Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: George Wei JC
• Judgment Date: 06 May 2015
• Neutral Citation: [2015] SGHC 125
• Plaintiff Counsel: Eugene Singarajah Thuraisingam, Cheong Jun Ming Mervyn and Jerrie Tan Qiu Lin (Eugene Thuraisingam LLP)
• Docket Number: Suit No 1022 of 2012
• Date: 06 May 2015
• Hearing Date: 05 May 2014,17 January 2014,09 January 2014,10 January 2014,07 January 2014,16 January 2014,08 January 2014,14 January 2014,15 January 2014
• Subject Matter: Malice,Justification,Qualified privilege,Malicious falsehood,Defamation,Defamatory statements,Tort,Negligence,Duty of care,Breach of duty
• Year: 2015
• Citation: [2015] SGHC 125
• Defendant Counsel: K Muralidharan Pillai, Luo Qing Hui and Huang Jieyang (Rajah & Tan Singapore LLP)
• Court: High Court (Singapore)
• Published date: 05 August 2016

George Wei JC:

This case concerns a claim for defamation arising from several reference checks and communications made in respect of the plaintiff, a financial adviser (“the Plaintiff”). These were provided by the defendant, AXA Life Insurance Singapore Pte Ltd (“the Defendant”), to the Monetary Authority of Singapore (“MAS”) and potential employers of the Plaintiff, namely, Prudential Assurance Company Singapore Private Limited (“Prudential”) and Tokio Marine Insurance Singapore Limited (“Tokio Marine”).

The Plaintiff also claims malicious falsehood and negligence on the part of the Defendant in the reference checks that were provided to these potential employers. The trial took place over a period of eight days. I reserved judgment upon the conclusion of the trial. Having considered both the evidence and the parties’ submissions, I dismiss the Plaintiff’s claims in defamation, malicious falsehood and negligence. I now set out the grounds for my decision.

The facts

Prior to joining the Defendant, the Plaintiff worked as an insurance agent at other insurance companies including Phillip Securities and Manulife Financial. It is not in dispute that the Plaintiff’s services at Manulife Financial were terminated for reasons relating to persistency and compliance issues.¹

The Plaintiff was first engaged by the Defendant as a financial adviser and financial services manager on 26 July 2005. At that time, the Defendant engaged the Plaintiff subject to a period of close supervision due to reference check reports the Defendant had received, and on which MAS had made enquiries of the Defendant.² That said, it is apparent that the Plaintiff performed well enough to be promoted to the position of a financial services director in 2007, when he led a group of advisers under his own agency organisation, “Ramesh Organisation”. These advisers were formally employed by the Defendant. In 2009, the Plaintiff was promoted to a senior financial services director (“Senior FSD”). At all material times, the Plaintiff was authorised to act as an agent for the Defendant for the purposes of soliciting and advising on life insurance applications, annuities and other products offered by the Defendant.³ The Plaintiff was not an employee of the Defendant. It is apparent that the Plaintiff received commissions based on the insurance policies sold by Ramesh Organisation.

The Plaintiff’s scope of work as a Senior FSD was to recruit, train and supervise advisers for the Defendant. In doing so, the Plaintiff would assess the sales figures and persistency ratios of the advisers directly under him.

Persistency ratios are essentially a measure used to track the number of insurance policies sold by advisers that are still in force over a certain period of time. The Plaintiff gave evidence that from January 2007 to April 2011, the Defendant had always relied on a 19-month persistency ratio to assess the performance of the advisers under his supervision. The 19-month persistency ratio was a measure of how many regular and single premium policies are still in force over an 18-month period. As at April 2011, the Plaintiff had 47 advisers under him in Ramesh Organisation.

Industry reference check system

The MAS prescribes fit and proper guidelines for representatives of financial institutions (“FIs”) in relation to their competency, integrity, and financial soundness (“the Guidelines on Fit and Proper Criteria”). In September 2006, the MAS introduced an industry reference check system (“the Industry Reference Check System”) to facilitate effective and efficient compliance with the Guidelines on Fit and Proper Criteria. The Industry Reference Check System was implemented on 2 October 2006. This was followed by a Representative Notification Framework (“RNF”) licensing regime introduced on 26 November 2010, which imposes a duty on an FI to respond to queries by MAS and reference check requests by other FIs in relation to its ex-financial advisers.

It is not disputed that the Defendant, Prudential and Tokio Marine are FIs subject to regulation by MAS. Specifically, they are subject to the abovementioned Industry Reference Check System, the Guidelines on Fit and Proper Criteria and the RNF.

Under the Industry Reference Check System, FIs are obliged to conduct reference checks on persons applying to them for jobs involving regulated activities under the Financial Advisers Act (Cap 110, 2007 Rev Ed) (“FAA”) and the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“SFA”). These reference checks are obtained from the job applicant’s ex-principal(s) using a standard industry reference check form (“the Industry Reference Check Form”). The checks are conducted to ensure that the job applicant satisfies the Guidelines on Fit and Proper Criteria. The ex-principals are expected to respond in a timely and forthcoming manner to facilitate such reference check requests.

The Industry Reference Check Form comprises four parts: (a) Section A (minimum compulsory information); (b) Section B (optional information); (c) Written authority to conduct the reference check; and (d) Guidelines for use of the reference check form (“the RCF Guidelines”). The Industry Reference Check Form was developed by the Life Insurance Association (“LIA”) in 2006. The RCF Guidelines stress that the prospective employer or principal is at liberty to request more information under the optional section (eg, information on persistency ratios).⁴

The Industry Reference Check Form contains a section where the applicant gives written authorisation to the prospective hiring FI to conduct the inquiry into his or her previous employment, and to release from liability all persons or entities requesting or supplying such information that pertains to the applicant’s previous employment.

Under the RNF, FIs are to notify MAS whenever they intend to appoint a representative to provide financial advisory or capital markets services under the FAA or the SFA. They are to ensure that any proposed representative satisfies the Guidelines on Fit and Proper Criteria. The FIs do this by making due and diligent enquiries on the applicant’s background based on all relevant information that is available. This includes conducting the necessary reference checks with the applicant’s ex-employer or principal using the Industry Reference Check Form. The FIs must also ensure that their appointed representatives are, and continue to be, fit and proper under the Guidelines on Fit and Proper Criteria.

On 26 November 2010, MAS revised the Guidelines on Fit and Proper Criteria. The revised guidelines (like its predecessor) provided that FIs must implement appropriate recruitment policies, and adequate controls and procedures to ensure that their representatives meet the fit and proper criteria. The fit and proper criteria included (but was not limited to): (i) honesty, integrity and reputation, (ii) competence and capability, and (iii) financial soundness.⁵

Reference should also be made to the MAS Circular of 7 February 2011, which states (amongst other matters) that a FI is expected to conduct probity checks on the proposed representative’s past record by confirming that he has not been dismissed or asked to resign. The FI is also to enquire whether the proposed representative has any adverse material record such as a warning, reprimand or other disciplinary action for misconduct.⁶

On 26 November 2010, the Defendant successfully applied for an RNF licence for the Plaintiff.

Plaintiff’s resignation from the Defendant

An issue apparently arose between the parties in or around October 2010, when the Plaintiff realised that the advisers in Ramesh Organisation might not be receiving the Defendant’s Top Awards for 2010 due to an apparent mismatch in the parties’ expectations. At that point in time, Ramesh Organisation had focused predominantly on regular premium policies. The Plaintiff claims that Ramesh Organisation’s targeted approach of focusing on regular premium policies was highlighted to the Defendant’s then chief executive officer (“CEO”), Mr Gilbert Pak (“Mr Pak”). Through Mr Pak, the Defendant apparently assured the Plaintiff that only regular premium policies would be considered for the purpose of assessing the top awards.

On or around 1 December 2010, Mr Glenn Williams (“Mr Williams”) replaced Mr Pak as the Defendant’s CEO. On 11 January 2011, Ramesh Organisation held its annual function to celebrate the organisation’s performance the year before. At this function, Mr Williams complimented the organisation’s performance. In addition, Mr Williams also communicated the Defendant’s position that it would be taking into account the persistency ratios for single premium policies in assessing the Defendant’s top performers. It thus transpired that the Defendant determined the top performers based on both single and regular premium policies. Dismayed at the Defendant’s stance, the Plaintiff notified the Defendant via an email to Mr Williams dated 14 January 2011 that Ramesh Organisation had decided to leave the Defendant.

The Plaintiff claims that thereafter, a few of the Defendant’s executive officers, including Mr David Matthews (“Mr Matthews”), the Regional Chief Executive Officer of South East Asia, asked him to stay with the Defendant. According to the Plaintiff, Mr Matthews invited him to Hong Kong to meet him from 18 to 21 February 2011. The Plaintiff’s travel expenses were fully paid by the Defendant. Subsequently, in March 2011, the Defendant offered the Plaintiff a remuneration package known as the “AXA Growth Package”, which was worth $1.3 million.

On 29 April 2011, the Defendant’s Mr Williams met the Plaintiff and told him that he knew of the Plaintiff’s intention to leave the Defendant. On the same day, the Defendant terminated the Plaintiff’s contract with the Defendant via a termination letter dated 29 April 2011, giving the Plaintiff 14 days’...