Scan Electronics (Singapore) Pte Ltd v Seah Chwee Lim

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 30 October 1999
• Neutral Citation: [1999] SGHC 287
• Docket Number: Suit No 600038 of 1998
• Date: 30 October 1999
• Published date: 19 September 2003
• Year: 1999
• Plaintiff Counsel: Michael Hwang SC and Daren Shiau (Allen & Gledhill)
• Citation: [1999] SGHC 287
• Defendant Counsel: Steven Chong SC, Lionel Tan and Gavin Khoo (Rajah & Tann)
• Court: High Court (Singapore)
• Subject Matter: Duty of solicitor to investigate title,Damages,Whether plaintiffs would have acted otherwise but for negligent advice,Tort,Whether duty relieved by client's instruction not to offend vendor,Negligence,Negligent advice by solicitor,Solicitor-client relationship,Contributory negligence,Causation,Measure of damages,Whether losses incurred reasonably incurred

:The defendant Mr Seah Chwee Lim, an advocate and solicitor, practises as Seah Chwee Lim & Associates. The plaintiffs were his clients.

The plaintiffs were carrying on business at Sim Lim Tower, Jalan Besar. In April 1993 the plaintiffs` directors Azam Ali and Chow Kwok Seng decided to buy a property along Jalan Besar facing Sim Lim Tower. They looked at several properties and were interested in a two-storey shophouse at No 13 Jalan Besar.

A search at the Land Office revealed a Deed of Appointment of Trustees. Azam Ali contacted one of the trustees Syed Salim Alhadad bin Syed Ahmad Alhadad, and expressed interest in purchasing the property. Syed Salim referred him to his nephew Syed Jafaralsadeg bin AbdulKadir (`Jafar`).

Azam Ali met Jafar and eventually they agreed on a price of $550,000. Azam Ali also agreed to pay a commission of $50,000 to an agent who Jafar claimed he had appointed to sell the property. In truth there was no agent, and Jafar was subsequently convicted for cheating Azam Ali of the $50,000.

An option was issued on 29 May 1993 to the plaintiffs for the purchase of the property. The option was issued by Syed Ibrahim bin Abdul Kadir Alhadad, Syed Hashim bin Abdul Kadir Alhadad and Syed Salim Alhadad bin Syed Ahmad Alhadad as the personal representatives of the estate of Syed Abdulkadir bin Ahmad Alhadad (hereinafter referred to as `the vendors`).

On 31 May the two directors engaged the defendant to act in the purchase and showed him the option they obtained. The defendant did not take any action after being instructed till 22 June, when the plaintiffs exercised the right to purchase the property. On that day, he carried out a title search on the property.

He was not satisfied with the search results because it did not show that the title of the property was vested in the estate of Syed Abdulkadir bin Ahmad Alhadad. On the following day, he informed the solicitors for the vendors, G Balan Nair & Co (`Balan Nair`), that

2 An updated Lot Base title search reveals that the property was owned by Mohamed bin Ali bin Faraj Basalamah in 1935.

3 Probate No 385/1953 was taken out in respect of the estate of Mohamed bin Ali bin Faraj Basalamah in 1935. Syed Abdulkader bin Ahmad Alhadad was appointed the administrator.

4 In 1991, Probate No 1508/1981 was taken out in respect of the estate of Syed Abdul Kader bin Ahmad Alhadad. Sharifah Bahaiah bte IA and Syed Ibrahim bin Abdul Kadir Alhadad were appointed the administrators.

5 In January 1993, Sharifah Bahaiah bte Ibrahim Alsree and Syed Ibrahim bin Abdul Kadir Alhadad appointed Syed Ibrahim bin Abdul Kadir Alhadad and Syed Salim Alhadad bin Syed Ahmad Alhadad as trustees (presumably Sharifah Bahaiah btw Ibrahim Alsree had quit).

6 Hence, in February 1993, Syed Salim Alhadad bin Syed Ahmad Alhadad and Syed Ibrahim bin Abdul Kadir Alhadad appointed Syed Hashim bin Abdul Kader Alhadad as their co-trustee.

7 So, Syed Salim Alhadad bin Syed Ahmad Alhadad, Syed Ibrahim bin Abdul Kadir Alhadad and Syed Hashim bin Abdul Kadir Alhadad, the vendors in the option, are said to be the personal representatives of the estate of Syed Abdul Kadir bin Ahmad Alhadad in the sale.

8 There is no evidence of the passing of beneficial interests in the property by the estate of Mohamed bin Ali bin Faraj Basalamah to the estate of Syed Abdul Kader bin Ahmad Alhadad.

9 Please enlighten us as to how the estate of Syed Abdul Kader bin Ahmad Alhadad had become able to sell the interests in the property.

On 30 June he received a reply from Balan Nair which did not deal with his query, but stated that the sale and purchase of the property was subject to the vendors obtaining an order of court pursuant to s 35(2) of the Conveyancing and Law of Property Act.

The defendant wrote back to Balan Nair on 1 July and repeated his concern that

3 It has been contended ... that the court order under s 35(2) of CLPA does not cure a `bad root` in the title. ...

4 We are afraid your clients might not be the actual trustees of the registered proprietor of the property and they have no locus standi to make any application in the first instance.

5 Hence the court order, even if granted, might not be good for the purpose.

6 If your clients are not and cannot be construed as the actual trustees of the estate of Mohamed bin Ali bin Faraj Basalamah, the whole exercise may be futile.

7 May we therefore request for perusal of draft affidavit by the trustees setting out their rights to file an application seeking court order to sanction the sale of the property to the purchasers.

When Azam Ali had received copies of the defendant`s letters to Balan Nair, he communicated with Jafar. Jafar wrote to him on 24 June to assure him that

We had done title search on the said property and you do not have to worry about anything, as the sale shall be sanction by the court. Please be informed that we are selling the said property as the legal owner and you and your lawyer should not worry unnecessarily about who is the equitable owner, that is our family internal matter with the Basalamah families.

After all the sale proceed shall be held in trust account with our lawyers after the sale.

Subsequently Azam Ali spoke with the defendant on 6 July. The defendant made an attendance note of their conversation, the relevant parts of which read

1 Azam Ali said the trustees have said they have powers to sell. The rest are internal matter. All beneficiaries will sign.

2 Ali said trustees offended. I told him I had no intention to do so. It is entirely up to trustees to satisfy themselves of the status. I owed purchaser a duty.

In his affidavit of evidence-in-chief he deposed that `Azam Ali also said that the vendors had felt offended by our letter of 1 July 1993 and had therefore threatened to call off the sale` and that he had explained to Azam Ali that he owed the plaintiffs a duty to ensure that they obtained a good title to the property. Azam Ali denied that the trustees had threatened to call off the sale and the attendance note supported him insofar as it made no reference to such a threat.

The defendant was not deterred by the conversation from seeking clarification on the vendors` title. He wrote to Balan Nair on 13 July to ask for a draft copy of the affidavit in support of the pending application under s 35(2). Balan Nair replied on 4 August stating that he would not forward the draft affidavit and only offered to let him have a copy of the order of court.

The defendant spoke with Azam Ali again on 4 August and advised him of the response. He made an attendance note that

1 Ali said he has read the fax of 4.8.93 by G Balan Nair & Co.

2 I told him since the vendors` solicitors are adamant about it, we don`t have a choice but to hope for the best.

3 There is no contractual term for us to peruse affidavit first.

Ali said `ok` - let it be.

Don`t offend the vendors or their solicitors.

Subsequently the defendant received copies of the order of court in OS 787/93 dated 27 August 1993 and the affidavit in support of the ex parte application. In the affidavit it was deposed that (i) that Mohamed bin Ali Faraj Basalamah (`Basalamah`) the sole beneficial owner of No 13 Jalan Besar died intestate on 11 August 1944, (ii) that letters of administration to his estate were granted in favour of Syed Abdul Kader bin Ahmad Alhadad (`Alhadad`) on 27 July 1953, (iii) Alhadad died intestate on 4 June 1981, (iv) letters of administration to the estate of Alhadad were granted to Sharifah Bahiah bte Ibrahim Alsree and Ibrahim bin Abdul Kadir Alhadad, (v) the two administrators appointed Syed Ibrahim bin Abdul Kadir Alhadad and Syed Salim Alhadad bin Syed Ahmad Alhadad as the trustees of the estate of Alhadad and (vi) the said trustees appointed Syed Hashim bin Abdul Kadir Alhadad as an additional trustee.

Even before he received the copies of the order of court and the affidavit, the defendant had obtained copies of the title deeds by 14 July. When he read them, he realised that there was a break in the title of the vendors and that the plaintiffs would not obtain a proper title, but he did not bring that to the attention of Azam Ali or the plaintiffs. He took no further action after receiving the order of court, evidently forsaking his earlier (and correct) view that it would not cure a bad root of title.

Two days before the completion, on 13 October the defendant met with Azam Ali and Chow Kwok Seng again. In his affidavit of evidence-in-chief he deposed that

I advised them that since M/s Balan had been very uncooperative since the time a request for full documents was made as regards the OS 787/93 application by the vendors, and now that M/s Balan were not even able to furnish the particulars of the tenant/occupier of the property in writing, it was risky to complete the sale and purchase because, inter alia, the tenant could apply for adverse possession. I further informed that we would require a letter of indemnity from the plaintiffs if they insisted on going ahead with the completion.

Under cross-examination, he admitted that they discussed the problem of adverse possession, and that he did not advise Azam Ali and Chow not to complete the sale because the vendors had no title. If he had any remaining doubts on the title, he did not bring them up with them or refer to them in the draft letter of indemnity he prepared for them to sign.

Azam Ali took the initiative to deal with the adverse possession problem himself. He went to the tenants with the trustees and obtained a rent receipt. He handed the receipt to the defendant on 15 October and told him that he will not issue the letter of indemnity.

The defendant`s attendance note on this attendance corroborated his evidence insofar as it recorded that Azam Ali instructed that there was no problem with the tenants and that he will not issue the letter of indemnity. However there...