Anwar Patrick Adrian and another v Ng Chong & Hue LLC and another

• Judge: Chao Hick Tin JA
• Judgment Date: 30 September 2015
• Neutral Citation: [2015] SGCA 49
• Hearing Date: 28 May 2015
• Docket Number: Civil Appeal No 194 of 2014
• Year: 2015
• Published date: 06 October 2015
• Citation: [2015] SGCA 49
• Court: Court of Three Judges (Singapore)
• Plaintiff Counsel: Tan Cheng Han SC (instructed), P Balachandran and Luo Ling Hui (Robert Wang & Woo LLP)
• Subject Matter: Measure of Damages,Damages
• Defendant Counsel: Michael Khoo SC, Josephine Low and Chiok Beng Piow (Michael Khoo & Partners)

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

This is an appeal from the decision of the High Court judge (“the Judge”) in Anwar Patrick Adrian and another v Ng Chong & Hue LLC and another [2014] SGHC 234 (“the Judgment”), where the Judge held that the settlement between the appellants, Anwar Patrick Adrian (“Adrian”) and Andrew Francis Anwar (“Francis”) (collectively referred to as “the Appellants”), and the creditor bank, Société Générale Bank & Trust (“SGBT”), was not reasonable. The respondents, Ng Chong & Hue LLC (“NCH”) and Ng Soon Kai (“Ng”) (collectively referred to as “the Respondents”), were therefore ordered to pay only S$1,000 in nominal damages to the Appellants.

When the issue of liability first came before us, we reversed the Judge’s earlier decision and held that Ng (and consequently, NCH) was in breach of the implied retainer which he had entered into with the Appellants. In addition, we found that Ng (and consequently, NCH) had failed to take reasonable care in advising the Appellants of the contents of the security documents. The Appellants’ claim in negligence therefore succeeded. Having allowed the appeal with regard to the issue of liability, we remitted the question of whether the settlement between the Appellants and SGBT was reasonable to the Judge as he had made no finding on the same at first instance.

Before the Judge, both parties took the view that no further evidence had to be adduced in relation to whether the settlement was reasonable. After considering the submissions put forward by both parties, the Judge held that the settlement was not reasonable when it was viewed from the perspective of regarding the settlement payment as a reasonable quantum of damages payable by the Respondents to the Appellants. It was further held that the Appellants should be entitled to only S$1,000 in nominal damages as there was insufficient evidence showing that the Appellants had personally paid any money themselves to SGBT.

Before us, the Appellants argued that the Judge erred on two grounds. First, it was submitted that the application of the benevolence principle rendered it irrelevant whether or not third parties paid the settlement amount on behalf of the Appellants. Secondly, it was contended that there was sufficient evidence to establish that the settlement entered into between the Appellants and SGBT was reasonable.

The Respondents submitted that the application of the benevolence principle did not absolve the Appellants from having to prove that the settlement was reasonable. It was further argued that the Appellants had failed to discharge their burden of proof, given the lack of evidence adduced by the Appellants.

Background facts

The only outstanding issue before us concerns the measure of damages, specifically, the question of whether the settlement between the Appellants and SGBT was reasonable, such that if the settlement is found to be reasonable, the settlement sum may be taken as the measure of the Appellants’ loss. The issue of liability has already been resolved in favour of the Appellants when the matter first came before us in Anwar Patrick Adrian and another v Ng Chong & Hue LLC and another [2014] 3 SLR 761 (“the CA Judgment”). Therefore, in this judgment, we will focus mainly on the facts that are relevant to the settlement between the Appellants and SGBT. A more comprehensive account of the background facts, including facts that are only relevant to the issue of liability, can be found at [6]–[29] of the CA Judgment.

The parties

Adrian and Francis are the sons of Agus Anwar (“Agus”), the chief protagonist in the entire dispute. Agus was an astute investor who was extremely familiar with the world of finance and banking. He used to be the Chief Executive Officer of PT Bank Pelita, a bank in Indonesia. At the time of the dispute with SGBT, Adrian had already begun working, while Francis was still schooling in the United States.

The second respondent is Ng, a lawyer who practised in, and was also one of the directors of, NCH, the first respondent. As we have mentioned at [6] of the CA Judgment, nothing turns on the separation of Ng and NCH’s individual identities in so far as the present dispute is concerned.

The credit facility

Agus had a credit facility with SGBT. Sometime in July 2008, Agus was requested to provide additional collateral as the market value of the existing collateral held by SGBT had crashed. In October 2008, as share prices continued to plummet, SGBT sold off some of the shares that had previously been pledged by Agus. This was, however, insufficient to meet the shortfall in the collateral, which stood at approximately S$8m then. SGBT demanded that Agus pay the outstanding amount of the loan or provide additional collateral of the same value by 9 October 2008. It was at this particular point in time that Agus approached Ng to act for him. At this juncture, it is useful to point out that Ng had acted for Agus on numerous occasions prior to the dispute with SGBT. This included representing Agus in a dispute in Indonesia, as well as in property transactions.

Thereafter, in the course of negotiations between Agus, who was mainly represented by Ng, and SGBT, it was agreed, inter alia, that Agus would provide additional collateral in the form of mortgages over four properties. These properties were not held in Agus’s name. They had been purchased in the names of the Appellants and companies which the Appellants were shareholders and directors of (“the Companies”). Apart from that, SGBT also wanted personal and corporate guarantees from the Appellants and the Companies respectively. Agus was agreeable to the Companies providing corporate guarantees but not to the Appellants providing personal guarantees. Agus was of the view that the Appellants would hardly be able to provide any real security to SGBT as they were just “2 young boys”.

After a period of further negotiations between the parties, SGBT agreed to forgo asking for personal guarantees from the Appellants in a counter-proposal which involved Agus furnishing even more security in addition to the initial four properties. Pursuant to this understanding, a forbearance agreement and other relevant documentation were eventually signed and executed by the parties, including Agus and the Appellants. Although the draft agreements did not require the Appellants to provide personal guarantees in favour of SGBT, the security documents, consisting a mortgage document and a deed of assignment, incorporated such personal guarantees. It was stated that the mortgagor of the property (ie, the Appellants and the Companies) shall pay SGBT on demand all sums due and owing to SGBT by Agus.

The commencement of legal proceedings by SGBT

Despite having provided additional collateral pursuant to the forbearance agreement, Agus still could not meet his obligations under the credit facility with SGBT. As a result, SGBT commenced legal proceedings against Agus, the Appellants and the Companies in April 2009. The Appellants filed their defence on 25 May 2009. They were still represented by Ng then. Agus and the Companies did not file a defence, and judgment in default was entered against them on 3 June 2009.

On 22 June 2009, SGBT filed an application for summary judgment against the Appellants. The application was rejected by the Assistant Registrar (“the AR”) at first instance. The Appellants were given unconditional leave to defend the action. Dissatisfied with the AR’s decision, SGBT appealed to the High Court. At this juncture, it bears noting that sometime between the dismissal of SGBT’s application by the AR and the hearing of the appeal by the High Court, Ng had discharged himself. The Appellants were subsequently represented by Tan Kok Quan Partnership (“TKQP”).

When the matter came before the High Court, SGBT’s appeal was allowed and final judgment was awarded in favour of SGBT. It was held that there was no merit in any of the Appellants’ pleaded defences. After taking into account the recovery of S$2,293,864.73 from the sale of shares, payment of dividends and the sale proceeds from two mortgages, final judgment in the sum of S$14,958,718.99, together with contractual interest liable to be paid under the facility agreement, was entered against the Appellants.

At this juncture, TKQP wrote to the Respondents on behalf of the Appellants, placing the Respondents on notice that the Appellants would be seeking to recover from the Respondents the amount that had to be paid to SGBT pursuant to the High Court’s judgment. In a letter dated 12 November 2009, it was alleged that Ng had failed to explain the security documents prior to execution and that the Appellants’ liability to SGBT was caused by Ng’s breach of duty. The letter concluded with the following notice:

In the meantime, we are instructed by our clients [ie, the Appellants] to and do put you on notice of their claim against you for the sum of S$14,958,718.99, together with contractual interest pursuant to Clause 9 of [SGBT’s] Facility Terms and Conditions on the principal sum from 2 April 2009 to the date of full payment and costs of RA 316, Summons 3302 and the Suit on an indemnity basis arising from the aforesaid breaches.

The Respondents replied, by way of a letter sent by Michael Khoo & Partners (“MKP”) dated 11 January 2010, in which it was denied that the Respondents were liable to the Appellants in any way. Specifically, the Respondents denied having acted for the Appellants in respect of the security documents, which were the subject matter of SGBT’s action against the Appellants. The Respondents took the view that it had only acted for Agus with regard to the “provision of further collateral and security to [SGBT]”. It was also contended that the Appellants had not contacted or instructed Ng to act for them in relation...