WINRISE ASIA LTD v. DBS BANK (HONG KONG) LTD

HCCL 4/2023

[2024] HKCFI 2732

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 4 OF 2023

________________________

________________________

________________________

D E C I S I O N

________________________

A. INTRODUCTION

1.  By summons of 24^th October 2023 (“the Summons”), the Plaintiff (“Winrise”)  applies for summary judgment against the Defendant (“DBS”).

2.  Winrise says that DBS allowed five unauthorised payments out of its accounts with DBS.

B.  THE FACTUAL BACKGROUND

3.  Save as otherwise indicated, the following facts are not disputed.

4.  On or about 7^th August 2006, Winrise executed a bank mandate (“the 2006 Mandate”)  for two accounts with DBS – a current account number ending in -001 and a savings account ending in -940 (“the Accounts”).  The 2006 Mandate identified the following persons as being authorised to operate the account:

4.1  Group 1: Benishay (Benichou)  Itzhak (“Mr Benishay”),

4.2  Group 2: Richard Alexis Edouard,

4.3  Group 3: Zhan Lihua (“Ms Zhan”), Chau On Ki.

5.  The signing instructions were that Group 1 signatories could sign singly, and Group 2 plus any one of Group 3 signatories together could sign.

6.  The 2006 Mandate was accompanied by a document entitled “Remote Channel Authority and Indemnity” (“the Remote Channel Authority”).  In this document, Winrise requested DBS

“to act on any instructions, requests and/or other communications (a “Remote Instruction”)  given by telephone, facsimile or such other communication device as the Bank may from time to time approve, which the Bank in good faith believes to have been given by me/us or by the person(s)  from time to time authorised to operate such account(s)  under the above account title(s)  which is/are currently, or may hereafter from time to time, be opened by me/us with the Bank”.

7.  On 6^th August 2007, Winrise executed a form entitled “Change of Specimen Signature / Company Chop” (“the 2007 Mandate”), requesting DBS to change the authorised signatories for the Accounts as follows:

7.1  Group A: Mr Benishay,

7.2  Group B: Chau On Ki, Ms Zhan,

7.3  Group C: Wong Chiu Ming (“Mr Wong”).

8.  The signing instructions were that Group A signatories could sign singly, and one Group 2 signatory could sign with one Group 3 signatory.

9.  On 18^th March 2008, Winrise submitted a registration form for the IDEAL platform, to enable the use of DBS’ online banking services for the Accounts (“the 2008 IDEAL Registration Form”).  Two users were named: Ms Zhan and Mr Wong.

10.  It is DBS’ evidence that:

10.1  its customers using the IDEAL platform can choose between “Dual Management Control” (where a transaction requires the active involvement of a “maker” who creates a transaction and an “authorizer” who approves the transaction), and “Single Management Control” (where just one person is required to complete a transaction);

10.2  the management control of the IDEAL platform is a separate matter from the signing instructions for a bank account.  A customer has to specifically designate a set of authorised personnel to operate the IDEAL platform even if he has already granted signing authority to a set of authorised signatories (even though the identities of such operators may overlap with those of the signatories).  Conversely, if a customer has designated a person to operate the IDEAL platform, that person would have the authority to do so even if he or she otherwise has no signing authority over the bank account in question.

11.  In the 2008 IDEAL Registration Form, Winrise designated Ms Zhan as a “maker”, and Mr Wong as a “maker” and “authorizer”.  Winrise elected “Dual Management Control” on the form.

12.  On 4^th July 2014, Winrise submitted a Maintenance Form for the IDEAL platform (“the 2014 IDEAL Maintenance Form”), adding Mr Benishay as a user of the IDEAL platform.  He was designated an “authorizer”.

13.  On about 10^th August 2017, Winrise executed an undated board resolution (“the August 2017 Board Resolution”)  to:

13.1  change the authorised signatories of the Accounts to Mr Benishay (Group A)  and Chau On Ki and Ms Zhan (Group B), with Mr Benishay being able to sign singly and Chau On Ki and Ms Zhan being required to sign jointly; and

13.2  delete Mr Wong as an authorised signatory of the Accounts.

14.  DBS says that Winrise provided a copy of the August 2017 Board Resolution to it, but DBS considered that the document did not appear to be regular or in order and the change of mandate could not be processed.  DBS says that its relationship manager Ms Sugar Wong informed Ms Zhan of Winrise about this and asked for amendments and documents in a telephone conversation on or about 15^th August 2017. There was then an email from Ms Sugar Wong to Ms Zhan on that day:

“Regarding the change of signature letter received on 10^th August 2017, please be noted that the existing signing arrangement will remain unchanged until the amendment is completed as discussed today. In other words, Mr Wong’s signing power is kept during the transition period. Thanks.”

15.  On 31^st August 2017, Winrise submitted another Maintenance Form for the IDEAL platform (“the August 2017 IDEAL Maintenance Form”).  This:

15.1  updated Ms Zhan’s profile, designating her as both “maker” and “authorizer”,

15.2  removed Mr Benishay as a user, and

15.3  selected “Single Management Control”.

16.  No change was made in respect of Mr Wong in the August 2017 IDEAL Maintenance Form, so he remained as a user of the IDEAL platform.

17.  On 20th September 2017, Winrise submitted a form entitled “Mandate for Limited Company” (“the September 2017 Mandate”).  This:

17.1  listed the authorised signatories as Chau On Ki, Ms Zhan and Mr Benishay, with Chau On Ki and Ms Zhan being required to sign jointly and Mr Benishay being able to sign singly, and 

17.2  no longer named Mr Wong as an authorised signatory.

18.  In other words, the September 2017 Mandate again sought to achieve what had been attempted in the August 2017 Board Resolution. However, a number of documents remained missing, and it is DBS’s case that all the necessary supporting documents were provided only on or about 9^th November 2017, and that the change of authorised signatories took effect only on 20th November 2017.  Counsel for Winrise, Mr Paul Carolan, accepted this to be the case for present purposes.

19.  On 19^th December 2017, Winrise submitted another Maintenance Form for the IDEAL platform (“the December 2017 IDEAL Maintenance Form”).  This removed Mr Wong as a user.  No selection was made as regards “Dual Management Control” or “Single Management Control”.

20.  On 13th June 2019, Winrise submitted another Maintenance Form for the IDEAL platform (“the June 2019 IDEAL Maintenance Form”).  This:

20.1  updated Ms Zhan’s profile, designating her as a “maker”,

20.2  updated Mr Benishay’s profile, designating him as an “authorizer”, and

20.3  selected “Dual Management Control”.

21.  Between 1^st December 2017 to 13th June 2019, Winrise conducted 276 transactions using the IDEAL platform.  All of them were carried out on Ms Zhan’s sole instruction.  Winrise says that five of these transactions, being payments out of funds from the Accounts between 18^th January 2019 and 20th March 2019, took place because Winrise was the victim of an unknown fraudster, who impersonated Mr Benishay and persuaded Ms Zhan to make five payments to third party accounts (“the Five Payments”).  The fraud was discovered in March 2019.

C.  THE PARTIES’ CASES

22.  Winrise says that the Five Payments were made in breach of its mandate to DBS as Ms Zhan operated the online payment system on her own.

23.  DBS says that:

23.1  Ms Zhan was duly authorised to operate the Accounts via the IDEAL platform to make the Five Payments;

23.2  alternatively, Winrise is barred by promissory estoppel, estoppel by representation, estoppel by convention or acquiescence from disputing Ms Zhan’s authority to operate the Accounts and effect the Five Payments;

23.3  alternatively, Winrise is barred by contractual estoppel from disputing Ms Zhan’s authority in issuing instructions for the Five Payments due to its failure to object to DBS’s confirmations for the instructions in a timely manner;

23.4  alternatively, Winrise is liable to indemnify DBS for any putative liabilities incurred in respect of the Five Payments. Winrise’s claims therefore fail for circuity of actions.

D.  WHETHER ARGUABLE CASE THAT MS ZHAN HAD AUTHORITY TO OPERATE THE ACCOUNTS AND MAKE THE FIVE PAYMENTS

24.  The key issue on which the parties focused at the hearing was that of whether it was arguable that Ms Zhan had the authority to operate the Accounts via the IDEAL platform to make the Five Payments.

25.  DBS’s case is that under the August 2017 IDEAL Maintenance Form, Winrise opted for “Single Management Control”, and Ms Zhan was authorised to operate the IDEAL Platform on her own.  It will be remembered that DBS’s evidence is that designating the authorised personnel to operate the IDEAL platform for an account is a different matter to granting signing authority to authorised signatories to operate an account. Counsel for DBS, Mr Harrison Miao, submitted as follows.

25.1  In the 2008 IDEAL Registration Form, section 6 provided that “The Current / Savings Account authorized signer given the highest authorization limits will be the authorized signer of IDEAL Maintenance Form and all future DBS IDEAL services related documentation.  If more than one Current / Savings Account authorized signer have equal highest authorization limit, EITHER / ANY one of these authorized signers will be the authorized signer(s)  of IDEAL Maintenance Form and all future DBS IDEAL services related documentation.”

25.2  The term “highest authorization limit” is a reference to the monetary limit given to the authorised signer.  This is made clear by the Chinese version of the term, which is “最高限額授權” (highest amount limit authorisation).

25.3  The 2008 IDEAL Registration Form further specified that Mr Wong was in authorisation class “A”, with an unlimited transaction limit.  Subsequently, in the 2014 IDEAL Maintenance Form, Mr Benishay was added as a user of the IDEAL platform and was also designated as being of the same authorisation class.  There was therefore no difference in their authorisation limits.

25.4  The August 2017 IDEAL Maintenance Form selected Single Management Control, and updated Ms Zhan’s designation as both “maker” and “authorizer”.  The form was signed by Mr Wong and Ms Zhan, who at the time were authorised signatories of the Accounts, authorised to sign jointly.

25.5  Ms Zhan was therefore authorised to operate the IDEAL platform to effect the Five Payments.

26.  At the hearing, Mr Carolan advanced six reasons as to why it was said that the Five Payments were not made within DBS’s mandate.  All of these reasons went to the validity of the August 2017 IDEAL Maintenance Form in authorising Ms Zhan to operate the IDEAL platform.

27.  First, Mr Carolan submitted that the person with the “highest authorization limit” under section 6 of the 2008 IDEAL Registration Form was Mr Benishay, as he was the only person who could sign singly in respect of the Accounts.  It was said that otherwise, in a case such as the present where no financial limits were set in respect of each signatory, it would be impossible to rank the priority of the signatories.

28.  However, I note that section 6 of the 2008 IDEAL Registration Form provided that if authorised signers had equal authorisation limits, then any one of them would be authorised to sign IDEAL Maintenance Forms and IDEAL services related documentation.  Mr Carolan fairly accepted that it was at least arguable that Mr Benishay and Mr Wong had the same authorisation limit.

29.  Second, Mr Carolan referred to paragraph 2 of section 10 of the 2008 IDEAL Registration Form.  Section 10 constituted a board resolution of Winrise, albeit it constituted part of DBS’s standard form. Paragraph 2 provided as follows:

“RESOLVED THAT the content of the IDEAL Registration Form and submission by [Winrise] of the IDEAL Registration Form subject to acceptance by the Bank is hereby approved and FURTHER RESOLVED THAT any one director of [Winrise] be and is authorized to be the SIGNER OF the DECLARATION OF [Winrise] in section 9 of the IDEAL Registration Form and he / she be and is hereby also authorized to execute for and on behalf of [Winrise] the following documents [documents relating to registration for IDEAL platform].”

30.  Mr Carolan’s submission was that only Mr Benishay could sign documents in relation to the IDEAL platform, as he but not Mr Wong or Ms Zhan, was a director of Winrise.  After all, the 2006 Mandate had made it clear that it could only be amended by a board resolution.  Therefore, Mr Wong and Ms Zhan were not authorised to sign the August 2017 IDEAL Maintenance Form.

31.  However, paragraph 3 of section 10 of the 2008 IDEAL Registration Form went on to provide that the persons authorised under section 6 were authorised to sign IDEAL Maintenance Forms and other documents in connection with the maintenance of the IDEAL platform services.  In other words, section 10 drew a distinction between documents relating to the registration or setup of the IDEAL platform (which could only be executed by a director of the corporate customer)  and documents relating to the maintenance of the platform (which could be executed by the persons authorised under section 6).  Mr Carolan submitted that paragraph 3 only permitted the execution of forms which conformed to the mandate already given by the customer to DBS, but this is not a limitation stated on the face of paragraph 3.

32.  Furthermore, insofar as a board resolution was necessary to modify the mandate under the 2006 Mandate, section 10 was stated to be a board resolution.

33.  Third, Mr Carolan submitted that the 2008 IDEAL Registration Form could not have the effect of amending the terms of the 2006 Mandate as it was merely a form to set up the use of online services and did not attempt to change the overarching mandate conferred under the terms of the 2006 Mandate.  After all, 7 of the 2006 Mandate expressly provided that the resolutions thereunder were to remain in full force and effect unless and until DBS received a duly certified copy of an amending resolution duly passed by Winrise’s Board of Directors.

34.  However, DBS’s evidence is that setting up the IDEAL platform and designating persons authorised to operate it is not the same as authorising signatories in respect of the Accounts.  It must be at least arguable that the 2008 IDEAL Registration Form constituted a valid decision of Winrise in setting up the IDEAL platform and providing for the designation of persons authorised to operate the platform. Furthermore, as already referred to above, section 10 of the 2008 IDEAL Registration Form was stated to constitute a board resolution of Winrise, and was executed by Mr Benishay as chairman.  It must be at least arguable that insofar as any modification of the 2006 Mandate was needed, the same was effected through this resolution.

35.  Fourth, Mr Carolan submitted that Mr Wong and Ms Zhan were not authorised to sign the 2017 IDEAL Maintenance Form (which selected “Single Management Control”)  as they were not directors and therefore did not have the ostensible authority to sign “for and on behalf of” Winrise.

36.  However, as Mr Carolan fairly acknowledged, there is at least an argument that the 2008 IDEAL Registration Form authorised Mr Wong and Ms Zhan to sign IDEAL Maintenance Forms, which would have included the 2017 IDEAL Maintenance Form.

37.  Fifth, Mr Carolan submitted that at the time when Mr Wong (and Ms Zhan)  signed the 2017 IDEAL Maintenance Form, DBS was aware that Winrise was in the process of removing Mr Wong as an authorised signatory of the Accounts.  Mr Carolan cited DEX Asia Ltd v DBS Bank (Hong Kong)  Ltd [2009] 4 HKLRD 160 at [55] (DHCJ Chua Guan Hock SC)  for the proposition that where a bank has notice of a proposed revocation of an existing authority, it cannot accept as authority a signature from the person whose authority is being revoked; it did not need to be satisfied that the formalities for the revocation had been fully completed before it should be treated as being aware of the revocation of the mandate.

38.  I do not agree that DEX Asia Ltd goes this far.  At the very least, as Mr Miao pointed out, the question of the bank’s liability involves an inquiry into whether it had reasonable grounds for believing that there was a lack of authority.  In the present case, it is not disputed that at the time, since the formalities for removing Mr Wong had not been completed, DBS’s stance was that it would treat Mr Wong as being an authorised signatory in the meantime, and this was accepted by Winrise.  DBS’s stance was made clear in the email from Ms Sugar Wong to Ms Zhan of 15^th August 2017.  Ms Zhan of Winrise was therefore aware of DBS’s stance, and also did not raise any objection to Mr Wong signing the 2017 IDEAL Maintenance Form together with her.  There must at least be a triable issue of fact as to whether the bank had reasonable grounds at the time for believing that Mr Wong had no authority to sign the form.

39.  Sixth, Mr Carolan submitted that even if his first five reasons were not accepted, the September 2017 Mandate overrode the August 2017 IDEAL Maintenance Form, it was a fresh submission of a full mandate form, similar to the original 2006 Mandate, unlike the 2007 Mandate which was merely a form for “Change of Specimen Signature / Company Chop”.  The September 2017 Mandate set out the authorised signatories afresh, specifying that Mr Benishay could sign singly and that Ms Zhan could sign together with Chau On Ki; Mr Wong was not listed as an authorised signatory.  (It will be remembered that this document in fact formed part of the process for removing Mr Wong as a signatory, which was not completed until November 2017.)  Mr Carolan submitted that since cl.1 of the document referred to the fact that DBS was being requested to provide not only “(a)  accounts opening and operation” services but also “(c)  other banking services”, including internet banking services, it was an overarching “umbrella” mandate which overrode the August 2017 IDEAL Maintenance Form.

40.  However, I note that:

40.1  cl.1(c)  described the other banking services as those “as may from time to time be subsequently requested or directed by the Authorised Signatory(ies)” (emphasis added).  Similarly, cl.5 provided that all accounts, products and additional services subsequently opened or subscribed for by Winrise were to be operated and dealt with under the terms of the September 2017 Mandate; and

40.2  there was nothing in the September 2017 Mandate that sought to revoke the August 2017 IDEAL Maintenance Form.  The evidence that designation of operators under the IDEAL platform was a separate matter to the designation of authorised signatories is again relevant here.

41.  It therefore is at least arguable that the August 2017 IDEAL Maintenance Form was not overridden by the terms of the September 2017 Mandate.

42.  Apart from these six reasons, Mr Carolan in his skeleton submissions argued that the December 2017 IDEAL Maintenance Form, in leaving the selection of “Single Management Control” or “Dual Management Control” blank, meant that the default position of “Dual Management Control” should apply.  However, I accept that it is at least arguable that when considered in the context of the express choice, made in the August 2017 IDEAL Maintenance Form, of “Single Management Control”, the default position did not apply as Winrise had already indicated its choice; the purpose of the December 2017 IDEAL Maintenance Form was simply to remove Mr Wong as an operator, with Winrise only filling in the section entitled “Add / Update / Remove User or Subscribe New Service”.  I note that Mr Miao’s construction of the form is consistent with Winrise’s subsequent conduct in allowing Ms Zhan to operate, singly, the IDEAL platform thereafter for one and a half years (and indeed for some time even after the fraud relating to the Five Payments was discovered).

43.  Accordingly, I do not consider that the various reasons advanced by Mr Carolan are sufficient for me to hold that it is not at least arguable for DBS to say that Ms Zhan was authorised to operate the IDEAL platform to effect the Five Payments.

E.  THE OTHER DEFENCES ADVANCED BY DBS

44.  It is therefore strictly speaking not necessary for me to go further to consider whether, even if Ms Zhan was not authorised to operate the IDEAL platform to effect the Five Payments, DBS nevertheless has an arguable defence.  I will just make some brief observations about these.

E1.  The “estoppel defences”

45.  Mr Miao relied on the doctrines of promissory estoppel, estoppel by representation, estoppel by convention, and acquiescence, and submitted that the requisite elements were as follows.  Mr Carolan did not seek to dispute these.

46.  Mr Miao submitted that promissory estoppel arises if:

46.1  the parties are in a relationship involving enforceable or exercisable rights, duties, or powers;

46.2  the promisor, by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the promisee that he will not enforce or exercise some of those rights, duties or powers; and

46.3  the promisee reasonably relies on that promise and is induced to alter his position on the faith of it, such that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise;

citing Luo Xing Juan v Estate of Hui Shui See (2009)  12 HKCFAR 1 at [55] (Ribeiro PJ); Hua Tyan Development Ltd v Zurich Insurance Co Ltd (2014)  17 HKCFAR 493 at [18] (Ma CJ).

47.  Mr Miao submitted that estoppel by representation arises if:

47.1  a representor has made a false representation of fact to a representee;

47.2  the representor intended or knew that the representation would likely be acted upon;

47.3  the representee acts to his detriment in reliance on the representation; and

47.4  the representor subsequently seeks to deny the truth of the representation;

citing Wilken & Ghaly, The Law of Waiver, Variation and Estoppel, 3^rd ed., paragraph 9.02.

48.  Mr Miao submitted that estoppel by convention arises if:

48.1  the parties entered into a legal relationship on the basis of a common assumption;

48.2  that assumption was communicated between the parties;

48.3  the parties acted upon the common assumption in the belief that they were both proceeding with the transaction on the basis of the same shared assumption;

48.4  one party attempts to depart from the common assumption; and

48.5  it is unjust for him to do so because of the part taken by him in occasioning the adoption of the common assumption by the other party, and if he were afterwards allowed to set up rights inconsistent with the assumption, the other party would suffer detriment;

citing First Laser Ltd v Fujian Enterprises (Holdings)  Co Ltd (2012)  15 HKCFAR 69 at [79] (Lord Collins NPJ).

49.  Mr Miao submitted that acquiescence is established if:

49.1  a plaintiff has assented or lain by in relation to the acts of another person;

49.2  in view of the assent or lying by and consequent acts, it is unjust in all the circumstances to grant the relief in question;

citing Spry, Equitable Remedies (9^th ed.), pages 456-457.

50.  Mr Miao’s argument was that DBS would still be entitled to rely on one of these defences even if Ms Zhan was not authorised to operate the IDEAL platform and effect the Payments, given that:

50.1  Winrise had by conduct communicated a representation, promise, common understanding (as shared by DBS)  or assent that Ms Zhan would be authorised to operate the Accounts via the IDEAL platform on the basis of “Single Management Control”, or had lain by as the state of affairs continued, in that:

50.1.1  for around one and a half years between December 2017 and June 2019, Ms Zhan was the only person operating the IDEAL platform on behalf of Winrise, in over two hundred transactions;

50.1.2  Winrise was aware of the transactions, and stood by without objecting.  Winrise has never denied that it knew of Ms Zhan’s operation of the IDEAL platform; DBS provided Winrise with remittance advices and account statements reflecting Ms Zhan’s operation of the Accounts; Mr Wong and Ms Zhan were Winrise’s authorised signatories under the 2006 Mandate and 2007 Mandate and their knowledge and actions (including the execution of the August 2007 IDEAL Maintenance Form)  were attributable to Winrise);

50.2  Winrise must have intended or known that DBS would rely on Ms Zhan’s authority to operate the IDEAL platform singly;

50.3  it would be unjust to allow Winrise to resile from its earlier position to now say that Ms Zhan had no authority to operate the IDEAL platform singly.

51.  Mr Carolan’s argument was that these “estoppel defences” could not constitute a defence to a complaint about a payment made in breach of mandate.  Reliance was placed on Bullen & Leake & Jacobs’ Precedents of Pleadings, 19^th ed., paragraph 9-10, and Paget’s Law of Banking, 15^th ed., paragraph 23.2, it being said that such defences were not mentioned as being available to counter a claim for payment in breach of mandate.

52.  It seems to me that whether or not an estoppel could have arisen depends on the facts of the case.  DBS’s duty to pay in accordance with the mandate given by Winrise is contractual (Paget, paragraph 23.1). Mr Carolan did not identify any reason why, as a matter of law, an estoppel could not arise between parties in such a contractual relationship.

53.  The availability of the “estoppel defences” is therefore not a matter that can be determined summarily at this stage, and needs to await a determination of the relevant facts.

E2.  Contractual estoppel

54.  Mr Miao further relied on the doctrine of contractual estoppel, which he submitted would be established where the parties have bound themselves by contract to accept a particular state of affairs they know to be untrue, with no proof of reliance being required other than entry into the contract itself (citing First Tower Trustees Ltd v CDS (Superstores International)  Ltd [2019] 1 WLR 637 at [47] (Lewison LJ)).  Again, Mr Carolan did not take objection with Mr Miao’s description of the doctrine.

55.  For this defence, Mr Miao relied on the Remote Channel Authority, which provided that:

“…(d)…if [DBS] gives written confirmation of any Remote Instruction, that [Winrise] must examine such confirmation and must notify DBS within 3 days of its receipt of any error, discrepancy or unauthorised transaction arising from whatever cause…Unless there is a manifest error, or [DBS] has failed to act in good faith, after such period, the Bank’s confirmation will be deemed to be correct and conclusive evidence that the transaction is authorised and binding on [Winrise]…

(h)  that this Authority shall apply notwithstanding existing or future mandates and/or other agreements or course of dealings between DBS and [Winrise] …”.

56.  The argument was that remittance advices and monthly account statements, for each of the Five Payments were issued to Winrise. No objection having been raised at the time, Winrise is contractually estopped from saying that the Five Payments were unauthorised.

57.  Mr Carolan’s argument was that:

57.1  monthly statements did not relate to any specific transaction and could not amount to a request to a customer to confirm any transaction in particular;

57.2  remittance advices and monthly account statements could not be “written confirmations” within the meaning of cl.(d), as such documents were records of transactions made after the transactions had taken place, rather than being confirmations of instructions regarding transactions yet to take place.  Under cl.(b), DBS could require a confirmation of instructions before they were carried out, so the term “confirmations” must refer to confirmations issued prior to transactions taking place;

57.3  at least in relation to the last of the Five Payments on 20th March 2019, DBS was orally notified about the fraud within two days thereafter, on 22^nd March 2019;

57.4  cl.(d)  was not a sufficiently “clear and unambiguous provision” which was needed for a bank to introduce a contractual obligation “a binding obligation upon the customer who does not query his bank statement to accept the statement as accurately setting out the debit items in the accounts”, failing to pass the “rigorous test” in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] 1 AC 80 at 109H-110C (Lord Scarman).  The submission at the hearing was that whether the clause could stand was subject to a test of reasonableness.

58.  I accept Mr Miao’s submission that at least for the purpose of resisting summary judgment:

58.1  even if the monthly statements did not relate to specific transactions, the remittance advices did, and there was one provided to Winrise for each of the Five Payments;[1]

58.2  it is at least arguable that “confirmations” in cl.(d)  of the Remote Channel Authority did not refer to confirmations of instruction sought prior to a transaction being carried out (which were covered by cl.(b)), as otherwise this would mean that DBS would be incentivised to delay the execution of every remote instruction by at least three days in order to obtain the protection of a contractual estoppel, which would undermine the customer’s operation of his bank account;

58.3  it is at least arguable that cl.(d)  is not ambiguous.  And if the test for the validity of cl.(d)  is one of reasonableness, that is a matter that needs to be determined at trial.

E3.  Indemnity

59.  Mr Miao submitted that DBS would in any event be entitled to an indemnity from Winrise for the same loss and damage under cl.(g)  of the 2006 Mandate, pursuant to which Winrise undertook to hold DBS harmless and keep it indemnified against any claims, proceedings, liabilities, losses and expenses suffered or incurred as a result of acting on remote instructions.

60.  Since DBS’ claim would mirror the damages being claimed against it, DBS would have an absolute defence of circuity.  Mr Miao relied on Barings plc (in liq)  v Coopers & Lybrand (a firm)  (No 2) [2002] 2 BCLC 410 at [36].

61.  Mr Carolan submitted that cl.(g)  could not avail DBS.  He cited The Bank of Bermuda Limited v Pentium (BVI)  Limited and Landcleve Limited, unreported, Civil Appeal 14 of 2003, 20th September 2003, where the Court of Appeal of the British Virgin Islands at [24] held that a similar clause was directed at claims from third parties, and not claims for breach of contract made by the contracting party; otherwise, this would insulate the bank from liability for breach of contract, rendering the contract nugatory.  Mr Carolan further submitted that in any event, the clause would fail the test of reasonableness under the Control of Exemption Clauses Ordinance (Cap.71).

62.  This defence was far down the list of the alternative defences relied on by DBS.  Insofar as it would require to be determined, I accept that the issue of reasonableness, at least, would involve a triable issue.

F.  DISPOSITION

63.  I give unconditional leave to DBS to defend Winrise’s claim. I further make an order nisi that the costs of and occasioned by the Summons be in the cause.