NATAMON PROTPAKORN v. CITIBANK, N.A.

HCA 190/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 190 OF 2005

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J U D G M E N T

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Introduction

1.  This is an appeal from an order of Master Hui dated 14 September 2007 giving leave for the statement of claim to be amended.  The Plaintiff, Natamon Protpakorn, who is from Thailand, became a customer of Defendant (“the Bank”) at its Hong Kong head office on 17 March 2000 by, in the usual way, signing a number of the Bank’s standard terms and conditions, as everybody who becomes a bank customer is required to do.  Most particularly she signed, to give it its full name, a Foreign Exchange/Gold Index/Foreign Exchange Option Trading Account Agreement which I will from now on refer to as the Standard Form FX Agreement.  It is also said that she entered into what is called a Master Derivative Agreement which she signed.  By doing so, she became a private banking client of the Bank whose services are only available to individuals of very substantial means which she undoubtedly has.

2.  I will need to explain more fully the background to her relationship with the Bank in due course.  For present purposes all I need to relate is that in July 2004, the Bank wrote to the Plaintiff and informed her that it had decided to close her account with it because it was not satisfied about the source of her wealth, nor that she had effective control of the assets in her account or, of the good standing of her Japanese financial advisor to whom she had given authority to operate the account on her behalf.  This notice was given without any previous indication that this might happen and at a time when she was exposed on a number of foreign exchange trades which she had expected to leave open and to renew or “roll-over” until a profitable situation arose.  In the event, the Bank having done what it said it would do, these positions were closed prematurely for her purposes, exposing her to losses on her positions totalling US$16,729,198 and in addition depriving her of profits of US$22,099,079.  She has therefore sued the Bank for breach contract in the total amount of US$38,828,227.

The Course of the Action to Date

3.  The writ was issued on 28 January 2005 and on 3 June 2005 the Bank applied by summons to strike out the statement of claim as one disclosing no reasonable cause of action, and also under the other limbs of O.18 r.19, as well as under Order14A to have two points of law determined in their favour which would in effect have been dispositive of the action.  On 23 November 2005, Deputy Judge Muttrie struck out the claim as disclosing no reasonable cause of action but left open the prospect that the Plaintiff might be able to salvage the action by applying to amend her pleadings.  In those circumstances, he made no order on the Order14A summons.  The Plaintiff then appealed to the Court of Appeal, dispensing with her original solicitors and counsel and instructing others in their place.  The appeal was listed for hearing on 6 June 2006 but on 18 May the Plaintiff’s solicitors indicated that she would not be pursuing the appeal and that she would seek leave from the Court of Appeal to amend her statement of claim in the form of a draft that had been provided.  On 6 June 2006, the Court of Appeal declined to hear the application for leave to amend the statement of claim taking the view that such an application should be made at first instance.

4.  The Bank refused to consent to the amendments and so on 14 September 2007 the Plaintiff’s summons to amend the statement of claim was heard by Master Hui who, having heard the argument, gave leave for the amendments.  Hence this appeal from his order.

The Amendments

5.  The proposed amended-statement of claim represents a completely fresh start, the whole of the original pleading having been deleted and replaced with a new version.  This having been said the factual basis of the plea remains the same following, as it does, the basis put forward in the Plaintiff’s affidavit of 15 July 2005 [B/200-216].  I will need to embark on a certain amount of analysis of the amended pleading in order to decide the appeal and, as will be apparent, the pleaders having adopted the factual basis of the struck out original, have sought to apply to those facts alternative legal labels which, at this stage, are said to be perfectly viable pleas which should be allowed to proceed to trial.

The Defendant’s Burden

6.  Mr Aiken SC, for the Plaintiff, has correctly emphasised that in order to prevent the amended-statement of claim from being brought into play, the Defendant has to repeat its success before Deputy Judge Muttrie by demonstrating that the proposed amended pleading is one that is “hopeless” and “bound to fail” on the principles required under O.18 r.19.  Provided these new pleas are “fairly arguable” they should be allowed to proceed to trial.  I have no doubt that this is the correct test to apply.  In terms of an application to amend (as this is) I also have no doubt that provided the pleading survives an O.18 r.19 examination, I would be disposed to allow the amendments under the principles set out in the current practice [see the note at para. 20/8/6, page 378-9].  Mr Martin Rogers, who appears for the Bank, I think, readily accepts that this should be so, and that no forensic prejudice would be suffered by his clients where the action has yet to really get going.

The Factual Background

7.  I gratefully acknowledge the considerable assistance that I have obtained from reading Deputy Judge Muttrie’s judgment on the Defendant’s summons to strike out the original statement of claim [see B37-65].  Although he had to consider the original pleas put forward, which he held to be doomed to fail, he was required to consider the identical factual background as well as the same Agreements which the Plaintiff had entered into.  Like him, it seems to me that I should set out the relevant terms of the Standard Form FX Agreement upon which the Bank so heavily relies as governing the parties contractual relationship and upon which the Bank is said to have been able to terminate the Plaintiff’s accounts without any of the consequences which the Plaintiff wishes to visit upon it by this action.  Unavoidably, I will need to set out the terms that, for these purposes, are relevant:

“2.     Application

In consideration of the Bank opening or maintaining or continuing to open or maintain the Trading Account, the Account holder hereby agrees that

(a)   all the provisions in section II shall be applicable to all Contracts (unless the context of otherwise requires) and are binding on the Account Holder.

…

7       Termination

7.01  If any of the following events (‘Event of Termination’) shall occur and be continuing:

(a)	The Account Holder shall not have provided any additional margin due under clause II, 4.02 or clause III, 3.03 hereof; or
(b)	The Account Holder shall fail to make any payment hereunder when due or, as the case may be, on demand; or
(c)	Any representation or warranty given by the Account Holder hereunder is or proves to have been incorrect or misleading when made; or
(d)	It shall become illegal or impossible or shall be asserted by any central bank or other governmental authority to be illegal or impossible for one Account Holder or the Bank to perform any of their respective obligations under these terms and conditions and/or any or all of the Contracts; or
(e)	The Account Holder shall die or be incapacitated, or shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Account Holder to adjudicate it a bankrupt or insolvent or any order shall be made by any competent court or other appropriate authority or resolution shall be passed for its winding-up or dissolution or for the appointment of a liquidator, receiver or trustee for it or any substantial part of its property, revenues or undertaking; or
(f)	Distress, execution, sequestration, attachment or other process is levied against any or all of the assets, rights or revenues of the Account Holder; or
(g)	The Bank considers, due to a material adverse change in the financial condition of the Account Holder or otherwise in its absolute discretion, it advisable or necessary to safeguard its interest under these terms and conditions and/or any or all of the Contracts.

then, and in any such event, the Bank may (i) terminate the Trading Account and any outstanding obligations to the Account Holder hereunder and/or under any or all of the Contracts, (ii) realise or liquidate and/or deal with in any manner as the Bank deems fit all or any of the Contracts and/or offset any or all of the Contracts against the other(s) of them or such Contract(s) as the Bank may in its sole and absolute discretion determine notwithstanding that the relevant Contract(s) has or have not yet matured and recover all obligations and liabilities including all interest and costs and expenses in connection with the recovery thereof, due by the Account Holder to the Bank, (iii) without prejudice to its right to otherwise demand payment of any amounts payable by the Account Holder hereunder to be forthwith due and payable, such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Account Holder, and/or (iv) without prior notice to the Account Holder, liquidate, sell, realise, dispose of or otherwise deal with any or all of the Collateral in such manner as the Bank may deem appropriate.  Any proceeds from the sale of the Collateral remaining after deducting all costs and expenses in connection herewith and payment of all amounts due hereunder, shall be paid to the Account Holder.  In the event such proceeds are insufficient to cover the payments referred to before, the Account Holder shall pay to the Bank forthwith upon demand the amount of any such deficiency.  For the avoidance of doubt, the Bank has an absolute discretion to choose which (if not all) of the Contracts shall be terminated, liquidated, sold, realised, disposed of and/or otherwise howsoever dealt with, regardless of the nature of the Event of Termination relied upon, whether the same relates to the Foreign Exchange Contracts or, as the case may be.  Gold Index Contracts or, as in case may be, Option Contracts only or whether the net position of all the Contracts as such that the payments referred to before will be adequately covered.

…

15.  Amendments, Etc.

No amendment or waiver of any provision hereof or of any Contract, nor consent to any departure by the Account Holder therefrom, shall in any event be effective unless the same shall be in writing and signed by the Bank and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  For the avoidance of doubt, the Bank shall be entitled from time to time without prior notice to the Account Holder to amend, vary, add to or delete in whole or in part, any or all of the terms and conditions and these terms and conditions as amended shall become effective on such date as the Bank may in its absolute discretion specify.  The Bank may (but not bound to) send these terms and conditions, as amended, to the Account Holder for record purpose.  These terms and conditions, as amended, shall be binding on the Account Holder.”

Other relevant clauses are these:

“7.02   The Account Holder hereby acknowledges that it will not have any right or claim against the Bank in respect of any loss arising out of any liquidation, realisation, sale, disposal or dealing referred to in … clause II 7.01 howsoever such loss may have been caused, and whether or not a better price could or might have been obtained, by either deferring or advancing the date of such liquidation, realisation, sale, disposal or dealing.

…

11. No Waiver, Remedies

No failure or delay on the part of the Bank in exercising any right hereunder or under any Contract shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under any Contract preclude any other or further exercise thereof or the exercise of any other right.  The Bank’s rights and remedies herein or therein provided are cumulative and not exclusive of another rights or remedies provided by law.

…

16. Enforceability

16.01   No delay or omission by the Bank in exercising any right, power or privilege conferred upon it by these terms and conditions and/or any Contract shall impair the same nor shall any single or partial exercise thereof preclude any further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.”

Lastly, the Agreement came with a Risk Disclosure Notice for FX Margin Trading which the Plaintiff signed, it is in these terms:

“This notice is being issued to inform you of the risks associated with leveraged foreign exchange (FX margin) trading.

The risk of loss in leveraged foreign exchange trading can be substantial.  You may sustain losses in excess of your initial margin funds.  Placing contingent orders, such as ‘stop-loss’ or ‘stop-limit’ orders, will not necessarily limit losses to the intended amounts.  Market conditions may make it impossible to execute such orders.  You may be called upon at short notice to deposit additional margin funds.  If the required funds are not provided within the prescribed time, or if the Bank considers that it is advisable or necessary to safeguard its interest, the Bank is entitled under its terms and conditions to liquidate your position without prior notice to you.  You will remain liable for any resulting deficit in your account.  You should therefore carefully consider whether such trading is suitable in light of your own financial position and investment objectives.

8.  The Plaintiff’s case which for present purposes I need to assume to be factually accurate is very fully set out in the proposed pleading.  It is there to be read and no practical purpose is to be served by repeating it here.  What can usefully be done is to set out the principal factual bases of the action from which certain legal propositions are sought to be advanced by Mr Aiken which he submits provide her with valid causes of action and, if proved at trial, the remedies which are sought.  At this stage, he correctly reminds me that the threshold is the low one of him having to demonstrate that the pleading is “fairly arguable”.

9.  The Plaintiff, having been a customer of UBS, was persuaded by her banker there, a Mr Balmelli, to follow him to the Bank after he had become employed by it.  She agreed to do so and it was Mr Balmelli who arranged for her to sign the Standard Form FX Agreement under which she was able to operate her accounts with the Bank.  Whilst at UBS, she had been a very conservative investor preferring to keep her money in interest bearing time deposit accounts.  Mr Balmelli knew that she did not have an appetite nor was she familiar with more risky, albeit particularly more profitable, investments such as foreign exchange trading.

10.  After she followed him to the Bank, she continued through him to keep her money in time deposits.  Things changed in 2001 when Mr Balmelli left the Bank and her account was managed by a Mr Harry Lai, and it was Mr Lai who persuaded her to try her hand at Margin FX Trading by making a series of representations to her when he visited her at Bangkok.  These representations referred to as the “2001 representations” are extensively set out in paras. 22-24 of the proposed pleading.  The central feature of these representations, which the Plaintiff is said to have found attractive and persuasive, were those relating to the “Roll-over Term(s)” on FX contracts, the effect of which was that an unprofitable position could be “rolled-over” for a further term until the trade moved into profit when it could be realised.  This representation, which if true, would have meant that much of the risk which attends FX trading on a margin would be eliminated, ultimately caused the Plaintiff to change her mind and alter her investment strategy from safe time deposits to FX margin trading which is usually a notoriously risky way of investing, calling for a steady nerve and a willingness to risk losing a lot of money in the hope of even greater returns.

11.  It is alleged that as a result of these representations, a separate oral 2001 Margin FX Agreement was entered into between the parties, distinct from the written Standard Form FX Agreement, which now governed the Plaintiff’s Margin FX Trading with the Bank.  The particular features of this oral agreement are pleaded at paras.26 and 27, inter alia containing and express Roll-over Term that the Plaintiff was entitled to roll-over and keep open any FX contract as long as she had sufficient funds deposited with the Bank.  By virtue of these representations, which persuaded her to enter into this oral Margin FX Agreement, there is a plea of estoppel at para.27 to the effect that the Bank is now estopped from terminating the Plaintiff’s account at its discretion which it had under the Standard Form FX Agreement nor, can it be heard to deny that she is entitled to roll-over and keep open her FX contracts in accordance with the Roll-over Term.

12.  The period from 2001 to 2004 can be taken more shortly.  It is alleged that pursuant to this oral agreement, the Plaintiff had been allowed by the Bank to conduct her FX Margin Trading in this way and indeed increase the volume of trading.  At this time, as was always the case, the Bank was protected by virtue of the fact that she kept sufficient deposits with it.

13.  Things changed in June 2004 when the Bank decided that it would need to vary this oral agreement with particular reference to her free-hand in rolling-over losing positions.  The Bank sent her a letter dated 15 July [see para.31] in which it informed her that it had become necessary for the Bank:

“to review your practice of rolling-over loss positions at historical rates rather than market rates thereby deferring recognition of your losses.  This is contrary to normal trading practice encouraged by the Bank and by market regulators and we were not prepared to allow this to continue indefinitely.  This was discussed with you on various occasions …”

14.  The conclusion drawn from this event at para.32 of the proposed amendment is that the Bank:

“had agreed to, acquiesced to, or should be estopped from denying, the Roll-over Term as governing the Margin FX Trading between the parties.”

It has to be said, although this would be for the trial, that if the amendments were allowed that the Bank’s letter, if anything, serves to contradict the very existence of an alleged oral agreement in 2001.  Be that as it may, for present purposes I am required to take the facts as they are.

15.  The narrative then continues from para.33 which relates that from 2002 to 2004, the Plaintiff switched from Margin FX Trading to foreign exchange options which resulted in a US$3 million loss.  As a result of that she is said to have consulted a Mr Kawabe, who is a friend and who had been convicted of financial fraud in Japan and sentenced to a substantial term of imprisonment.  He is somebody who the Plaintiff trusted and whose judgment in such matters she respected.  She agreed with the Bank to provide Mr Kawabe with a mandate allowing him to carry out all manner of trading on her behalf.  At about this time [early 2004], it is also alleged that Mr Lai confirmed with the Plaintiff that the oral agreement for Margin FX Trading still governed their relationship for such trading as a result of which she resumed Margin FX Trading in about February 2004.  Her FX Trading lines were increased by the Bank to US$250 million.  By April 2004, Mr Lai had left the Bank and was replaced by Miss Jessica Poh.  In May 2004 it is pleaded that Miss Poh, with five other members of her team, met the Plaintiff and Mr Kawabe at Osaka.  The effect of these meetings are pleaded at paras.41-47 as a confirmation of the oral agreement arrived at with Mr Lai in 2001, during which meetings the Plaintiff was encouraged to increase her trading volume and was offered lower commission charges as an incentive for doing so.

16.  Within two months, the relationship appears to have soured.  This is reflected at paras.48-56.  There was a meeting at Bangkok on 30 June 2004 with Jessica Poh.  The Plaintiff was asked to close some of her FX contracts to keep her total unrealised losses to below US$2 million.  When the Plaintiff, who had sufficient funds deposited with the Bank, refused the Bank is said to have unilaterally suspended the Plaintiff’s FX Trading lines and refused to accept new FX contracts.  Nevertheless, two days later [para.50] it is pleaded that revised terms were agreed, under protest from the Plaintiff, for the Plaintiff’s Margin FX Trading based on what are referred to as the “2004 Representations”, which included a “revised Roll-over Term”.

17.  The new terms, pleaded at para.50(3), which I need not recite here, were more restrictive of the Plaintiff’s trading but still enabled her to roll-over losses, albeit less advantageously from her point of view.

18.  Thereafter, and without warning, as I have related at para.2 above, the Plaintiff’s positions were closed and her account terminated causing her the losses which I have already referred to. 

The New Bases of the Plaintiff’s Case

19.  Mr Aiken puts forward six different ways of viewing the facts which he submits afford the Plaintiff a case for damages to be recovered from the Bank.  They are as follows:

“(1)	Two collateral agreements, namely:
	(a)	The 2001 Margin FX Agreement;
	(b)	The 2004 Margin FX Agreement;
(2)	Misrepresentations, made orally by D’s employee to P to induce her into engaging in Margin FX Trading with D;
(3)	Estoppel, based on D’s representations to P;
(4)	Breach of duty of care, which D as a bank owed to P as a customer;
(5)	Invalidity of the exemption of liability clause in the Standard Form FX Agreement, since P is a consumer and the clause is unreasonable under the Control of Exemption Clauses Ordinance (Cap.71); and
(6)	The Standard Form FX Agreement being null, void, or alternatively not binding on P.”

Mr Aiken submits that all are fairly arguable and not bound to fail.  This submission found favour with the Master.  Mr Rogers has sought to deal with these points in turn.

The Arguments and The Analysis

20.  Mr Rogers begins with what is Mr Aiken’s 6^th and last point relating to the Standard Form FX Agreement not being appropriate to the Plaintiff’s circumstances, she being a “consumer” rather than a “business” customer, and therefore that the standard contract has no binding effect and is null and void.  In effect this is a plea of mistake.  Mr Rogers submits that quite simply the Plaintiff signed the standard form of contract and is bound by her signature.  If authority is needed for such a well-known proposition he cites L’Estrange v Graucob [1934] 2 KB 394 at 403, 404 and 406.  He points to the nature of her trading activities which were wide-ranging, on her own behalf and subsequently, under the apparently more expert guidance of her appointed agent Mr Kawabe.  As to the plea that:

“the Plaintiff was an individual investor and looked to her private banker for service in relation to her personal and not business-related finance”

and,

“… did not intend to engage in any business where she would incur currency obligations or exposure in gold.”

Mr Rogers characterises this as so devoid of merit that it should be struck out as frivolous and vexatious.  The evidence is that she expressly confirmed her intention to trade in foreign exchange, incur currency obligations and exposure in gold.  Her authorization letter to the Bank at B/17/236 amply indicates the full range of products and investment activities that Mr Kawabe could carry out on her behalf.  Her affirmation of 15 July [paras.9 and 10, A/13/202] says that:

“After the appointment of Mr. Kawabe as my consultant and agent, he set up a team of traders to perform the leveraged foreign exchange trading with the Defendant.  Since then, my trading through the leveraged FX account(s) with the Defendant became active with a substantial increase in the volume of trading.  At that time, the line limit (i.e. the aggregate value of the open (or outstanding) positions of the contract value in respect of the leveraged foreign exchange contracts that I was entitled to trade) was US$100,000,000.”

Mr Rogers submits that this is clearly a contract that she was prepared to sign up to and did so irrespective of the way that it purports to describe the Bank’s customer as a “business” customer.  Having signed, she invested, avoiding hyperbole given the amounts referred to in the evidence, in a very substantial way.  The plea of mistake resulting in the nullity of the standard form is therefore bound to fail.

21.  In response, Mr Aiken puts the matter at its highest.  He speaks of the Bank knowing that this type of form of agreement did not and could not apply to the Plaintiff and yet it “lured” her into signing it.  Accordingly, there was no meeting of minds.  He submits that the fact that she then engaged in substantial trading is neither here nor there for the purposes of this argument.

22.  In my judgment, this argument and the plea that reflects it is simply not open to the Plaintiff.  It is bound to fail and any reference to it cannot be allowed to stand.  The fact is, as Mr Rogers submits, that on signing these Standard Forms a bank customer is taken to accept them and agrees to be bound by them, a fortiori, a sophisticated wealthy individual who had previous experience of private banking and who trusted her long-standing banker, Mr Balmelli who had presented the documents for her signature.  I do not believe that I need to say more on this aspect of the matter.

23.  Mr Rogers then turns to the prospect that by virtue of an oral collateral contract engineered by Mr Lai, the Standard Form Contract was superseded, certainly in respect of Margin FX Trading.  I need to approach this on the basis that these allegations are also factually correct.  In this respect, Mr Aiken has a difficult task when faced with a uniform Standard Form Agreement which is said to have been varied by a separate oral agreement.  Clause 15 of the Standard Form says that no amendment, waiver or departure from the written Agreement will be effective unless this is done in writing and signed on behalf of the Bank.  On its face, the collateral contract has the effect of contradicting the specific terms of trading contained in the Standard Form.  It seems to me that Mr Rogers is correct to rely on both Chitty, 29^th Edtn, Vol. 1, 22-033 and the case of MSAS Global Logistics v Power Packaging [2003] EWHC 1393(Ch.), para.49 which are clear authority for the proposition that if a contract in writing only allows variations which are in writing then, any purported variation which does not comply with that requirement will be to no effect.  What the Plaintiff is relying on is an oral collateral contract which carves out highly material differences between that collateral contract and the Standard Form.

24.  Whilst there can be instances when collateral agreements will effectively vary a main agreement, and Mr Aiken has referred me to some, this plea on these facts will simply not run and is also bound to fail.  The whole purpose of a written main contract requiring variations to be in writing is to avoid the very problem which one would encounter in this case.  See Edward Wong Finance v Profit Making Investment Ltd, 1049/2000, pages 10-11 and Inntrepreneur Pub Co. (GL) v East Crown Ltd (2000) 2 Lloyds Reports 611 at 614.  I am satisfied that there is no prospect of a plea such at this, in these circumstances, being “fairly arguable” and I will not allow the amendment.

25.  Mr Aiken has also invited the court to consider the representations which are said to give rise to a collateral contract, because the Plaintiff agreed to accept these terms, as actionable misrepresentations both as to the events of 2001 and 2004.  Again, I need to take these allegations at face value in deciding whether, really as a matter of law, a plea such as this should be allowed to run on the very generous basis that one considers applications for amendments of pleadings.

26.  Mr Rogers submits that on a true analysis of these representations, these can only be said to be promises, as opposed to representations as to fact.  He refers to the proposed plea itself at para.50(3), A/10/157.  When one considers the precise language used the references are to “would be” and “will be” being references to future events and only promissory in nature.  Mr Rogers has referred to a first instance decision in the case of Kee Lloyd Energy Ltd, HCA 1299/2004, para.28 where a representation by a bank that it would increase the general banking facilities from $1.656 billion to $3.08 billion were mere promises and not representations of fact.  In the present case as well, the alleged representations are merely promises and cannot give rise to a cause of action.  Mr Rogers submits that support can also be obtained from Chitty, 29^th Edtn, Vol.1, 6-004 to 6-006, which is in these terms:

“Statement of opinion and intention.  The traditional rule is that a misrepresentation must be a false statement of fact, past or present, as distinct from a statement of opinion, or of intention, or of law.  A mere statement of opinion, which proves to have been unfounded, will not be treated as a misrepresentation, nor will a simple statement of intention which is not put into effect; for as a general rule these cannot be regarded as representations of fact, except insofar as they show that the opinion or intention is held by the person expressing it.

Statement of opinion may amount to statement of fact.  However, in certain circumstances a statement of opinion or of intention may be regarded as a statement of fact, and therefore as a ground for avoiding a contract if the statement is false.  Thus, if it can be proved that the person who expressed the opinion did not hold it, or could not, as a reasonable man having his knowledge of the facts, honestly have held it, the statement may be regarded as a statement of fact.

Opinion not honestly held.  If a person states as his opinion something which he does not in fact believe, or which given the facts known to him, he could not honestly hold, he makes a false statement of fact.  So where, at a sale of property, the vendor described the occupier as ‘a most desirable tenant,’ while in fact he knew that the rent was considerably in arrear, this was held to entitle the purchaser to rescind the contract.”

What is clear is that the passage at 6-004 is, of course, a correct statement of the law.  The passages at 6-005 and 6-006 do not help Mr Rogers, nor do they reflect on the situation which Mr Aiken has urged on me.  These representations are not put forward as statements of opinion but rather as representations of fact that these would be the basis of the parties’ legal relationship, which he characterises as a statement of fact.

27.  For my part, I cannot see how these statements, assuming for the moment that they were made by Mr Lai in 2001 and by Mr Chiew in 2004, could be seen as more than mere promises which were not kept.  This plea must therefore also be doomed to fail on any view of the matter, in which circumstances it should not be advanced.

28.  An alternative way in which the matter is put by Mr Aiken is that based on the misrepresentations as to fact, an estoppel has now come about which prevents the Bank from going back on its word as to the terms of the oral agreements including an estoppel preventing it from now closing the Plaintiff’s contracts.  It must logically follow that if, as I have, declined to allow the Plaintiff to plead the misrepresentations then no espoppel can be said to arise with the consequence that this plea must fail as well.  The two pleas would stand and fall together.  On this occasion, in these circumstances, the latter is the case.

29.  Next, I turn to consider the allegation that the Bank owed the Plaintiff a duty of care.  This duty is identified by Mr Aiken not as a duty to give good investment advice — he does not advance this — but a duty to advise the Plaintiff on how Margin FX Trading operated and on what her rights and obligations were which the Bank failed to do — if any thing she was misadvised.

30.  Mr Rogers response is largely related to the giving of “investment type” advice on which the Bank is heavily protected by Clause 8.01 of the Standard Agreement and by Clause 4.12 of the Master Derivative Agreement, both of which clearly warn a customer to be aware of the risks involved and of the need to seek independent investment advice.  To some extent, this would cover part of the sort of duty advanced by Mr Aiken but what really strikes me as conclusive is that when a customer like the Plaintiff signs an agreement such as the Standard FX Agreement, she is to be taken as understanding what she is letting herself in for in embarking on these types of investment — she needs to understand how the mechanics of the investment operate and the underlying investment risk in the particular “bet”, for this is what she is undertaking.  I cannot see how in circumstances such as these a duty of the sort identified by Mr Aiken can be said to exist and, if it does, I would have thought that the Bank is covered by the warning which comes with embarking on such investments by the customer.  At this level, the Bank is entitled to expect that its customer, who has signed up for such risky products, knows what he or she is doing.  This plea is not one which in my judgment can succeed and the amendment therefore will not be permitted.

31.  Lastly, Mr Aiken submits that the Exemption Clause in the Standard Form FX Agreement is invalid, this because the Plaintiff is a “consumer” and the clause is unreasonable under the Control of Exemption Clauses Ordinance, Cap.71.

32.  Mr Rogers says that this element of the pleading is not for now.  It is not a claim as such and should only appear in a Reply after, and in the event that, the Exemption Clause appears in the Defence.  It strikes me that this analysis is the correct one and at present it cannot assist the Plaintiff.  It is simply inapposite at this stage of the pleadings.

33.  The other matter which should be engaged is whether the Plaintiff can be said to be a “consumer” as opposed to doing this as “a business”.  This will always be a matter of fact and degree.  Where is the line to be drawn?  In Standard Bank London Ltd v Apostolakis & Anr [2002] CLC 933, a wealthy Greek couple who engaged in Margin Forex Trading to the tune US$7 million were regarded by the court as consumers.  In the present case and on the figures this lady was in a completely different class of investing.  In her case a credit line of US$250 million was made available to her.  She was courted by teams of people from the Bank at Bangkok and Osaka and she employed a team of her own investment advisors headed by Mr Kawabe.  At her level this had all the hallmarks of an investment business, rather than as a mere consumer entitled to the statutory protection of the Control of Exemption Clauses Ordinance.  Had I been put to it I would have so held but I am content to say, because I need go no further at this stage, that this part of the pleading is premature and cannot assist the Plaintiff.

Conclusion

34.  Notwithstanding Mr Aiken’s highly persuasive submissions, I am afraid to say that all the causes of action that are proposed in the amended pleading have no prospect of success, in which circumstances I decline to allow the statement of claim to be amended in this way.  This being my view, the Master’s order will have to be set aside, together with an order nisi that the costs of the appeal should be to the Bank.

35.  I do not propose to strike out the action as Mr Rogers invites me to.  The Bank must take out an appropriate summons to make that application.  The Plaintiff will, in any event, wish to consider her position and the court will wish to hear argument on a summons to strike out the action, although I am bound to say that at present the Plaintiff’s position does not appear to be a hopeful one.