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445
20. TORT LAW
KOH Kok Wah
LLB (Hons) (National University of Singapore);
Advocate and Solicitor (Singapore).
Gene KWEK
LLB (Hons) (National University of Singapore);
Advocate and Solicitor (Singapore).
Breach of statutory duty
20.1
In Loh Luan Choo Betsy v Foo Wah Jek [2005] 1 SLR 64, the deceased
and his family and the defendant and his family were holidaying together in
South Africa when an accident took place. The defendant was driving the
vehicle they were in at the time of the accident.
20.2
Mdm Loh brought the action on behalf of the deceased’s estate and
her son and also on her own account. The claim was brought on two causes
of action, namely negligence and breach of statutory duty. The claim for
breach of statutory duty was brought on the basis that it was against South
African law for the defendant to drive without an international driving
licence.
20.3
Following X (Minors) v Bedfordshire County Council [1995] 2 AC
633, the High Court held (at [25]) that in the ordinary case, a breach of
statutory duty does not in itself give rise to a private law cause of action for
damages unless construction of the statute in question established “that the
statutory duty was imposed for the protection of a limited class of the public
and that Parliament intended to confer on members of that class a private
right of action for breach of the duty”. As no evidence of the relevant South
African statute was adduced and the plaintiff did not call any expert witness
to testify that the statute was intended to confer a private right of action, the
court could not hold that the breach of the statute gave rise to a right of
action to the plaintiffs.
20.4
Turning to the Singapore legislation, the Road Traffic (International
Circulation) Rules (Cap 276, R 7, 2001 Rev Ed) made pursuant to the Road
Traffic Act (Cap 276, 1997 Rev Ed) gave the Automobile Association of
Singapore and the Deputy Commissioner of Police the power to issue
international driving permits to qualified persons who apply for them. The
Rules did not require that a person going abroad had to apply for an
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international driving permit. There being no breach of any Singapore
statutory provision, the claim for breach of statutory duty failed. The
plaintiff ’s appeal was dismissed.
Conspiracy
20.5
In Tang Yoke Kheng v Lek Benedict (No 2) [2004] 4 SLR 788, the
plaintiff, a creditor of Amrae Benchuan Trading Pte Ltd (“the Company”)
sued the third defendant for conspiring with the first and second defendants
in alleged wrongdoings. The plaintiff ’s claim against the third defendant was
that the third defendant, being an employee of the Company, had conspired
with the first and second defendants (the directors and shareholders of the
Company) to cause the Company to continue trading when it was insolvent,
and to wrongfully transfer the Company’s assets in order to put them out of
the plaintiff ’s reach. In particular, the plaintiff alleged that the third
defendant had conspired with, aided and abetted the first and second
defendants in the dissipation of the assets of the Company by receiving
moneys as purported salaries, bonuses and loans, as well as in the setting up
of other companies and transferring to them goods bought by the Company
from the plaintiff without the Company or the plaintiff being paid for the
same.
20.6
On the facts, the court held, inter alia, that the allegations against the
third defendant were not made out. The court endorsed the view in Seagate
Technology Pte Ltd v Goh Han Kim [1995] 1 SLR 17 that the essence of a
conspiracy was an agreement and that there has to be proof of the existence
of an agreement or, at least, an arrangement between the alleged conspirators
to defraud. It was further held that a high degree of proof was required. In
the present case the court held that no evidence of any conspiratorial
agreement or arrangement was adduced, and that the allegations made in the
present case would not suffice to establish the tort. The plaintiff ’s appeal was
dismissed.
Conversion
20.7
The case of RBG Resources plc v Banque Cantonale Vaudiose [2004]
3 SLR 421, involved a dispute between Credit Lyonnais (“CL”) and RBG
Resources plc (“RBG”) relating to the sale and purchase of metals, arising out
of the liquidation of RBG. One of the issues that arose was whether the
removal, by CL, of 300mt of nickel briquettes owned by RBG and stored in a
warehouse, amounted to conversion of those goods.
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20.8
The relevant background for the conversion claim may be very
briefly set out as follows. RBG entered into metal trading with CL, where CL
purchased metals from RBG. The metals were not physically delivered into
CL’s possession, but were stored in a warehouse. The purchase was
constituted or evidenced by a purchase confirmation which involved the
issuance of delivery documentation to CL by the warehouse manager. This
was in the form of a warehouse receipt certifying that the metal cargo in the
warehouse was held for the account of and to the order of CL. The delivery
documentation also set out specific lot reference numbers purportedly
identifying the metal cargo in question. However, the quantities of metal
purchased by CL were not physically segregated and identified as CL’s, but
were stored within the warehouse as part of an unsegregated bulk.
20.9
With effect from 3 May 2002, the English court ordered RBG to be
placed in provisional liquidation, and on 7 October 2002, RBG was ordered
to be wound up by the Singapore court. On 9 May 2002, CL arranged with
the warehouse manager for the release of 300mt of nickel briquettes. This
quantity of metal was then taken by CL’s hauliers to another free trade zone
at Jurong Port. RBG claimed against CL for conversion.
20.10 The court held that property to the nickel briquettes would not pass
to CL, notwithstanding its receipt of the delivery documentation, unless and
until the metal in question was ascertained pursuant to s 16 of the Sale of
Goods Act (Cap 393, 1999 Rev Ed). In the present case, CL’s position was that
the appropriation was achieved by the references to lot numbers in the
warehouse receipt, which was part of the warehouse accounting system.
However, on the facts, the court held that although the lot numbers were a
point of reference in communication, they did not amount in this case to a
warehouse accounting system of identification and appropriation. On the
evidence, the court held that the lot numbers were used by the warehouse
manager to give the impression that the metals referred to in each warehouse
receipt had been appropriated to the order of CL when in fact this was not
so. The court also opined that CL was unable to adduce any direct evidence
of a proper warehouse accounting system and the indirect factors which it
sought to rely on were equivocal.
20.11 In the circumstances, the court held that the nickel briquettes had
not been appropriated to CL prior to their release. Vis-a-vis CL, RBG
remained the legal and beneficial owner of the nickel briquettes in the
warehouse which had been held for the account of RBG prior to any dealing
of the metals between RBG and CL. CL was therefore liable for conversion
for the removal of the nickel briquettes from the warehouse.
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20.12 The case of Hong Leong Finance Limited v Cycle and Carriage Motor
Dealer Pte Ltd [2004] SGDC 105 involved the conversion of a Preferential
Additional Registration Fee (“PARF”) certificate. The plaintiff hire purchase
company entered into a hire purchase agreement with one Ang Eng Hian
(“Ang”). Through intervening fraud, the vehicle was de-registered and
exported. The Land Transport Authority (“LTA”) duly issued the PARF
certificate for the de-registration of the vehicle, bearing a rebate value of
S$92,710, which was sold to the defendant for that sum. The defendant was
unaware of the hire purchase agreement or any of the circumstances leading
to the de-registration of the vehicle. The defendant thereafter used the PARF
certificate to offset the costs in relation to the purchase of a vehicle. The
plaintiff brought an action against the defendant for conversion of the PARF
certificate.
20.13 The court held that it was settled law that physical documents
evidencing choses in action may be converted. The issues were: (a) whether
the plaintiff had an immediate right to possession of the PARF certificate;
and (b) whether there was wrongful appropriation by the defendant.
20.14 On the first issue, the court first analysed the hire purchase
transaction between the plaintiff and Ang. Although the vehicle was
registered in Ang’s name, as was the Certificate of Entitlement, the
proprietary interest in the vehicle remained with the plaintiff. The purported
transfer of the vehicle to a third party was subject to the principle of nemo
dat quod non habet, and the subsequent party could acquire no better title
than Ang. At the same time, the hire purchase agreement having been
breached, the plaintiff would have the right to immediate possession of the
vehicle. Going a step further, the court held that the PARF certificate was also
part and parcel of the hire purchase agreement because the plaintiff, who
retained the proprietary interest in the car, also owned the surrender value
from the outset, and this value was evidenced in the PARF certificate.
Therefore the court held that the right to the PARF rebate was in existence
from inception, its price at any time during the hire purchase being
dependent upon the age of the car and its Open Market Value (“OMV”).
Once the physical document, the PARF certificate, came into existence in the
course of Ang’s breach of the hire purchase agreement, the plaintiff had an
immediate right to possession of it.
20.15 On the second issue, it was settled law that the fact that the
defendant had no knowledge of the intervening fraud and was a bona fide
purchaser for value was no defence in an action for conversion. The
knowledge of the defendant was immaterial. Dealing with the goods in a
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manner inconsistent with the owner’s rights, and an intention in so doing to
assert rights inconsistent with the owner’s, was sufficient to establish the tort.
20.16 Therefore the court found the defendant liable for conversion and
awarded damages to the plaintiff in the sum of S$92,710, the value of the
PARF certificate at the time of conversion. The defendant’s appeal to the
High Court (see Cycle & Carriage Motor Dealer Pte Ltd v Hong Leong Finance
Ltd [2005] 1 SLR 458) was dismissed on 9 December 2004 on substantially
the same grounds.
Damages
20.17 In Lo Lee Len v Grand Interior Renovation Works Pte Ltd [2004]
2 SLR 1, the respondent’s motor vehicle was damaged in a road accident as a
result of the appellant’s negligence. Judgment in default was entered against
the appellants. The main issue at the assessment of damages and in the
appeal to the High Court was whether the respondent was entitled to
compensation for the repair cost of $450 and $600 for the loss of use of his
vehicle. The respondent was insured with NTUC Insurance Co-operative Ltd
(“NTUC Income”). After the accident he signed a form to make a claim
against the third party and had left it to his insurers to handle the matter. He
did not make a claim under his policy as he regarded himself as not being at
fault. He arranged for his damaged car to be repaired by a “Quality
Workshop”. In return, he was given a taxi allowance of $50 daily on the terms
of NTUC Income Agreement no A12451. Under the terms of that agreement,
the respondent agreed to account and pay to NTUC Income any sums which
he might receive pursuant to any award or judgment for any loss of use.
NTUC Income paid the repair cost and a sum of $600 to the respondent for
loss of use of his car. The appellants argued that the award offends the
principle against double recovery. There was no recoverable loss as the
respondent had received from his insurers collateral benefits which meet the
same loss as the award of damages.
20.18 Dismissing the appeal, Belinda Ang Saw Ean J held that there was no
double recovery as the respondent was required to account to NTUC Income
for the damages he received under the judgment. The court did not consider
the payments of the repair bill and taxi allowance, even if they were made
gratuitously, to be something akin to the respondent receiving collateral
compensation. The court also considered the situation where repairs are
carried out for free. The respondent’s car was undeniably damaged and as a
matter of principle, the appellants had to satisfy the respondent for this loss.
The fact that repairs were carried out for free did not avoid this underlying
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loss. Applying the reasoning of the English Court of Appeal in Burdis v Livsey
[2003] QB 36, the court held that the respondent should be able to recover
the $450 paid in advance by NTUC Income.
Defamation
20.19 Two defamation suits were brought in respect of an article published
in The Business Times (“BT”) following the highly-publicised corporate
takeover battle for Natsteel Ltd (“Natsteel”) by 98 Holdings Pte Ltd
(“98 Holdings”) and Sanion Enterprises Ltd (“Sanion”), a company
controlled by Oei Hong Leong (“Oei”).
20.20 In January 2003, 98 Holdings emerged the eventual winner and
acquired majority control of Natsteel. Sanion accumulated 29.99% of the
shares, making it the second largest shareholder after 98 Holdings. On 2 May
2003, the board of directors of Natsteel issued a circular to the shareholders
to give them notice of an extraordinary general meeting (“EGM”) to be held
on 28 May 2003 to pass six resolutions, three of which were to approve:
(a)
certain amendments to the Memorandum and Articles of
Association (“the M&A resolution”);
(b)
contingent upon the passing of the M&A resolution, the
payment of a special dividend of 55 cents per share ; and
(c)
contingent upon the passing of the M&A resolution, a scrip
dividend scheme under which shareholders could elect to receive
future dividends declared in shares instead of cash (“the dividend
resolution”).
20.21 Resolutions (b) and (c) were ordinary resolutions. Resolution (a)
was a special resolution requiring at least a 75% vote.
20.22 Oei was of the view that it was not in the interest of Sanion that the
M&A resolution be passed and the scrip dividend scheme implemented and
objected to the linkage of the dividend resolution with the other two
resolutions. On 27 May 2003, one day before the EGM, 98 Holdings issued a
statement to say that it was prepared to support amendments to the dividend
resolution (“the whitewash proposal”) which it believed would address
Sanion’s concerns.
20.23 At the EGM on 28 May 2003, Sanion’s proxy voiced his opposition
to the linkage of the resolutions. Other minority shareholders also voiced
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their opposition as they believed that the dividend resolution would not be
approved in the light of Sanion’s opposition to the other resolutions. The
EGM was also attended by David Gerald, the president of the Securities
Investors Association (“SIAS”). With the consent of the chairman, David
Gerald was allowed to address the meeting as an observer. During his speech,
he expressed SIAS’s objection to the linkage of the resolutions. His speech
received laughter and applause. In the end, the rowdy EGM was adjourned
for a week for Sanion’s proxy to take instructions and seek legal advice.
20.24 On 4 June 2003, the date of the adjourned EGM, the BT carried an
article entitled “No Resolution in Sight for Natsteel-Oei Stalemate” written
by Catherine Ong, a senior journalist of Singapore Press Holdings Ltd
(“SPH”), the publisher of BT. The article was based on an interview that
Catherine Ong had with David Ban (“Ban”), a director of 98 Holdings, in
which he commented on Oei’s opposition to the resolutions and on David
Gerald’s conduct at the EGM. The two defamation suits were brought by Oei
and David Gerald respectively in respect of certain words attributed to David
Ban in the article.
20.25 In Oei Hong Leong v Ban Song Long David [2005] 1 SLR 277, the
plaintiff, Oei, brought an action against four parties for defamation. The
action was brought in respect of words spoken by Ban, the first defendant
(and director of 98 Holdings, the second defendant), to the fourth defendant,
Catherine Ong (the journalist employed by the third defendant, SPH, the
publisher of BT). The alleged defamatory words were “[w]hat you have here
is the obstructive action of a minority shareholder that is disadvantaging the
majority, including 98 Holdings. It is not oppression by the majority but the
minority. Everyone including 98 [Holdings] wants the dividends. If
shareholders don’t get their dividends, they should be blaming him” and
“Mr Ban said Mr Oei’s opposition isn’t rational”.
20.26 In determining whether the words were defamatory of Oei, the High
Court applied the principles set out in Microsoft Corp v SM Summit Holdings
Ltd [1999] 4 SLR 529, ie, the meaning must be gathered from the words
themselves and in the context of the entire passage in which they are set out.
The court is not confined to the literal or strict meaning but would take into
account what the ordinary person may reasonably infer from the words. The
ordinary person reads between the lines.
20.27 Tay Yong Kwang J held that the words “obstructive action” were not
necessarily defamatory. However, used in juxtaposition with “disadvantaging
the majority”, they did hint of unreasonable and unfair conduct which
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reflects on a person’s character or reputation and was defamatory. He also
held that the word “oppression” was used to imply unfairness with
consequential hardship suffered and was therefore defamatory. As for the
comment by Ban that Oei’s opposition was “not rational”, His Honour held
that the words by themselves were not defamatory, but were similarly tainted
by the context in which they appeared because they elaborated on the
unreasonable and unfair conduct that Oei had been accused of. The words
taken as a whole were therefore defamatory. The learned judge went on to
consider the defences raised by the defendants.
20.28 In support of the defence of justification, the defendants sought to
show obstructive and irrational action on Oei’s part by relying on events
leading up to 3 June 2003 as well as Oei’s conduct thereafter. The court held
that events occurring after the publication of the defamatory words were not
relevant for this defence. However it held that the plaintiff ’s actions prior to
3 June 2003 in continuing to oppose the resolutions and the whitewash
proposal without further explanation and going abroad and being
uncontactable for six days after the EGM could be described as obstructive
and oppressive. The defence of justification therefore succeeded.
20.29 Ban also relied on the defence of qualified privilege which accorded
a right to a person whose character or conduct has been attacked to answer
such an attack. The court noted that Ban’s comments were made as part of an
on-going debate. At the 28 May EGM, Sanion’s proxy had criticised the
linkage of the resolutions as irrational and unnecessary. Although the EGM
was meant to be a closed-door matter, the proceedings had become very
public. The court held that Ban, as chairman of the executive committee and
a director of Natsteel, was entitled to respond to the attack. The response
could not be said to be disproportionate to the attack and unreasonable in
the circumstances. Further, as Natsteel is a listed company, the public, in
particular the shareholders, had an interest in its corporate governance. The
defendant had a duty to respond to the criticism levelled against the board,
and the public had a corresponding interest in his response. The defence of
qualified privilege therefore succeeded.
20.30 Relying on the doctrine of derivative privilege which was applied in
Oversea-Chinese Banking Corp Ltd v Wright Norman [1994] 3 SLR 760, the
court also held that SPH and Catherine Ong were protected by the defence of
qualified privilege as well.
20.31 The defendant also relied on the defence of fair comment. The court
referred to the case of Chen Cheng v Central Christian Church [1999] 1 SLR
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94 where the Court of Appeal held that to succeed in this defence, the
defendant had to prove that: (a) the words complained of were comments;
(b) the comment was on a matter of public interest; (c) the comment was
based on facts; and (d) the comment was one which a fair-minded person
could honestly make on the facts proved. Applying this test, the court held
that the words spoken by Ban were his deductions made in the context of the
events which had taken place. The matters concerning the Natsteel saga had
attracted a lot of public attention and debate and were certainly matters of
public interest. In coming to this conclusion, the court also addressed the
assertion by Oei that he had the right to vote any way he wished as a
shareholder. The court rightly considered his undisputed right as a
shareholder to vote any way he pleased to be a different matter. However the
right to do as one pleased did not carry with it immunity from comments
and criticism.
20.32 The court went on to find that on the facts, there was no evidence of
malice on the part of the defendants. Referring to the adversarial nature of
the events that occurred in the takeover battle over Natsteel which Oei had
relied on as evidence of malice, the court held (at [114]) that:
[W]e should not be hasty in imputing malice simply because two persons
have stood at opposing ends of an idea. There should be room for genuine
disagreement over ideas. A spirited debate, ... even over a period of time,
need not mean that enmity and animosity will rule their relationship for
the rest of their lives.
20.33 Even though it was not necessary to deal with the question of
damages, which was academic in the light of the court’s finding of nonliability in favour the defendants, the court, very helpfully, went on to express
its opinion that if it had to decide on damages, an award of $60,000 would be
fair compensation for asserting that the plaintiff had been conducting
himself in an unreasonable and unfair manner. In arriving at this amount,
the court took into account the following factors: (a) there was no malice;
(b) the article was taken off the internet website as soon as the complaint was
received; (c) the allegation was narrow in scope and effect as it related only to
his opposition to the resolutions; (d) it was clear from subsequent events that
the other shareholders did not share the views of Ban as they voted with
Sanion anyway. (Oei’s appeal to the Court of Appeal was dismissed on
26 April 2005 in [2005] SGCA 35.)
20.34 The second case Jeyasegaram David v Ban Song Long David [2005]
1 SLR 1 was brought by David Gerald against Ban. The allegedly defamatory
words in the article were: “Mr Ban, however, feels that Mr Gerald is ‘playing
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to the gallery.’” The plaintiff alleged that the words meant, inter alia, that the
plaintiff was not discharging his duties as CEO/president of SIAS in an
unbiased, impartial and objective manner and had caused SIAS to support
the opposition by the minority shareholders of Natsteel for the dominant
purpose of displaying showmanship and/or of enhancing his personal
popularity and reputation.
20.35 At the close of the plaintiff ’s case, the Defence submitted that there
was no case to answer because: (a) the words in issue were not in their
natural and ordinary meaning defamatory of the plaintiff; (b) even if the
words were defamatory, the defamatory imputation was justified on the
plaintiff ’s own evidence; (c) the words were fair comment on a matter of
public interest; and (d) the words were published on an occasion of qualified
privilege. The High Court ruled in favour of the defendant on each of the
aforesaid points.
20.36 The court applied the principles set out by the Court of Appeal in
Microsoft Corp v SM Summit Holdings Ltd (supra para 20.26) in determining
the natural and ordinary meaning of the words complained of in a
defamation action. Referring to the dictionary meanings of the words
“playing to the gallery”, the court found that the common focus of the
definitions was the focus on the manner of doing or saying things. The words
did not impugn a person’s integrity or belief in doing or saying those things.
Saying a person had rather more form than substance was no worse than
saying a person had a lot of substance and no form. The court held that the
remarks in both instances, while not complimentary, were not defamatory.
20.37 Counsel for the plaintiff relied on Goh Chok Tong v Jeyaretnam
Joshua Benjamin [1998] 1 SLR 547 in submitting that a similar phrase
“directed at the gallery” was used by S Rajendran J in his judgment to
describe defence counsel’s objectionable conduct in cross-examination.
However, Tay Yong Kwang J distinguished that case by drawing the
distinction that the phrase in that case was used to describe the conduct of
counsel in court. A counsel’s duty is not to ask irrelevant or sensational
questions but to assist the court with the issues. It was little wonder that such
conduct as described by the judge met with his disapproval. The passage
cited from Rajendran J’s judgment does not suggest that “playing to the
gallery” is objectionable conduct attracting legal sanctions in every situation.
20.38 Tay J also went to find that the plaintiff was a charismatic and
humorous speaker whose words continued to build the minority
shareholders’ chorus into a crescendo. In his view, such a public performance
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could be described as playing to the gallery. The defendant therefore
succeeded in his defence of justification. His Honour also held that the
comment by the defendant was not disproportionate to the attack from the
plaintiff. As Natsteel is a listed company and the public had an interest in its
corporate governance, the defendant had a duty to respond to the criticism
and the investing public had a corresponding interest in his response. The
defence of qualified privilege therefore succeeded.
20.39 The court also held that the defence of fair comment was
established. The ingredients of the defence as set out in Chen Cheng v Central
Christian Church (supra para 20.31) were satisfied. On the difficulty of
distinguishing an assertion of fact from a comment, the court once again
adopted the guiding principles in that case, ie, “one should adopt a common
sense approach and consider how the statement would strike the ordinary
reasonable reader, ie, whether it would be recognisable by the ordinary reader
as a comment or a statement of fact. Using this test, the court held that
saying someone is playing to the gallery must be in the nature of a comment.
The words in issue are a metaphor which is used to describe certain factual
situations.
20.40 On the issue of malice, the court noted that the matters enumerated
by the plaintiff to make good his claim that the defendant bore him ill will
and malice were all inferential ones. The fact that parties were in opposing
camps did not necessarily infer ill will. The court noted that the statement
from the defendant might have appeared dismissive but that was not
sufficient evidence of malice (at [96]):
To infer the presence of ill will and malice from such evidence is to say that
he who has not shown me love hates me.
20.41 As in the first case, the court went on to give an indication of
damages even though the issue of damages was academic. The court opined
that if effectively calling a person a showman in these circumstances was
actionable in defamation, an award of $10,000 should be more that adequate
to soothe any hurt feelings and repair any damage done.
20.42 On 4 April 2005, the Court of Appeal delivered its judgment on the
plaintiff ’s appeal (see [2005] 2 SLR 712). Disagreeing with the High Court,
the Court of Appeal held that the words “playing to the gallery” was
defamatory, and that the defence of justification was not established.
However the Court of Appeal agreed with the High Court that the defences
of qualified privilege and fair comment were established. The appeal was
dismissed with costs.
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Inducing breach of contract
20.43 In Stratech Systems Ltd v Nyam Chiu Shin [2004] SGHC 168, the
plaintiff and the third defendant companies were business partners involved
in a joint project. Disputes arose in relation to the project. One of the issues
that arose was whether the third defendant was guilty of inducing the first
and second defendants (the plaintiff ’s employees) to join its company in
breach of their contractual obligations to the plaintiff.
20.44 It was established that shortly after the disputes arose between the
plaintiff and the third defendant, the first and second defendants, who were
involved in the joint project, terminated their employment with the plaintiff.
They were subsequently employed by a subsidiary of the third defendant
whose business was totally unconnected to that of the plaintiff and the third
defendant. However, the first and second defendants were then directly
seconded to work for the third defendant in relation to the same project.
20.45 In finding the third defendant liable for inducing a breach of
contract by the first and second defendants, the court had regard to the
following factors: the third defendant agreed to indemnify the first and
second defendants should they be sued by the plaintiff; the first and second
defendants secured a 20% increase in pay when they joined the third
defendants; it was conceded that the first and second defendants were
formally employed by the third defendant’s subsidiary “in order to put more
distance” between them and the third defendant, when it was clear that the
first and second defendants’ work expertise was unrelated to the business of
the third defendant’s subsidiary; the third defendant initiated all the steps
taken to procure the employment of the first and second defendants; and the
salary in lieu of notice paid to the plaintiff was borne by the third defendant.
20.46 On the evidence, the court therefore concluded as a finding of fact
that the third defendant knew it was assisting in the breach of the first and
second defendants’ employment contract with the plaintiff. The fact that the
plaintiff might have considered the matter and concluded in good faith that
there would be no breach, did not absolve the third defendant because the
test was an objective one. Therefore the evidence was, in the court’s view,
sufficient to establish the tort.
20.47 However, on appeal, the Court of Appeal, in a decision dated
28 March 2005 (reported at [2005] 2 SLR 579, reversed the trial judge’s
decision on this point. The Court of Appeal reviewed the principles relating
to covenants in restraint of trade and concluded on the facts that the plaintiff
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was unable to demonstrate sufficient legitimate interest that required
protection by a restraint of trade clause. The court took the view that the
main function of the restraint of trade clause in this case was indeed to
inhibit competition in the plaintiff ’s business. As such, the court held that
the clause was not binding on the first and second defendants, and there was
therefore no breach of the first and second defendants’ employment
contracts with the plaintiff. Consequently the third defendant could not be
guilty of inducing breach of contract.
20.48 In Diva XL Pte Ltd v Goenka Mahesh Kumar [2004] 3 SLR 506, the
defendant was the managing director and substantial shareholder of one
Lalasis Trading Pte Ltd (“Lalasis”). The plaintiff had, in an earlier action,
obtained judgment against Lalasis for a sum of $384,930, arising out of
Lalasis’s breach of two contracts relating to the sale and purchase of
computer processors (“the Contracts”). However, the plaintiff ’s attempts to
receive payment on the judgment from Lalasis, including garnishee
proceedings and judgment debtor summons, were to no avail. The plaintiff
brought an action against the defendant, alleging, inter alia, that he had
caused the moneys paid by the plaintiff as deposits under the Contracts to be
used by the defendant personally in purported discharge of a debt allegedly
owed by a third party to another company which the defendant also
substantially owned and controlled. Lalasis subsequently refused further
performance of the Contracts on the basis that it had not been paid by the
plaintiff. In the circumstances, the plaintiff asserted that the defendant had
caused, induced or procured the breaches of the Contracts by misapplying
the moneys paid by the plaintiff under the Contracts, and subsequently
causing Lalasis to refuse further performance of the Contracts on the basis of
non-payment. Records were adduced reflecting the transfer of the deposit
sums under the Contracts to the defendant’s personal account.
20.49 On the facts, the court held that the defendant had interposed his
personal interests and gain over the contractual obligations between the
plaintiff and Lalasis. The defendant’s claim that the transfer of the moneys
from Lalasis was merely a book transaction and that the entries had since
been reversed was not supported by any credible or admissible evidence. In
the court’s view, the defendant had knowingly and deliberately interfered
with the Contracts. Therefore, judgment was entered for the plaintiff. The
decision is being appealed against.
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Misrepresentation
20.50 In Wee Soon Kim Anthony v UBS AG (No 4) [2004] SGCA 33, the
Court of Appeal ruled on issues of alleged misrepresentations made by bank
officers in relation to the plaintiff ’s investments. The plaintiff ’s action against
the bank involved, inter alia, allegations that the bank officers had
misrepresented the interest rate being earned in the plaintiff ’s leveraged
deposit, and that the bank officers had misrepresented certain issues in
relation to the plaintiff ’s foreign exchange trading.
20.51 The bank officers had deposed in their affidavit that at a meeting
with the plaintiff on 19 December 1997, they had told the plaintiff that he
was experiencing negative interest on his deposits when in fact the true
position was that the plaintiff would face the prospect of a negative interest
rate differential if he rolled over the deposits again. On this basis the trial
judge found that there was a misrepresentation by the bank officers in stating
that the plaintiff was already facing negative interest as at 19 December 1997.
The Court of Appeal, however, clarified that in one of the bank officer’s
testimony at trial, he explained that the loose language in the affidavit had
not accurately described what had transpired. The Court of Appeal accepted
the bank officer’s clarification that at the 19 December 1997 meeting, the
negative interest referred to the prospective state of affairs which was to come
in a matter of a few days, upon maturity of the deposits in question. The
court also noted from the plaintiff ’s evidence that the plaintiff himself knew
that this was what the bank officers were referring to. The court was therefore
prepared to reverse the finding of fact by the trial judge, and held that there
had been no such misrepresentation made by the bank officers.
20.52 Further, the Court of Appeal agreed with the trial judge that in any
event no loss was shown to be suffered by the plaintiff. Even if the plaintiff
had been told on 19 December 1997 that he was already in a negative interest
position but in fact was not, that misstatement did not actually cause him
any loss.
20.53 On the second allegation of misrepresentation, the court accepted
the bank officers’ evidence that there had been substantial meetings and
discussions between the plaintiff and the bank officers in relation to the
investments in question. The court opined that there was no basis to interfere
with the findings of the trial judge in preferring the evidence of the bank
officers over that of the Plaintiff. The court also noted, in passing, that in the
course of the plaintiff ’s work, he had routinely advised banks on legal
matters and he had engaged in foreign exchange transactions previously. In
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the court’s view, the plaintiff had shown himself to be unreliable, by claiming
to be a novice in foreign exchange dealings when he was not so, and by
denying that a meeting had taken place on the 26 December 1997, when his
son admitted that such a meeting had indeed taken place. The final position
could have been that the plaintiff had not fully understood the bank officers’
advice but, if this had been so, it would have been incumbent on him to seek
further explanation. On the evidence, the plaintiff had not done so, but
instead confirmed after the discussions with the bank officers that he
accepted the proposed strategy. The trading risk was something which every
trader had to bear and there was no basis to place the loss upon the bank. In
the circumstances, the plaintiff ’s appeal was dismissed.
Negligence
Construction
20.54 In Afro-Asia Shipping Co (Pte) Ltd v Da Zhong Investment Pte Ltd
[2004] 2 SLR 117, the plaintiff was the owner of Afro-Asia Building. The first
defendant, Da Zhong Investment Pte Ltd (“Da Zhong”) were the owners of
the neighbouring building. In 1995, Da Zhong engaged the second to fifth
defendants to redevelop the land. The second and third defendants were the
demolition and piling contractors and were in control of the site on
15 March 1995 and 30 June 1995 respectively. The fourth defendant was the
main contractor for the erection of the superstructure of the new building.
The fifth defendant was employed to do piling work in 1997. Construction of
a new 20-storey building was completed in 2000. During this period, the
plaintiff alleged that various types of damage were caused to their building.
20.55 It was held, following Xpress Print Pte Ltd v Monocrafts Pte Ltd
[2000] 3 SLR 545 (“Xpress Print”) that Da Zhong had a duty as a landowner
to ensure that there were sufficient means of support for the building and
was liable for resulting damage caused by the second defendant’s excavation
activities. The second and third defendants were also found to be liable in
negligence as they had breached their duty of care to take all necessary
precautions to reduce the impact of their works on neighbouring properties.
20.56 The claim against the fourth defendant was dismissed as the
evidence was insufficient to establish negligence on its part. The plaintiff ’s
attempt to rely on the doctrine of res ipsa loquitur was rejected by the court.
The court reiterated that in order for the doctrine to apply, it must be
established that: (a) an event had occurred which in the ordinary course of
things was more likely than not to have been caused by negligence; and
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(b) the defendant must have managed the event. In this case, these
ingredients were not satisfied. The plaintiff also relied on the principle
enunciated in Xpress Print to impose a strict duty of care on the fourth
defendant. The court however held that the principle applies only to the
landowner. As the fourth defendant was only a contractor, the principle did
not apply. The court found that the fifth defendant was liable for some minor
damage to the roof of the plaintiff ’s building. Other than such damage, the
court found that the plaintiff had not proved that the fifth defendant was
negligent or that any damage resulted from its works.
20.57 On the issue of damages, it was disclosed by the plaintiff that its
controlling shareholders had consented to an order in another set of
proceedings in the Court of Appeal which provided that the plaintiff ’s
building would be sold and the proceeds of sale divided equally between the
two groups of shareholders. It was clear therefore that the plaintiff had no
intention of rectifying the building or of re-building it. The court therefore
decided that on the facts, the damages payable by the first to third defendants
for the damage caused to the building should be assessed on the basis of the
diminution in the capital value of the building as at the date of judgment
rather than on the basis of the costs of rectifying the building to restore it to
its original condition.
20.58 A claim by the plaintiff for exemplary damages was not allowed by
the court as the case did not fall within any of the categories established by
Rookes v Barnard [1964] AC 1129. The plaintiff ’s invitation to reject Rookes v
Barnard as good law in Singapore was declined by the court. The appeals
were dismissed by the Court of Appeal.
20.59 MCST Plan No 2297 v Seasons Park Ltd (No 2) [2004] SGHC 160
was a decision of Choo Han Teck J in relation to three questions ordered to
be tried as preliminary issues in the action which was commenced by the
management corporation of Seasons Park Condominium against the
developers. The action was based on contract and tort and also for an
indemnity. The action was brought on behalf of all the subsidiary proprietors
in respect of defects and damage to the common property as well as to
individual units.
20.60 The first question was whether the management corporation was
entitled to sue in contract on behalf of all the subsidiary proprietors. The
plaintiff relied on s 116(1) of the Land Titles (Strata) Act (Cap 358, 1999 Rev
Ed) which provides that:
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Where all or some of the subsidiary proprietors of the lots in a subdivided
building are jointly entitled to take proceedings against any person ... (any
such proceedings being proceedings for or with respect to common
property), the proceedings may be taken by or against the management
corporation ...
20.61 The court held that the claim in contract must fail because there was
no pleaded cause of action in contract. In order for an action to be brought
in contract, it behoved the plaintiff to identify all the subsidiary proprietors
on whose behalf it was suing. The identity of the parties ought to be pleaded.
The Writ of Summons and pleadings in the case only identified the plaintiff
as “the management corporation representing 390 subsidiary proprietors”.
Some of the subsidiary proprietors were sub-purchasers who had no contract
with the defendant. Section 116(1) did not confer or create any cause of
action. The power to take proceedings against any person was contingent
upon a right or a cause of action. Hence the management corporation could
sue a defendant in contract only where there was a cause of action in
contract available to the subsidiary proprietors.
20.62 The second question was whether the defence of independent
contractor defeated the plaintiff ’s claim of negligence in failing to exercise
reasonable care and skill “in designing and/or building the [Seasons Park
Condominium] and/or supervising the construction and rectification
works”. The court held that a person is not liable in negligence if he
employed an independent contractor and the damage is caused by the
negligence of that contractor. All that is required of the defendant is to prove
that he used reasonable care and skill in employing his independent
contractor. However the plaintiff was entitled to proceed to trial on its claim
that the defects were caused by the defendants personally.
20.63 The third question was whether the plaintiff was entitled to an
indemnity from the claims of subsidiary proprietors. The court held that no
indemnity in contract or tort arose.
20.64 On appeal in relation to the first two questions, the Court of Appeal
affirmed the rulings made by Choo J (see [2005] 2 SLR 613).
Contributory negligence
20.65 The relationship between the Highway Code and risk
apportionment was considered by the High Court in Cheong Ghim Fah v
Murugian s/o Rangasamy [2004] 1 SLR 628. In that case, the deceased, whilst
jogging along Lower Delta Road, was killed when he was knocked down by
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the defendant who was riding a motorcycle. The deceased was jogging in the
extreme left side of the road with his back to the traffic. The action was
brought by the deceased’s wife and the administrator of the estate against the
defendant.
20.66 Rule 7 of the Highway Code (Cap 276, R 11, 1990 Rev Ed) (“HC”)
provides:
Always walk facing oncoming traffic and not with your back towards it.
Where there is a pavement or adequate footpath, use it. Do not walk next to
the kerb with your back to traffic ...
20.67 Section 112(5) of the Road Traffic Act (Cap 276, 1990 Rev Ed)
provides:
A failure on the part of any person to observe any provision of the highway
code shall not of itself render that person liable to criminal proceedings of
any kind, but any such failure may, in any proceedings whether civil or
criminal and including proceedings for an offence under this Act, be relied
upon by any party to the proceedings as tending to establish or to negative
any liability which is in question in those proceedings.
20.68 The court held that the fact that a road user has ignored or failed to
comply with the provisions of the HC should never be lightly dismissed. The
consequences of a breach will be dependent on a confluence of factors that
includes: (a) the particular provision of the HC breached; (b) the
circumstances in which the breach took place; and (c) whether the breach
was conscious or inadvertently took place because of certain exigencies. In
the present case, the deceased was in breach of the HC and had to bear some
responsibility for the accident. The court found that the defendant was 85%
responsible for the accident.
20.69 In Ang Kuang Hoe v Chia Chor Yew [2004] 1 SLR 696, the plaintiff
was attempting to cross the road when he was hit by the defendant’s car. The
plaintiff sued the defendant in negligence, alleging that the defendant was
wholly liable for the accident by failing to keep a proper lookout for
pedestrians and for driving at an excessive speed. The defendant alleged that
the plaintiff was at fault as he had dashed into the path of the car, and for
failing to cross the road at a pedestrian crossing within 50m of the site of the
accident. The High Court found that the defendant was negligent by failing
to keep a proper lookout, driving at an excessive speed and failing to slow
down. The defendant was also at fault as he did not properly look out for
oncoming traffic before crossing the road. He had also crossed the road
within 50m of a pedestrian crossing and was thereby in breach of r 3 of the
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Road Traffic (Pedestrian Crossings) Rules (Cap 276, R 24, 1990 Rev Ed). The
plaintiff ’s carelessness for his own safety was blameworthy enough to justify
a finding of contributory negligence. The court applied the principles
relating to the apportionment of responsibility established in Podrebersek v
Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 (“Podrebersek”). Applying
the test in Podrebersek, the court concluded that it was difficult to assess the
fault of either party as materially in excess of that of the other. In the
circumstances, both should be regarded as bearing equal responsibility. The
plaintiff was awarded 50% of the amount of damages assessed.
Employer’s duty to provide safe and secure system of work
20.70 In China Construction (South Pacific) Development Co Pte Ltd v Shao
Hai [2004] 2 SLR 479, the respondent was employed as a carpenter by the
appellant for construction works. He was involved in a fight at the site with
another worker, Cao, which resulted in the respondent suffering hand
fractures. The respondent’s action in the District Court against the appellant
was based on two causes of action: (a) the appellant was vicariously liable for
the wrongful acts of Cao and the three other co-defendants when they
assaulted the respondent; (b) the appellant was negligent in failing to provide
a safe and secure system of work at the site, proper supervision and/or safe
fellow employees. The district judge dismissed the claim of vicarious liability
but held the appellant to be 50% liable for the respondent’s injuries. The
appellant appealed to the High Court against the decision.
20.71 The court held that in determining whether the appellant had failed
to provide a safe system of work and supervision, the correct question to ask
was whether Cao had a propensity to violence which the appellant knew or
ought to have known about in order to have anticipated that more
supervision was required of any site where Cao was working. It was not the
pleaded case, nor was there any evidence, that Cao was a difficult worker or
was a man who was prone to violence. Neither Cao nor any of the other
workers sued had any previous record of fighting or assaulting other workers
or even any sort of disciplinary problem at all. Before the incident, there was
no known animosity between the respondent and Cao. The standard of care
that was required was not to anticipate and guard against every conceivable
eventuality but rather only to take reasonable precautions for the safety of its
workers having regard to the nature of the construction works, the skill level
of the workers and the general condition of the site. Allowing the appeal, the
court held that the weight of the evidence did not support the finding that
the respondent’s injury resulted from any breach of duty on the part of the
appellant.
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Inevitable accident
20.72 In Loh Luan Choo Betsy v Foo Wah Jek (supra para 20.1), the
deceased and his family and the defendant and his family were holidaying
together in South Africa when an accident took place. The defendant was
driving the vehicle they were in at the time of the accident, when the right
rear tire burst.
20.73 The defendant reacted by stepping lightly on the brakes but the
vehicle veered to the right. He released the brakes and corrected the vehicle to
the left. He then stepped hard on the brakes with a view to bringing the
vehicle to a halt. Instead, it veered to the right and went off the road. The
deceased died instantly and his wife (Mdm Loh) and son were also injured.
Mdm Loh brought the action against the defendant on behalf of the
deceased’s estate and her son and also on her own account on the grounds of
breach of statutory duty and negligence. The claim based on breach of
statutory duty has been discussed above.
20.74 The claim in negligence was met by a defence of inevitable accident.
Judith Prakash J adopted the definition of inevitable accident laid down by
the Privy Council in The Marpesia (1872) LR 4 PC 212 at 220:
[I]nevitable accident ... is ... that which the party charged with the offence
could not possible prevent by the exercise of ordinary care, caution, and
maritime skill.
20.75 The learned judge was of the view that the consideration of the
defence of inevitable accident and the particulars of negligence relied on by
the plaintiffs were two matters on opposite sides of the coin. On the facts, the
court found that the defendant was not negligent. He was faced with an
agonising situation in which he had to make a split-second decision. The
court was of the view that although the benefit of hindsight showed that he
reacted in what turned out to be the wrong way, there was no basis for
holding that his reactions were any different from those of the ordinary and
careful driver placed in the same situation. The court therefore found that
the defendant was not negligent in the handling of the vehicle when the tyre
burst and the bursting of the tyre made the accident inevitable. The
plaintiff ’s appeal was dismissed.
Product liability
20.76 The Court of Appeal delivered its judgment on the appeal arising
out of the highly publicised case brought by actress Andrea de Cruz (“de
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Cruz”) against parties involved in the distribution, importation and sale of
the slimming drug known as Slim 10: TV Media Pte Ltd v De Cruz Andrea
Heidi [2004] 3 SLR 543. de Cruz had commenced the action against five
defendants in the High Court for her liver damage, allegedly caused by her
consumption of Slim 10. The action did not proceed against the first
defendant, the Chinese manufacturer of Slim 10 as it could not be located for
service of the Writ of Summons. The second defendant, Health Biz Pte Ltd
(“Health Biz”), was a Singapore company that imported and sold Slim 10.
The third defendant, Semon Liu (“Liu”), was the director and principal
shareholder of Health Biz. The fourth defendant, TV Media Pte Ltd (“TV
Media”), was the sole distributor of Slim 10 in Singapore. The fifth
defendant, Rayson Tan, was de Cruz’s colleague who had supplied her with
Slim 10.
20.77 In the High Court, the trial judge found Health Biz and TV Media
liable for de Cruz’s liver failure: see De Cruz Andrea Heidi v Guangzhou
Yuzhitang Health Products Co Ltd [2003] 4 SLR 682. The trial judge also
found Liu personally liable for authorising, directing and/or procuring
Health Biz’s negligent acts. The claim against Rayson Tan was dismissed. The
High Court awarded de Cruz $250,000 in general damages for pain and
suffering and loss of amenities, and awarded her a multiplier of 34 years in
relation to future medical expenses. For a discussion of the High Court
decision, please refer to (2003) 4 SAL Ann Rev 400.
20.78 TV Media and Liu appealed on the issue of liability as well as the
quantum of damages. Liu further argued that the learned judge had erred in
finding him personally liable.
20.79 The Court of Appeal dismissed the appeals against liability but
allowed the appeals against quantum. The issue of liability turned mainly on
the High Court’s findings of fact as to causation (eg, whether de Cruz had
consumed Slim 10), which were upheld by the Court of Appeal. The test for
overturning any finding of fact by a trial judge required the appellant to
show that the finding of fact was plainly wrong or unjustified on the totality
of the evidence before the trial judge: Peh Eng Leng v Pek Eng Leong [1996]
2 SLR 305. The Court of Appeal found that the appellants had failed to
surmount this high threshold.
20.80 On the issue of whether TV Media owed de Cruz a duty of care, the
Court of Appeal applied the three criteria for the imposition of a duty of care
summarised by Lord Bridge of Harwich in Caparo Industries Plc v Dickman
[1990] 2 AC 605 (“Caparo”). They are: (a) forseeability of damage;
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(b) proximity of relationship between the parties; and (c) whether it is fair,
just and reasonable to impose such a duty. Applying this test to the facts, TV
Media knew that Health Biz was getting Rayson Tan to distribute Slim 10 to
MediaCorp artistes in unmarked packaging. TV Media must have foreseen
that these artistes would take the pills without the benefit of dosage
instructions. The requirement of foreseeability was therefore met.
20.81 On the second requirement of proximity, TV Media argued that it
should not owe a duty to de Cruz since she was not in the class of people
who relied on their advertisements and had bought pills from an authorised
retailer. They relied on a portion of Lord Reid’s judgment in Hedley Byrne &
Co Ltd v Heller & Partners Ltd [1964] AC 465 (“Hedley Byrne”) at 483 where
he said that “it would be going very far to say that he owes a duty to every
ultimate ‘consumer’ who acts on those words to his detriment”. The court
had no difficulty in distinguishing Hedley Byrne as a case dealing specifically
with a situation where the only damage suffered was pure economic loss. The
courts have consistently taken a more restrictive approach to the imposition
of a duty of care in economic loss cases. The damage suffered by de Cruz in
the present case was physical damage. The court held that it is established law
that a distributor may be in a proximate enough relationship to the
consumer so as to owe him a duty of care to check the safety of what he
distributes: Watson v Buckley, Osbourne, Garrett & Co Ltd [1940] 1 All ER
174. In the present case, TV Media was in a sufficiently proximate
relationship with de Cruz. The Court of Appeal was also of the view that it
was fair, just and reasonable to impose a duty of care on TV Media. Having
determined that all three Caparo criteria were satisfied, the trial judge’s
finding that TV Media did owe de Cruz a duty of care in its promotion,
endorsement and advertisement of Slim 10 was upheld by the Court of
Appeal.
20.82 As to whether such duty of care was breached, TV Media asserted
that it was not in breach as it had placed its faith in the Health Sciences
Authority (“HSA”) and only prepared the advertisements after HSA had
given product approval for Slim 10. The Court of Appeal (at [68]) agreed
with TV Media’s submissions in so far as it asserted that HSA should bear
some degree of responsibility when granting approval for a product since
“[f]or HSA to insist that products are not necessarily safe even though it has
given its stamp of approval begs the question of what its role in the approval
process is”. However, the issue of HSA’s liability was academic as it was not a
party and none of the defendants made any attempt to join it as a third party.
As a joint tortfeasor, TV Media was still liable to de Cruz for the whole
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damage she suffered. TV Media was not entitled to place unquestioning
reliance on HSA’s approval and was in breach of its duty of care.
20.83 TV Media also appealed on the grounds of novus actus interveniens
and contributory negligence. It asserted that de Cruz was contributorily
negligent in that she ought to have stopped taking the pills or seen a doctor
when she experienced chills, pains, insomnia and palpitations. Following
Muirhead v Industrial Tank Specialities Ltd [1986] QB 507, the court held that
it is only where the act or omission is of such a nature as to constitute a
wholly independent cause of the damage that the intervening conduct may
be termed a novus actus interveniens. De Cruz’s omission to seek medical aid
was not so “wholly unreasonable” as to constitute a novus actus interveniens.
The Court of Appeal also referred to its decision in Rajendran a/l Palany v
Dril-Quip Asia Pacific Pte Ltd [2001] 3 SLR 274 where it held that if the
defence of contributory negligence was not pleaded below or if the facts
pleaded were not sufficiently clear that the defendant was alleging the
plaintiff ’s partial responsibility for the injuries giving rise to the action, the
court below would not be entitled to make a finding of contributory
negligence. In the present case, this ground of appeal was disposed of as the
defence had not been pleaded before the High Court.
20.84 The appeal by Liu against the trial judge’s holding that he was
personally liable for authorising, directing and/or procuring Health Biz’s
negligent acts was brought on several grounds. The first ground was that it
was improper for the judge to lift Health Biz’s corporate veil when this was
not pleaded. The Court of Appeal rejected this argument and was of the view
that the claim against Liu for authorising, directing and/or procuring was
essentially a claim asking the court to lift the corporate veil. Next, Liu argued
that the phrase “authorising, directing and/or procuring” was directed at a
situation where the wrong could be isolated as a positive, clear deliberate act.
In contrast, both his negligence and that of Health Biz lay in omissions which
formed a negligent course of conduct. The Court of Appeal also rejected this
argument. Referring to a series of English cases, the court was of the view
that it was not apparent that a valid distinction could be drawn between acts
of commission and omission. In any event, the claim against Health Biz was
couched in positive terms, ie, it was accused of importing, distributing
and/or selling pills which contained poisonous and/or harmful substances.
The Court of Appeal agreed with the trial judge’s findings that Liu had
absolute control of Health Biz and his involvement in Health Biz’s negligence
was not only great but total. The inescapable conclusion from the evidence
was that he was the only person in the position to direct, authorise and/or
procure Health Biz’s negligence.
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20.85 The Court of Appeal’s attention was drawn to the cases British
Thomson-Houston Co Ltd v Sterling Accessories Ltd [1924] 2 Ch 33 and
Fairline Shipping Corp v Adamson [1975] QB 180 for the proposition that
where a director is to be fixed with liability, his agency must be established
substantially and cannot be inferred from his office as director and his
control of the company shares. The court noted that the issue of a director’s
liability for his company’s torts involved the consideration of difficult policy
questions. The court had to respect the principle that a company was a
separate entity on one hand, and on the other hand not allow directors to
escape personal liability merely because they committed the torts in the
course of carrying out their duties as directors. The conclusion depends on
the factual situation at hand. The court must look at the level of his
involvement to determine the extent to which he is the company’s alter ego:
Gabriel Peter & Partners v Wee Chong Jin [1998] 1 SLR 374. In this case, the
very exceptional circumstances of the case justified a lifting of Health Biz’s
corporate veil.
20.86 In relation to the appeal on quantum of damages, the Court of
Appeal reiterated the principle that an appellate court will only interfere with
an award when it is convinced either that the trial judge acted upon some
wrong principle of law or that the amount awarded was so manifestly high or
low as to have been a wholly erroneous estimate of the damage: Peh Diana v
Tan Miang Lee [1991] SLR 341 at 345, [17]. The appellants cited several
awards made to quadriplegics in order to buttress their claim that the award
of $250,000 was too high. The Court of Appeal agreed with the appellants.
While noting that the sufferings of liver transplant patients and quadriplegics
cannot be measured or quantified “apple to apple”, a strong case can be made
that the travails of quadriplegics exceed those of liver transplant patients.
After referring to the awards cited by the appellants, the Court of Appeal
reduced the award for pain and suffering and loss of amenities to $150,000.
20.87 The Court of Appeal also agreed with the appellants that the
multiplier of 34 years in relation to de Cruz’s medical expenses was too high.
After considering several High Court decisions, the court held that,
considering de Cruz was 27 years old when her liver failed, a multiplier of 17
years was more than appropriate.
20.88 As the appellants succeeded on the issue of quantum and not on the
larger issue of liability, the court ordered that de Cruz should have 60% of
the costs of the appeals.
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Recovery for pure economic loss: Relationship between actions in contract
and tort
20.89 In Man B&W Diesel SE Asia Pte Ltd v PT Bumi International Tankers
[2004] 2 SLR 300, cross appeals were heard by the Court of Appeal arising
from the High Court’s decision in PT Bumi International Tankers v Man
B&W S E Asia Pte Ltd [2003] 3 SLR 239. To summarise briefly, PT Bumi
International Tankers (“Bumi”) was the owner of a vessel which was built by
Malaysian Shipyard and Engineering Sdn Bhd (“MSE”) pursuant to a
contract between Bumi and MSE. The engine for the vessel was supplied to
MSE by Man B&W Diesel S E Asia Pte Ltd (“MBS”). There was no contract
between Bumi and MBS for the supply of the engine. However, Bumi was
aware that MBS had been commissioned by MSE to do the job. When the
engine of the vessel subsequently encountered problems and eventually
broke down, the issue was whether Bumi could maintain a tortious action
against MBS for economic loss in the absence of a contractual relationship,
when Bumi had in place a contract with MSE for the entire vessel.
20.90 At first instance, Judith Prakash J, applying the cases of RSP
Architects Planners & Engineers v Ocean Front Pte Ltd [1996] 1 SLR 113
(“Ocean Front”) and RSP Architects Planners & Engineers v MCST Plan
No 1075 [1999] 2 SLR 449, held that there was a relationship of sufficient
proximity between Bumi and MBS giving rise to a duty of care on the part of
MBS to exercise reasonable care and skill in the design and manufacture of
the engine so as to support a tortious action by Bumi against MBS in the
absence of a contractual relationship. The court held that although the
contract between Bumi and MSE operated to prevent any contractual
relationship from arising between Bumi and MBS, it did not expressly
exclude liability in tort.
20.91 Significantly, the Court of Appeal departed from the approach of the
High Court. On the duty of care issue, the Court of Appeal took pains to
limit the principles in the Ocean Front case. It pointed out that the court in
Ocean Front had sought to emphasise the special position of the management
corporation. It was in the special factual matrix of that case, having regard to
the manner in which the management corporation came into being, that a
remedy in tort was made available to the management corporation who
would otherwise have been without a remedy. The Court of Appeal
concluded (at [44]) that the relationship between the developer and the
management corporation in the Ocean Front case was “as close to a contract
as could reasonably be” and that Ocean Front should therefore be treated as
“a special case in the context of the statutory scheme of things under the
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Strata Act or at least be confined to defects in buildings”. It emphasised that
extreme caution should be exercised in extending the decision in Ocean Front
to new situations, particularly to a situation which was essentially
contractual.
20.92 At the same time, the Court of Appeal chose not to lay down any
general pronouncement on the issue of recoverability for pure economic loss
in respect of chattels, holding at [47] that “it would be unwise to generalise”.
Instead, the court focused on the particular facts of the case, emphasising
that Bumi could clearly have entered into a direct contractual arrangement
with MBS with regard to the engine for the vessel, but it had chosen instead
to contract with MSE to build the complete vessel, together with the engine,
and it had made MSE solely responsible for any defect that could arise in
respect of the vessel, including the engine. On the facts, the court held that it
was Bumi’s deliberate choice to distance itself from MBS, and to look to MSE
for redress should the vessel, including its engine, fail to meet specifications.
There was therefore no evidence that Bumi had relied on the promise of
MBS to deliver a satisfactory engine. Such a duty of care would be owed by
MBS to MSE under their sub-contract, but no similar duty was owed to
Bumi.
20.93 As to whether Bumi could be accorded a separate remedy in tort
against MBS, the Court of Appeal differed from the approach of the High
Court. The High Court had taken the view that the tortious action was
allowed because it had not been expressly excluded by the contract, and
therefore Bumi should not be deprived of the availability of such a claim.
However the Court of Appeal held that the correct question to be asked in
this case was not whether there was any justification for depriving Bumi of
the remedy in tort, but whether there was any compelling reason to deem it
fair to extend such a remedy to Bumi, which would be in conflict with Bumi’s
express contractual commitment. In adopting this stance, the Court of
Appeal appears to have been influenced by the fact that Bumi seemed to have
a superior bargaining position. The court was therefore loath to help Bumi
improve its commercial bargain, which the court felt would be the case if
Bumi was allowed to pursue a tortious claim against MBS.
20.94
The Court of Appeal therefore dismissed Bumi’s claim against MBS.
Solicitors
20.95 In Lie Hendri Rusli v Wong Tan & Molly Lim [2004] 4 SLR 594, the
plaintiff was the principal director and shareholder of PTB, an Indonesian
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company which had a close business relationship with the Alps Group, a
group of related electronics distributors in Singapore which included Alps
Investments Pte Ltd (“Alps”). In 1999, PTB’s business met with difficulties
and the Alps Group pressed PTB to settle its debts. It was proposed that the
plaintiff mortgage his apartment to Malayan Banking Berhad (“MB”) for
Alps’ benefit. The Alps Group would then also deal with PTB’s debts
benignly. The plaintiff agreed. On the suggestion of an officer in the Alps
Group, the plaintiff agreed to engage the defendant firm of solicitors to act
for him. The plaintiff was aware that the defendant also represented the Alps
Group. The defendant also received instructions from MB to act for it in the
restructured facility agreement with Alps. The defendant prepared the
necessary documents to secure the proposed mortgage of the apartment
which included an “all moneys clause” making the plaintiff personally liable
for all facilities extended by MB to Alps. In 2002, the Alps Group met with
financial difficulties. Eventually the apartment was discharged by way of a
partial discharge of mortgage while the personal covenant remained. MB
later commenced action against several parties including the plaintiff, who
settled the claim for $500,000.
20.96 The plaintiff commenced the action against the defendant alleging
that he had suffered a loss of $500,000 as a result of the negligence of a
partner of the defendant in failing to explain to him the consequences of
signing the mortgage documents, as he had unwittingly become a surety of
MB’s facilities to Alps. The court’s views on issues of adequate disclosure,
conflict of interest in acting for multiple parties and a conveyancer’s
responsibilities are instructive.
20.97 The court found the defendant’s partner to be a cautious and
experienced solicitor who had orally conveyed to the plaintiff the purport
and intent of the mortgage documents at a meeting with the plaintiff. With
regards to the strong reliance by the plaintiff that no attendance note was
kept by the defendant, the court held that while there was much to be said in
favour of the practice of maintaining accurate attendance notes, it was quite
another matter to assert that the absence of an attendance note was
tantamount to negligence or robbed a solicitor’s testimony of all significance.
While the legal profession must seek to jealously maintain high standards,
high standards are not synonymous with impractical standards. A solicitor is
not an underwriter for a client’s business or the commercial wisdom of a
transaction. The scope of a solicitor’s duty in any particular case depends on
his retainer. The real issue in any given case is whether the court views the
standards applied and skills discharged by the particular solicitor as
consistent with the legal profession’s presumed responsibilities to its clients.
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A solicitor’s role, in the absence of specific instructions and special
circumstances, is plainly to give legal as opposed to commercial or financial
advice.
20.98 Solicitors should not act in a matter where there is or will be a real
risk of potential conflict of interests or actual conflict between clients in a
transaction. In the final analysis, it is the integrity and common sense of the
solicitor that will provide the answer as to whether to proceed in any
proposed transaction – a balance between principle and expediency must be
struck. Following the Privy Council decision of Clark Boyce v Mouat [1994]
1 AC 428 at 435, the court held that there is no general rule of law that a
solicitor should never act for both parties in a transaction. However the
standard of skill and care expected of a solicitor acting for multiple parties
vis-à-vis each client must be at least equivalent to that of the solicitor acting
for a single client. This is also reflected in r 25(b) of the Legal Profession
(Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed). A solicitor who
objectively speaking reaches the crossroads where he has difficulty in
advising and dealing with multiple clients competently and evenly ought to
discharge himself. Alternatively, in some cases he must seek express consent,
underpinned by full disclosure, from parties involved and/or when there is
reasonable doubt, to at least ask the client to seek independent advice.
20.99 It is not uncommon for a solicitor in Singapore to act for more than
one party in a conveyancing transaction. In such a situation, the solicitor is
not invariably in a position of conflict. The parties share a commonality of
interests in completing the transaction. The conflict arises if and when a
solicitor cannot fairly and objectively discharge his responsibility to protect
each client’s interest with the same competence and skill that a solicitor
acting for a single party would demonstrate. There is also a public interest
element in allowing multiple representation in certain matters where the
conflict often exists more in principle than in fact. Such a practice assists in
lowering transactional legal costs in standard matters. Indeed r 28 of the
Legal Profession (Professional Conduct) Rules appears to expressly sanction
the acceptance of multiple instructions. However, solicitors ought to candidly
disclose at the outset to all their clients precisely whom they are acting for.
20.100 The court in Lie Hendri Rusli v Wong Tan & Molly Lim followed the
judgment of Millett LJ in Bristol and West Building Society v Mothew
[1998] Ch 1 at 11 where he summarised the onus of a claimant alleging
negligence against his solicitor:
Where a client sues his solicitor for having negligently failed to give him
proper advice, he must show what advice should have been given and (on a
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balance of probabilities) that if such advice had been given he would not
have entered into the relevant transaction or would not have entered into it
on the terms he did.
...
Where, however, a client sues his solicitor for having negligently given him
incorrect advice or for having negligently given him incorrect information,
the position appears to be different. In such a case it is sufficient for the
plaintiff to prove that he relied on the advice or information, that is to say
that he would not have acted as he did if he had not been given such advice
or information.
20.101 The court found that on the facts that the defendant had informed
the plaintiff that he was undertaking personal liability. The defendant was
not expected or required to proffer any advice on the wisdom of the
transaction. Accordingly the action was dismissed with costs. The court also
took the opportunity to remind the legal profession to: (a) document the
nature and scope of retainers with clients; (b) maintain reliable minutes of
discussions with clients; and (c) carefully consider whether to document
through correspondence significant advice rendered.
20.102 In Chew Kim Kee v Kertar and Co [2004] SGHC 95, the action was
brought by the plaintiff against her former solicitors for alleged negligence in
failing to advise on an appeal against an order made on 21 September 1999
pertaining to the division of matrimonial assets, and for not filing a notice of
appeal contrary to the plaintiff ’s instructions. The court found that on
22 September 1999, Kertar (the sole proprietor of the defendant firm) and
the plaintiff had a telephone conversation during which various scurrilous
allegations were made against the lawyer handling the matter. The plaintiff
was informed that she could engage another firm to act for her if she did not
want the defendant to act on her behalf. On hearing this, the plaintiff
promptly informed Kertar that she no longer wanted him to be her lawyer.
20.103 The deadline for the appeal was 5 October 1999. On 5 October, the
defendant wrote to the plaintiff informing her that the firm would be
applying to court to be discharged as her solicitor on record. No application
for discharge was filed as the plaintiff appointed a new firm of solicitors.
They notified the defendant on 19 October 1999 that they had taken over the
conduct of the matter. A notice of change of solicitors was filed and served
on 22 November 1999.
20.104 The court found that the relationship of solicitor and client had
come to an end on 22 September 1999. This brought to a conclusion the
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contract of retainer and any co-extensive duty of care in tort. An argument
raised by the plaintiff that the retainer had not been terminated as there was
no order to discharge the firm as solicitors on record was rejected by the
court. The court held, following Gamlen Chemical Co (UK) Ltd v Rochem Ltd
[1980] 1 WLR 614 at 623, that O 64 r 5(1) of the Rules of Court (Cap 322,
R 5, 1997 Rev Ed) did not deal with the relationship between the solicitor on
record and his client but between other parties to the litigation and the client.
The order was dealing only with matters of procedure. Order 64 r 5(1)
provides that “[the solicitor] shall, subject to Rules 1 to 4, be considered the
solicitor of the party till the final conclusion of the cause or matter, whether
in the Court or the Court of Appeal”. The plaintiff ’s claim was dismissed
with costs.