The Management Corporation Strata Title Plan No 689 v DTZ Debenham Tie Leung (SEA) Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Goh Yi Han AR
• Judgment Date: 30 June 2008
• Neutral Citation: [2008] SGHC 98
• Citation: [2008] SGHC 98
• Court: High Court (Singapore)
• Published date: 02 July 2008
• Plaintiff Counsel: Chen Mei Lin Lynette, Lim Yin Mei Sue-Anne (Harry Elias Partnership)
• Defendant Counsel: Teo Weng Kie, Lorraine Ho (Tan Kok Quan Partnership)
• Subject Matter: Civil Procedure

30 June 2008 Judgment reserved.

AR Goh Yihan:

Introduction

1 This is an application by DTZ Debenham Tie Leung (SEA) Pte Ltd and DTZ Debenham Tie Leung Property Management Services Pte Ltd for specific discovery of certain documents against Management Corporation Strata Title Plan No 689 under O 24 r 5 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules”). Although the principles governing discovery are relatively uncontroversial and have been, with respect, ably and eloquently discussed by AR Paul Tan in Dante Yap Go v Bank Austria Creditanstalt AG [2007] SGHC 69 (“Dante Yap Go”) (at [16]–[32]), I will articulate the full reasoning for my decision with this judgment as an attempt has been made to resist discovery of certain categories of documents on the ground of litigation privilege, a creature seldom encountered by our courts notwithstanding its antiquity.

Background to the present application

2 The applicants in the present application are the first and second defendants (collectively “the defendants”) in the substantive action (viz, Suit No 208 of 2007), whereas the respondent is the plaintiff (“the plaintiff”). The plaintiff is the management corporation of a building located at 11 Collyer Quay known as “The Arcade”. The plaintiff engaged DTZ Leung Pte Ltd (“DTZ Leung”) as the managing agent of The Arcade from 1 April 1991 to 31 March 1997. As part of its contractual duties as managing agent, DTZ Leung stationed its employee, one Loh Wan Wah (“Wilson Loh”), as the Maintenance Supervisor or Complex Manager of The Arcade. The second defendant took over as the managing agent of The Arcade from 1 April 1997 to 6 February 2006 after it was engaged by the plaintiff. The second defendant likewise stationed Wilson Loh, who had then become its employee, at The Arcade as the building’s Maintenance Supervisor or Complex Manager. The plaintiff’s substantive action against the defendants arises from Wilson Loh’s alleged actions in his capacity as Maintenance Supervisor or Complex Manager from 1991 to 2005.

The plaintiff’s pleaded case

3 According to the plaintiff’s Statement of Claim (Amendment No 1) filed on 15 June 2007, on or about 4 October 2005, it was discovered that a cheque issued by the plaintiff and made payable to the plaintiff’s mechanical and electrical sub-contractor was dishonoured by the bank. It was also found that Wilson Loh had disappeared and was no longer contactable. Based on the plaintiff’s subsequent investigations, it was discovered that Wilson Loh had misappropriated funds through a series of fraudulent accounts and cheques signed by the plaintiff’s cheque signatories. For example, it was pleaded by the plaintiff that its investigations revealed that two conflicting sets of accounts were produced for the years 1997 to 2004. The first set of the accounts had been produced by the plaintiff’s auditors while the second set had been produced by Wilson Loh and presented to the plaintiff purporting to be the auditors’ accounts. Further, the plaintiff’s investigations also showed that Wilson Loh had from time to time in his capacity as the Maintenance Supervisor or Complex Manager of The Arcade fraudulently represented to the plaintiff that various sums totalling $4,767,622.43 had to be paid by the plaintiff to Wilkins Enterprise. Wilkins Enterprise was a sole-proprietorship owned by Wilson Loh and an instrument in his fraudulent scheme. This sum of $4,767,622.43, apart from other consequent disbursements and expenses, formed the main bulk of the plaintiff’s claim against the defendants.[note: 1]

4 In the result, the plaintiff commenced the substantive action against the defendants on 2 April 2007. As against the first defendant, the plaintiff claimed that as Wilson Loh had committed the fraudulent acts while he was an employee, servant or agent of DTZ Leung, DTZ Leung should be vicariously liable to the plaintiff for those acts. The plaintiff stated that in the circumstances of this case, the first defendant should be treated the same as DTZ Leung and therefore it is the first defendant who should be vicariously liable for the fraudulent acts of Wilson Loh. The payments made to Wilkins Enterprise when DTZ Leung was the managing agent of The Arcade is stated to be $1,252,819.51.[note: 2]

5 In relation to the second defendant, the plaintiff claimed that the second defendant should be vicariously liable for the fraudulent acts of Wilson Loh while he was the employee, servant or agent of the second defendant. Furthermore, as part of its claim against the second defendant, the plaintiff stated that Wilson Loh misappropriated $1,252,819.51 (being part of the $4,767,622.43 claimed for in total) when DTZ Leung was the managing agent of The Arcade. Accordingly, the second defendant should be vicariously liable for the loss of opportunity to recover the sum of $1,252,819.51 from DTZ Leung since the fraudulent acts took place while Wilson Loh was the employee, servant and/or agent of the second defendant and when the second defendant was the managing agent of The Arcade.

The defendants’ pleaded case

6 On their part, the defendants have pleaded four main “defences” (as that term is loosely used), as is evident from the main headings in their Defence (Amendment No 2) filed on 13 August 2007: (a) lack of causation, (b) contributory negligence by the plaintiff, (c) insufficient mitigation of losses and (d) the onset of limitation.

7 In relation to defences (a) and (b), the defendants have averred that Wilson Loh was stationed at The Arcade as Complex Manager and he reported directly to the Chairman and Council Members of the plaintiff’s Management Council (“the Management Council”) in respect of matters relating to the building. As such, the Management Council, and not the defendants, had control and supervision over Wilson Loh in respect of his fraudulent acts as pleaded by the plaintiff. The defendants have also pleaded that the various payments referred to by the plaintiffs as quantifying their losses were made by cheques signed by the plaintiff’s appointed cheque signatories, who were members of the Management Council. Accordingly, those cheque signatories ought to have been aware of the identities of providers of goods or services to the plaintiff, and therefore should have realised that no payments were due to Wilkins Enterprise. In essence, the plaintiff and/or the Management Council have failed to institute or carry out sufficient safeguards in respect of the plaintiff’s accounts, approval, signing or payments by cheques, expenditure and funds. Hence, the alleged losses suffered by the plaintiff were caused (partly or wholly) by the plaintiff and/or members of the Management Council.

8 Apart from defences (c) and (d) (see [6] above), both of which are immaterial for the present application, it was submitted before me that the defendants have also denied the quantum of claim of $4,767,622.43 as pleaded by the plaintiffs. In this regard, counsel for the defendants, Mr Teo Weng Kie (“Mr Teo”), elaborated that the claim quantification of $4,767,622.43 by the plaintiff was based solely on cheque images which it obtained from its bank. These are cheques which were drawn in favour of Wilkins Enterprise. However, Mr Teo said that the defendants do not agree that the cheques were signed by members of the Management Council, and that there was no forgery of signatures on any of the cheques.[note: 3] He pointed to para 20 of the Defence (Amendment No 2) as supposedly containing the defendants’ denial of the quantum of claim of $4,767,622.43 as pleaded by the plaintiffs. Paragraph 20 (as amended) states as follows:

20. Paragraphs 25 and 26 of the Statement of Claim (Amendment No. 1) are denied. The Defendant avers that such loss of opportunity, if any, which is denied, was caused by the Plaintiff and/or the Plaintiff’s Cheque Signatories and/or members of the Plaintiff’s Management Council, and the 2^nd Defendant repeats the particulars as set out at paragraph 14(a) to (g) above.

In turn, paras 25 and 26 of the Statement of Claim (Amendment No 1), referred to in para 20 of the Defence (Amendment No 2) as reproduced above, provides as follows (as amended):

25. This fraudulent concealment [referring to Wilson Loh’s concealment of prior frauds or misappropriations] continued until after DTZ Leung was dissolved on 2 May 2000.

26. As a result of the fraudulent concealment pleaded above, the Plaintiff lost the opportunity to recover the loss of S$1,252,819.51 from DTZ Leung before it was dissolved and has thereby suffered loss and damage.

9 I should also mention that Mr Teo in his reply submissions (tendered at the adjourned hearing of the present application) referred to para 24 of the Defence (Amendment No 2) as showing that the defendants have denied the quantum claimed.[note: 4] Paragraph 24 (as amended) states that:

Paragraph 30 of the Plaintiff’s Statement of Claim (Amendment No 1) is denied. The Defendant further denies that the losses allegedly suffered by the Plaintiff, if any, were caused by the Defendant.

Paragraph 30 of the Statement of Claim (Amendment No 1) alludes to the following:

Apart from the frauds or misappropriations pleaded above, the Plaintiff avers that the 2^nd Defendant failed to properly and promptly administer the affairs of the Plaintiff in breach of the implied terms pleaded in paragraph 9 above. As a result of the [sic] this breach, the Plaintiff has also suffered the following loss and damage: …

The “following loss and damage” as pleaded in para 30 (which I have not reproduced) in fact do not relate to the sum of $4,767,622.43 or any part thereof, but instead relate to consequential losses due to the misappropriation of the $4,767,622.43, including penalties for the non-payment of taxes and utility bills.

10 Reading these paragraphs, I first do not agree with Mr Teo that para 20 of the Defence (Amendment No 2) shows that the defendants have denied the...