SINGAPORE – The apex court in Singapore has struck out insolvent oil trader Hin Leong Trading’s largest claim of US$2.6 billion (S$3.4 billion) against its former external auditor.

A five-judge Court of Appeal on July 16 allowed an appeal by auditing firm Deloitte & Touche that arose from a pre-trial application to strike out Hin Leong’s claim for trading losses.

The decision leaves Hin Leong with two remaining claims – one for US$90 million in dividends that were wrongfully declared by the family of its founder Lim Oon Kuin, and another for $612,000 in audit engagement fees paid to Deloitte.

The claims will be determined at trial.

In a 96-page judgment, the court ruled that Deloitte is not liable for the trading losses Hin Leong incurred from November 2015 to mid-April 2020.

It also ruled that an auditor’s duty of care does not include a “duty to consider the interests of creditors” of a firm it audits when that firm is insolvent.

Hin Leong had argued that it would have been put into liquidation earlier and not have incurred further trading losses, had Deloitte “not been negligent in the conduct of its audit” and “uncovered the fraudulent or improper conduct of the Lim family” in their management of the company’s affairs.

In rejecting such contentions, the court determined that the trading losses were “not reasonably foreseeable” by the auditor when it undertook the engagement.

The court said Deloitte did not have any involvement in Hin Leong’s trading activities, and that it “did not have any sight over” the trading strategies that the company employed.

The court found that the auditor did not give any input to the Lim...