Sim Tee Meng v Haw Wan Sin David and another

• Jurisdiction: Singapore
• Judge: Judith Prakash JA
• Judgment Date: 19 November 2019
• Neutral Citation: [2019] SGCA 71
• Docket Number: Civil Appeal No 14 of 2019
• Date: 19 November 2019
• Published date: 12 December 2019
• Plaintiff Counsel: N Sreenivasan SC, Kyle Gabriel Peters and Teh Jing Hui (instructed counsel) and Sng Kheng Huat (Sng & Co)
• Hearing Date: 13 August 2019
• Defendant Counsel: Harish Kumar s/o Champaklal and Toh Jun Hian, Jonathan (Rajah & Tann Singapore LLP)
• Court: Court of Appeal (Singapore)
• Subject Matter: Misrepresentation,Duty of care,Tort,Negligent misrepresentation,Negligence

Judith Prakash JA (delivering the grounds of decision of the court): Introduction

This appeal raised the question as to the circumstances in which a Key Executive Officer (“KEO”) and director of a limited company in business as an estate agency can be found to be personally liable for representations made to customers by him when such representations were made in the course of his employment with the company and in order to promote the business of the company.

Before us, the appellant was Sim Tee Meng (“Mr Sim” or “the appellant”) and the respondents were Haw Wan Sin, David and Yee Ai Moi, Cindy (“Mr Haw” and “Mdm Yee” respectively, and “the respondents” collectively). The respondents are husband and wife. The appellant was at all material times the KEO of Faber Property Pte Ltd (“Faber”), a limited liability company incorporated in Singapore.

In District Court Suit No 3237 of 2015 (“DC 3237”), the respondents sued the appellant, Faber and one Seah Beng Hoon (“Ms Seah”) for negligent misrepresentation. Faber was and still is an estate agency licensed by the Council of Estate Agencies (“CEA”). Apart from being KEO of Faber, the appellant was its sole shareholder and only director. Ms Seah was an Associate Director of Faber and a licensed real estate salesperson. The respondents pleaded that in reliance on certain representations the defendants made to them, they had entered into various agreements with a New Zealand company Albany Heights Villas Limited (“the Developer”) for a “First Right of Refusal” (“FRR”) in respect of three units in a residential housing project in New Zealand (“the Project”). The Developer subsequently went into insolvent liquidation and the respondents suffered loss as a result.

In summary, the District Judge (“the DJ”) found that only Faber was liable to the respondents for negligent misrepresentation. She dismissed their claims against the appellant and Ms Seah. The DJ’s decision is Haw Wan Sin David and another v Faber Property Pte Ltd and others [2018] SGDC 143 (“Judgment (DC)”).

The respondents then filed District Court Appeal No 16 of 2018 (“DCA 16”), seeking to overturn the DJ’s decision in part. The High Court Judge (“the Judge”) allowed the respondents’ appeal in respect of the appellant (Mr Sim), but dismissed their appeal in respect of Ms Seah. The Judge’s decision is Haw Wan Sin David and another v Sim Tee Meng and another [2018] SGHC 272 (“Judgment (HC)”).

The appellant then sought and was granted leave to appeal to this Court against the High Court’s decision. Before this Court, he argued that the Judge erred in: (1) overturning the DJ’s factual finding that he did not make the alleged representations; and (2) finding that he was personally liable to the respondents for making those representations.

After hearing the parties, we dismissed the appeal. We upheld the Judge’s findings of fact and her holding that the appellant owed a personal duty of care to the respondents arising out of his interactions with them. We accordingly lifted the stay of execution on the judgment below which had earlier been granted pending the outcome of this appeal.

These are the reasons for our decision.

Facts

On 7 January 2012, Faber entered into an agreement with the Developer and the Developer’s Singapore entity to market the Project in Singapore. On 14 January 2012, a marketing event was held at an external venue to sell the FRR investment in the Project. At the event, Faber’s representatives and salespersons approached potential investors with a view to marketing the investment. The respondents were amongst those who attended this event.

The respondents pleaded that Ms Seah made the following misrepresentations that day about the Project to a group of potential investors which included them: Representation 1: the owners of the Developer had a good track record of successful developments; Representation 2: Phase 1 of the Project was fully sold and construction was already in progress, while Phase 2 was 60% sold; and Representation 3: investment moneys paid by any investor would be held in a trust account by New Zealand lawyers, and the Developer would only have access to the moneys according to the progress of construction of the Project.

Two days later, on 16 January 2012, the respondents attended at Faber’s office and met Ms Seah and Mr Sim. The respondents met Ms Seah first, and then they asked to speak with Mr Sim. Mr Haw had suggested to his wife that they meet with Mr Sim as he was Faber’s KEO. They wanted to obtain confirmation of the representations Ms Seah had made, and to seek Mr Sim’s assurance that all necessary due diligence checks for the Project had been performed. Mr Haw also wanted to speak with Mr Sim about the Project as he was concerned that Ms Seah, being a salesperson, might subsequently leave Faber whilst the Project was ongoing whereas it was less likely that the KEO would do so.

At the respondents’ meeting with Mr Sim, Mdm Yee told him that she herself was a real estate salesperson and asked whether she could receive a co-broking commission if she found other persons to invest in the FRR scheme. The respondents had pleaded that Mr Sim made the following misrepresentations to them during the meeting: Representation 4: the representations Ms Seah had made at the marketing event on 14 January 2012 were true and correct; Representation 5: the defendants had complied with CEA’s strict requirements to perform checks on the ownership and legality of the Project; and Representation 6: the defendants had done all relevant and necessary due diligence checks on the Developer and details such as title to the Project and building approval for marketing, and everything was in order.

In this regard, Mr Sim admitted that he had represented to the respondents that Faber had conducted due diligence checks in respect of the Project when he was asked about this by Mdm Yee. He, however, averred that the details of the due diligence checks conducted were not included in his representation.

The respondents’ case was that in reliance on Representations 1 to 6, they entered into various agreements with the Developer that same day to obtain the FRR for three units in the Project. The respondents had to pay S$15,000 as reservation deposit and US$142,656.76 as the balance of the FRR price for the three units. In DC 3237, the respondents sought the return of those sums.

The fact of the matter was that, amongst other things, the Developer had neither the title nor the resource consent required to develop the relevant plot of land on which the Project was supposed to be constructed. Subsequently, the Developer went into liquidation and investigations by liquidators in New Zealand suggested that those who came up with the FRR scheme had siphoned off substantial sums paid by purchasers such as the respondents.

The DJ’s decision in DC 3237

As mentioned, the DJ found that only Faber was liable to the respondents. The DJ found that Faber owed a duty of care to them as it had assumed responsibility to exercise care to avoid loss to investors like the respondents. Those investors relied on Faber to exercise care when presenting information about the Project, and Faber knew or ought to have known of such reliance (see Judgment (DC) at [27], [29]). Of the six alleged misrepresentations, the DJ found that Ms Seah, as Faber’s representative, had only made Representations 1 to 3, or representations along those lines, to the respondents on Faber’s behalf (see [34]–[36]). In spite of this, the DJ later held that Faber breached its duty of care by failing to ensure that it had a good basis for making Representations 1 to 3, 5 and 6 to the respondents (see [51], [58]).

As regards Mr Sim, the DJ accepted his account that when Mdm Yee asked whether due diligence checks had been conducted, he responded that Faber had conducted them but he did not particularise the exact checks conducted (see Judgment (DC) at [75]). The DJ held that it was unlikely that the respondents had asked Mr Sim to confirm that all the representations Ms Seah had made were true. The DJ was of the view that the respondents’ evidence was inconsistent as to what transpired between them and Mr Sim, and that it was likely that their version was concocted as an afterthought to pin personal liability on Mr Sim (see [70], [74]). The DJ further held that Mr Sim’s representation that due diligence checks had been conducted was made on Faber’s behalf in his capacity as Faber’s director and not in his personal capacity, and that the respondents relied on the representation as coming from Faber and not Mr Sim the individual (at [77]). The DJ found that Mr Sim did not owe a personal duty of care to the respondents in making that general representation to them and dismissed their claim against him (at [81]).

As regards Ms Seah, the DJ found that she had made representations to the respondents along the lines of Representations 1 to 3 on behalf of the entities behind the marketing event (which included Faber) and that she was “merely a mouthpiece” when doing so (Judgment (DC) at [90]). The DJ found that Ms Seah did not owe a personal duty of care to the respondents as she did not voluntarily assume personal responsibility for those representations made on Faber’s behalf. Further, the respondents had relied on them as representations made by Faber, not as representations made by Ms Seah (see [94]). The DJ thus dismissed the respondents’ claim against Ms Seah.

The decision in DCA 16

As mentioned, in DCA 16, the Judge found the appellant jointly and severally liable with Faber to pay the respondents damages of S$15,000 and US$142,656.76.

The Judge found that the following evidence showed that the appellant had made Representations 4 to 6 to the respondents. First, when Mdm Yee asked the appellant generally whether due diligence checks had been conducted, he replied in...