Tort Law

Date01 December 2010
Published date01 December 2010

Conversion

23.1 The three cases on conversion relate to the following issues: the distinction between the tort of conversion and the choice of remedy for purposes of determining the appropriate limitation period, the underlying rationale for conversion that is based essentially on possession of a chattel and finally, the question of whether a temporary certificate of entitlement for the purchase of a car in Singapore may be converted.

23.2 Chip Hup Hup Kee Construction Pte Ltd v Yeow Chern Lean [2010] 3 SLR 213 concerned primarily the tort of conversion and the question of limitation periods. The managing director of the plaintiff company had originally issued cheques to its manager who in turn handed the cheques to the defendant. The defendant applied the proceeds from the cheques to purchase and construct a house. In Suit No 136 of 2007, the managing director sued the defendant for damages for conversion, moneys had and received and a declaration that the property was held on trust for the managing director. Lai Siu Chiu J in Neo Kok Eng v Yeow Chern Lean [2008] SGHC 151 decided that the defendant was liable to the managing director for, inter alia, the sum of the cheques. The learned judge held that the managing director“s alternative claim in money had and received was not a claim in tort or contract and that s 6(1)(a) of the Limitation Act (Cap 163, 1996 Rev Ed) (‘Limitation Act’) did not apply. Section 6(1)(a) reads as follows:

6.- (1) Subject to this Act, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued:

(a) actions founded on a contract or on tort;

23.3 On appeal, however, the Court of Appeal in Yeow Chern Lean v Neo Kok Eng [2009] 3 SLR(R) 1131 held that the managing director had

no locus standi to bring the claim as he had already relinquished title to the cheques in favour of the plaintiff company.

23.4 The plaintiff company subsequently sued for moneys had and received and a declaration that the property was held by the defendant on trust for the plaintiff company. In the instant case, the defendant sought to strike out the claim on the grounds of the expiry of the limitation period pursuant to s 6(1)(a) of the Limitation Act.

23.5 Notwithstanding the claim for moneys had and received in the present case, Andrew Ang J observed that the claim rested on establishing the alleged conversion of cheques by the defendant: Chip Hup Hup Kee Construction Pte Ltd v Yeow Chern Lean [2010] 3 SLR 213 at [21] and [22]. Following the case of United Australia, Ltd v Barclays Bank, Ltd [1941] AC 1, which was adopted by the Court of Appeal in Yeow Chern Lean v Neo Kok Eng [2009] 3 SLR(R) 1131 at [52], the claim for moneys had and received was merely a choice of remedy in response to a wrong (ie, conversion): Chip Hup Hup Kee Construction Pte Ltd v Yeow Chern Lean [2010] 3 SLR 213 at [25]. Hence, the action was held to be one ‘founded’ on tort. Section 6(1)(a) of the Limitation Act applied and the action was time-barred.

23.6 The second case, Ang Sin Hock v Khoo Eng Lim [2010] 3 SLR 179, involved conversion, fraudulent misrepresentation, breach of contract and the limitation period. The appellant consigned a parcel of gemset jewellery which he owned to the respondent and one Singh for sale. The respondent and Singh were in business as traders of gemstones and precious metals. However, the appellant did not receive the sale proceeds in accordance with the consignment contract. The respondent requested the appellant to prepare an invoice to document the payment of a sum of money representing the appellant“s share of the sale proceeds for the jewellery. Despite providing the invoice, the appellant was still unable to recover the jewellery. The appellant thus lodged a police report accusing the respondent and Singh of failing to pay him the sale proceeds. Thereupon, they provided the appellant with an undertaking to arrange for payment. Again, the appellant did not receive any money. Singh was later arrested by the police, charged with dishonest appropriation of property under s 403 of the Penal Code (Cap 224, 1985 Rev Ed) and subsequently convicted and sentenced. When the appellant instructed his lawyers to send a letter of demand to the respondent, the respondent denied liability, contending that the jewellery was consigned to Singh and that he had merely played the role of an intermediary.

23.7 The appellant sued in contract, conversion and fraudulent misrepresentation but could not establish any of the causes of action in the High Court (Ang Sin Hock v Khoo Eng Lim [2009] 4 SLR(R) 549). On appeal, the appellant again failed to prove conversion and fraudulent

misrepresentation (see paras 23.8-23.10). The appellant“s claim based on the consignment contract was also time-barred. However, the Court of Appeal decided that there was a breach of a fresh contract between the respondent and the appellant in which the respondent promised to make payment by a specified date and the cause of action based on this contract was commenced by the appellant within the limitation period.

The appeal was thus allowed.

23.8 With respect to the claim in conversion, the Court of Appeal found that the sale of the jewellery by Singh was authorised by the appellant. The appellant had also waived the claim by electing to proceed against the respondent pursuant to the monetary claim. The Court of Appeal explained that the claim for conversion was inconsistent with the claim for sale proceeds under the consignment contract. A claim in conversion is based on the claimant“s immediate right to possession: Ang Sin Hock v Khoo Eng Lim [2010] 3 SLR 179 at [31]. When the appellant elected to claim for the sale proceeds (as evidenced by the invoice and his subsequent conduct), his right to a claim in conversion was extinguished.

23.9 The cause of action in fraudulent misrepresentation also failed. There were two sets of alleged misrepresentations. First, the appellant alleged that the respondent had fraudulently made the representations to induce the appellant to hand over jewellery to Singh. There was no evidence of such a misrepresentation. Secondly, the appellant alleged that the respondent made representations that the jewellery had been sold and that proceeds would be remitted to the appellant. The representation that the jewellery had been sold was an unequivocal statement of fact. The other statement that the sale proceeds would be remitted back to the appellant was a statement of intention, which would not be actionable unless the appellant can show that the respondent did not hold the view in good faith: Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483, per Bowen LJ. On the facts, the respondent made the latter representations with serious doubts about their truthfulness or was reckless as to whether or not they were true. They were at least negligent misrepresentations: Ang Sin Hock v Khoo Eng Lim [2010] 3 SLR 179 at [43].

23.10 However, there was no evidence that the appellant relied upon the representations to his detriment. The appellant had already lodged police reports against the respondent and Singh before the representations were made. Further, the argument that the appellant forbore to sue the respondent must be rejected as the appellant already knew, at the time of Singh“s arrest and charge, that the respondent“s representations were untrue. Even if there was such forbearance to sue, it did not cause the appellant any loss as the appellant still had time to bring the claim against the respondent.

23.11 The third case is Kenso Leasing Pte Ltd v Hoo Hui Seng [2010] SGMC 8 (‘Kenso Leasing’). This involved a claim for conversion arising from the defendant“s use of a temporary certificate of entitlement (‘COE’). The plaintiff sold parallel-imported cars and financed the trading of motor vehicles. The defendant agreed to purchase a motor car from a company (‘KB’). The defendant and KB agreed that KB would secure a temporary COE for the defendant. Unknown to the defendant, KB agreed with the plaintiff that the latter would bid for the temporary COE. The plaintiff was paid $500 for the bidding. The plaintiff successfully obtained and paid $10,000 for the temporary COE in the defendant“s name.

23.12 It turned out, however, that KB did not deliver the car to the defendant. But the defendant was informed by KB that they had secured a temporary COE for the defendant. The defendant thus decided to purchase another car from another seller and in the process, used the temporary COE for the purchase. The plaintiff alleged that the defendant had intentionally committed a wrongful act inconsistent with the former“s rights vis-�-vis chattels.

23.13 One pertinent question was whether the temporary COE was capable of being converted. The District Judge held that the temporary COE, as an electronic or paper document that evidences a right to the eventual use of a car, was capable of being converted: Kenso Leasing at [20]. By way of dicta, the learned judge stated that even the electronic version of the temporary COE may be converted: see ss 3(c), 6 and 7 of Electronic Transactions Act 2010 (Act No 16 of 2010). The defendant did not make any payment for the temporary COE. He was registered as a holder of the temporary COE only because he had agreed to purchase the car from KB. In this case, the plaintiff was the owner of the temporary COE. The defendant had, in appropriating the COE for his use with respect to the new car, intentionally acted in a manner inconsistent with the plaintiff “s rights as the owner: Kenso Leasing at [23]. The defendant was ordered to pay damages of $9,500 to the plaintiff.

Conspiracy

23.14 This section highlights three cases on conspiracies involving companies and their directors, shareholders and officers. They concern both simple and unlawful means conspiracies.

23.15 In Swiss Butchery Pte Ltd v Huber Ernst...

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