Chu Said Thong v Vision Law LLC

CourtHigh Court (Singapore)
Judgment Date14 August 2014
Date14 August 2014
Docket NumberSuit No 735 of 2011

[2014] SGHC 160

High Court

Vinodh Coomaraswamy J

Suit No 735 of 2011

Chu Said Thong and another
Vision Law LLC

Tan Gim Hai Adrian and Yeoh Jean Wern (Drew & Napier LLC) for the plaintiffs

N Sreenivasan SC and K Gopalan (Straits Law Practice LLC) for the defendant.

Angus v Clifford [1891] 2 Ch 449 (refd)

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Legal Profession Act (Cap 161, 2009 Rev Ed) s 2 (1)

Unfair Contract Terms Act 1977 (c 50) (UK)

Agency—Agent's warranty of authority—Fraudster impersonating innocent third party and engaging defendant as agent—Defendant warranting to plaintiffs that it had authority from impersonated party to act as that party's agent—Plaintiffs relying on defendant's warranty of authority to transact with fraudster and thereby suffering financial loss—Whether defendant strictly liable to plaintiffs for breach of warranty of authority—Whether defendant could be said to have caused various heads of plaintiffs' financial loss

Tort—Misrepresentation—Fraud and deceit—Fraudster impersonating innocent third party and engaging defendant as conveyancing solicitors—Defendant making representations to plaintiffs as impersonated party's solicitors—Plaintiffs relying on representations to transact with fraudster and thereby suffering financial loss—Whether representations made fraudulently

Tort—Misrepresentation—Negligent misrepresentation—Fraudster impersonating innocent third party and engaging defendant as conveyancing solicitors—Defendant making representations to plaintiffs as impersonated party's solicitors—Plaintiffs alleging that defendant failing to take reasonable care in making these representations—Plaintiffs relying on representations to transact with fraudster and thereby suffering financial loss—Whether defendant owing plaintiffs duty of care in negligence

The plaintiffs were husband and wife. In September 2010, the plaintiffs came across an advertisement for the sale of a house at 13 AJalan Berjaya (‘the Property’) which met all their requirements. Unbeknownst to them, the advertisement had been placed by a fraudster, Victor Tan, who had no connection to the true owner of the Property, Lum Whye Hee. Victor Tan had fabricated in its entirety an option which purportedly gave him the right to buy the Property from Lum Whye Hee.

Impersonating Lum Whye Hee, Victor Tan engaged the defendant law firm and instructed it to act in the sale of the Property. He faxed a copy of the fabricated ‘option’ to one of the defendant's conveyancing secretaries, Susan Chua. Susan Chua verified that the name in the ‘option’ matched the owner of the Property on the land register. She also rang the number written on the ‘option’ and spoke to Victor Tan. Victor Tan fraudulently confirmed that he was ‘Mr Lum’. The defendant took no other steps to verify the identity of its putative client.

Victor Tan then defrauded the plaintiffs into agreeing to acquire from him his non-existent right to buy the Property under the fabricated ‘option’. Before agreeing to do so, the first plaintiff called the defendant and spoke to Susan Chua about the ‘option’. The plaintiffs alleged that in that conversation, Susan Chua represented that (a) the defendant acted for Lum Whye Hee; (b) Lum Whye Hee had issued the ‘option’ to Victor Tan; and (c) there would be no problems with the plaintiffs purchasing the ‘option’ from Victor Tan and paying him $35,200 for the ‘option’ and $70,000 as goodwill money. The plaintiffs claimed that on the strength of these three representations, they handed $105,200 to Victor Tan. The defendant denied that it was bound by any representations which Susan Chua might have made to the first plaintiff and, even if it were, denied that Susan Chua had made the third representation.

The plaintiffs exercised their ‘option’ on 23 September 2010 through their lawyers. They paid over to the defendant the sums due upon exercise, which the defendant agreed to hold as stakeholders. On 8 October 2010, Victor Tan's fraud was uncovered. The plaintiffs demanded that the defendant refund their stakeholding money and compensate them for $105,200 which they had paid to Victor Tan. The defendant eventually refunded the plaintiffs' stakeholding money on 15 June 2011 but rejected any liability to compensate the plaintiffs for the loss they had suffered.

In this action, the plaintiffs claimed compensation from the defendant for their loss and damage under two heads. First, they sought to recover from the defendant the sum of $105,200 which they had handed over to Victor Tan to acquire his right to buy the Property under the fabricated ‘option’. Second, they claimed that the ill-fated transaction with Victor Tan caused them to lose the opportunity to buy an alternative property in their desired area in September and October 2010. They claimed the difference in price between what they actually paid per square foot for the property they eventually bought in December 2011 and the average price per square foot of suitable properties in their desired area in September and October 2010.

Held, allowing the claim in part:

[Editorial note: The paragraphs indicated in parentheses in holding (1) are not reported. They can be found in the unreported version of the judgment ([2014] SGHC 160) on Law Net.]

(1) Susan Chua made the first two representations to the first plaintiff as he alleged, but did not make the third representation (at [53] to [71]).

(2) Susan Chua's representations were attributable to the defendant for the purpose of determining its liability. Unlike ordinary conveyancing secretaries, the defendant's conveyancing secretaries, including Susan Chua, carried out the defendant's professional work without the supervision of solicitors and communicated with members of the public, who were not actual or potential clients, about the defendant's professional work. This included communication with counterparties of the defendant's clients. In the circumstances, Susan Chua acted within the scope of her employment when she made the first two representations: at [73] , [75] , [83] , [84] to [86] , [89] and [95] .

(3) The fact that, objectively speaking, the defendant had no reasonable grounds to believe in the truth of the representations which it made did not make those representations fraudulent misrepresentations. The tort of deceit vindicated the innocent party's right not to be lied to. A lie required a specific, subjective state of mind. Therefore fraud always had to be determined subjectively, not objectively: at [112] , [116] and [117] .

(4) A person made a representation fraudulently if he made it (a) knowing that the representation was false; (b) without belief in its truth; or (c) recklessly, not caring whether it was true or false. The defendant did not make...

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