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Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd (2018)

Singularis Holdings Limited (“the Company”) was formed to deal with the personal assets of Mr Al Sanea, the sole shareholder of the company, but one of a number of directors.

Daiwa Capital Markets Europe Ltd (“the Bank”) operated the Company’s bank account. The Bank became aware that the Saudi Arabian Monetary Authority had frozen Mr Al Sanea’s assets, and decided that no further payments should be made from the account. The Bank, however, allowed Mr Al Sanea to make a number of payments from the account, which it was later discovered were fraudulent.

The Company then went into Liquidation.

A claim was issued by the Company against the Bank for the total amount of the transfers made from the account. The High Court held that Bank’s duty of care to the Company had been breached. The Bank appealed the decision. They considered that Mr Al Sanea’s fraudulent activity should be attributed to the Company.

The Court of Appeal held that the High Court’s decision was correct. It was found that in order to attribute one director’s fraudulent activity to a company, that company must be a sole-director, sole-shareholder company. In this case, the other directors were not active in the management of the Company, but they were still innocent directors to whom the Bank owed a duty of care. The Bank’s appeal was therefore dismissed.

Posted: 12.04.2018
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