Ratio Decidendi

DBS Trustee and DHJ Management breached their supervisory/trustee or director duties by approving (i) substantial AUD purchases in the extremely adverse market conditions in late July–early August 2008 and (ii) purchases of decumulators that were inappropriate hedges and exposed the trust/underlying company to prolonged currency lock‑up; those failures amounted to gross negligence (serious or flagrant negligence) warranting equitable restitution/compensation and specific monetary orders directed at restoration of the trust/underlying company assets. Other claims against DBS Bank, DBS:PB, DBS Corporate and individual officers were dismissed because no fiduciary duties or dishonest...

Court Disposition

Partial judgment for plaintiffs on trustee/director liability; other claims dismissed

Orders

  • DBS Trustee to repay to the Trust US$68,825 (wrongful charges) and GBP13,325 (wrongful charges) with interest at HSBC prime +1% from the dates paid
  • DBS Trustee to release/repay retained sum of US$1,000,000 to the Trust with interest at HSBC US$ Prime +1% from 19 November 2011 to judgment