Tan Chin Seng and Others v Raffles Town Club Pte Ltd

• Jurisdiction: Singapore
• Judge: S Rajendran J
• Judgment Date: 22 November 2002
• Neutral Citation: [2002] SGHC 278
• Court: High Court (Singapore)
• Published date: 22 March 2013
• Year: 2002
• Plaintiff Counsel: Molly Lim SC, Ronald Tong and Wang Shao-Ing (Wong Tan & Molly Lim)
• Defendant Counsel: K Shanmugam SC, Boey Swee Siang, Sanjiv Rajan, Stanley Lai, Marcus Yip and Candace Ler (Allen & Gledhill)
• Citation: [2002] SGHC 278

Judgment Cur Adv Vult

GROUNDS OF DECISION

1 Raffles Town Club Pte Ltd ("the defendants") was incorporated in 1996 for the purpose, inter alia, of setting up and running a proprietary club in Singapore ("the Club"). The Club was to be erected on a 30-year leasehold site at the junction of Dunearn Road and Whitley Road which has been acquired from the Urban Redevelopment Authority ("URA") in May 1996. A competition was held soon thereafter to select the architectural firm to be entrusted with the design of the Club and the firm so selected submitted building plans for the Club to the authorities. Provisional permission (with requirements) for the erection of the clubhouse was obtained on 18 October 1996. The Club was to open in late 1998 but delays in construction and in the obtaining of relevant approvals resulted in the Club opening its doors in March 2000.

The drive for membership: "founder" members

2. The Club began its membership drive with a priority launch for "founder" members in November 1996. A number of financial institutions participated in this launch. Letters of invitation (dated 9 November 1996) were sent out by these institutions to selected customers of theirs. Enclosed with the letter were a brochure on the Club ("the Brochure"), a question and answer sheet ("Q&A Sheet") and a priority application form for "founder" membership ("application form"). The memberships were all transferable memberships. The plaintiffs in their pleadings and at the hearing referred to the invitation letter, the Brochure and the Q&A Sheet as the common law prospectus but conceded that they were not using that term in any legal sense.

3. There were slight variations in the format of the letters of invitation that were sent out by the various institutions but in essence the letters stated that a limited number of exclusive individual "founder" memberships were available at $28,000 to selected customers. The ambience and facilities that would be available at the Club were described in effusive and laudatory terms in these letters. The invitation letter sent out by the United Overseas Bank, for instance, began by saying:

"As your aspirations become reality, the desire for a place to pause and enjoy the rewards of your achievements becomes something of an aspiration in itself. UOB is proud to present you with an opportunity to actualize these aspirations for gracious living, with membership to a private city club without peer in terms of size, facilities, and sheer opulence – the Raffles Town Club."

And, after giving more details of this special offer to the selected customer, ended by stating:

"Raffles Town Club is dedicated to providing the ultimate lifestyle investment for you and your family. We invite you to join Singapore’s elite in a most distinguished setting."

The letter emphasised that "founder" membership was available by invitation only and applications had to be submitted by 30 November 1996.

4. The Brochure, in keeping with the tone of its contents, was headed "A Treat For The Elite". It began with a quotation from Shakespeare:

"There is a tide in the affairs of men,

which, taken at the flood, leads on to fortune."

and declared to the invitee:

"You are of the chosen few. The tide has risen, and you ride a wave of prominence. Indeed, now that you have evolved beyond a certain station in society, there is an exquisite reward awaiting you. It is called the Raffles Town Club."

The pages in the Brochure that follow unabashedly extol the facilities, ambience and services that will be available at the Club: "The Revival of a Venerable Lifestyle"; "The Epitome of Grace, Achievement and Opulence"; "Exclusivity and Cultivation in an Age of Sophistication" are the sort of sub-headings used to describe what was on offer at the Club. And, as was to be expected from a club using such unabashedly extravagant language to tout its virtues, the Brochure was a glossy publication resplendent with colourful illustrations envisioning lavish facilities.

5. There could be no doubt that what the Brochure was telling the invitees was that this was going to be a premier and first-rate club for the exclusive enjoyment of the selected elite in Singapore.

6. The Q&A Sheet also gave some pertinent assurances. There was an assurance, for instance, that:

"Common problems will be addressed, such as carparking, where members will have ample space to park with nearly 600 lots. And by allocating much larger areas, traditional bottleneck facilities such as the gymnasium and coffeehouse will serve you smoothly even during peak periods."

and on the question of transferability of membership, invitees were told that membership would, subject to the Club’s approval, be transferable and that a transfer fee of 10% of the prevailing entrance fee, set by the Club at $60,000 upon opening, will be applicable.

7. The Q&A Sheet posed and answered certain questions about the Club. This was also clearly a document aimed at promoting sales. The last question and answer, for example, read:

Q. If I am not successful in this application, when can I re-apply for membership?

A. As only a limited number of memberships are available under this priority launch, we may not be able to accommodate all suitable applicants. We will however be conducting an initial public launch from 1^st December 1996 for Individual Ordinary memberships at $40,000.

By asking that question and giving that answer the promoters were insinuating that any invitee who did not immediately apply for "founder" membership at $28,000 would lose out: if he joined at a later date, he would have to pay the increased price of $40,000. Implicit in this answer was, of course, the suggestion that anyone who bought a membership (which was transferable) at $28,000 stood to make a good profit when the price went up.

8. The application form, besides requiring the personal details of the applicant, contained a number of declarations that the applicant was required to make. The first of these declarations was the following:

"I, the undersigned, undertake at all times to comply with and be bound by the rules and regulations as may be prescribed and/or varied from time to time by Raffles Town Club Limited (the ‘Proprietor’). I understand that the current rules and regulations as prescribed by the Proprietor may be viewed by me at the office of the Proprietor at 2 Nassim Road, Singapore 258370. I further understand that a copy of the same will be sent to me upon acceptance of my application."

I will not refer to the other declarations as they were of no particular relevance in these proceedings.

9. Each of the plaintiffs herein, upon receipt of the invitation, applied for membership by submitting the duly completed application form to the defendants. It was not in dispute that when the defendants accepted each of these applications the contract between that applicant and the defendants came into being. It was also not disputed that the declarations in the application form – and in particular the Rules and Regulations of the Club ("the Rules") referred to in the very first declaration – was part of that contract. The defendants contended that the declarations contained in the application form constituted the entire contract with each of the plaintiffs. The plaintiffs, however, contended that some of the representations in the Brochure and in the Q&A Sheet also constituted the contract. I will deal with these contentions in dealing with the plaintiffs’ claims in contract.

10. The priority launch for "founder" members met with considerable success and 18,992 persons who applied for membership were admitted as "founder" members. Subsequently (ie after the closing date for the priority launch), an additional 56 persons were admitted as "ordinary" members of the Club at the increased fee of $40,000 each. The plaintiffs in this case (all 4,895 of them) were from the group of 18,992 "founder" members.

11. It would appear that the general membership of the Club did not, at that time, know that the total number of "founder" members exceeded 18,000. This fact became publicly known only in late March 2001 as a result of disclosures made in court at the hearing of Suit No. 742/2000 in which Peter Lim (one of the original shareholders of the defendants) sued the other shareholders (Lawrence Ang, William Tan and Dennis Foo) as a result of certain disputes amongst them. These disputes were eventually settled out-of-court on confidential terms sealed by the court.

12. In July 2001, the original shareholders sold their entire interest in the defendants to two new investors: Lin Jian Wei and Margaret Tung. At the time the new shareholders assumed control, some $501.5 million of the $515 million collected as entrance fees had been spent leaving the defendants with a cash balance of only about $13.5 million. The financial viability of the defendants when the new shareholders took over was therefore dependent largely on the monthly subscription from members and the profits that the defendants could make from the food and beverage and other services provided at the Club.

13. On 15 November 2001, the ten named plaintiffs herein commenced this representative action – on behalf of themselves and the 4,885 other "founder" members of the Club – against the defendants for alleged misrepresentation/breach of contract. The remedy they sought was the rescission of their membership contracts or damages in lieu thereof on the grounds of misrepresentation. Alternatively, they sought damages for breach of contract. I will deal first with the claim based on misrepresentation.

The tort of misrepresentation

14. The representations relied on by the plaintiffs for their claim in misrepresentations were pleaded in paragraph 9(a) to (g) of the Amended Statement of Claim. I will set these claims out in full:

"9. The prospectus contained, inter alia, the following highlights...