Larpin, Christian Alfred v Kaikhushru Shiavax Nargolwala

• Jurisdiction: Singapore
• Judge: Roger Giles IJ
• Judgment Date: 21 February 2022
• Court: High Court (Singapore)
• Docket Number: Suit No 3 of 2020

Larpin, Christian Alfred and another

and

Kaikhushru Shiavax Nargolwala and another

[2022] SGHC(I) 4

Roger Giles IJ

Suit No 3 of 2020

Singapore International Commercial Court

Contract — Misrepresentation — Action for rescission — Buyer of luxury villa claiming that negotiations between seller of luxury villa and third party which resulted in litigation were actively concealed from him — Whether buyer entitled to rescission of sale agreements

Contract — Misrepresentation — Damages — Buyer of luxury villa claiming that negotiations between seller of luxury villa and third party which resulted in litigation were actively concealed from him — Whether costs of litigation buyer was involved in as result of those negotiations were recoverable as damages

Contract — Misrepresentation — Fraudulent — Buyer of luxury villa claiming that negotiations between seller of luxury villa and third party which resulted in litigation were actively concealed from him — Whether representations were made — Whether representations were fraudulent

Held, dismissing the suit:

(1) The plaintiffs pleaded a number of representations, called the “8 November Representations”, the “14 November Representations”, and the “15 November Representations”: at [25] to [34].

(2) In a case of failure to disclose facts, silence could produce a false representation that a previous statement was true if there was a duty to disclose facts which, if disclosed, would materially affect the truth of the previous statement. If there was no previous statement, if there was a duty to disclose the facts, failure to disclose them could produce a false representation that the facts did not exist. Such a duty could arise out of the relationship of the parties and/or other circumstances in which the silence was maintained and was to be assessed by reference to how a reasonable person would view the silence in all the circumstances: at [35] to [37].

(3) The plaintiffs maintained a case of active concealment and appeared to accept that for active concealment it was necessary that the defendants dishonestly concealed the truth with the intention to mislead the plaintiffs (“dishonest intention”): at [46].

(4) There was no requirement that all cases of misrepresentation by failure to speak or disclose be cast in the mould of active concealment or that (whatever might be the position in a true case of active concealment) dishonest intention was a necessary ingredient in all cases where representation by failure to speak or disclose was alleged: at [51] and [53].

The 8 November Representations

(5) The plaintiffs claimed that by actively concealing what were called “Material Facts” (said to indicate an arguable agreement to sell the Villa to Mr Lew), the defendants represented that as at 8 November 2017:

(a) there were no issues in relation to them selling the Villa to the plaintiffs, and there were no possible adverse claims in respect of the Villa by any third party (“Representation 1”); and

(b) pursuant to cl 1.1 of the Reservation Agreement, the Villa could be sold to Quo Vadis on an “as-is where-is” basis, and the consideration of US$7.9m was based on the assumption that the Villa could be acquired from the defendants on a debt-free basis, free from any encumbrance (“Representation 2”): at [97].

(6) Representation 1 was pleaded far wider than could come on any view from failure to disclose the Material Facts. The court held that a representation that there was no possible adverse claim of an arguable agreement to sell to Mr Lew was not conveyed. To a reasonable person in the position of the Nargolwalas, or assessing their position, as at 8 November 2017, there was no more than failed negotiations with a potential purchaser: at [105], [106] and [108] to [110].

(7) Representation 2 was not a representation of fact but a representation as to the effect in law of cl 1.1. It was difficult to find any implied factual statements in Representation 2. Even if Representation 2 was made by failure to disclose the Material Facts, it was not made as an actionable representation of fact. In any event, there was no duty to disclose the Material Facts, such that failure to do so brought the representation that the Villa could be acquired free from any encumbrance: at [112] to [118] and [121].

(8) If this was incorrect and there was a duty to disclose, there was no dishonest intention on the part of the Nargolwalas: at [123].

The 14 November Representations

(9) The plaintiffs claimed that by actively concealing the Material Facts and what were called the “Further Material Facts” from the plaintiffs, the defendants made the same representations as Representations 1 and 2 but as at 14 November 2017 (ie, “Representations 3 and 4”), and also represented that as at 14 November 2017:

(a) pursuant to cll 1.1, 4.2.1 and 4.2.2 of the Share Purchase Agreement, the Villa could be sold to Quo Vadis free from all liens, charges and encumbrances (“Representation 5”);

(b) pursuant to cl 4.2.8 of the Share Purchase Agreement, there was, amongst others, no other legal proceedings pending, or threatened, against, or involving Querencia, or the business of Querencia (“Representation 6”); and

(c) pursuant to cl 4.2.11 of the Share Purchase Agreement, all information relating to Querencia which would materially affect the sale and purchase of the Villa had been disclosed to Quo Vadis (“Representation 7”): at [144].

(10) The material time, for the purposes of rescission of the Share Purchase Agreement, was prior to its execution. The court found that that none of the representations was made as an actionable representation. The Nargolwalas only became aware that Mr Lew claimed that there was a binding agreement to sell the Villa to him after the Share Purchase Agreement had been executed. They could not have failed to disclose something which they did not know, and only the Material Facts were relevant as the Further Material Facts occurred thereafter: at [146] and [157].

(11) Representations 3 and 4 were in the same position as Representations 1 and 2. Representations 5, 6 and 7 were not made as actionable representations of fact. In any event, taking the representations as put in submissions, the circumstances were not such that a reasonable person would say that there were pending or threatened legal proceedings against or involving Querencia or its business, or information which would materially affect the sale and purchase of the Villa, which should be disclosed to Mr Larpin lest he be misled in himself purchasing the Villa, or that it was represented by a failure to disclose the Material Facts that there were no such matters: at [147] to [154].

(12) If there was a duty to disclose, there was no dishonest intention on the part of the Nargolwalas: at [156].

The 15 November Representations

(13) The plaintiffs claimed that, by actively concealing the Material Facts and the Further Material Facts from the plaintiffs, the defendants made the same representations as Representations 1, 2, 5, 6 and 7 but as at 15 November 2017 (ie, “Representations 8, 9, 10, 11 and 12”), and also represented to the plaintiffs that as at 15 November 2017:

(a) Mr Nargolwala had received a threatening e-mail from someone on 14 November 2017, who was alleging that he had seen the Villa, and made an offer to purchase it (“Representation 13”); and

(b) the defendants had never met the person, had not accepted any offer whatsoever in relation to the Villa from the person, and had not signed any contract with the person, and the person's claim in respect of the Villa was unsustainable (“Representation 14”): at [171].

(14) The court found that only Representations 13 and 14 had been made. Representation 8 was not made by active concealment, or at all. Mr Nargolwala told Mr Larpin on 15 November 2017 that there was an issue in relation to the sale of the Villa and that there was an adverse claim. Representation 9 was also not made as an actionable representation of fact for the same reason: if Mr Lew's claim was an encumbrance, it was disclosed. As to Representations 10, 11 and 12, as with Representations 5, 6 and 7, there were no representations of fact, and the representations could not sensibly be found from silence or failure to disclose the Material Facts or the Further Material Facts when Mr Larpin was told that there were legal proceedings threatened against or involving Querencia. Representation 13 was made but was true and could be ignored. Representation 14 was also made, save that in relation to sustainability what was said was that the Nargolwalas believed that Mr Lew's claim was unsustainable: at [175] to [179].

(15) Looking at the substance of the plaintiffs' complaint, although departing from the pleading, a reasonable person would not consider that the Nargolwalas should have themselves volunteered and explained to Mr Larpin their dealings with Mr Lew, or volunteered the e-mail in which Mr Lew asserted his claim and threatened litigation. To the extent that there was a failure to disclose, it was not with dishonest intention: at [180] and [181].

(16) As to Representation 14, it was true save that the plaintiffs submitted that the defendants did not believe that Mr Lew's claim was unsustainable. The court rejected the submission and found that the representation was not false: at [184] to [188].

(17) The plaintiffs' claim therefore fell at the hurdle of misrepresentation: at [189].

[Observation: The court observed that as a matter of law, the costs of the proceedings involving Mr Lew, in excess of the costs awarded, would not be recoverable as damages even if there were a successful cause of action for fraudulent misrepresentation: at [216].]

Case(s) referred to

Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317 (refd)

Broadley Construction Pte Ltd v Alacran Design Pte Ltd [2018] 2 SLR 110 (refd)

Chai Cher Watt v SDL Technologies Pte Ltd [2012] 1 SLR 152 (refd)

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