Fong Maun Yee and Another v Yoong Weng Ho Robert (practising under the name and style of Yoong & Co)

• Jurisdiction: Singapore
• Judgment Date: 16 April 1997
• Date: 16 April 1997
• Docket Number: Civil Appeal No 117 of 1996
• Court: Court of Appeal (Singapore)

Fong Maun Yee and another

Plaintiff

and

Yoong Weng Ho Robert

Defendant

[1997] SGCA 62

Yong Pung How CJ

,

M Karthigesu JA

and

L P Thean JA

Civil Appeal No 117 of 1996

Court of Appeal

Agency–Implied authority of agent–Warrant–Solicitor warranting to client that he was authorised to represent company in sale of property–Authority based on forged documents–Solicitor failing to verify with company on instructions to act–Whether breach of warranty–Contract–Discharge–Breach–Breach of warranty of authority–Implied representation–Whether solicitor's conduct represented that he had authority to act for company–Whether solicitor liable for misstatement and breach of warranty of authority–Legal Profession–Duty of care–Negligence–Solicitor and client–Solicitor failed to verify instructions to act for company–Whether solicitor met standard required of a reasonably competent conveyancer–Whether solicitor breached his duty of care and skill to client–Tort–Negligence–Breach of duty–Negligent misrepresentation–Whether solicitor's conduct represented that he had authority to act for company–Whether solicitor made negligent misrepresentation–Whether misrepresentation played real and substantial role in inducing client to act to his detriment–Tort–Negligence–Contributory negligence–Causation–Whether failure of client to disclose reservations to solicitor contributed to his own loss

The second appellant was a property developer of ten years and the first appellant was his secretary. They claimed that through the negligence and lack of exercise of professional care, skill and diligence due to them by the respondent, a lawyer, they had parted with $806,000 to a property agent known to both the second appellant and the respondent. Alternatively, they asserted that the respondent had negligently represented to them that a party (“the purported seller”) wanted to sell the property known as 9 Ewart Park (“the property”) and appointed him as their solicitor. They had relied on the respondent's representation and parted with the moneys to the property agent.

Sometime in July 1994, the property agent rang the second appellant to seek out his interest on the property. The second appellant confirmed his interest. The property agent faxed a letter to the second appellant confirming the telephone conversation. In August 1994, the property agent accompanied the second appellant to view the property from the outside. They agreed on a purchase price of $12.8m. The second appellant agreed to pay the property agent another $1.1m in consideration for the latter securing the option to purchase the property from the purported seller. The property agent presented to the respondent a resolution purportedly signed by all the directors of the purported seller resolving to sell the property and appointing the respondent to act for the purported seller in the sale. The property agent also showed the respondent an option purportedly signed by the managing director. The second appellant and the respondent did not know that these documents were forgeries. The respondent carried out a company search and confirmed to the first and second appellants that the persons who had signed the resolution and option were at the material time the purported seller's directors. The second appellant nominated the first appellant to exercise the option as his nominee. The respondent did not obtain a letter of appointment from the purported seller. Subsequently, the property agent disappeared with the second appellant's monies.

The trial judge found that the respondent's conduct had not fallen below the standard of a reasonably competent conveyancer for not verifying his instructions to act for the purported seller as there was no necessity to do so. The judge also found that the respondent had not acted in breach of his duty to exercise professional care, skill and diligence by acting on the basis that the documents presented to him by the property agent were valid, and held that the losses of the appellants must lie where it fell. The appellants appealed. The issue was whether the respondent ought to have verified with the purported seller his instructions to act for the purported seller in the sale of property before acknowledging to the appellants that he had been so instructed, merely on the strength of the purported seller's resolution and the option. The appellant also added a new cause of action, claiming a breach of warranty of authority, namely, that the respondent warranted to the appellants that he was authorised to represent the purported seller in the purported sale of the property.

Held, allowing the appeal:

(1) A solicitor owed a duty to his clients to exercise care and skill as their solicitor. To determine whether a conveyancing solicitor had acted in breach of his duties of care and skill, the court had to consider whether his conduct has fallen below the standard expected of a reasonably competent conveyancing solicitor. In the circumstances of the case, where a property agent was not an officer or employee of the seller but who held the seller's option and was seeking to benefit from it, a solicitor should have insisted on getting the confirmation of the seller before holding himself out as acting for the seller in the sale of the property: at [40], [41] and [43].

(2) Negligent misrepresentation need not be the sole or decisive factor in inducing the representee to act, but sufficed if it played a real and substantial role in causing the representee to act to his detriment: at [52].

(3) The elements required to be proved in an action for breach of warranty were that a person by words or conduct represented that he had authority to act on behalf of another, and a third party was induced by such representation to act in a manner which he would not have acted if that representation had not been made, the first-mentioned person was deemed to warrant that the representation was true, and was liable for any loss caused to such third party by a breach of that implied warranty, even if he acted in good faith, under a mistaken belief that he had such authority. The act of the respondent simply pointing to the resolution would be a sufficient warranty that the purported seller really wanted to sell the property and that the respondent represented the purported seller in the sale: at [53] and [55].

(4) Where a defendant's liability in contract was concurrent with an identical duty in tort, and the relevant evidence established that the cause of damage suffered by the plaintiff was the combination of the fault on his part and the wrong doing of the defendant, the defence of contributory negligence was available to the defendant. Where a client suspected “a trick” by a third party and went to his lawyer to allay his fears, but failed to disclose his concerns, and his failure to do so contributed to his loss as in that the lawyer was not put on his guard in his dealings with the third party, the client contributed to his own loss. In apportioning liability, the particular relationship between plaintiff and defendant must not be overlooked; where the relationship was one of a client and a professional, the court would take account of the primary responsibility of the professional: at [55], [62] and [63].

[Observation: Guidelines to good conveyancing practice, such as para 1.3.1 of Silverman, The Law Society's Conveyancing Handbook (1993) and para 9.05 of the The United Kingdom Law Society's Guide to the Professional Conduct of Solicitors (1990), should be adopted and, where possible, followed by conveyancing practitioners, so as not to be exposed to the risk of acting without authority: at [44] and [45].]

Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1995] 2 All ER 769 (refd)

Edward Wong Finance Co Ltd v Johnson Stokes & Master (a firm) [1984] AC 296 (folld)

Forsikringsaktieselskapet Vesta v Butcher [1989] AC 852; [1988] 2 All ER 43; [1988] 1 Lloyd's Rep 19 (folld)

JEB Fasteners Ltd v Marks, Bloom & Co [1983] 1 All ER 583 (refd)

Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384; [1978] 3 All ER 571 (folld)

Residential Property Act (Cap 274, 1985 Rev Ed)

Tan Cheng Han and Lim Chuen Ren (Cheong Hoh & Associates) for the appellants

V K Rajah and Steven Lim (Rajah & Tann) for the respondent

.

Judgment reserved.

M Karthigesu JA

(delivering the judgment of the court):

1 The second appellant (“Soh”) is a property developer with more than ten years' experience. He is a director of several companies and the managing director of one, known as Land Resources Holding Pte Ltd (“Land Resources”). He has been involved in hundreds of sale and purchase transactions of landed property over the years. The first appellant (Fong) at the material time was a secretary working for Soh at Land Resources.

2 The respondent (“Yoong”) is an advocate and solicitor, admitted to practise in 1976 and has since practised as a sole proprietor under the name of Yoong & Co. Yoong's main area of work is in conveyancing although he does engage in some litigation and corporate work.

3 The appellants' claim for damages against Yoong revolves around the alleged negligence of Yoong as the solicitor acting for the appellants in the purported purchase by Fong as the nominee of Soh of 9 Ewart Park (“the property”) from its owners Fontana Pte Ltd (“Fontana”). The central figure through whose machinations Soh parted with $806,000, which sum the appellants claimed from Yoong as damages for Yoong's alleged negligence, was one Foo Peng Boon (“Foo”).

4 Foo was known both to Soh and to Yoong. Soh had known him for over ten years as a property agent and had done business with him on at least three previous occasions. Soh's impression of Foo was that he was a person always in need of money; Foo had borrowed money from Soh on a few occasions totalling in all to about $20,000, which Foo had not repaid. In fact Soh testified...