Haw Wan Sin David and another v Sim Tee Meng and another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu SJ
• Judgment Date: 17 December 2018
• Neutral Citation: [2018] SGHC 272
• Court: High Court (Singapore)
• Docket Number: District Court Appeal No 16 of 2018
• Published date: 12 December 2019
• Year: 2018
• Hearing Date: 12 October 2018,10 October 2018
• Plaintiff Counsel: Harish Kumar s/o Champaklal and Toh Jun Hian, Jonathan (Rajah & Tann Singapore LLP)
• Defendant Counsel: Akesh Abhilash and Surenthiraraj s/o Saunthararajah (Eversheds Harry Elias LLP),the second respondent in person.
• Subject Matter: Tort,Misrepresentation,Negligent misrepresentation,Negligence,Breach of duty
• Citation: [2018] SGHC 272

Lai Siu Chiu SJ:

This appeal arose from the decision of the learned District Judge in District Court Suit No 3237 of 2015 (“the Suit”). She gave her written grounds in Haw Wan Sin David and Yee Ai Moi Cindy v Faber Property Pte Ltd and Sim Tee Meng and another [2018] SGDC 143 (“the GD”). At the heart of this appeal lies the following issue: under what circumstances can an agent be held personally liable for representations made on behalf of his or her principal?

The facts The parties

The appellants are Haw Wan Sin, David (“David Haw”) and Yee Ai Moi, Cindy (“Cindy Yee”). They are husband and wife, and are both registered property agents.¹ They claimed against three parties for damages resulting from misrepresentation: Sim Tee Meng (“Jimmy Sim”), Seah Beng Hoon (“Belle Seah”), and Faber Property Pte Ltd (“Faber”). The District Judge allowed the appellants’ claim against Faber, but dismissed the claims against Jimmy Sim and Belle Seah. The appellants appealed against the decision in respect of Jimmy Sim and Belle Seah, who are the respondents in this appeal.

Faber is a licensed estate agency. At all material times, Jimmy Sim was the Key Executive Officer (“KEO”), sole shareholder and director of Faber. Belle Seah was an Associate Director of Faber, and a licensed real estate salesperson.

The appellants were retail investors who entered into agreements with a New Zealand company called Albany Heights Villas Limited (“the Developer”) for the “First Right of Refusal” (“FRR”) to purchase units in a residential housing project in New Zealand (“the Project”). Faber was involved in the marketing activities in Singapore in respect of investment in the Project. Unfortunately, the Developer went into liquidation due to insolvency and it appears that the persons behind the various New Zealand companies that came up with the FRR scheme had siphoned off substantial sums paid by purchasers such as the appellants. In the Suit, the appellants sought to recover the sums of S$15,000 and US$142,656.76 which they had paid towards obtaining the FRR.²

Background facts

Much of the background facts are as set out in the GD and were not contested on appeal. The chronology of events leading up to the making of the alleged misrepresentations is as follows:³ On 14 December 2011, Belle Seah met with a director of the Developer, Christoper Cook (“Cook”). Cook sent Belle Seah a proposal which was subsequently brought to Jimmy Sim’s attention. Faber then entered into an agreement with the Developer and Hunter Sterling & Company Pte Ltd (“Hunter Sterling”) on 7 January 2012 to market the Project.⁴ Hunter Sterling was the Developer’s Singapore entity. On or around 12 January 2012, advertisements were placed in local newspapers which led to the appellants attending a marketing event at The St Regis Hotel regarding the FRR investment in the Project. The details of these advertisements are set out in the GD at [16] and [17], but are not material for present purposes. The marketing event was later held on 14 January 2012. Prior to the marketing event, the Developer engaged William Wai (“Wai”) to conduct a training session with Faber’s personnel in relation to selling the FRR investment in the Project. Wai was at the time a business development manager of a Hong Kong real estate agency that had previously marketed the Project in Hong Kong.⁵ 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”): A Reservation Form on the letterhead of Faber as representative of the Developer, and signed by Belle Seah as a representative of Faber; An agreement between the Developer and the appellants titled “First Right of Refusal” on the letterhead of the Developer, dated 16 January 2012 (“the FRR Agreement”); and An agreement between the Developer and the appellants titled “On-Sale Agreement”, dated 16 January 2012. The appellants later made the following payments: S$15,000 by way of a cheque dated 18 January 2012 made out to “Hunter Sterling & Company Pte Ltd” ($5,000 being the reservation deposit for each of the three units); and US$142,656.76 by way of a cheque dated 31 January 2012 made out to “Hunter Sterling & Company Client Account (Albany Heights Villas Ltd)” as the balance of the FRR price for the three units.

It later turned out that the Developer had neither the title nor the resource consent to develop the relevant plot of land that the Project was supposed to be developed on. Neither Belle Seah nor Jimmy Sim knew that this was the case.⁶

The alleged misrepresentations

The appellants alleged that Belle Seah made the following three misrepresentations at the marketing event on 14 January 2012:⁷ The owners of the Developers had a good track record of successful developments (“Representation 1”); Phase 1 of the Project was fully sold and construction was already in progress, while Phase 2 was 60% sold (“Representation 2”); and Investment moneys paid by any investor would be held in a trust account by a New Zealand firm of lawyers, which was as safe as a Singapore lawyer’s client account, and that the Developer would only have access to the moneys according to the progress of construction (“Representation 3”).

As against Jimmy Sim, the appellants alleged that the following misrepresentations were made when they attended at Faber’s office on 16 January 2012:⁸ The representations made by Belle Seah at the marketing event were true and correct (“Representation 4”); The respondents and Faber had performed checks on the ownership and legality of the Project in accordance with the strict requirements of the Council of Estate Agencies (“the CEA”) (“Representation 5”); and The respondents and Faber had done all relevant and necessary due diligence checks on the Developer, and details such as title to the Project and the building approval for marketing, and that everything was in order (“Representation 6”).

The District Judge’s findings and decision

At the outset, the learned District Judge took the view that Representations 5 and 6 were effectively representations that due diligence checks had been done. She noted that the obligation to undertake due diligence checks is “implicit within the duty of care”. Thus, in her view, it was not necessary for her to make a specific finding as to whether each of the two representations were made to the appellants. Nevertheless, she stated that the undisputed evidence of Jimmy Sim was that he did make the representations to the appellants that due diligence checks had been conducted by Faber. However, he maintained that the details of the due diligence conducted were not included in the representation.⁹

In respect of Faber, the learned District Judge held that Faber owed a duty of care to the appellants, which it breached: The advertisements placed in the newspapers made it clear that Faber was involved in the Project, albeit with other entities such as Hunter Sterling and the Developer. It was therefore not open to Faber to deny liability simply on the basis that they were not the entity that placed the advertisements in the newspapers. Consequently, a comprehensive analysis of all relevant facts and circumstances had to be taken to determine whether a duty of care was owed by Faber.¹⁰ It was undisputed that Faber’s agents and salespersons were present at the marketing event.¹¹ There was a system whereby potential investors who turned up at the marketing event were approached by Faber’s representatives to market investment in the Project to them, such as by walking visitors through the information on exhibition boards that were put up.¹² It was fair to infer that because there were representatives from various entities present at the marketing event, the different representatives would have worn name tags that would state which entity each person was representing. Consequently, representations made by Faber’s representatives would have been considered representations made on behalf of Faber.¹³ Faber ought to have known that the appellants would suffer damage from its carelessness.¹⁴ This was because it was the instrument through which the masterminds behind the Project used to reach out to local investors in Singapore. It was Faber that brought the Project into Singapore to be marketed, and it was Faber’s salespersons who distributed the Project’s brochures at the exhibition.¹⁵ There was sufficient legal proximity between the appellants and Faber. It was clearly foreseeable that potential investors would rely on representations made by Faber. There was also an assumption of responsibility by Faber to exercise care to avoid loss or damage to investors, and there was reliance by such investors that Faber had exercised care in presenting information about the Project to them.¹⁶ There were no policy considerations that militated against the imposition of a duty of care on Faber.¹⁷ The evidence showed that Belle Seah had attended to the appellants during the marketing event. It was highly likely that Representations 1 and 2 were made as part of the “sales talk” between Belle Seah and the appellants. The training notes showed that Belle Seah, Jimmy Sim, and all of Faber’s agents were in fact specifically trained by Wai to make representations along the lines of Representations 1 to 3. It was also Wai’s evidence that many potential investors were asking about how the monies would be handled, and he expected that Faber’s agents would reply that the money was held in a trust account as this was what he had trained them to say.¹⁸ Consequently, the learned District Judge found that Representations 1 to 3 were made on behalf of Faber.¹⁹ On the issue of whether Faber had breached its duty of care, it was necessary to examine the actions of the persons...