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In Xue v Yung and another [2025] HKCFI 4183, the Hong Kong Court clarified the principles governing negligent misstatement in the context of informal communications made by a relationship manager to a customer. The decision reinforces the high threshold for establishing a duty of care against banks.
Background
The Plaintiff, a sophisticated businessman, was assisting his partner ("Xu") in making a HK$10 million investment under the Capital Investment Entrant Scheme ("CIES"). To facilitate the remittance of funds from the Mainland to Hong Kong, the Plaintiff contacted the Defendant, his relationship manager ("RM") at a securities firm. The RM provided details of two PRC bank accounts to the Plaintiff via WeChat. The Plaintiff subsequently remitted RMB 8,383,000 to the accounts, but the funds were never received. The Plaintiff brought proceedings to recover the missing funds, alleging that the oral and written representations made by the RM were negligent, and that the securities firm was vicariously liable.
Decision
The Court dismissed the Plaintiff's claims and held that no duty of care arose on the facts:
- The Plaintiff was a sophisticated businessman, familiar with cross-border remittances and how foreign exchange controls work.
- The Court found that the RM did not possess any skill or knowledge regarding cross-border remittances.
- The information provided by the RM was imparted informally, outside the scope of professional advice.
- The Plaintiff's account-opening documents with the securities firm contains disclaimers that the firm does not provide financial advice and that the Plaintiff is responsible for his own decisions.
The Court found that the RM's alleged oral representations were not substantiated by evidence and that the written WeChat messages amounted to the provision of information only, not advice. Given the absence of a duty of care and reasonable reliance, the Court found no breach or causation. The Plaintiff also failed to take reasonable steps to mitigate his loss, such as promptly reporting the matter to authorities or taking action to freeze the accounts. The Court found the Plaintiff wholly contributorily negligent, given his background and the circumstances of the transaction.
The Court further held that the securities firm was not vicariously liable for the RM's acts. The provision of remittance information was outside the scope of the RM's employment, and the conduct in question was not sufficiently closely connected to her role as a relationship manager.
Conclusion
This decision underscores the importance of contractual terms in defining the bank's scope of responsibility in client relationships and highlights the high threshold for establishing a duty of care against banks.
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