Tort Law

AuthorKumaralingam AMIRTHALINGAM LLB (Hons), PhD (Australian National University); Professor, Faculty of Law, National University of Singapore. Gary CHAN Kok Yew LLB (Hons), MA (National University of Singapore), MA (Birmingham), LLM, BA (University of London); Professor, Yong Pung How School of Law, Singapore Management University.
Publication year2021
Date01 December 2021
I. Introduction

28.1 2021 turned out to be a relatively calm year for tort law. There was a noticeable increase in the economic tort claims, especially for the torts of conspiracy and fraud. This review examines the ten most significant decisions handed by the High Court and the Court of Appeal in 2021. They cover areas including negligence, fraud, conspiracy, defamation and vicarious liability.

II. Negligence
A. Duty of care

28.2 Tan Woo Thian v PricewaterhouseCoopers Advisory Services Pte Ltd1 (“Tan Woo Thian”) was an appeal from the High Court judgment in Tan Woo Thian v PricewaterhouseCoopers Advisory Services Pte Ltd,2 which was reviewed in detail in the previous Annual Review.3 For convenience, the summary of facts is reproduced here. The plaintiff, a former director and chief executive officer (“CEO”) of SBI Offshore Limited (“SBI”), sued the defendant engaged by SBI to conduct a factfinding review of certain impugned transactions involving the plaintiff. SBI had acquired a 35% stake in another entity, Jiangyin Neptune Marine Appliance Co Ltd (“NPT”), which was 65% owned by Jiangyin Wanjia Yacht Co Ltd (“Wanjia”). Two acquisition equity transfer agreements (“ETAs”) were entered into. The first was signed by the former CEO and the second by both the former CEO and the plaintiff. Both ETAs related

to the same transaction, but there was a discrepancy: the first ETA stated that the consideration was US$1.75m while the second ETA stated that it was US$350,000.

28.3 When SBI was listed on the Singapore Stock Exchange Securities Trading Ltd (“SGX-ST”), its 35% stake in NPT was disclosed as US$1.75m in SBI's offer document. Subsequently, SBI entered into an agreement to dispose of its 35% stake in NPT. Again, two ETAs were entered into for the disposal. The first was to dispose the stake at the price of US$3.5m to Hua Hanshou (“Hua”), the father of Ollie Hua, a representative of NPT who had advised the plaintiff on SBI's acquisition of the 35% stake. The purchaser insisted that the purchase price be paid in two halves, with US$1.75m paid out of Hong Kong and US$1.75m paid out of the People's Republic of China (“PRC”). Ollie Hua then advised SBI that the PRC tax for the transaction would be calculated on the basis of a capital gain of US$1.4m, which was the difference between US$1.75m (purchase price paid out of the PRC) and US$350,000 (price stipulated in the second acquisition ETA). SBI's chief financial officer responded, stating that the correct figures were US$3.5m for the disposal and US$1.75m for the acquisition, giving a capital gain of US$1.75m to be taxed.

28.4 Subsequently, Hua proposed to the plaintiff that a second disposal ETA be executed between SBI and Wanjia for the transfer of the 35% stake in NPT to Wanjia for the sum of US$1.75m. Hua claimed that this was necessary due to Chinese laws prohibiting ownership of joint ventures and to account for the US$1.75m paid out of the PRC. The plaintiff brought this proposal to the SBI board, which rejected it. The plaintiff nevertheless went ahead and signed it on behalf of SBI. Meanwhile, SBI approved a novation agreement to replace Hua with Wanjia as the purchaser of the 35% stake.

28.5 SBI then appointed the defendant to review the acquisition and disposal of its 35% stake in NPT and to investigate allegations against another party (irrelevant to the negligence action by the plaintiff). Following its review, the defendant made several factual findings and noted that the conflicting acquisition ETAs meant SBI could have violated the Securities and Futures Act4 (“SFA”) and the SGX-ST Catalist Rules (“CR”) or Chinese tax laws. The disposal ETAs were equally problematic, exposing SBI to potential violations of the SFA and CR or having ETAs that were not valid as they were not approved by the board. SBI sought legal advice and subsequently lodged a report with the Commercial Affairs Division (“CAD”) of the Singapore Police Force. The CAD investigated and dismissed the matter. Based on its legal advisers' findings, SBI made

an announcement stating that it potentially faced a tax levy risk, and that the plaintiff and another individual had committed breaches of statutory duties and obligations to SBI.

28.6 The plaintiff sued the defendant in negligence, claiming for loss of employment with SBI, loss of business reputation, deterioration of the value of his shares in SBI, and emotional and psychological trauma. See Kee Oon J dismissed the action, holding that the plaintiff had failed to prove duty, breach or causation of damage. The appeal was dismissed by the Court of Appeal. Sundaresh Menon CJ, in an ex tempore judgment, held that the case was doomed to fail as the appellant had not provided evidence to show that that the defendant's negligence had caused the appellant loss.

28.7 Although the trial was bifurcated and restricted to the question of liability, Menon CJ emphasised that the appellant nonetheless had to establish all elements of negligence — duty, breach and causation of damage that is not too remote. While there was no need for the appellant to provide evidence as to “the quantification of the losses and injuries”,5 there had to be evidence showing that damage was caused by the defendant's negligence. The appellant had merely listed the heads of damage he intended to claim, leaving the particulars to be set out at assessment. No evidence was placed before the court to show that the appellant had indeed suffered the alleged losses or that the respondent had caused them.

28.8 Having dismissed the appeal on causation, Menon CJ went on to offer some observations on whether a duty of care ought to be found in cases where “a professional party (the ‘professional fact-finder’) contracting with a client to carry out an investigation or a fact-finding exercise into the actions of a third party owes that third party a duty of care”.6 Referring to the duty of care test in Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency (“Spandeck”),7 Menon CJ noted that factual foreseeability was satisfied as the respondent would have foreseen that the appellant who was the subject of its report might suffer economic loss or reputational harm if the report were negligently prepared and made adverse findings against the appellant.

28.9 The difficult questions were whether there was sufficient proximity between the parties and whether there were any policy considerations that would weigh on the existence and scope of any duty. Menon CJ set out three arguments in favour and three arguments against a duty. The main argument against a duty was the risk of conflict with the respondent's contractual duty to its client. The respondent was engaged to carry out a fact-finding exercise, which included investigating into the appellant's conduct. Thus, a tortious duty owed to the appellant could conflict with the contractual duty owed to the respondent's client. Secondly, the appellant had other avenues for redress; for example, he could bring an action in defamation for loss of reputation or lodge a professional misconduct complaint against the respondent. Thirdly, imposing a duty of care on fact-finders might have a chilling effect on, or raise the costs of, fact-finding exercises.

28.10 On the other hand, there were countervailing arguments in favour of a duty. Most significantly, there was causal and circumstantial proximity. Causal proximity was established as the respondent's negligence directly affected the appellant. Circumstantial proximity existed as the respondent was privy to personal information of the appellant and knew that the appellant as an individual would be affected if the report were negligently prepared. Secondly, while there was a possibility of conflict, courts have long recognised co-existing tortious and contractual duties.8 Thirdly, the existence of alternative causes of action does not preclude an action in negligence.

28.11 The Court of Appeal's judgment in Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd9 provides an example of the third argument. The claimant's former employer provided a negligently prepared reference to the claimant's prospective employer, causing him reputational and economic harm. The court held that a duty in negligence could be found even when the claimant had recourse to the tort of defamation. Menon CJ noted that a failure to recognise a duty of care in some cases could create “a legal ‘black hole’”,10 leaving the claimant with no remedy at all. Nonetheless, these observations were made by way of obiter, and Menon CJ stressed that the existence and scope of a duty in such cases remained an open question.

B. Medical negligence

28.12 Foo Chee Boon Edward v Seto Wei Meng11 (“Seto Wei Meng”) involved a claim by the deceased's estate and dependants against the appellant doctor. The High Court judgment in Seto Wei Meng v Foo Chee Boon Edward12 was discussed in detail in the previous Annual Review.13 The deceased died following a liposuction and fat transfer procedure in 2013. She had two prior liposuction procedures (in 2010 and 2011). Based on the evidence, the deceased had suffered a pulmonary fat embolism which resulted in her death. It was argued at trial that the deceased had suffered from fulminant fat embolism syndrome (“FFES”), which was much rarer than ordinary fat embolism and more likely to be fatal.

28.13 The respondents alleged that the appellant had negligently failed to advise the deceased on the risks and complications of the procedure, including the fact that the risks were higher in repeat procedures, which was the case with the deceased. The respondents further alleged that the appellant had been negligent in conducting the procedure by negligently injecting fat directly into the vein. Finally, the respondents alleged that the appellant was negligent in the post-operative management and care of the deceased, namely by failing to recognise the symptoms...

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