IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE [2018] SGHC 272
![IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE [2018] SGHC 272](/img2/39/judgment-dca-16-of-2018-26-12-18-final-pdf.webp)
IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE[2018] SGHC 272District Court Appeal No 16 of 2018Between(1) Haw Wan Sin, David(2) Yee Ai Moi, Cindy AppellantsAnd(1) Sim Tee Meng(2) Seah Beng Hoon RespondentsJUDGMENT[Tort] – [Misrepresentation] – [Negligent misrepresentation][Tort] – [Negligence] – [Breach of duty]
This judgment is subject to final editorial corrections approved by thecourt and/or redaction pursuant to the publisher’s duty in compliancewith the law, for publication in LawNet and/or the Singapore LawReports.Haw Wan Sin David and anothervSim Tee Meng and another[2018] SGHC 272High Court — District Court Appeal No 16 of 2018Lai Siu Chiu SJ10, 12 October 201817 December 2018Judgment reserved.Lai Siu Chiu SJ:1This appeal arose from the decision of the learned District Judge inDistrict Court Suit No 3237 of 2015 (“the Suit”). She gave her written groundsin Haw Wan Sin David and Yee Ai Moi Cindy v Faber Property Pte Ltd and SimTee Meng and another [2018] SGDC 143 (“the GD”). At the heart of this appeallies the following issue: under what circumstances can an agent be heldpersonally liable for representations made on behalf of his or her principal?The factsThe parties2The appellants are Haw Wan Sin, David (“David Haw”) and Yee AiMoi, Cindy (“Cindy Yee”). They are husband and wife, and are both registeredproperty agents.1 They claimed against three parties for damages resulting from1GD at [66].
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272misrepresentation: Sim Tee Meng (“Jimmy Sim”), Seah Beng Hoon (“BelleSeah”), and Faber Property Pte Ltd (“Faber”). The District Judge allowed theappellants’ claim against Faber, but dismissed the claims against Jimmy Simand Belle Seah. The appellants appealed against the decision in respect ofJimmy Sim and Belle Seah, who are the respondents in this appeal.3Faber is a licensed estate agency. At all material times, Jimmy Sim wasthe Key Executive Officer (“KEO”), sole shareholder and director of Faber.Belle Seah was an Associate Director of Faber, and a licensed real estatesalesperson.4The appellants were retail investors who entered into agreements with aNew Zealand company called Albany Heights Villas Limited (“the Developer”)for the “First Right of Refusal” (“FRR”) to purchase units in a residentialhousing project in New Zealand (“the Project”). Faber was involved in themarketing activities in Singapore in respect of investment in the Project.Unfortunately, the Developer went into liquidation due to insolvency and itappears that the persons behind the various New Zealand companies that cameup with the FRR scheme had siphoned off substantial sums paid by purchaserssuch as the appellants. In the Suit, the appellants sought to recover the sums ofS 15,000 and US 142,656.76 which they had paid towards obtaining the FRR.2Background facts5Much of the background facts are as set out in the GD and were notcontested on appeal. The chronology of events leading up to the making of thealleged misrepresentations is as follows:32GD at [1]-[2].2
Haw Wan Sin David Haw v Sim Tee Meng(a)[2018] SGHC 272On 14 December 2011, Belle Seah met with a director of theDeveloper, Christoper Cook (“Cook”). Cook sent Belle Seah aproposal which was subsequently brought to Jimmy Sim’sattention. Faber then entered into an agreement with theDeveloper and Hunter Sterling & Company Pte Ltd (“HunterSterling”) on 7 January 2012 to market the Project.4 HunterSterling was the Developer’s Singapore entity.(b)On or around 12 January 2012, advertisements were placed inlocal newspapers which led to the appellants attending amarketing event at The St Regis Hotel regarding the FRRinvestment in the Project. The details of these advertisements areset out in the GD at [16] and [17], but are not material for presentpurposes. The marketing event was later held on 14 January2012.(c)Prior to the marketing event, the Developer engaged WilliamWai (“Wai”) to conduct a training session with Faber’spersonnel in relation to selling the FRR investment in theProject. Wai was at the time a business development manager ofa Hong Kong real estate agency that had previously marketed theProject in Hong Kong.5(d)On 16 January 2012, the appellants attended at the office ofFaber, and entered into various agreements in relation to threeunits in the Project. The following documents were signed inrespect of each unit (collectively, “the FRR Agreements”):3GD at [3]-[4].4GD at [13].5GD at [14].3
Haw Wan Sin David Haw v Sim Tee Meng(i)[2018] SGHC 272A Reservation Form on the letterhead of Faber asrepresentative of the Developer, and signed by BelleSeah as a representative of Faber;(ii)An agreement between the Developer and the appellantstitled “First Right of Refusal” on the letterhead of ”); and(iii)An agreement between the Developer and the appellantstitled “On-Sale Agreement”, dated 16 January 2012.(e)The appellants later made the following payments:(i)S 15,000 by way of a cheque dated 18 January 2012made out to “Hunter Sterling & Company Pte Ltd”( 5,000 being the reservation deposit for each of the threeunits); and(ii)US 142,656.76 by way of a cheque dated 31 January2012 made out to “Hunter Sterling & Company ClientAccount (Albany Heights Villas Ltd)” as the balance ofthe FRR price for the three units.6It later turned out that the Developer had neither the title nor the resourceconsent to develop the relevant plot of land that the Project was supposed to bedeveloped on. Neither Belle Seah nor Jimmy Sim knew that this was the case.66GD at [5].4
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272The alleged misrepresentations7The appellants alleged that Belle Seah made the following threemisrepresentations at the marketing event on 14 January 2012:7(a)The owners of the Developers had a good track record ofsuccessful developments (“Representation 1”);(b)Phase 1 of the Project was fully sold and construction esentation 2”); and(c)Investment moneys paid by any investor would be held in a trustaccount by a New Zealand firm of lawyers, which was as safe asa Singapore lawyer’s client account, and that the Developerwould only have access to the moneys according to the progressof construction (“Representation 3”).8As against Jimmy Sim, the appellants alleged that the followingmisrepresentations were made when they attended at Faber’s office on 16January 2012:8(a)The representations made by Belle Seah at the marketing eventwere true and correct (“Representation 4”);(b)The respondents and Faber had performed checks on theownership and legality of the Project in accordance with thestrict requirements of the Council of Estate Agencies (“theCEA”) (“Representation 5”); and7GD at [6].8GD at [6].5
Haw Wan Sin David Haw v Sim Tee Meng(c)[2018] SGHC 272The respondents and Faber had done all relevant and necessarydue diligence checks on the Developer, and details such as titleto the Project and the building approval for marketing, and thateverything was in order (“Representation 6”).The District Judge’s findings and decision9At the outset, the learned District Judge took the view thatRepresentations 5 and 6 were effectively representations that due diligencechecks had been done. She noted that the obligation to undertake due diligencechecks is “implicit within the duty of care”. Thus, in her view, it was notnecessary for her to make a specific finding as to whether each of the tworepresentations were made to the appellants. Nevertheless, she stated that theundisputed evidence of Jimmy Sim was that he did make the representations tothe appellants that due diligence checks had been conducted by Faber. However,he maintained that the details of the due diligence conducted were not includedin the representation.910In respect of Faber, the learned District Judge held that Faber owed aduty of care to the appellants, which it breached:(a)The advertisements placed in the newspapers made it clear thatFaber was involved in the Project, albeit with other entities suchas Hunter Sterling and the Developer. It was therefore not opento Faber to deny liability simply on the basis that they were notthe entity that placed the advertisements in the newspapers.Consequently, a comprehensive analysis of all relevant facts andcircumstances had to be taken to determine whether a duty ofcare was owed by Faber.109GD at [7].6
Haw Wan Sin David Haw v Sim Tee Meng(b)[2018] SGHC 272It was undisputed that Faber’s agents and salespersons werepresent at the marketing event.11 There was a system wherebypotential investors who turned up at the marketing event wereapproached by Faber’s representatives to market investment inthe Project to them, such as by walking visitors through theinformation on exhibition boards that were put up.12(c)It was fair to infer that because there were representatives fromvarious entities present at the marketing event, the differentrepresentatives would have worn name tags that would statewhich entity each person was representing. Consequently,representations made by Faber’s representatives would havebeen considered representations made on behalf of Faber.13(d)Faber ought to have known that the appellants would sufferdamage from its carelessness.14 This was because it was theinstrument through which the masterminds behind the Projectused to reach out to local investors in Singapore. It was Faberthat brought the Project into Singapore to be marketed, and itwas Faber’s salespersons who distributed the Project’s brochuresat the exhibition.15(e)There was sufficient legal proximity between the appellants andFaber. It was clearly foreseeable that potential investors wouldrely on representations made by Faber. There was also an10GD at [18].11GD at [21].12GD at [22].13GD at [23].14GD at [27].15GD at [26].7
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272assumption of responsibility by Faber to exercise care to avoidloss or damage to investors, and there was reliance by suchinvestors that Faber had exercised care in presenting informationabout the Project to them.16(f)There were no policy considerations that militated against theimposition of a duty of care on Faber.17(g)The evidence showed that Belle Seah had attended to theappellants during the marketing event. It was highly likely thatRepresentations 1 and 2 were made as part of the “sales talk”between Belle Seah and the appellants. The training notesshowed that Belle Seah, Jimmy Sim, and all of Faber’s agentswere in fact specifically trained by Wai to make representationsalong the lines of Representations 1 to 3. It was also Wai’sevidence that many potential investors were asking about howthe monies would be handled, and he expected that Faber’sagents would reply that the money was held in a trust account asthis was what he had trained them to say.18 Consequently, thelearned District Judge found that Representations 1 to 3 weremade on behalf of Faber.19(h)On the issue of whether Faber had breached its duty of care, itwas necessary to examine the actions of the persons runningFaber, namely Jimmy Sim as KEO. The learned District Judgethus adopted the standard of a “reasonably competent and16GD at [27]-[29].17GD at [29].18GD at [33].19GD at [35].8
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272prudent KEO”.20 Faber, through Jimmy Sim, owed an obligationto investors to obtain relevant accurate facts about the Projectbefore Faber embarked on selling the Project to the public. Thescope of due diligence work that Faber was obliged to do wouldinclude taking reasonable steps to check that the underlying factsas stated in the representations regarding the Project were true.21(i)Faber had fallen short of the standard of care in the followingrespects:(i)Faber had failed to check that the Developer had title tothe land on which the Project was to be developed. Theland title document sent to Jimmy Sim was for anotherplot of land, for another venture owned by anothercompany, and not the land the Project was purporting todevelop.22 Jimmy Sim had understood that he needed toverify the land title information, as indicated from thefact that he had expressly asked for the information, buthe did not query further about the difference in the plotof land as reflected in the land title document.23(ii)Faber had failed to check that planning consent had beenobtained for the Project land. In response to Jimmy Sim’srequest for “Plan approval”, he was given the Planner’sReport and a Consent Order. However, both documentsdid not relate to the land on which the Project was to be20GD at [37].21GD at [38].22GD at [44].23GD at [46].9
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272developed. The Planner’s Report instead related to aseparate plot of land, and was an application by an entityother than the Developer.24 In fact, it expressly stated thatwhile the Project was initially included in the applicationfor resource consent, it had “dropped out” of theapplication. Jimmy Sim knew that this meant that noconsent had been sought in relation to the site that Faberwas supposed to market.25(iii)Faber had failed to check that investors’ monies paid intothe trust account would be secure. Faber did not take anysteps to verify the truth of what Cook had said about thetrust account. In fact, the trust arrangement was nowhereto be found in any of the documents that Cook had sentto Jimmy Sim, and a “Sample S&P” that was sent in factmade clear that there was no trust arrangement.26(iv)Faber had failed to verify the track record of theDeveloper as represented. This representation was inreality completely untrue. There was however not a shredof evidence to show that Faber took any steps to verifythis representation.27(v)On the basis of these failures, Faber had breached its dutyof care owed to the appellants by making Representations1-3, 5 and 6. It followed that Faber was liable for the loss24GD at [48].25GD at [49].26GD at [52]-[53].27GD at [55].10
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272that the appellants had suffered by relying on thoserepresentations.28(j)Faber’s defence that the appellants had not relied on therepresentations made but had been drawn to the FRR by virtueof the returns promised was rejected. It was the sum total of allthe representations made that induced the appellants to enter intothe FRR Agreements.2911These findings are not disputed given that Faber is not a party to thisappeal. I have set them out in some detail because, as will be seen, they arehighly relevant to whether Jimmy Sim had breached any duty of care owed tothe appellants.12In respect of Jimmy Sim, the learned District Judge held that Jimmy Simwas not liable for any loss suffered by the appellants in respect of therepresentations made to them. She reasoned as follows:(a)It was undisputed that the only time that Jimmy Sim metappellants was when they had visited Faber’s office to sign theFRR Agreements. The purpose behind the meeting was forCindy Yee to speak to Jimmy Sim about the possibility ofreceiving a co-broking commission if she were to recommendinvestors to invest in the scheme (as noted above the appellantsare both registered property agents).30(b)The appellants’ evidence on what transpired at that meeting was“rather inconsistent”, and their version of events was likely28GD at [58] and [61].29GD at [59].30GD at [66].11
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272concocted as an afterthought so as to pin personal liability onJimmy Sim.31 Instead, it was more likely than not that theconversation between the appellants and Jimmy Sim had been ashort one, the main purpose of which was for the appellants tofind out about the possibility of co-broking. In this regard, thelearned District Judge accepted Jimmy Sim’s evidence that,when asked whether due diligence checks had been performed,he responded that Faber had done due diligence checks and therewas no particularisation of the extra checks conducted. It wasunlikely that the appellants had asked Jimmy Sim to confirm thatthe representations made by Belle Seah were true.32 Therepresentation that due diligence had been conducted by Faber isdifferent from the alleged representations (ie, Representations to6) on which the appellants had premised their case againstJimmy Sim.33(c)The learned District Judge therefore turned to consider whetherthere was a duty of care that arose in respect of the (singular)representation found to have been made by Jimmy Sim, ie, thatdue diligence had been done. This representation was made onbehalf of Faber. It was obvious that the parties were not talkingabout due diligence by Jimmy Sim because there was norelationship between Jimmy Sim and the appellants. In makingthese representations, he was making them in his capacity asdirector of Faber, and not in his personal capacity. Similarly, theappellants had relied on these representations as coming from31GD at [70] and [74].32GD at [75].33GD at [76].12
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272Faber, and not from Jimmy Sim as an individual.34 Consequently,the nexus between Jimmy Sim and the appellants was “tootenuous” to impose a tortious duty of care on Jimmy Sim. In theview of the learned District Judge, if there were to be a tortiousduty of care on the part of Jimmy Sim, that would result in theimposition of a similar duty of care on any director involved inany commercial transaction. This was untenable as a director ofa company cannot be held personally liable for all the statementsmade on behalf of a company in the course of a company’sbusiness. In any event, even if there were sufficient proximitybetween Jimmy Sim and the appellants, policy considerationswould result in such a duty being negated. Liability for negligentmisstatements made in the course of the company’s businessattaches only to the company, and not to the director of thecompany.35(d)It followed that Jimmy Sim was not liable to the appellants inmaking the representation that Faber had conducted duediligence checks.3613Finally, in respect of Belle Seah, the learned District Judge held that shewas not liable to the appellants. Her reasons were as follows:(a)In all likelihood, the exhibition boards put up at the marketingevent displayed information akin to Representations 1 to 3, andBelle Seah walked through the exhibition boards with the34GD at [77].35GD at [80].36GD at [81].13
Haw Wan Sin David Haw v Sim Tee Meng[2018] SGHC 272appellants.37 She attended to the appellants, and madeRepresentations 1 to 3.38(b)However, the representations were made at a marketing eventorganised by Faber and the Developer. It would be plain to theappellants and anyone that Belle Seah, as an individual, was notthe organiser behind the marketing event. Thus, when Belle Seahrepeated those representations, it would have been obvious thatshe was making those representations on behalf of the entitiesbehind the marketing event. She was “merely a mouthpiece”,and her representations merely corroborated those made by theentities behind the marketing event.39(c)Belle Seah had not acted as an “independent contractor” vis-àvis Faber. There was evidence that it is the norm for associatesfrom real estate agencies to be involved in the marketing ofproperty projects for developers. Associates would be expectedto make representations regarding the project to the public, andthose representations are those they would have been told tomake either on behalf of the real estate agency, or on behalf ofthe developer. When it comes to representing that due diligencehad been done, the property associates would generally trust thatthe company “had done it”. The learned District Judge thereforefound that, in such scenarios, property associates do not assumepersonal responsibility for ensuring due diligence. Except wherethe property associate has gone outside the scope of instructionsto make representations of his or her own accord, such
a Hong Kong real estate agency that had previously marketed the Project in Hong Kong.5 (d) On 16 January 2012, the appellants attended at the office of Faber, and entered into various agreements in relation to three units in the Project. The following documents were signed in respect of each unit (collectively, “the FRR Agreements”):
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