| Bank of America National Trust and Savings Association v Herman Iskandar and Another [1998] 2 SLR 265; [1998] SGCA 22 |
| CA 151/1997 | |
| 30 Mar 1998 | |
| Court of Appeal | |
| Karthigesu JA, L P Thean JA, Yong Pung How CJ | |
| Michael Hwang SC, K Shanmugam SC and Maria Ho (Allen & Gledhill) for the appellants, Steven Chong SC and Philip Tay (Rajah & Tann) for the respondents |
Judgment
[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.] Judgment reserved. Karthigesu JA (delivering the judgment of the court): 1 This is an appeal against the decision of judicial commissioner CR Rajah made on 30 June 1997 in which he granted judgment to the respondents and ordered the appellants to pay the respondents compound interest for the period between 1979 to 1991 in respect of moneys placed in two fixed deposit accounts with the appellants. His judgment is reported at 2 The respondents are brothers and are Indonesian citizens. The first respondent, Herman Iskandar (Herman) is the executor of the estate of his late father Lugito Surjo Kusno (Lugito) who died on 21 November 1978, as well as the co-executor of the estate of his late mother Lily Iskandar (Lily) who died on 17 September 1983. Lily was Lugito’s second wife. The second respondent Willy Iskandar (Willy) is the co-executor of Lily’s estate. Herman brought this action in his personal capacity as the sole surviving joint account-holder, as an executor of the estate of Lugito and as a co-executor of Lily’s estate. Willy brought this action in his capacity as a co-executor of Lily’s estate. The appellants are a bank with a branch in Singapore. 3 Lugito was a very wealthy Indonesian businessman who left substantial assets in Singapore on his death. He had two families, one from the first marriage and the second from his marriage to Lily. When he died, he left a will appointing Lily and Herman as his executors. Probate proceedings took place between the two families. Eventually probate of the immovable properties in Singapore was granted to Lily and Herman, and probate of the movable properties was granted to Herman and Willy. The facts (1) The large account 4 Prior to Lugito’s death, he had two current accounts and a fixed deposit account with the appellants’ Singapore branch. Lugito was a valued customer of the appellants. We shall call this fixed deposit account the ‘large account’. The large account was a time deposit account No 71096-016 reference No 202831 opened with the appellants on 31 May 1973. This account was later reconstituted as account No 71096-024 on 28 August 1991. Lugito, Lily and Herman were the joint account-holders of the large account. Any one of the three joint holders could give instructions to the appellants to deal with the money in the large account. Lugito attended to all the formalities in establishing the account. Neither Herman nor Lily knew that he or she was a joint account-holder. Herman only discovered it in 1991 and Lily never discovered it. The learned judicial commissioner found that Lugito had, from time to time, asked Lily and Herman to sign the documents in blank without telling them what they were for. The correspondence address provided by Lugito for the large account was initially in Medan. This was later changed to No 111, Cairnhill Circle, Singapore 0922. 5 At the time a fixed deposit such as the large account was opened with the appellants, the appellants would issue the account-holder with a fixed deposit receipt known as a time certificate of deposit (TCD). A TCD was issued by the appellants in respect of the large account but had been lost. The TCD would set out the customer’s fixed deposit number, the principal sum, the date of issue, value date, maturity date, the period of the deposit and the rate of interest payable. 6 Although the original TCD was lost, the appellants used a standard form of the certificate of deposit until December 1988 for all fixed deposits in Singapore dollars, including the large account. There is no dispute as to the express terms of the TCD. This TCD would have set out the principal sum received from the customer, the period for which the principal sum was to be placed on deposit, and the principal sum together with the interest which would be payable at the end of maturity period upon presentation of the receipt, subject to the following rules: (a) interest will cease on due date; (b) the receipt must be duly stamped upon repayment; (c) if the receipt is lost, written notice should be given to the bank immediately; (d) before maturity of this receipt, the depositor is not allowed to withdraw the principal or interest. 7 Lugito had made a number of renewals, withdrawals and further deposits into the large account in his lifetime. When the large account was opened $5m was deposited into it on 31 May 1973 for a period of one year. All the subsequent withdrawals and renewals were set out in great detail by the learned judicial commissioner. Before 1975, all the moneys were transferred out of the large account. 8 On 24 January 1975, a fresh deposit of $1.2m was paid into the large account and instructions were given to place the money on fixed deposit for 12 months. Upon maturity, the principal and accrued interest were rolled over into another fixed deposit for 12 months. This was repeated for another 12 months and then another six months expiring on 24 July 1978. When the six-month period expired on 24 July 1978, the appellants did not receive any instructions for renewal until 18 October 1978 when they received instructions to renew for another six months. However the appellants treated the principal and accrued interest as being rolled over into a new deposit with effect from 24 July 1978. This was the last renewal prior to Lugito’s death. 9 Lugito passed away on 21 November 1978. At the time of his death, the amount standing to the credit of the large account was $1,490,399.54 with a maturity date on 24 January 1979. On maturity, the sum of $44,140.33 was credited to the account as accrued interest and the principal sum in the large account stood at $1,534,539.87. (2) The small account 10 The two current accounts, account Nos 10425-018 and 10425-042, were maintained by Lugito. These two accounts were opened in his sole name. On the date of Lugito’s death, account No 10425-018 had $3,885.38 standing to its credit, and current account No 10425-042 had US$309.87 standing to its credit. (3) Lui’s instructions 11 When Lugito passed away, the appellants received two letters from Phang & Co dated 4 December 1978 and 6 December 1978 which informed the appellants of Lugito’s death and instructed the appellants to hold all his moneys until proper legal representation was obtained. Phang & Co were the solicitors acting for Lugito’s son from his first marriage. 12 Lui Boon Poh & Co (Lui) were appointed by Herman and Lily to act for Lugito’s estate. On 26 December 1978, Lui wrote to the appellants on behalf of the executors to inquire whether Lugito had maintained any accounts with them and, if so, for a statement of the accounts which he had held in his lifetime. The appellants replied by a letter dated 18 January 1979, stating the reference numbers of the accounts maintained by Lugito, the amounts standing to the credit of the accounts and highlighting the fact that the large account was to mature on 24 January 1979. This letter of 18 January 1979 was never received by Lui and Lui wrote two reminders to the appellants before the latter replied on 8 June 1979 to inform them that the information requested had been given previously and repeated the contents of the 18 January 1979 letter. 13 By a letter dated 23 June 1979, Lui gave instructions to the appellants. This letter is important and we set out the material portions: We refer to your letter of 8 June, 1979 and shall be pleased if you will kindly transfer the balances of S$3,885.38 and US$309.87 in current accounts No 10425-018 and No 10425-042 respectively to fixed deposit accounts for a period of one year each and let us have the fixed deposit receipts thereof. Further, as for the fixed deposit account No 202831 for S$1,490,399.54 which matured on 24 January 1979, please renew the same for a further period of one year and keep us informed. 14 The appellants did carry out the instructions in relation to the current accounts. The money in the second current account (that was in US dollars) was converted to Singapore dollars and combined with the first current account to constitute a single fixed deposit No 72801-018 reference No 205104 (the ‘small account’) in the name of the estate of Lugito. The moneys in this account totalled $4,563.07. The small account was opened on 29 June 1979 and a TCD for the amount was received by Lui on 14 July 1979. The small account matured on 30 June 1980, one year having expired, and the amount standing in its credit was $4,855.56. This account was re-constituted as account No 72801-026 on 28 August 1991 on the instructions of Haridass Ho & Partners, who later acted for Lugito’s estate. 15 The appellants failed to carry out the instructions in respect of the large account nor did they keep Lui informed. It should be noted, however, that the evidence disclosed that on receipt of Lui’s letter dated 23 June 1979 a clerk with the appellants did telephone Mr Lui Boon Poh’s secretary and ask for the return of the original TCD. There was no follow-up by either. This evidence is dealt with in detail later in this judgment at 40 and 41. The unfortunate outcome was that the money in the large account laid dormant from 24 January 1979 to 28 August 1991. It sat there without earning any interest. While the appellants sent reminders to Lugito at the address of the Cairnhill property, the reminders never reached the respondents. The appellants posted a final reminder by registered mail on 22 January 1981 but the letter was returned unclaimed. The Cairnhill property was in fact occupied by Lugito’s adopted son and his first wife who were in the opposite camp from the respondents with regard to the Lugito estate. At all material times, the appellants never sent the reminders to Lui. 16 In 1983, Lui were winding down their law practice and handed the file to LAJ Smith & Co. In the years following, there were several changes of solicitors acting for Lugito’s estate. LAJ Smith & Co acted from November 1984 to November 1986. AC Fergusson acted from April 1987 to September 1990. Haridass Ho & Partners acted from September 1990 to July 1993 and Drew & Napier from July 1993 to December 1997. AC Fergusson and Haridass Ho & Partners had written to the appellants for information with respect to the large account. Until a specific query was made by Haridass Ho & Partners in 1991, the appellants did not say that Herman was a joint account-holder of the large account or that he could give instructions to the appellants for renewal of the fixed deposit in his own capacity. 17 On 5 January 1988, AC Fergusson wrote to the appellants stating that he acted for Herman as executor of Lugito’s will and asked for a confirmation of the balances in Lugito’s accounts. The appellants refused initially to provide information because of the then banking secrecy provisions in the Banking Act until the production of the certified true copy of the letters of administration or grant of probate or written permission from the personal representatives of the estate. Herman signed a letter authorising the release of information but he used a new signature which differed from that which appeared on the account opening forms for the large account. On 29 February 1988, the appellants replied to Herman’s letter, saying that they refused to provide the information, on the ground that the signature on the letter differed from the file records. 18 All along Herman believed that the moneys in the large and small accounts were continuing to earn interest. Meanwhile the estate duty on the Lugito estate remained unpaid and interest on the unpaid estate duty was running at 12% per annum. He knew that this exceeded the interest that the large account would be earning and wanted the money to be released to pay estate duty. By this time, he was a customer of the appellants’ private banking department. His private bankers with the appellants were Brian Williamson and Yap Yip Leong. Yap Lip Leong had earlier informed Herman in a meeting in Jakarta either just before Herman received the appellants’ letter of 29 February 1988 or soon thereafter that his signature in his letter of 15 January 1988 was different from those in the appellants’ file records. 19 Herman had used the same signature which he used to establish a deposit account with the appellants in Hong Kong in the early 1970s. He had transferred some of these funds from his Hong Kong accounts to the Singapore branch and he thought this was how the Singapore branch had his old signature. Yap Lip Leong asked him to sign whatever other signatures he had used with the appellants on a photocopy of his letter of 15 January 1988. However Yap Lip Leong did not tell him that he was a joint account-holder of the large account. 20 On 15 March 1988, he wrote a letter directly to Yap Lip Leong of the appellants requesting the appellants to release the estate money in the large account to the Comptroller of Estate Duty in payment of estate duty. The learned judicial commissioner drew the inference that Herman was unaware that he could withdraw the money in the large account as the surviving holder of the large account or that the money in the large account was not earning any interest. Nevertheless the appellants made no attempt to correct Herman’s mistaken impression. 21 n reply to Herman’s letter of 15 March 1988, the appellants’ solicitors, Shook Lin & Bok, wanted to know: (i) the capacity in which Herman made the request; (ii) the accounts in relation to which the request was made; (iii) the amounts for which the request was made, and (iv) copies of all documents relating to the above. Mr. Fergusson, who was then acting for Herman, replied by letter dated 20 April 1988, providing the required information. He also inquired the status of the two fixed deposit accounts. Shook Lin & Bok replied by letter dated 14 June 1988 stating the balances currently standing to the credit of the two accounts. This was the first time the appellants gave an indication that the large account was a joint account. However the appellants did not say who the signatories to the joint account were. 22 At this juncture, it is most unfortunate that the solicitors acting for Herman did not notice that the amounts in credit in the two fixed deposits stood at exactly the same amount as at 1979, ie the appellants had not credited any interest to the two accounts since 1979. It was only in 1991 when Haridass Ho & Partners took over the matter, and on specific queries from the firm as to why the moneys in the two accounts were not earning any interest, that the appellants replied stating that they had no instructions to place the amounts on interest bearing deposit since 1979. On 28 August 1991, Haridass Ho & Partners instructed the appellants to place the moneys in the large account on a seven-day interest bearing deposit and the moneys in the small account on a one-month interest bearing deposit. The appellants effected these instructions with immediate effect. 23 It was only on 3 September 1991 that the appellants’ solicitors, Shook Lin & Bok revealed that the large account was a joint account in the name of three parties, ie Lugito, Herman and Lily. By a letter dated 4 May 1992, Haridass Ho & Partners demanded full repayment of all moneys in the large and small accounts inclusive of all the interest accrued thereon within seven days of the date of the letter. The appellants failed to make such payment. On 1 October 1992, the respondents commenced their present action against the appellants, demanding the repayment of the moneys standing in the large and small accounts, as well as the interest that would be payable if the two accounts had been renewed annually. 24 On 3 February 1993, the appellants paid the respondents the sum of $1,585,727.73 in respect of the large account representing $1,534,539.87 and interest accrued from 28 August 1991 to 2 February 1993. On 17 February 1993, the appellants paid $5,902.12 in respect of the small account, representing $4,855.56 and interest from 28 August 1991 to 15 February 1993. The appellants adamantly refused to pay any interest from 24 January 1979 to 27 August 1991. 25 In the court below, the respondents argued that the appellants were bound to comply with the lawful and reasonable instructions in the letter by Lui dated 23 June 1979 to renew the fixed deposit for a year, and to keep them informed. Further they argued there was an implied term in fixed deposit contracts that the bank would contact a fixed deposit account-holder to inform him of the maturity of the fixed deposit and seek his instructions. The appellants were in breach of this duty since they ought to have sought instructions from Lui, whom the appellants knew were the solicitors acting for the Lugito estate. 26 The appellants raised several defences which were all rejected by the learned judicial commissioner. The appellants argued that under rule 2 found on the face of the TCD, the production of the TCD was a condition precedent to the renewal, and the TCD was never produced at all material times. The appellants argued that they were under no obligation to obey Lui’s instructions, and further there was no room to imply a contractual term that the bank was under an obligation to seek the instructions of its customers, the fixed deposit account-holders, on the maturity of the fixed deposit. Even if there was such a contractual term, the appellants had fulfilled their duty by sending reminders to the Cairnhill address, the address provided by Lugito at the time of the opening of the account. The appellants argued that in any event the respondents’ causes of action were hopelessly timebarred since any breaches of duty on the part of the appellants took place in 1979, or at the latest, in 1980. 27 The learned judicial commissioner accepted all the arguments raised by the respondents. He held that the appellants were contractually bound to comply with Lui’s instructions to renew the fixed deposit for a year. It was not a condition precedent for the TCD to be produced before renewal of the fixed deposit. The production of the TCD was only necessary where the customer had sought repayment of his principal sum and the interest. The appellants were contractually obliged to take reasonable steps to seek instructions from the respondents on the maturity of the fixed deposit; the attempts made by the appellants were short of what a reasonable banker would do. The respondents’ claims were not time-barred as the breaches by the appellants were of a continuing nature. 28 In the result, the appellants were ordered to pay compound interest to the respondents on: (i) $1,534,539.87 from 25 January 1979 to 3 September 1991, at the appellants’ TCD rate for six-month deposits for the whole of the period with no rests during such period; (ii) $4,855.56 from 1 July 1980 to 27 August 1991 at the appellants’ TCD rate for monthly deposits; (iii) the difference in interest between the interest paid to the respondents from 28 August 1991 to 2 February 1993 on $1,534,539.87 and the interest that should be paid for that period on the principal amount with compound interest as calculated in (i); (iv) the difference in interest between the interest paid from 28 August 1991 to 15 February 1993 on $4,855.56 and the interest that should be paid on the principal amount with compound interest in (ii). Consequential orders on the interests payable on the judgment sum and costs were made. The appeal Duty to comply with customer’s instructions 29 Before us, counsel for the appellants attacked the holding of the learned judicial commissioner on various grounds. Counsel argued that the appellants were under no obligation to renew the deposit in the large account for a period of a year, notwithstanding the receipt of Lui’s instructions of 23 June 1979. Lui was acting on behalf of the executors to Lugito’s estate and had instructed that the amount standing to the credit of the large account be renewed on maturity which was on 24 January 1979. Counsel advanced two arguments under this issue: first, the terms in the fixed deposit did not confer any contractual option to renew; the appellants were only under an obligation to repay the deposit moneys and the interest for a year on its maturity to the customer. What Lui did when they requested for a renewal of the deposit was only an offer made to the appellants which was not accepted by the appellants. Second, it was a precondition that the TCD be produced before renewal could take place, and even though this precondition was communicated to Lui, no expired TCD was ever produced. Counsel attacked the findings of the learned judicial commissioner that the appellants did not actually communicate to Lui’s office that renewal would not take place until and unless the old TCD was produced. 30 The essence of the contract between a banker and customer in a contract of fixed deposit is that the customer deposits an amount for a specified period of time at an agreed rate of interest. The balance standing to the credit of a customer’s fixed deposit account is a debt due to him from the bank, and this sum together with interest is payable either on demand or at a predetermined date. If the deposit is renewed at maturity, the bank would roll over the deposit and the interest payable into a new deposit, and fix the interest rate at the then prevailing rate. An analysis of some of the incidents of the banker-customer contract was stated by Atkin J in Joachimson v Swiss Bank Corp … The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. 31 In DFC New Zealand v Goddard It is elementary that an unsecured deposit, whether for a term or at call, with a bank or similar financial institution creates normally only a debtor-and-creditor relationship and not a trust, and that this applies to an authorised deposit of trust funds. 32 Hence, in the absence of any special relationship between the bank and the customer such that the bank is held out to be a fiduciary, the amount is not held by the bank as a trustee. In Hart v Sangster 33 The terms of the TCD were silent as to the renewal of the deposits. There was no dispute that Lui had by the letter dated 23 June 1979 clearly instructed the appellants to renew the fixed deposit standing in the large account for a period of one year. When such an instruction is given, it is really unarguable that what the account-holder is saying is that the deposit is to be renewed on the banker’s usual terms and interest rates for the amount given (presumably at the then prevailing interest rate). There was no ambiguity in respect of the instructions. The instructions were not uncertain since there was an objective market standard to be applied at all times. That was indeed how the appellants understood the instructions in the same mandate of 23 June 1979 to consolidate the two current accounts, one in Singapore currency, and the other in US currency, and to place them on a one-year deposit. 34 Counsel relied on Felthouse v Bindley (1862) 11 CBNS 869 for the proposition that an offeror was not entitled to treat an offer as having been accepted by the offeree if the offeree did not respond to the offer. However, the proposition that silence did not amount to acceptance did not apply where it was one continuing contract between the customer and the bank. The only question was what sort of terms were agreed by the parties. It must be that the bank was contractually bound to accept further deposits into the account on the instructions of the customer, if they were above a prescribed minimum, as long as the bankercustomer contract existed between the parties. If the appellants refused to accept the instructions either to place any further money in the fixed deposit account or to renew the deposit with the accrued interest when maturity date was reached, the appellants should at the very least give reasonable notice to the customer before terminating the account. In this case, the appellants never terminated the banker- customer relationship. In fact the appellants acted on the same mandate in transferring the money in the two current accounts into a new fixed deposit account and sending the TCD to Lui. The appellants themselves said that they contacted Lui for the return of the expired TCD in respect of account No 202831 before they would renew the deposit in the large account. All these showed that the appellants never terminated the contract between the parties. 35 The second argument advanced by counsel was on the construction of rule 2 found on the face of the TCD. Rule 2 provided that the ‘receipt must be duly stamped upon repayment’. The terms of the TCD were that the bank received from the customer a stated sum of money to be placed on fixed deposit for a certain period repayable with interest at the stipulated rate upon presentation of this receipt, subject to the following rules. Rule 2 was one of the rules . It is clear that these terms were concerned with repayment to the customer and not renewal of the deposit. Counsel’s argument that rule 2 also applied to the renewal of the deposit is not persuasive at all. 36 Counsel for the appellants relied on Voo Foot Yiu v Oversea Chinese Banking Corp Ltd 37 In Re Wee Cheow Keng (deceased), a father deposited $100,000 with the bank in the joint names of himself and his infant son. The bank issued a receipt which provided that the amount ‘shall be received’ by the named persons ‘or bearer in Singapore’. Murray-Aynsley CJ at p 207 said by way of dicta that: … This document [the receipt] was not negotiable and it could not be assigned at law by mere delivery. Parties cannot by contract make a chose in action negotiable, nor can they create a chose in action which is assignable other than in accordance with the statute. Delivery would at most operate as an equitable assignment and an assignee could only sue the bank in his own name after the procedure required by statute for the legal assignment of a chose in action had been completed … 38 We fail to see why the appellants perceived that the return of the expired TCD was important. The decision in Re Wee Cheow Keng (deceased) made it clear that a deposit receipt was not negotiable. The appellants’ TCD was not a negotiable instrument. Transferring an unexpired TCD in itself could not transfer any rights in ownership to the transferee. This is a fortiori the case with an expired TCD. 39 The learned judicial commissioner held that, even if the presentation of the TCD was a condition precedent to the renewal of the deposit, the appellants were obliged to act with reasonable care and skill to duly notify the respondents clearly, unequivocally and promptly that they were refusing to renew the deposit until the expired TCD was presented, and the failure to do so was a breach of contract. In our view, the appellants were under an implied duty of care to the account-holders to give such a notice and such a breach gave rise to an estoppel. The appellants by their conduct were estopped from insisting on the presentation of the expired TCD, a provision which was inserted only for the benefit of the appellants. The practice of the appellants from 1973 (the date on which the account was opened) to 1978 (the date of Lugito’s death) was to automatically renew fixed deposits on the maturity date without insisting on the presentation of the TCD. The appellants did not write a single letter from 1979 to 1991 to state that the large account could not be renewed because the expired TCD was not returned. In all the inquiries made by Herman’s solicitors to the appellants, no mention was made that the expired TCD was not returned. In 1991, when the appellants were asked why interest was not paid since 1979, their answer was not the non-return of the TCD but the lack of specific instructions to place the moneys in an interest bearing account. 40 Counsel for the appellants attacked the learned judicial commissioner’s finding that there was no actual communication by the appellants to the respondents of the necessity of returning the expired TCD. The learned judicial commissioner did accept that Tan Bee Choo, also known as Cindy Koh, a clerk with the appellants in the fixed deposit department at the time the 23 June 1979 letter was received, made a telephone call to the office of Lui on 27 June 1979. She testified that she called and spoke to a Miss Tan, a clerk in the firm. This was supported by a contemporaneous note made by Tan Bee Choo. The learned judicial commissioner made a finding that while such a telephone conversation did take place, it was probable that all she told Miss Tan was to ask for the large account’s TCD. He was not prepared to find that Tan Bee Choo did communicate explicitly to Miss Tan that the deposit of the large account moneys would not be renewed until the expired TCD was produced. This was a finding of fact made by the learned judicial commissioner who had seen and heard Tan Bee Choo’s evidence, and who had assessed the probative value of the contemporaneous note which only stated that she had spoken to Miss Tan who would get the original TCD from the client. In our view, he was perfectly entitled to come to such a finding. 41 In addition, the learned judicial commissioner held that in any event, such a conversation would not be sufficient to discharge the appellants’ burden in establishing that they had given the respondents proper notice of their refusal to renew unless the expired TCD was returned. This conversation was between a clerk with the appellants and a secretary with Lui. A reasonable banker would have informed Mr Lui Boon Poh personally or given the firm written notice hereof. Counsel for the appellants argued that there was no requirement that all communications between a bank and its customer must be in writing, citing the example of telephone banking. We think that this missed the point completely. Whether it was appropriate to use the telephone as a means to convey information would depend on the importance of the information. The appellants’ position that they would not renew the fixed deposits without the return of the original TCD should have been clearly communicated to Mr Lui Boon Poh personally or to the firm. It was unreasonable for Tan Bee Choo to leave the instructions to return the expired TCD with a secretary of the solicitor without confirming it in writing. Proper notice of their stance taken was important and would have required the appellants to confirm their position in writing. Duties of the bank on the maturity of the fixed deposit 42 We now turn to the second issue which is the scope of the bank’s duty of care to the customer when it has not obtained the customer’s instructions to deal with the money in the fixed deposit on its maturity. This issue concerns both the large and small accounts. This issue is far more contentious. Counsel for the appellants argued that in relation to the large account, even if they ought to comply with the instructions given in the 23 June 1979 letter, they were under no obligation to pay interest for any longer than that one-year period. The respondents relied on the implied terms in the banking contract. There were no express terms in the contract, as evidenced on the face of the TCD, the opening account cards, loan/time deposit form and the time deposit confirmation, regarding notification to the customer on maturity of the deposit or the renewal of the fixed deposit. 43 Counsel for the respondents relied on the letter of 23 June 1979 which contained an instruction to the appellants to ‘keep us [Lui] informed’. The learned judicial commissioner held that these words, ‘keep us informed’, would be understood by a bank taking reasonable care and skill in interpreting, ascertaining and acting in accordance with the instructions of its customer to mean that the respondents required them to communicate with Lui on all matters in relation to the large account which they would in the normal course of their operations communicate with the account-holders of the large account. The failure of the appellants to ask Lui upon the maturity of the deposit of the large account moneys whether the deposit should be renewed was a breach of duty. We disagree with the learned judicial commissioner that the words ‘to keep us informed’ import contractual effect. This request was far too vague to constitute a binding mandate. It was more of words of mere courtesy and was insufficient to import a binding obligation to require the appellants to inform them periodically the state of the fixed deposit account. 44 Counsel for the respondents sought to imply a term that the bank is under a duty of care to contact the account-holders for instructions on the maturity of the fixed deposit. The appellants should not only have renewed the deposit for a year following the instructions of 23 June 1979, but should also have reminded Lui that the large deposit had matured. 45 In Energy Shipping Co Ltd v UDL Shipping (Singapore) Pte Ltd … To my mind … a bank has a duty under its contract with its customer to exercise ‘reasonable care and skill’ in carrying out its part with regard to operations within its contract with its customer. The standard of that reasonable care and skill is an objective standard applicable to bankers. Whether or not it has been attained in any particular case has to be decided in the light of all the relevant facts, which can vary almost infinitely. 46 Counsel for the appellants argued that the dicta in Selangor United Rubber Estates Ltd was too wide and was criticised in Lipkin Gorman v Karpnale Ltd & Anor [1992] 4 All ER 409. In Lipkin Gorman, Cass was a partner in a solicitors’ firm and was a compulsive gambler. He drew cheques on the firm’s client account with the bank and made the cheques payable to cash as well as to the building society from whose account Cass withdrew the proceeds. Those cheques were honoured by the bank even though the branch manager knew of Cass’ gambling activities, and was aware that the method used for the drawing of the cheques was unusual. May LJ criticised the application of the reasonable banker test used in Selangor to the claim against the banks for negligence and at p 421 he said: In my opinion, whether it was by concession or not, it was wrong to equate the duty to inquire where there has been fraud and the bank is proved to have known of it with that where all that is being alleged is that the bank has been negligent. Nor was it necessary to rely upon any such equivalence in order to decide the issues in the Selangor case. It was because of this error I think that both Ungoed-Thomas J in Selangor [1968] 2 All ER 1073 at p 1118, 47 Lipkin Gorman was concerned with how the reasonable banker test should be applied in the context of whether a bank had been negligent in honouring a cheque drawn within the authority of its customer’s agent without enquiries. The formulation of the reasonable banker test in ordinary transactions remained the same, but the criticism only went to when the court should hold that the bank would be put on inquiry, and its failure to investigate amount to negligence. 48 In our view, the bank is under an implied duty of care to take reasonable steps to inform the account-holders on the maturity of their fixed deposits. Counsel for the appellants argued that it would be unrealistic to expect the appellants to continually send reminders and that an absolute duty for the bank to seek out the customer was too onerous a duty and would be tantamount to requiring the bank to act as a part-time detective. This argument is exaggerated. Reasonable steps in many cases would ordinarily mean, in the absence of special circumstances, writing once to the customer at the address provided when it has not received any instructions for renewal. Obviously the bank could not be under an absolute duty to seek out its customer. 49 We fail to see how imposing such an obligation to send reminders was contrary to fundamental principles in the banker and customer contract. Counsel relied on Holden, The Law and Practice of Banking (5th Ed) Vol 1, and Clare & Co v Dresdner Bank 50 The authorities relied on by the appellants were not inconsistent with the duty of care imposed by a bank in reminding the customers of the maturity of the deposit. Holden stated that the ordinary rule that a debtor must seek out his creditor did not apply between the bank and customer in the context of repayment of the deposit: Holden, at p 55. The customer had no right of action against his banker in respect of money deposited until after a demand had been made, and so time did not begin to run against the customer under the Limitation Act (Cap 163, 1996 Ed), until such demand. In Clare & Co v Dresdner Bank 51 Whether we ought to impose a duty of care on the bank to send reminders to fixed deposit account holders had nothing do with when limitation was to set in or at which branch the customer could demand repayment of the sums deposited. The rule that the banker was not obliged to seek its customer dealt with the banker’s obligation to repay the deposit, and had nothing do with general duties of care imposed on the banker. 52 Reverting to the present case, the facts are very unusual and unfortunate for the respondents. The attempts which the appellants made in contacting the account holders were the reminders which they sent to the Cairnhill property. Tan Bee Choo and Lilian Hui, a customer service officer, adduced evidence of a comprehensive method of using a computer-generated device to send reminders to the account holders. The system, according to them, was that it would ensure that a reminder was sent seven days before the fixed deposit was due to mature and, if the appellants had still not received any instructions on what to do with the deposit upon maturity, another reminder would be sent seven days after the maturity of the deposit. Further reminders would then be sent. After five reminders, a registered letter would be sent as a last resort. This system was already in place in the appellants. However, all the reminders were sent to the Cairnhill property occupied by the first family which was at loggerheads with the respondents. The upshot was that the respondents were not informed of those reminders. The appellants did send a registered letter on 22 January 1981 which was returned unclaimed. This would be obvious to anyone, including the appellants, that no instructions would come from that address or that the customer had moved from the address or could no longer receive correspondence through that address. 53 The appellants did not give a satisfactory explanation as to why there was no follow-up action or any attempt to contact Lui or Mr Lui Boon Poh whom they knew from the 23 June 1979 letter were the solicitors acting for the executors of Lugito’s estate. The appellants had indeed taken Lui’s instructions in respect of consolidation of the two current accounts and could not possibly dispute that they were entitled to ignore Lui as a source of instructions. Moreover Tan Bee Choo testified that she accepted that Lui were the proper source of instructions and had called the solicitor’s office to request for the return of the expired TCD. The letter of 23 June 1979 from Lui was recorded on a ‘caution’ card in the appellants’ records with respect to the large account. In 1985, the appellants claimed that they lacked any form of instructions, and forced the account into dormancy. 54 On Lugito’s death on 21 November 1978, the right of survivorship operated and legal title to the joint account vested in Herman and Lily. On Lily’s death on 17 September 1983, Herman would hold the sole legal title to the funds. For some inexplicable reason, between 1979 and 1991, the appellants did not inform Herman or his solicitors that either Herman or Lily (when she was alive) could give instructions in his or her capacity. In reply to the letter of 5 January 1988 from Mr Fergusson, the appellants cited banking secrecy and refused to give information on the accounts which Lugito held with the bank. The appellants should have provided the information to Herman in his own right as a joint account holder. The first indication to the respondents was the letter dated 14 June 1988 by the appellants’ solicitors, Shook Lin & Bok, that the account was a joint account, but the letter did not state who the parties to the joint account were. When Haridass Ho & Partners took over the matter and wrote to the appellants, the appellants avoided mentioning that Herman or Lily were joint account holders. These facts were only revealed by the appellants’ solicitors in a letter dated 3 September 1991, in response to specific queries by Haridass Ho & Partners. 55 Counsel for the appellants argued that the learned judicial commissioner appeared to have been swayed by the fact that Herman and Lily did not know of the account, and this was irrelevant because the appellants’ contractual duty could not vary according to the knowledge or foibles of their customers. The fact that Herman and Lily ought to know that they were joint account holders because they were signatories to the account opening forms did not detract from the fact that a reasonable and prudent bank ought to have reminded them that they could operate on the account in their own capacity. This was particularly the case where it was clear that there was no sensible reason why the customers were content not to renew the account and hence not to earn any interest. 56 Further, the failure to inform Herman that he was a joint account holder of the large account was inexcusable considering the fact that Herman was the appellants’ customer in the private banking division since January 1988. As private bankers, they undertake to provide services to the customers over and above the ordinary services, and the least that could be expected was to inform Herman that he had a joint account for a substantial sum with the appellants. 57 Counsel for the appellants argued that Herman was represented by solicitors. Lui had clearly undertaken for themselves the duty and obligation to their clients to keep the money on interest-bearing deposits with the appellants, and the onus must be on the solicitors to protect the estate’s money. We will revert to the solicitors’ conduct in our discussion on the issue of limitation but, assuming that the inaction of the solicitors was really inexcusable, the fact remains that the appellants had indeed failed to discharge their duty of care in sending reminders to the depositors. 58 In these very exceptional circumstances, we hold that the appellants have not discharged their contractual duty in taking reasonable steps to contact the account holders in the large account. They had notice that no instructions would be forthcoming from the address provided by the account holders and more importantly, they knew that one of them had passed away and they knew the solicitors on record acting for the executors of the estate. This was amply demonstrated by the appellants’ file records. The executors were also joint account holders in their own right who could have given instructions to the appellants in their own capacity. Herman was a private banking customer of the appellants. Yet, in all those years, the appellants did not attempt to tell either Herman or Lily (when she was alive) that he or she was a joint account holder. The appellants knew that the depositor was unaware that the large deposit was not generating interest or that he could give instructions in his own capacity. The appellants’ conduct was inexcusable. We emphasise that the facts in the case are very exceptional and do not detract from the general rule that in most cases, where the bank is not put on notice of any special circumstances, it is sufficient for the bank to send a reminder to the address provided by the account holder. Also we emphasise that we are dealing with the banker’s contractual duties to the customer, and both parties have accepted that the appellants do not owe a fiduciary duty to the respondents. 59 The above holding applies equally to the small account. When the small account matured on 30 June 1979, the appellants were under a duty to take reasonable steps to contact the executors of the small account or their solicitors on the maturity of the deposit. The appellants acted on Lui’s instructions to consolidate the two current accounts into the fixed deposit account, and had without doubt accepted that Lui were the proper source of instructions. 60 The learned judicial commisioner found that the appellants had breached their duty of care to the respondents. He said in¶58 of his judgment: The defendants’ failure to send the reminders to and seek instructions from Lui Boon Poh & Co were in the circumstances of this case a breach of their contractual duties to the account holders of the large account even if Lui Boon Poh & Co had not given the fourth instruction in the 23 June 1979 letter to ‘keep us informed’. Their failure to do so despite a specific instruction to be kept informed only emphasises the extent of the defendants’ failure to act with reasonable care and skill in this matter. We entirely agree with the learned judicial commissioner’s conclusions that a failure to renew a deposit on maturity occasioned by a failure to take reasonable steps to seek out the account holder and obtain his instructions is a breach of the banker’s duty of exercising reasonable care and skill in the discharge of his duties to his customer. 61 However, the question still remains as to what a bank should do if after all reasonable and diligent efforts it is still unable to find the account holder and get his instructions. In our view it should set aside the deposit together with all interest earned up to that date in a suspense or holding account and pursue its efforts to seek out the account holder and get his instructions. Failure to do this and by retaining the moneys on fixed deposit the bank is at risk of having to pay the account holder, when he turns up and demands payment, interest on the deposit as if the account holder had renewed the deposit. Limitation 62 Counsel for the appellants argued that the claims were time-barred because the breaches of contract occurred more than six years before the writ in the present action was issued. Under s 6 of the Limitation Act, contractual debts become timebarred after the lapse of six years. Time begins to run from the day on which the cause of action accrues. Three of the possible breaches were identified: (i) if the appellants were in breach of contract in failing to comply with the instructions in the 23 June 1979 letter, the breach occurred shortly after 23 June 1979; (ii) if the breach was in failing to contact the account holders when one year had lapsed from the date of the letter, that breach occurred in or about June 1980; (iii) if the appellants did not, in the absence of the instructions, place the moneys in an interest bearing account, this breach occurred on or about June 1980. 63 The learned judicial commissioner rejected the limitation defence, holding that the breach by the appellants was a continuing breach of contract. He held: … The contractual banker and customer relationship between the defendants and the account holders was a continuing one which remained until the large and small accounts were closed in February 1993. Under the terms of this contractual relationship, the defendants were obliged to pay the plaintiffs on due demand all the moneys in the large account and the small account. The plaintiffs demanded such payment only by their letter of 4 May 1992 requiring payment of all such moneys within seven days thereof. The plaintiffs would expect to be paid the full amount of the original deposit of $1,200,000 into the large account plus all the compounded interest accrued thereon up till date of payment. And so too in respect of the moneys in the small account. Whether the defendants had been compounding this interest periodically or only did so right at the end when the plaintiffs asked for payment was not something the plaintiffs were concerned with. So far as the plaintiffs were concerned, it was a matter of total indifference to them as to what date the defendants chose to credit the large account and the small account with the compounded interest that was due so long as the defendants’ contractual obligations to repay all principal and compounded interest due on the large account and the small account were effectively fulfilled: see Midland Bank Co Ltd & Anor v Hett, Stubbs & Kemps 64 Counsel for the appellants argued that the holding that the third breach was an on-going breach was fallacious because there was no sensible distinction between an obligation to transfer a sum of money to an interest-bearing account and an obligation simply to pay interest on it. However, we have earlier held that there is no obligation on the part of the appellants to place the money in the fixed deposit account automatically. What the appellants ought to have done, if they did not wish to renew the fixed deposits, was to take reasonable steps to inform the account holders which they have not done. However, if the appellants chose to allow the money to remain on the fixed deposit, they were obliged to pay compounded interest on it at the prevailing interest rates. 65 Hence the action by the respondents was in effect an action for the repayment of the principal and compounded interest due on the large account and the small account, which was not discharged by the appellants when a valid demand was made. In a banker-customer relationship, a bank would only be obliged to pay when a demand was made for the repayment of the money. 66 In the case of a current account, it is settled law that time only begins to run from the date of making of a demand for the repayment of the deposit. In Foley v Hill (1848) 2 HL CAS 28, a customer paid an amount of money to an account on the understanding that it would earn interest at the rate of 3% per annum As no interest was credited to the amount for approximately six years, the customer sued the bank, alleging that he was entitled to the remedy sought either as the beneficiary of a trust or as the bank’s principal. The bank pleaded the Statute of Limitations. It was held that the customer was not entitled to an account and the correct course was to institute a common law action in debt for the amount due. The relationship between the parties was only one of debtor and creditor. It was the bank’s duty to ‘repay to the principal when demanded, a sum equivalent to that paid into his hands.’ A customer’s cause of action against the bank arose only after a demand had been made by the customer and refused by the bank. The time bar only ran from the date on which the bank refused to make payment. Lord Cottenham LC held: He agrees to pay 3% for the use of the money … Now he might have been guilty of default if he had not kept his contract, — that is, if he had either refused to pay the 3% or had refused to pay the money when demanded. That was the whole contract. He had contracted for nothing more. I can see no breach of contract by this banker, who, if it had been demanded at the proper time, we may suppose would have kept his contract, and have paid the 3% … I do not advert to the question on the Statute of Limitations at all, because, if I am right upon this, which is the first question, the Statute of Limitations does not apply. 67 In relation to savings account, it was held in Hart v Sangster 68 The learned judicial commissioner relied on Midland Bank Trust Co Ltd & Anor v Hett, Stubbs & Kemp 69 Nevertheless we would caution against reliance on Midland Bank Trust for the proposition of continual breach of contract. In Midland Bank Trust, the solicitor engaged in a conveyancing transaction failed to register the option as a land charge, and the option was defeated when the land was sold to a third party. The issue was identifying the relevant tort. The Court of Appeal held that the negligence on the part of the solicitors’ firm was not the giving of wrong and negligent advice, in which the breach of contract would have arisen at a fixed point in time, but the failure to perform the duty to register the option, which was a breach of continuing contractual duty, one which continued to bind the firm until it ceased to be capable of effective performance when the land was sold. In Bell v Peter Browne & Co [1990] 3 All ER 124, the court held that there must be special circumstances for there to be a continuing contractual obligation; the mere fact that the existing breach of contract was remediable did not constitute a further breach of contract and set a new limitation running. 70 By way of the alternative, counsel for the respondents sought to argue that s 29 of the Limitation Act extended the limitation period where the right of action was concealed by the fraud of such a person. Extensive submissions were made on s 29 of the Limitation Act which we think we ought to discuss. 71 Section 29(1) of the Limitation Act provides that: (1) Where, in the case of any action for which a period of limitation is prescribed by this Act (a) the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; (b) the right of the action is concealed by the fraud of any such person as aforesaid; … the period of limitation shall not begin to run until the plaintiff has discovered the fraud or mistake, as the case may be, or could with reasonable diligence have discovered it. 72 Under s 29, the court is entitled to take into account any deliberate concealment of material facts after the accrual of the cause of action. In Sheldon v RHM Outwaite (Underwriting Agencies) Ltd 73 In King v Victor Parsons & Co The word ‘fraud’ here is not used in the common law sense. It is used in the equitable sense to denote conduct by the defendant or his agent such that it would be ‘against conscience’ for him to avail himself of the lapse of time. The cases show that, if a man knowingly commits a wrong (such as digging underground another man’s coal); or a breach of contract (such as putting in bad foundations to a house), in such circumstances that it is unlikely to be found out for many a long day, he cannot rely on the Statute of Limitations as a bar to the claim: see Bulli Coal Mining Co v Osborne Megaw LJ at p 36 said: … The defendants say that ‘ought to know’ [in our s 29 of the Limitation Act] is not enough. I agree. I do not think that the cases go so far; or that, at least as a general principle and in the absence of very special circumstances, the meaning of ‘concealed by fraud’ should be extended to cover a case where the defendant, whether himself or by persons whose knowledge should be treated as his knowledge, did not know the fact or facts which constituted the cause of action against him. 74 However there must at least be a deliberate act of concealment. We hold that the facts here do not support the respondents’ case for fraudulent concealment within s 29 of the Limitation Act. The respondents could not point to any of such deliberate acts of concealment. The appellants were negligent in not obeying instructions from Lui to renew the deposits on their maturity. The appellants were negligent in not informing Herman or Lily that the large account was a joint account in which either of them could give instructions in his or her own personal capacity. All the appellants did was to send reminders to the address as stated in the opening forms for the fixed deposit accounts without paying regard to the earlier correspondence with Lui. When the reminders were not answered and the last reminder returned unclaimed, the appellants did not do anything else. In 1985, a review was conducted on the file before the account was forced into dormancy. A note clipped to the dormancy statements indicated that the bank had consulted solicitors in 1985 prior to forcing the account into dormancy. This note was initialed by Patrick Tan, the head of Commercial Services. In 1986, Ann Tan & Associates wrote to the bank regarding the large account. They were purportedly acting for three beneficiaries under Lugito’s estate. The handwritten comments on the letter by Khoo Keng Hoe, the then head of the department overseeing the fixed deposit section of the bank at the time showed that the file was again subject to review. 75 However, it is too far-fetched to suggest that they deliberately chose not to write to Lui or the respondents. Counsel for the respondents drew attention to the fact that the account was forced into dormancy on 5 July 1985, very shortly after six years from Lui’s letter of 23 June 1979. There really is no significance in this; the appellants were in breach of their customer’s instructions in failing to act on the instructions but that date when the cause of action accrued would not be in 1979 but the date where the repayment of the principal sum and the compounded interest accrued, ie in 1980. In any event, according to King v Victor Parsons, it was necessary to show that the appellants knowingly or recklessly committed the wrongdoing and did so secretly without telling the respondents. There was insufficient evidence to show that the appellants did not inform the respondents or their advisors because they wanted to conceal the fact that they had not acted on Lui’s instructions. It was more of a case of negligence on the part of the appellants’ bank officials. 76 The respondents were not free from blame. If their legal advisors had been more careful and had acted with reasonable diligence within s 29(2), they would have found out much earlier that the moneys lying in the accounts were dormant; the course of events that unfolded would have been quite different. Lui for some inexplicable reason did not follow up their letter of 23 June 1979 by confirming with the appellants as to whether the large account was indeed renewed for another year following its maturity in 1980. In 1980, they received the TCD for the small account only and not for the large account. Yet they did not request for the TCD for the large account, which is normally issued to the account holder, suggesting that they must have overlooked it. In cross-examination, Mr Lui Boon Poh’s only defence was that he would expect the appellants to inform him that the deposit had reached maturity and to take fresh instructions from him. 77 When the file was transferred to LAJ Smith & Co, the solicitors never wrote to the appellants to inform them that they had taken over the matter or make any inquiries as to the status of accounts which the estate had with the appellants. In 1988, AC Fergusson who had then taken over the conduct of the file only inquired about the status of the accounts. The appellants’ solicitors, Shook Lin & Bok, gave the account balances in a letter dated 14 June 1988 which was exactly the same as that in the appellants’ letter dated 8 June 1979, and informed AC Fergusson that the account balances were the same, ie no interest had accrued on the accounts since 1979. Yet AC Fergusson did not think it was important enough to warrant further inquiries as to the reason why interest was not payable on the two fixed deposit accounts. It was only in 1991 in response to specific inquiries from Haridass Ho & Partners that it was revealed who the joint account holders were. 78 On these facts, even if the appellants’ conduct amounted to fraud, the respondents could not rely on s 29(1)(b) if the reason for not discovering the fraud was that they had not acted with reasonable diligence. 79 For the reasons we have given we dismiss this appeal with costs. The orders for the payment of interest made by the learned judicial commissioner are confirmed. The security deposit for the appeal will be paid out to the respondents’ solicitors to account of the respondents’ costs. Appeal dismissed. Reported by Wan Wai Yee