Hin Leong’s case began with a simple proposition: without the alleged audit failure, the company would have stopped trading sooner. The Court of Appeal held that this did not make every later loss recoverable from the auditor.
In Deloitte & Touche LLP v Hin Leong Trading (Pte) Ltd (in compulsory liquidation) [2026] SGCA 33, the Singapore Court of Appeal considered Hin Leong Trading’s US$2.6 billion claim for trading losses incurred between November 2015 and mid-April 2020. The court struck out that head of loss as too remote, even if Deloitte were ultimately found negligent. The appeal proceeded on the assumption that Hin Leong’s pleaded facts were true. It was not a finding that Deloitte had breached its duties.
Causation was not enough
Hin Leong alleged that, without the audit failure, it would have entered liquidation earlier and avoided the later trading losses.
Hin Leong’s allegation addressed factual causation: would the trading losses have occurred but for the alleged breach? The separate question was whether Deloitte should bear legal responsibility for those losses. The first did not answer the second.
Because Hin Leong pleaded negligence in both contract and tort, the court applied the contractual remoteness rule in Hadley v Baxendale. It asked whether the claimed loss fell within the responsibility Deloitte could reasonably be taken to have assumed, given the purpose of the audit and the knowledge available when the engagement was accepted.
For this claim, the court treated the SAAMCo principle as an application of orthodox contractual remoteness, not as a separate scope-of-duty rule. An alleged audit failure may explain why a company kept trading. It does not make the auditor responsible for every later commercial loss.
The engagement defined the risk
Deloitte did not participate in Hin Leong’s trading activities, review its trading strategies or advise management on its choice of trading methods. The losses depended on market movements and management decisions outside the audit engagement.
The trading losses were outside Deloitte’s reasonable contemplation. A statutory audit did not amount to an undertaking to bear Hin Leong’s trading risk.
Other cases reached the opposite result on different facts. In JSI Shipping and PlanAssure, deficient audit work was tied to identifiable losses. AssetCo and Manchester Building Society allowed recovery where the loss arose from a continuing source or from the precise accounting risk the professional work was meant to address. Hin Leong was different: the US$2.6 billion claim arose from new trading decisions outside the audit engagement.
For liquidators, creditors and claim funders, each head of loss turns on three questions:
- What service did the professional undertake?
- What loss is being claimed?
- When the engagement was accepted, was that type of loss within reasonable contemplation, given its purpose, the professional’s knowledge and the statutory setting?
An earlier-liquidation counterfactual may explain why the loss would not have arisen. It does not show that the auditor assumed responsibility for it.
The statute set the knowledge threshold
At the time, wrongful- and fraudulent-trading liability under the Companies Act required actual knowledge of the relevant conduct. The court took that threshold into account when asking what losses were within Deloitte’s reasonable contemplation.
The court assumed, without deciding, that an auditor could incur wrongful-trading liability. Even on that assumption, it considered it unlikely that Deloitte had assumed responsibility in negligence on a lower knowledge threshold than the statute imposed.
What the appeal did not decide
The Court of Appeal did not find Deloitte negligent. It decided only whether the trading-loss claim was legally recoverable on the assumed pleaded facts.
The court also declined to answer the proposed ‘Creditor Duty’ question, which it regarded as academic and unsuitable for summary determination. It did not rule on whether particular reporting obligations might arise when an audited company is insolvent.
The strike-out order covered only the US$2.6 billion trading-loss pleadings. Hin Leong also claims US$90 million in allegedly wrongful dividends and S$612,000 in audit fees. Those claims were not struck out in this appeal.
Illegality may still affect the claim. Deloitte appears to have pleaded that the Lim family’s fraud should be attributed to Hin Leong as a basis for barring the claim. The Court of Appeal did not decide that defence, but noted that Deloitte may rely on it if the case proceeds to trial. Attribution will depend on the context, including whether it would defeat the purpose of the duty being enforced.
Claim evaluation should therefore run head by head and defence by defence. The counterfactual identifies a causal story; the engagement, statutory context and live defences determine whether the claimed loss sits within a realistic recovery case.
──────────────────────────
DISCLAIMER
This article is general information only.
It is not legal, financial or insolvency advice.
