Ong Han Ling and another v American International Assurance Co Ltd and others

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 29 December 2017
• Neutral Citation: [2017] SGHC 327
• Plaintiff Counsel: Deborah Barker SC, Haresh Kandar and Ng Junyi (KhattarWong LLP)
• Date: 29 December 2017
• Docket Number: Suit No 743 of 2012
• Hearing Date: 19 March 2016,03 March 2016,24 May 2016,23 March 2016,10 September 2016,15 March 2016,05 April 2016,13 May 2016,07 April 2016,06 April 2016,16 March 2016,17 March 2016,08 September 2016,26 May 2016,22 March 2016,01 March 2016,08 April 2016,29 March 2016,05 September 2016,02 March 2016,12 March 2016,23 April 2017,26 March 2016,01 September 2016,25 March 2016,18 March 2016,12 September 2016,25 May 2016,22 April 2017,27 May 2016,04 March 2016,11 March 2016,11 September 2016,24 March 2016,12 May 2016,07 April 2017
• Subject Matter: Restitution,Negligence,Conspiracy,Trusts,Third party and principal's relations,Equitable set-off,Tort,Quistclose trusts,Agency,Tortious liability,Causation,Vicarious liability,Unjust enrichment
• Year: 2017
• Defendant Counsel: Wendell Wong, Denise Teo and Priscylia Wu (Drew & Napier LLC),Melvin Chan and Justin Ee (TSMP Law Corporation)
• Court: High Court (Singapore)
• Citation: [2017] SGHC 327
• Published date: 17 October 2018

Belinda Ang Saw Ean J: Introduction

This action stems from the alleged fraud of Sally Low (“Sally”), who was, at all material times, an insurance agent of the first defendant, American International Assurance Company Ltd, an entity incorporated in Hong Kong (“AIA”). The second defendant, AIA Singapore Private Limited (“AIA Singapore”), a Singapore incorporated entity, took over AIA’s insurance business in Singapore together with all its rights and liabilities in 2012. As such, AIA Singapore is a nominal party in this action. For convenience, the first and second defendants are referred to collectively as “the AIA defendants”.

The plaintiffs are a wealthy elderly Indonesian couple, Ong Han Ling (“OHL”) and Enny Ariandini Pramana (“Enny”) (collectively “the Ongs”). The Ongs claim that from 2002 to 2008, Sally, as AIA’s insurance agent, perpetrated an elaborate insurance fraud on them. The core of this fraud was her promotion of a fictitious “AIA Thank You Policy” (“AIA TYP”), which OHL paid a premium of US$5,060,900 to AIA to purchase. According to the plaintiffs, Sally’s deception continued over the years. Unbeknownst to them, Sally misused the US$5,060,900 remitted for the AIA TYP to purchase different AIA policies purportedly for the plaintiffs and their young teenage daughter. When the plaintiffs stumbled upon the existence of some of these policies, Sally represented that the policies had been erroneously listed under the Ongs’ names as the result of a series of computer crashes at AIA. She then induced them to surrender these “erroneous” policies and return the bulk of the surrender proceeds, amounting to S$6,288,058 and US$1,000,000, to Sally, in the belief that she would return the proceeds to AIA. However, Sally misappropriated the money to purchase stocks and properties in her own name. According to the plaintiffs, they only began to discover the falsity of Sally’s representations in January 2008. Sally was suspended by AIA on 9 October 2009 and her contract with AIA was terminated on 11 December 2009.

Fraud in the life insurance industry is not unknown and AIA is aware of it. There are incidents of fraud on insurers by the insured and/or a third party, and fraud by insurance agents on policyholders and/or the insurers. Stories of crooked agents’ misappropriation of premiums and sales of bogus coverage using a legitimate insurance company’s name are not unheard of. The twist in this action is the plaintiffs’ alleged complicity in the agent’s fraud. The AIA defendants’ denial of liability is essentially premised on the plaintiffs’ falsity, with Sally being the key witness for their Counterclaim in conspiracy. It is common ground that Sally pleaded guilty to criminal charges of cheating the plaintiffs after testifying in this trial. Nevertheless, the AIA defendants maintain that the plaintiffs had agreed with Sally to defraud AIA by fabricating the bogus AIA TYP; that OHL was the mastermind behind a scam that involved Sally and OHL forging documents bearing AIA’s letterhead; that the plaintiffs’ complaint that they were duped into purchasing the AIA TYP was a mere pretence; so was their tale that the remittance of US$5,060,900 was, without their knowledge and authority, diverted by Sally to buy other policies. The objective of the trickery was for the plaintiffs to make use of Sally’s fraud and the fictitious AIA TYP to mount a dishonest claim against the AIA defendants for compensation based on the stated principal sum and assured returns.

The AIA defendants depicted Sally as someone who was unwillingly dragged deeper into the fraud in the hands of the main fraudster and puppet-master, OHL. Yet the details of the agreement of conspiracy, astonishing in themselves and taken at face value, smacks of so foolish such as to suggest a work of fiction. The evidence led needs to be clear and convincing and it is for the AIA defendants in their Counterclaim to properly establish the alleged conspiracy to the requisite standard of proof. If the unlawful means conspiracy is made out, the plaintiffs’ claim against the AIA defendants must fail. The various causes of action raised by the plaintiffs in the alternative will be considered in turn if the conspiracy plea fails. In this event, the presenting scenario is one where the plaintiffs and AIA were the victims of Sally’s fraud and the question that arises is whether the AIA defendants are liable to the plaintiffs for Sally’s fraud. The plaintiffs claim that the AIA defendants are contractually bound by the terms of the AIA TYP, including the sums promised by Sally upon its purported maturity, or alternatively that the AIA defendants are vicariously liable for Sally’s fraud or were negligent in failing to detect it. The plaintiffs’ action against the AIA defendants is also founded on trust and unjust enrichment. The plaintiffs were able to recover some money from Sally, having sued Sally personally in Suit No 179 of 2010 and obtained default judgment. Therefore, the plaintiff’s fall back claim against the AIA defendants is to recover the balance of their loss in the sum of S$1,597,250.69 (excluding interest).

The plaintiffs have also sued the third defendant, Motion Insurance Agency Pte Ltd (“Motion”), who they claim was Sally’s manager and was responsible for her training and supervision. The plaintiffs’ case against Motion is based on vicarious liability and negligence. Motion was set up by one Rayner Lee (“Rayner”), who was Sally’s manager and trainer, although the issue of whether he supervised Sally in his personal capacity or as Motion’ agent is disputed. The plaintiffs’ claim against Motion will also fail if the AIA defendants succeed in their Counterclaim. For ease of reading, the paragraphs dealing with the plaintiffs’ various claims against Motion are found at [123]-[127], [196]-[206] (vicarious liability for Sally’s’ fraud), [221]-[222] (tortious liability under agency principles), and [249]-[251] (negligence).

The plaintiffs are represented by Ms Deborah Barker, SC (“Ms Barker”). The AIA defendants are represented by Mr Wendell Wong (“Mr Wong”). Mr Melvin Chan acts for Motion.

The Policies

I propose to list the various life insurance policies I will refer to in this judgment. Apart from the AIA TYP, from 2002 to 2003, there were several other policies ostensibly purchased in the respective names of the plaintiffs. These were genuine life insurance products being offered by AIA at the material time, but the Ongs claim that they had not applied for some of them: Policy numbers L533717242 (“P01”) and L533717239 (“P03”) are policies applied for and authorised by Enny and OHL respectively, and will be collectively referred to as the “Authorised Policies”. Policy numbers U021484689 (“P02”), L533718186 (“P04”), U021485248 (“P05”) and L534479699 (“P06”) are policies in Enny (P04, P05, P06) and OHL (P02)’s names which they claim they had not applied for, and will be referred to as the “Unauthorised Policies”. The Authorised Policies and Unauthorised Policies will collectively be referred to as the “AIA Policies” as and when relevant. P02, P05 and P06 were surrendered by OHL (P02) and Enny (P05, P06) in 2005 and 2006 respectively and will be referred to as the “Surrendered Policies”. Policy number L533717226 (“P07”) was a pre-allocated policy number (see [102] below) cited for some of Enny’s medical reports, but AIA has never received a policy application for P07 and the plaintiffs make no claim in respect of it. It will not be referred to in this judgment. Policy number L534076568 (“P08”) was a policy which the Ongs claim that they had not applied for, the policy application was not approved and the Ongs do not claim in respect of it.

Counterclaim of unlawful means conspiracy

I begin by considering the alleged conspiracy between Sally and the plaintiffs. It is appropriate to resolve this allegation of conspiracy first because if the AIA defendants’ Counterclaim succeeds, it disposes of the entire case as the plaintiffs cannot succeed against all the defendants. On the other hand, if the conspiracy claim is not made out because Sally’s evidence on the plaintiffs’ complicity is rejected, Sally’s fraud on the plaintiffs will serve as the prima facie factual foundation of the plaintiffs’ case. This approach is supported by the particular circumstances of the case where the overall evidence would implicate Sally in the creation of false documents and the making of fraudulent statements to the plaintiffs and AIA, as well as exposing her false testimony in court.

The alleged conspiracy and the relevant law

The AIA defendants’ plea in their Counterclaim is that the Ongs and Sally conspired to create the fictitious AIA TYP to defraud AIA. Sally and the Ongs would forge promotional documents on AIA’s letterhead to give the impression that they were from AIA to create a paper trail for the AIA TYP. The AIA TYP was intended to be a life insurance policy which, upon a single premium payment, would guarantee a return of 6% per annum on the United States Dollar (“USD”) component and 7.5% per annum on the Singapore Dollar (“SGD”) component after a five-year maturity period. With the purported intention of purchasing the fictitious AIA TYP, the Ongs would remit US$5,060,900 to AIA. The money would then be used to purchase the AIA Policies with Sally’s assistance. After the purported five-year maturity period for the AIA TYP, the Ongs would demand the principal sum and assured returns from AIA, disavowing knowledge of the Unauthorised Policies.

The AIA defendants bear the burden of proving the conspiracy. Cogent evidence commensurate with the seriousness of an allegation of fraud is required. AIA has to prove (as per EFT Holdings Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another [2014] 1 SLR 860 at [112]): A combination of two or more persons to do certain acts; The alleged conspirators had the...