Ter Yin Wei v Lim Leet Fang

• Court: High Court (Singapore)
• Judge: Quentin Loh J
• Judgment Date: 20 April 2012
• Neutral Citation: [2012] SGHC 82
• Citation: [2012] SGHC 82
• Defendant Counsel: Netto Anthony Leonard (Nettowon LLC)
• Published date: 24 April 2012
• Plaintiff Counsel: Anthony Wee and Pak Waltan (United Legal Alliance LLC)
• Hearing Date: 27 March 2012
• Docket Number: District Court Appeal 40 of 2011
• Date: 20 April 2012
• Subject Matter: Contract,rules of construction,contractual terms

Quentin Loh J:

At about 9.35 am on 12 December 2008, a motor vehicle driven by the Appellant, Ms Ter Yin Wei (“Ms Ter”) collided into another vehicle driven by the Respondent, Mdm Lim Leet Fang (“Mdm Lim”). Mdm Lim was the plaintiff in the trial below and Ms Ter was the defendant. Ms Ter did not dispute liability. Mdm Lim’s car was damaged and, although she did not initially disclose that she had suffered any personal injuries, she had visited a Polyclinic the day after the accident and was diagnosed with whiplash and lumbar ligamental injuries 5 days later.

It is axiomatic that under liability policies, as was the vehicle insurance policy in this case, there are insured and uninsured losses. Insurance practitioners know that when settling or compromising a case being pursued under subrogation or an assignment, they must not compromise the insured’s right to claim for uninsured losses from the tortfeasor when settling the insured losses. Otherwise they would be answerable to the insured for their professional negligence. The same principle applies to lawyers who receive instructions from motor workshops in motor accident claims.

This forms the sole issue on appeal, viz, did the hapless lawyer who was acting on instructions from the motor workshop in settling the repair claim for the damage to Mdm Lim’s car (including a loss of use claim) compromise Mdm Lim’s right to claim for her personal injuries?

The learned District Judge (“DJ”) decided that the settlement agreement reached between solicitors instructed by Mdm Lim’s workshop and Ms Ter’s liability insurers (see [8]infra) did not prejudice Mdm Lim’s claims for personal injuries. Ms Ter, or I should more correctly say her liability insurers, appealed.

After hearing both parties, I allowed the appeal. I was asked by both counsel to issue a written judgment. As requested, I now set out the reasons of my decision.

Relevant Facts

Mdm Lim alleged that the pain, which indicated she had suffered an injury, only began 3 hours after the incident. However, in the Accident Report filed on the following day, 13 December 2008, in answer to the question: “Was anybody injured in the Accident?” Mdm Lim inexplicably wrote: “No”. Mdm Lim did not disclose that she was suffering from pain although such pain had allegedly manifested itself the day before. As noted above at [1], Mdm Lim visited a Polyclinic directly after filing the Accident Report, and was diagnosed with whiplash and lumbar ligamental injuries 5 days later.

Following the usual practice, Mdm Lim sent her car to the workshop and signed the usual papers which would have included a fairly standard assignment. Again following the usual practice, her car would have been repaired by the workshop and returned to her together with payment of a sum of money for the loss of use of her car during the period of repair. I pause to note that loss of use is an uninsured loss but the practice of the workshops is to include this sum to encourage custom.

The workshop instructed Messrs Teo Keng Siang & Partners (“TKSP”) to pursue the repair claim. TKSP sent a letter of demand dated 5 February 2009 to Ms Ter’s insurers, HSBC Insurance (Singapore) Pte Ltd (“HSBCI”) claiming for:

[L]oss and expense, particulars of which are as follows:
•	Cost of Repair	$3,600.00
•	Loss of use (5 x $60)	$300.00
•	LTA search fee	$8.00
•	GIA search fees	$29.00
•	Survey report fee	$333.00
•	Costs	$856.00
	Total	$5,126.00

This letter was copied to Ms Ter. Correspondence then ensued between HSBCI and TKSP negotiating an acceptable settlement sum. On 18 February 2009, TKSP made an offer to settle at $4,491 after compromising on some items including reductions in (i) the cost of repairs to $3,300; (ii) loss of use to $250 (5 days at $50 a day); and (iii) costs to $600. HSBCI gave a counter-offer of a global sum of $4,200 all-in. Following this there was a telephone conversation and a settlement was reached between TKSP and HSBCI on 25 February 2009 (“the Settlement”). TKSP wrote:

We write to confirm settlement in a global sum of $4,300 (all–in) as full and final settlement. Kindly let us have your discharge voucher and cheque within 7 days from the date hereof.

HSBCI sent its standard Discharge Voucher (“DV”) to TKSP on 25 February 2009 and asked that it be signed and returned, whereupon HSBCI would make payment. It should be noted that although the DV had Mdm Lim and Ms Ter’s names printed out in the text, the bottom had spaces above and next to the notations “Signature of Claimant” with the “Name” and “NRIC/Passport No.” left blank and to be filled in. TKSP returned the duly signed DV to HSBCI on 16 March 2009. There was a signature appended to the DV above the description “Signature of Claimant” and Mdm Lim’s name and NRIC number were written in the blank spaces below. The DV was in fact not signed by Mdm Lim but by Ms Liew Sun Kiap (“Ms Liew”), a representative of the workshop. There was no averment or dispute that Ms Liew did not have the authority to compromise the claim¹. The DV stated, inter alia:

We/I LIM LEET FANG hereby agree to accept the sum of S$4,300 ... in full and final settlement of all claims we/I have or may have against [HSBCI] and/or their insured TER CHAI SENG ... in respect of an accident involving SGH 3575M and SFF 4293S at/along BUKIT TIMAH RD & CASHEW RD which occurred on or about 12.12.2008 ... Upon our/my receipt of such payment [HSBCI] and their Insured shall be fully discharged from all claims we/I have or may have in respect of the incident.

... We/I also agree to indemnify [HSBCI] and their Insured against any claim whatsoever made against them by any person on my behalf in respect of the incident.

I/We further authorize you to pay the above settlement sum directly to [TKSP].

[emphasis added]

The ambit and construction of the Settlement embodied in the DV was disputed. HSBCI and Ms Ter claimed that the sum of $4,300 was accepted in full and final settlement of all claims Mdm Lim had or may have had in respect of the accident.² HSBCI claimed at the trial below that Mdm Lim’s cause of action for personal injury had merged with the settlement agreement in the DV and the DV discharged HSBCI and Ms Ter from all claims which Mdm Lim had or may have had. On the other hand, TKSP and Mdm Lim contended that the agreement only referred to the workshop claim for damage to the car and could not include a discharge from the personal injury claim.

The Decision below

The DJ ruled in favour of Mdm Lim. He placed great weight on the initial letter of 5 February 2009 and correspondence leading up to the Settlement, which only referred to the vehicular damage. He found that the Settlement was reached on 25 February 2009 when TKSP accepted HSBCI’s global counter-offer in respect of the property damage. There was no mention of Mdm Lim’s personal injuries, and therefore, no basis to imply that the parties’ settlement also included these personal injuries. In any case, such an implied term did not lend any business efficacy to the settlement agreement. The DV was something that came after the parties’ agreement on 25 February 2009.³

The learned DJ relied on the Court of Appeal decision in Projection Pte Ltd v The Tai Ping Insurance Co Ltd [2001] 1 SLR(R) 798 (“Tai Ping Insurance”) as being very instructive and quoted Tai Ping Insurance at [21] for the proposition that a discharge voucher “was no more than an acknowledgement of the receipt of the sum in full and final settlement of the claim”.⁴ The DV therefore could not to be taken into account in construing the compromise or agreement that was reached; rather, the correspondence and intentions of the parties were decisive.

The learned DJ also distinguished Kitchen Design and Advice Ltd v Lea Valley Water Co (1989) 2 Ll.L.R. 221 (“Kitchen Design”) as being appropriate where there is a settlement in the course of litigation of a property damage claim and the omission of a loss of profit claim.⁵ The learned DJ felt that the judge in Kitchen Design telescoped considerations belonging to res judicata to the issue of compromise when the proper consideration of the compromise reached should have been by way of an objective and contextual measure of the written and, where applicable, oral terms of the compromise, citing Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] (“Zurich Insurance”) SGCA 26 and Sandar Aung v Parkway Hospitals Singapore Pte Ltd (trading as Mount Elizabeth Hospital) and another [2007] 2 SLR(R) 891.⁶

Reasons for Allowing the Appeal

With respect, I could not agree with the learned DJ’s reading of Tai Ping Insurance. The issue being addressed in that case was totally different, viz, whether the parties had reached an agreement on settlement. That case arose in the context of a building contract. A retaining wall had collapsed during construction, causing damage to surrounding property. The main contractor made a claim under his Contractor’s All Risk Policy. There were protracted negotiations for settlement. Eventually, the insurer wrote to the main contractor’s agents on 31 March 1999, referring to previous correspondence and discussions, and agreeing, after adjustment, that “the final figure payable is $553,560.98.” They enclosed a discharge voucher, which the main contractor signed and returned but added the words “this full and final settlement shall be limited to the aforesaid incident only”.

It is important to note the arguments raised by the insurer before the Court of Appeal in Tai Ping Insurance. First, it disputed that a compromise agreement had in fact been reached. Secondly, it argued that its letter of 31 March 1999 was an offer, which was not accepted in...