United Overseas Bank Ltd v Lippo Marina Collection Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 22 February 2016
• Neutral Citation: [2016] SGHC 23
• Citation: [2016] SGHC 23
• Docket Number: Suit No 1250 of 2014 (Registrar’s Appeal No 145 of 2015)
• Published date: 27 February 2016
• Hearing Date: 21 September 2015,09 September 2015,26 October 2015
• Plaintiff Counsel: Eddee Ng, Ho Xin Ling, Alcina Chew and Lau Qiuyu (Tan Kok Quan Partnership)
• Date: 22 February 2016
• Defendant Counsel: Shanker Angammah Sevasamy and Claire Tan (Straits Law Practice LLC)
• Court: High Court (Singapore)
• Subject Matter: Order 14 r 12,Civil Procedure,Striking out,Pleadings,Summary determination of question of law

Aedit Abdullah JC: Introduction

What was ultimately in issue in this case was whether the fraud of an employee of a bank could be attributed to the bank so as to preclude it from suing other persons on the basis of misrepresentation and deceit involving that employee. This in turn raised issues concerning the attribution of knowledge in a company, and the limitations, if any, that applied to such attribution. Additionally, this case also presented the issue of when a summary determination of law under O 14 r 12 of the Rules of Court (Cap 322, r 5, 2014 Rev Ed) would be appropriate.

In Summons No 1069 of 2015 (“Summons 1069”), the plaintiff in Suit No 1250 of 2014 (“Suit 1250”) made two applications seeking: the determination of a question of law, pursuant to O 14 r 12 of the Rules of Court, on whether the plaintiff, a victim of a fraud or a conspiracy to commit fraud, is attributed with the knowledge or actions of a fraudulent employee so as to preclude it from alleging certain misrepresentations and acts of deceit committed by the second and third defendants (“the Defendants”) (“the Question”). This application shall be referred to as “the Application under O 14 r 12”; and the striking out of certain portions of the Defendants’ defence under O 18 r 9(1)(a) to (c) and/or (d) and/or O 92 r 4 on the grounds that they do not disclose a reasonable defence, are scandalous, frivolous or vexatious, may prejudice, embarrass or delay the fair trial of the action, and/or are an abuse of process of the court. This shall be referred to as “the Application for Striking Out”.

These applications involve only the Defendants (ie, the second and third defendants), and not the remaining six defendants in Suit 1250.

The learned Assistant Registrar (“the AR”) dismissed both applications, leading the plaintiff to file the present Registrar’s Appeal. After hearing the parties, I allowed the appeal and granted both applications. The Defendants have filed an appeal against my decision. I will now give the reasons for my decision.

Background

To understand the plaintiff’s applications in Summons 1069, it is necessary to first appreciate the background of Suit 1250.

Between 2011 and 2013, Lippo Marina Collection Pte Ltd (“Lippo Marina”) (the first defendant in Suit 1250), a developer, sold, in separate transactions, 38 units in a leasehold condominium development known as Marina Collection to 38 purchasers, including the sixth to eighth defendants. The plaintiff, the United Overseas Bank Limited, granted housing loans to each of these purchasers to finance their purchases.

The Defendants were real estate agents at the material time, although they are no longer licensed by the Council of Estate Agencies. The fourth to eighth defendants are relatives of either of the Defendants; the fourth and fifth defendants are the second defendant’s sons, while the sixth and seventh defendants are the third defendant’s daughter and nephew respectively. The eighth defendant is the seventh defendant’s wife.

The plaintiff pleaded in its statement of claim that it discovered, after granting the loans, that the 38 purchasers had not disclosed that Lippo Marina had given them substantial furniture rebates that exceeded the market norm. According to the plaintiff, the rebates resulted in the units being of far lower purchase prices than what were recorded on the application forms for the housing loans. The plaintiff contended that the first to eighth defendants (collectively referred to as “the defendants”) had made a deliberate effort to mislead the plaintiff into granting housing loans based on the inflated purchase prices that were stated on the application forms, instead of the actual purchase prices after factoring in the rebates. The plaintiff also asserted that it further discovered that many of the purchasers did not have the genuine means to service the housing loans, but were merely fronts procured by the Defendants to enter into purchase agreements with Lippo Marina. The plaintiff pleaded that this was apparent from the way in which monies were transferred to and from the bank accounts of the purchasers and that of the second, fourth and fifth defendants, in a bid to ensure that the balance sums in the purchasers’ accounts would meet the plaintiff’s requirements for the grant of the housing loans.

Convinced that it had been defrauded by the defendants, the plaintiff commenced Suit 1250 against them on 26 November 2014. Specifically, the plaintiff alleged that the defendants had conspired to obtain (i) financing from the plaintiff in circumvention of the Monetary Authority of Singapore’s (“MAS”) cooling off measures such as the maximum permissible amount of loan stipulated in MAS’s Notice No 632 (“the MAS Notice”); and (ii) housing loans that were in excess of the purchase price of the respective properties. It further alleged that Lippo Marina, the Defendants, and the purchasers had committed various acts of deceit, which included the following: failing to declare substantial furniture rebates that were given by the first defendant in the purchasers’ housing loan applications, which thereby induced the plaintiff to approve housing loans to the purchasers in excess of the MAS Notice (referred to by the plaintiff as the “Purchase Price Misrepresentation”); making or procuring or inducing the purchasers to make false representations of the true identity of the purchasers to prevent close scrutiny of the purchases by the plaintiff (referred to by the plaintiff as the “Identity Misrepresentation”); and procuring the transfer of monies between the accounts of the purchasers, as well as between the accounts of the purchasers and the accounts of the second, fourth and fifth defendants, so that there would be sums ranging from $200,000 to $1,200,000 in the bank accounts of the purchasers at the time of the application of the housing loans, with the intention to deceive the plaintiff into believing that the purchasers had financial standing so that the plaintiff would approve and thereafter disburse the housing loans (referred to by the plaintiff as the “Financial Standing Fraud”)

The Defendants filed a joint defence on 8 January 2015 (“the Defence”), while the other defendants separately filed their defences. The Defendants pleaded that there was no conspiracy between the defendants and that they did not commit any act of deceit. They argued, instead, that the Vice-President of Home Loans of the plaintiff, Ann Ong, had always been aware of all the matters arising from the purchasers’ housing loans applications, and was in fact the one who had suggested the arrangement to transfer monies between the accounts (ie, the acts alleged by the plaintiff to be part of the Financial Standing Fraud). Their case was that the knowledge and acts of Ann Ong, as an employee and agent of the plaintiff, should be attributed to the plaintiff, and thus the plaintiff cannot be said to have been induced or defrauded by the defendants. Further, or alternatively, the Defendants argued that Ann Ong’s knowledge would have estopped the plaintiff from bringing the various claims against them.

Issues

The issues before me were as follows: whether the Application under O 14 r 12 for the determination of the Question should be allowed; if a determination of the Question was appropriate, how should the Question be resolved; and whether the Application for Striking Out should be allowed (i) in the light of the answer to the Question; or (ii) on the alternative grounds raised by the plaintiff (discussed at [60] below).

The logical sequence is to deal first with the Application under O 14 r 12 before the Application for Striking Out because the primary ground for the plaintiff’s latter application was premised on the Question being resolved in its favour.

The Application under O 14 r 12 The law on O 14 r 12

Order 14 r 12 of the Rules of Court provides that:

Determination of questions of law or construction of documents

(O.14, r.12)

12. –(1) The Court may, upon the application of a party or of its own motion, determine any question of law … arising in any cause or matter where it appears to the Court that – (a) such question is suitable for determination without a full trial of the action; and (b) such determination will fully determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein.

The following threshold requirements must be met before a court will consider whether it is appropriate to exercise its discretion to proceed with summary determination: the defendant has entered an appearance in the action; the parties have an opportunity of being heard on the question of law; the question of law is suitable for determination without a full trial of the action; and such determination will fully determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein.

The overriding consideration in deciding when the discretion will be exercised is whether the summary determination would fulfil the underlying purpose of O 14 r 12, ie, to save time and costs for the parties: ANB v ANF [2011] 2 SLR 1 (“ANB”) at [61].

As the first two requirements are straightforward and self-explanatory, it is only necessary to discuss the approach that our courts have taken in respect of the third and fourth requirements (referred to at [13(c)] and [13(d)] above).

Concerning the third requirement (at [13(c)] above), it is well-established that a question that raises factual issues requiring findings of fact is not appropriate for summary determination: the Court of Appeal case of Obegi Melissa v Vestwin Trading Pte Ltd [2008] 2 SLR(R) 540 at [42] (“Obegi”), and the High Court case of TMT Asia Ltd v BHP Billiton Marketing AG (Singapore Branch) [2015] 2 SLR 540 (“TMT”) at [34]. This coheres with the observation in ANB at [32]...