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  • Ch.15 Law of Agency
    most common explanation for apparent authority is that it rests on the doctrine of estoppel see Freeman and Lockyer v Buckhurst Park Properties Mangal Ltd 1964 2 QB 480 15 4 7 The conduct of the principal that can constitute a sufficient representation may comprise placing an agent in a position that would normally carry the requisite authority but did not in the instant case because the principal had restricted the agent s authority It must be clear though that a person holding such a position would usually have such authority unless the authority was limited by the principal In such circumstances a third party would be entitled to assume in the absence of notice to the contrary that such an agent had the requisite authority In Skandinaviska Enskilda v Asia Pacific Breweries 2011 3 SLR 540 the Court of Appeal held that the title of finance director did not connote any specific authority and therefore the Defendant s finance director did not have apparent authority to perform the acts in question 15 4 8 Apparent authority can come about where an existing agent exceeds his authority or where the person was not an agent but appears to be one because of what the principal said or did For example A may have been appointed to act as P s agent The agency is later terminated by P but A continues to act as if he was P s agent and enters into a contract with T who does not know about the termination of the agency P is nonetheless bound by A s act Another example is where P never appointed A as P s agent but P allows A to act as if he were or leads T to believe that A is P s agent In such circumstances P will be bound to T if T enters into a transaction with A purportedly acting on behalf of P within the scope of A s apparent authority 15 4 9 It is important to note that the appearance of authority must have arisen because of what the principal did An agent cannot make representations as to his own authority and bind the principal by what the agent himself says see Sigma Cable Pte Ltd v NEI Parsons Ltd 1992 2 SLR 1087 If this were not the position anybody with some nexus to the principal could claim to have authority to bind the principal and cause the principal to incur obligations to a third party Commercial undertakings would be forced to take extraordinary steps to attempt to inform all and sundry exactly what their employees can or cannot do often perhaps to no avail 15 4 10 Apparent authority can arise even with companies A company can make the requisite representations through its properly authorized officers or through one of its organs such as the board of directors see Freeman Lockyer v Buckhurst Park Properties Ltd 1964 2 QB 480 15 4 11 Apparent authority allows the third party to sue the principal If the principal wants to sue the third party he cannot rely on apparent authority because he must obviously know that his agent did not have the requisite authority Nor can the principal claim the benefit of any estoppel that arises from the principal s own acts To sue the third party the principal must ratify the agent s acts Return to the top SECTION 5 RATIFICATION 15 5 1 Ratification is a means by which the agency relationship is created retrospectively Where the agent does not have actual authority the principal cannot rely on the acts of the agent since the agent was not authorized to perform those acts If the principal wishes to enforce the contract that the agent has entered into the principal must adopt what the agent has done The doctrine of ratification allows a principal to adopt his or her agent s past acts By so doing the principal retrospectively clothes his agent with authority and the law then proceeds on the basis that the agent had authority from the outset see Cavenagh Investment Pte Ltd v Kaushik Rajiv 2013 2 SLR 543 The doctrine of ratification facilitates the utility of the law of agency as an agent who exceeds his authority can have his acts adopted if the principal wishes to affirm the agent s acts albeit retrospectively From the third party s perspective the third party had consented to the transaction and ratification should generally be unobjectionable In a great many cases the third party will be completely unaware that the agent had not been clothed with authority and that ratification had taken place because there is no need to communicate the act of ratification to the third party The third party will only be unhappy with ratification if the market has moved against the third party but there may be no compelling reason why a third party who finds itself bound to a contract because of ratification should be in a better position than any other contracting party 15 5 2 For ratification to take place the agent must have purported to act on behalf of a principal If the agent did not make it clear that the agent was acting for a principal and the agent was not properly authorized to so act no ratification can take place Since what the agent did was unauthorized and the agent did not purport to act for anybody but himself there is no basis to allow the principal to adopt the agent s acts A principal who wishes to ratify must also ratify the agent s acts in their entirety A principal cannot pick and choose those parts of the contract that he likes and discard the rest To allow him to do so would be to impose a different contract on the third party than the one to which he agreed 15 5 3 Where an agent acts in an unauthorized manner the agent breaches his duty to the principal Thus where a principal is liable to the third party because of apparent authority the principal is entitled to recover his loss from the agent However where the principal ratifies the agent s acts in general the principal waives his rights against the agent for the breach of duty since the principal has seen it fit to adopt the agent s acts There may be circumstances though where the principal feels compelled to adopt the agent s acts e g the principal s business reputation would materially suffer if no ratification took place and in such circumstances it is possible that ratification will not absolve the agent from liability to the principal 15 5 4 The doctrine of ratification however applies even when the third party has withdrawn from the agreement with the agent prior to the act of ratification taking place see Bolton Partners v Lambert 1889 41 Ch D 295 This is in one sense a startling proposition as it effectively prevents the third party from withdrawing from the transaction even though the agent did not have any authority The proposition has therefore been criticized severely on the basis that absent a valid contract there should be nothing to prevent the third party from withdrawing The retrospective nature of ratification ought not to be extended to situations where there has been a valid withdrawal since such a withdrawal would mean that there is no longer any outstanding transaction for the principal s retrospective consent to fix on Nevertheless this legal principle has been around for more than a hundred years and there may be reluctance to overrule it in view of its antiquity 15 5 5 However recognizing the capacity of the ratification doctrine to cause injustice to third parties the law has developed limits to protect third parties Without such limits third parties may be in an invidious position The principal can take his or her time to decide whether to ratify or not If the market moves in the principal s favour the principal will ratify if not the principal will not In the meantime the third party does not know whether he will be bound or not and will take the full risk of any adverse market movements In a contract to sell goods for example the third party is potentially stuck with the merchandise until the principal decides whether to proceed with the purchase or not This is unfair to the third party Such a substantial risk would undermine the utility of the law of agency Limits to Ratification 15 5 6 Because of the potential injustice to third parties one limit to the doctrine of ratification is that it must take place within a reasonable time after the agent s unauthorized acts If ratification does not take place within such time the principal loses the right to ratify see Metropolitan Asylums Board v Kingham Sons 1890 6 T L R 217 at p 218 Re Portuguese Consolidated Copper Mines Ltd 1890 45 ChD 16 at pp 31 34 What is a reasonable time will depend on the nature of the contract and the circumstances For example if the contract is for the sale of perishable goods such as fruit and vegetables the time for ratification must be relatively brief In addition if the third party knows that the agent is unauthorized the third party can give a reasonable time limit to the principal to elect whether to ratify or not If the principal chooses not to do so the right to ratify will be lost 15 5 7 Another limit on ratification that relates to time is that when an act is required to be done by a certain time it cannot be ratified by the principal after that time It is said that if a time is fixed for doing an act whether by statute or agreement the doctrine of ratification cannot be allowed to apply if it would have the effect of extending that time see Presentaciones Musicales S A v Secunda 1994 Ch 271 Since the contract entered into by the agent specifies that the act is to be performed by a certain time ratification should not operate so as to effectively modify a key aspect of the agreement Thus if an option to purchase property has to be exercised within 14 days of the date of the option and the agent without authority exercises the option the principal cannot ratify the agent s act after the 14 days have expired To do so would be to give the principal more time to decide whether to exercise the option 15 5 8 The conventional view is that these two time based limits on the doctrine of ratification are based on separate rules However it may be that the second time based limit is a specific application of the rule that ratification must take place within a reasonable time Thus where the contract specifies a time limit for the doing of a certain act ratification after such time will generally not be considered to have taken place within a reasonable time 15 5 9 A further limit on the doctrine of ratification is that the act of ratification must take place at a time and under circumstances when the ratifying party might himself have lawfully done the act which he ratifies Bird v Brown 1850 4 Exch 786 In other words a principal cannot ratify an act if at the time of ratification the principal lacks the legal capacity to authorize the act in question A principal may also not be entitled to ratify certain acts that were lawful at the time they were entered into but were no longer so at the time of ratification Thus if there is a change in the law such that a transaction which was lawful when done has now become so unlawful that an attempt thereafter to authorize it would be void the transaction cannot be ratified unless perhaps there is nothing against public policy to allow the enforcement of rights that arose before the transaction became unlawful 15 5 10 In addition if property or contractual rights have vested in another person ratification cannot divest such a person of his rights see Bird v Brown 1850 4 Exch 786 Thus if A and T have entered into a contact by which T agrees to sell his property to P for whom A purports to act though he is not authorized and T subsequently enters into a contract to sell the same property to Z the subsequent ratification by P will not divest Z of the latter s contractual rights which have already vested This however does not prevent the principal from suing the third party for breach of contract if the ratification had taken place within a reasonable time Ratification may be effective as between the parties if not against others who are not privy to the contract or other transaction being ratified 15 5 11 Acts that are a nullity also cannot be ratified because such acts are devoid of any legal effect see Watson v Davis 1931 1 Ch 455 Similarly illegal acts cannot be ratified see Bedford Insurance Co Ltd v Instituto de Resseguros do Brasil 1985 Q B 966 Forgeries are an example of acts that are regarded as nullities see Brook v Hook 1871 L R 6 Exch 89 This however depends on the nature of the forgery Strictly speaking a forgery occurs where a signature or seal has been counterfeited However where a person has signed a document or affixed a seal on behalf of another person without the latter s authorization such acts constitute forgeries also see Northside Developments Pty Ltd v Registrar General 1990 170 C L R 146 It is said that a forgery in the former category cannot be ratified in so far as the perpetrator did not intend to act on behalf of the party whose signature or seal has been counterfeited In the latter category the forgeries may be ratified as the person who has signed the document or affixed the seal did intend to do so as an agent see M Kenzie v British Linen Company 1881 6 App Cas 82 at pp 99 100 15 5 12 It should be noted that if an agent acts outside the scope of the agent s authority and there is no ratification the third party can sue the agent This will be discussed under the section headed Breach of Warranty of Authority below Return to the top SECTION 6 RELATIONSHIP BETWEEN THE PRINCIPAL AND AGENT 15 6 1 As the agent is an intermediary generally once the principal and third party are brought into a contractual relationship the agent drops out of the picture subject to any issues of remuneration or indemnification that he may have against the principal and more exceptionally against the third party Generally agents are entitled to be indemnified for all liabilities reasonably incurred in the execution of the agents authority 15 6 2 Aside from any specific contractual obligations that may govern the relationship between the principal and the agent an agent is considered a fiduciary vis à vis the principal As such the agent should not without obtaining the informed consent of the principal place himself in a position where his duty to his principal may conflict with his own interests If the agent receives a secret bribe the agent must account for this to the principal see Mahesan v Malaysian Government Officers Co operative Housing Society Ltd 1975 1 MLJ 77 15 6 3 Obviously if the agent exceeds the authority conferred on him and this causes the principal loss the principal may claim against the agent Return to the top SECTION 7 RELATIONSHIP BETWEEN THE AGENT AND THIRD PARTY 15 7 1 The agent does not as an intermediary generally incur any liability to the third party under the contract entered into Nevertheless it is possible for the agent not only to contract on behalf of the principal but for the agent s own benefit too A good example arises in the case of a partner who negotiates a contract on behalf of the entire partnership Sometimes the form of words used will determine if the agent has contracted personally either in addition with the principal or sometimes to the exclusion of the principal For example if words of a representative character are used such as on behalf of or as agent for it will be clear that the agent is not contracting in the agent s own personal capacity On the other hand if the agent signs off as manager or even agent without any other qualifying words the issue will arise whether the agent was acting in a representative manner or if the words used are only intended to describe who the agent is or what he does in which event the agent may be held to have contracted personally Return to the top SECTION 8 UNDISCLOSED AGENCY 15 8 1 Under the law of agency there is a peculiar feature known as undisclosed agency Essentially where an agent enters into a contract intending to do so on behalf of the agent s principal provided the agent was acting within the scope of the agent s authority the principal may as a general rule sue and be sued on the contract even though the principal s existence and not merely his identity was unknown to the third party see Siu Yin Kwan v Eastern Insurance Co 1994 2 WLR 370 Since ratification is only possible where an agent has purported to act for a principal no ratification can arise in cases involving undisclosed agency 15 8 2 The doctrine of the undisclosed principal has been widely criticized as it allows a person who is not a party to the original contract to take all the benefits of such a contract against the third party who was altogether unaware of the

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  • Sigma Cable Co (Pte) Ltd v NEI Parsons Ltd [1992] 2 SLR 1087; [1992] SGHC 196
    photograph 19 It was not the defendants policy to collect equipment or materials purchased by them The defendants expected the seller to be responsible for safe transportation to the defendants site particularly to the Pulau Seraya site which was on an island 20 There was one occasion in April 1987 when Mr Johnson made arrangements for the purchase of cables from the plaintiffs and the purchase order PB1 pp 12 and 13 was issued by the defendants city office The cables were delivered by the plaintiffs on 30 April 1987 to Jurong Power Station which the defendants had built in 1972 1974 and carried on providing service 21 None of the authorized persons had any knowledge of the purchase orders exh P6 It was only when people from the plaintiffs visited the Pulau Seraya site office on 16 June 1987 that the defendants became aware of the purchase orders exh P6 Exhibit P6 did not bear labels of the defendants Singapore city office 22 Richard Kwan had taken sick leave before 16 June 1987 The matter was reported to the police and Richard Kwan was dismissed Findings of the court 23 The main question to be determined by the court is whether Richard Kwan had the authority to purchase the cables for and on behalf of the defendants 24 The plaintiffs can succeed in their claim only if they can establish either a that Richard Kwan had actual authority to purchase the cables on behalf of the defendants or b that Richard Kwan had apparent or ostensible authority to purchase the cables on behalf of the defendants 25 It is not the plaintiffs case that Richard Kwan had actually been authorized to make the purchases on behalf of the defendants What the plaintiffs contend is that the conduct of the defendants as a whole amounted to a representation that Richard Kwan had the necessary implied or apparent authority to purchase the nine lots of cables on behalf of the defendants It is submitted that the defendants had by their actions and acquiescence represented that Richard Kwan had the authority to purchase the cables on their behalf 26 The evidence adduced by the plaintiffs which they say supports their submissions is as follows a On seven occasions between 19 August 1986 to 5 June 1987 five faxes and two proforma invoices of the plaintiffs price quotations of the cables were sent to the defendants The five faxes were faxed to the defendants site office at Pulau Seraya and the two proforma invoices were mailed to the defendants city office b As no evidence was adduced by the defendants to the contrary the court is entitled to presume that these documents had been received by the defendants in the ordinary course of natural events c These documents were addressed to the defendants for the attention of Richard Kwan They bore the name of the plaintiffs which the defendants knew were suppliers of cables in Singapore and contained details of cables quoted and their prices Upon receipt of these documents the defendants did not at any time object to or deny Richard Kwan s authority to ask for quotations for cables or to purchase these cables By their acquiescence the defendants represented to the plaintiffs that Richard Kwan had the authority to ask for quotations for cables and accordingly the necessary or incidental authority to purchase the cables in relation to the quotations d The plaintiffs after the sale of the first two lots of cables on 28 May 1987 and 30 May 1987 sent to the defendants a statement of account for the period 31 May 1987 exh P7 showing these two sales and the amount owing by the defendants to the plaintiffs for these two sales The defendants on receipt of exh P7 on 5 June 1977 must know that there were two sales of cables to the defendants and that Richard Kwan was involved By not immediately objecting or denying Richard Kwan s authority after receipt of exh P7 the defendants again represented that Richard Kwan in fact had the authority to purchase the cables on their behalf This further induced the plaintiffs to continue to sell more cables to Richard Kwan e Richard Kwan wore a NEI PARSONS badge each time he visited the plaintiffs premises to confirm orders for the cables and to collect the cables On each occasion when he came he drove the defendants van to collect the cables during normal office hours f Richard Kwan was able to bring along the defendants purchase orders and the defendants official rubber stamp in the transactions with the plaintiffs g The defendants had conducted their business such that it was easy for Richard Kwan to leave the defendants office during normal office hours and to have access to the defendants van and rubber stamp and purchase order forms until 15 June 1987 h On 13 June 1987 Jackie Tan made a telephone call to the defendants site office at Pulau Seraya and she was told that Richard Kwan was the person who was in charge of purchase orders i The plaintiffs had made one sale of cables to the defendants in April 1987 The procedure adopted for that sale was similar to the procedure adopted in respect of the nine purchases made by the defendants through Richard Kwan the purchase order number was given by the defendants to the plaintiffs and the cables were delivered on the strength of the said purchase order number It was only at a much later date that the actual purchase order was delivered by the defendants In the previous sale the purchase order number was given by the defendants to the plaintiffs on 8 April 1987 the cables were delivered on 30 April 1987 and the actual purchase order PB1 pp 12 and 13 was only received by the plaintiffs from the defendants on 5 May 1987 27 Diplock LJ in Freeman Lockyer v Buckhurst Park Properties Mangal Ltd stated p 503 An apparent or ostensible authority on the other hand is a legal relationship between the principal and the contractor created by a representation made by the principal to the contractor intended to be and in fact acted upon by the contractor that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the apparent authority so as to render the principal liable to perform any obligations imposed upon him by such contract To the relationship so created the agent is a stranger He need not be although he generally is aware of the existence of the representation but he must not purport to make the agreement as principal himself The representation when acted upon by the contractor by entering into a contract with the agent operates as an estoppel preventing the principal from asserting that he is not bound by the contract It is irrelevant whether the agent had actual authority to enter into the contract In ordinary business dealings the contractor at the time of entering into the contract can in the nature of things hardly ever rely on the actual authority of the agent His information as to the authority must be derived either from the principal or from the agent or from both for they alone know what the agent s actual authority is All that the contractor can know is what they tell him which may or may not be true In the ultimate analysis he relies either upon the representation of the principal that is apparent authority or upon the representation of the agent that is warranty of authority The representation which creates apparent authority may take a variety of forms of which the commonest is representation by conduct that is by permitting the agent to act in some way in the conduct of the principal s business with other persons By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal s business has usually actual authority to enter into 28 In Ebeed v Soplex Wholesale Supplies Ltd the Court of Appeal held that in determining whether a principal had represented that his agent had authority to enter into a particular transaction the court had to consider the totality of the principal s conduct It was not right for the court to restrict its inquiries to an assessment of what was the normal or usual authority of the particular type of agent in question although this undoubtedly would be a relevant factor and on occasions it may be the only evidence available for determining the agent s apparent authority 29 Browne Wilkinson LJ in his judgment said p 411 It is important to bear in mind that the doctrine of holding out is a form of estoppel As such the starting point is that the principal must be shown to have made a representation which the third party could and did reasonably rely on that the agent had the necessary authority The relevant inquiry therefore in all cases is whether the acts of the principal constitute a representation that the agent had a particular authority and were reasonably so understood by the third party This requires the court to consider the principal s conduct as a whole In many cases the holding out or representation by the company consists solely of the fact that the company has invested the agent with a particular office eg managing director or secretary For example in a case such as British Bank of the Middle East v Sun Life Assurance Co of Canada UK Ltd 1983 2 Lloyd s Rep 9 1983 BCLC 73 the only holding out by the defendants to the third party was to invest someone with the title branch manager which enabled him so to describe himself in correspondence relied on by the third party in such a case the only representation which the third party can reasonably rely on is the representation that that person has the powers normally or usually enjoyed by a branch manager Therefore in such a case the only relevant inquiry is as to the powers normally enjoyed by branch managers in general But where as in the present case the holding out is alleged to consist of a course of conduct wider than merely describing the agent as holding a particular office although the authority normally found in the holder of such an office is very material it must be looked at as part and parcel of the whole course of the principal s conduct in order to decide whether the totality of the principal s actions constitute a holding out of the agent as possessing the necessary authority I therefore cannot accept either of the ways in which counsel for Refson put his case It is not right in this case simply to inquire what is the normal authority of documentary credit managers in general Nor is it right to start by seeking to establish the normal authority of documentary credit managers in general and then looking to see whether there are any additional factors which alter the position The only correct approach is the one adopted by the judge which is to consider the whole of Refson s conduct to determine whether it amounted to a holding out by Refson of Mr Booth as having the necessary authority 30 In the present case there was never any representation by the defendants to the plaintiffs as regards the authority of Richard Kwan Prior to 16 June 1987 the plaintiffs were told that Richard Kwan was an engineer employed by the defendants only by Richard Kwan himself The plaintiffs cannot rely on the representation of Richard Kwan as to his actual authority per Diplock LJ in Freeman Lockyer v Buckhurst Park Properties Mangal Ltd at p 505 31 In any case even if the defendants had represented to the plaintiffs before any of the purchases were made by Richard Kwan that Richard Kwan was their engineer the plaintiffs could only succeed if they can establish that the purchases made by Richard Kwan were within the scope of authority of an engineer The mere representation by the defendants that Richard Kwan was their engineer did not of itself amount to a representation that Richard Kwan had authority to make the purchases on behalf of the defendants per Diplock LJ in Freeman Lockyer v Buckhurst Park Properties Mangal Ltd at p 508 32 It is clear from the evidence adduced by the plaintiffs that Jackie Tan and Low Lean Siew relied on the position held by Richard Kwan in the defendants and had considered that the position of engineer carried with it the authority to make the purchases which Richard Kwan purportedly made on behalf of the defendants 33 It is for the plaintiffs to establish that the purchases made by Richard Kwan were within the scope of authority of an engineer see Kreditbank Cassel v Schenkers GmbH v Schenkers This the plaintiffs have failed to do 34 The duties normally associated with an engineer do not include the purchase of materials or goods although an engineer may advise on the type of materials required The decision to purchase from suppliers and the price to be paid are matters within the scope of the duties of the manager or other persons specially authorized by the management of the company 35 The plaintiffs cannot establish the authority of engineers to make purchases on behalf of their employers by merely relying on the evidence of Jackie Tan and Low Lean Siew that engineers were known to them to make purchases from the plaintiffs nor was their evidence sufficient to establish that engineers have by customs and usages in Singapore implied authority to make purchases of materials or goods on behalf of their employers 36 Richard Kwan was employed by the defendants as a making alive engineer His duties were to check the completeness and safety of the equipment before making it alive by switching on power to the equipment He was not involved in the design or construction of electrical devices Clearly it was no part of his duty to purchase materials or goods on behalf of the defendants or even advise the defendants on the type of materials required 37 I now come to deal with the other matters relied on by the plaintiffs Do they constitute a representation by the defendants that Richard Kwan had authority to make the purchases on behalf of the defendants 38 The plaintiffs cannot assume from the absence of any response from the defendants to their faxes and proforma invoices that Richard Kwan had authority to purchase or transact business for the defendants The most the plaintiffs can assume was that Richard Kwan had been requested by the management of the defendants to obtain price quotations The authority to request for price quotations cannot be construed as authority to make purchases or a representation of authority to make purchases The task of making enquiries or obtaining quotations is commonly assigned to very junior employees 39 Neither a badge which identifies a person as an employee of a company nor the use of the company s vehicle can conceivably be understood as a representation that that person has authority to conclude contracts or make purchases on behalf of the company If the plaintiffs are right then any employee can bind the company by wearing the company s badge and using the company s vehicle The wearing of a company s badge and the use of the company s vehicle are common everyday occurrences 40 The fact that Richard Kwan made use of the defendants purchase order forms and rubber stamp cannot be a representation unless the defendants knew and allowed Richard Kwan to use them This has not been established by the evidence adduced In fact the evidence was that it was not part of Richard Kwan s duty to keep the purchase order forms and he was not issued with the defendants rubber stamp 41 Even if the defendants purchase order forms and rubber stamp were kept by Richard Kwan that would not amount to a representation or holding out that Richard Kwan had the authority to use them and bind the defendants It cannot be said that it was wrong of the defendants to let Richard Kwan keep the rubber stamp see The Mayor Constables Company of Merchants of the Staple of England v The Governor Company of the Bank of England at p 167 There is no reason why purchase order forms should be treated differently from other stationery bearing a company s letterhead Both purchase order forms and stationery bearing the company s letterhead are capable of being used to order goods when properly completed or typed up In fact stationery bearing the company s letterhead are capable of serving other important functions when they are typed up Yet these documents and the company s rubber stamp are commonly kept by clerical or secretarial staff and are used everyday It cannot be that those clerical or secretarial staff could bind the company if they made use of the purchase order forms or the stationery bearing the company s letterhead and the rubber stamp 42 The fact that a company may have allowed its employee to retain possession of documents which would enable the employee to perpetrate or which would facilitate the perpetration of a fraud on a third party does not entitle the third party to claim against the company see Farquharson Brothers Co v C King Co 43 In Tham Seow Hing v Chop Kwong Fatt Cheong 6 the court held that the branch manager of the defendant firm did not have authority to borrow on behalf of the defendant firm and the

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  • Cavenagh Investment Pte Ltd v Kaushik Rajiv
    Property and therefore that letter and a faxed copy of it if received might well have been directed to Razali to handle and accordingly it never came to the attention of Madam Ching herself or for that matter any other employee In any case it is not required that I decide the reason for such inaction All that matters is that the silence or inaction in the case at hand is silence or inaction that is of an equivocal nature as to whether there was any assent by the Plaintiff Accordingly I do not agree that the Plaintiff could be said to have ratified the unauthorised acts of Razali and consequently bound itself to the terms of the purported lease 32 In further support of Dr Kaushik s case Mr Lim also cites the English Court of Appeal case of Spiro v Lintern and Others 1973 WLR 1002 Spiro In Spiro the first defendant Mr Lintern asked his wife to find a purchaser for his house but gave her no authority to sell The wife nevertheless purported to agree to a sale of the house to the claimant Mr Lintern knew about this and after meeting the claimant he permitted the claimant to proceed to get an architect and a gardener to work on the building and the garden without telling the claimant that his wife did not have authority to sell The Court of Appeal held that Mr Lintern could not deny that his wife had authority to sell the house Mr Lim s reliance on Spiro demonstrates how the concepts of ratification and estoppel can very often be confused Spiro does not stand for the proposition that the silence of the first defendant amounted to a ratification of the unauthorised act of his wife Instead the decision of the Court of Appeal was made on the basis of an estoppel Mr Lintern in the circumstances by his silence and inaction was found to have made a representation by conduct that his wife had the requisite authority The claimant having relied on the representation thereon and suffering a detriment as a result Mr Lintern was estopped from denying the authority of his wife and the validity of the contract 33 The more pertinent issue in this case therefore is whether any estoppel has been raised against the Plaintiff denying the existence of a valid lease I do not think so Even if the Plaintiff had received the said letter and the fax and thereafter remained silent and did not act such that this could amount to a representation I do not think that there was any reliance thereon by Dr Kaushik Dr Kaushik was content to carry on living in the Property because he was at all times under the impression albeit wrongly that he had from the outset a valid lease with the Plaintiff As a result the Plaintiff s silence and inaction upon receipt of the letter cannot be said to have ever played on Dr Kaushik s mind at the relevant time In contrast in Spiro before the representations by silence and inaction were made by Mr Lintern the claimant was labouring under a significant amount of doubt as to whether there was or was not a binding contract for the sale of the house because he had found out that it was Mr Lintern and not Mrs Lintern who owned the house On those facts Mr Spiro could be said to have relied on those representations by silence and inaction by Mr Lintern after the two finally met when he then instructed to his detriment an architect and a gardener to do the works An estoppel was thus raised in Spiro but none arises here Whether the Plaintiff is bound by any lease 34 Given all of the above I find that there was no valid lease between the Plaintiff and Dr Kaushik As a result I find that Dr Kaushik has committed the tort of trespass to land in wrongfully occupying the Property for the period between 1 December 2008 and 6 October 2011 Whether the defence of contributory negligence applies to the tort of trespass to land 35 Amongst the various defences raised by Dr Kaushik against the Plaintiff s claim for damages for trespass to land was the defence of contributory negligence as found in s 3 1 of the Contributory Negligence and Personal Injuries Act Cap 54 2002 Rev Ed the CNPIA To this end Dr Kaushik contends that the damages in respect of which the Plaintiff is claiming was caused wholly or at least largely by its own negligence During the conduct of the trial Mr Lim sought to show that the Plaintiff Lee Tat Property and its associated companies were run and managed in an indifferent lax and careless manner note 28 These included amongst other things the failure to keep track of or check on properties the failure to supervise Razali and the lack of proper control and supervision by Madam Ching and the management of Lee Tat Property over the properties collectively held by the group because of the large number of properties involved 36 Mr Lim suggested that the defence of contributory negligence was applicable to the tort of trespass to land because the tort is an unintentional tort Mr Lim has misrepresented the tort and has perhaps misapprehended the meaning of intentional or unintentional when used in respect of characterising torts as such Nevertheless whether or not the defence in s 3 1 of the CNPIA applies to a particular tort does not depend on whether or not the tort can be characterised as intentional or unintentional Very recently the English Court of Appeal in Pritchard v Cooperative Group Ltd 2012 QB 320 Pritchard was asked to determine whether the defence in s 1 1 of the Law Reform Contributory Negligence Act 1945 c 28 UK the 1945 Act which is in pari materia with our provision applies to the torts of assault and battery The Court of Appeal explained per Aikens LJ at 61 62 that the purpose of the 1945 Act was to provide relief to claimants whose actions would have previously failed because the common law incarnation of the defence was a complete defence by allowing the courts to apportion damages Its purpose was not to reduce damages which previously before the enactment of the statute would have been awarded Therefore if the common law defence did not apply to a tort pre 1945 the statutory defence would also not apply The Court of Appeal held that because it could find no case before 1945 which applied the defence to the intentional torts of assault and battery the statutory defence likewise did not apply 37 Whether or not the statutory defence of contributory negligence applies to the tort of trespass depends on whether or not the common law defence applied to it before the enactment of the CNPIA Although Mr Lim has taken the wrong approach to determining whether the defence applies he cites in his submissions the Straits Settlements Supreme Court decision of Brown v Attorney General 1889 KY 4 Brown for the proposition that the defence applies to the tort at hand Unfortunately Mr Lim s reading of Brown is mistaken In fact in Brown Wood J did not apply the defence of contributory negligence saying The exact application however of this principle which is embodied in the known legal maxim vigilantibus non dormentibus jura subveniunt I cannot find to have been held to prevail in a case quite like the present Wood J instead held in favour of the defendant there on the basis of a finding of fact that there was no act of trespass Ultimately whether or not the defence applies will be a matter of legal archaeology On the basis of the decision in Brown and the fact that I have not been able to find any other case before the enactment of the CNPIA or in fact the 1945 Act applying the defence to the tort of trespass to land I am of the view that the defence is not applicable here 38 I would only add that Dr Kaushik s reliance on the defence of contributory negligence presupposes that the Plaintiff owes him a duty of care which I am generally doubtful of given the many common law pronouncements that property owners owe no general duty to look after their own property Whether the Plaintiff was vicariously liable for Razali s acts 39 Another limb of Dr Kaushik s defence runs as follows note 29 Razali has committed the tort of deceit against him The Plaintiff is vicariously liable for the tort of Razali As a result Dr Kaushik is entitled to raise a set off against any damages claimed by the Plaintiff by relying on the damages the Plaintiff is liable to him 40 Creative as such the argument is the first obstacle Dr Kaushik faces is the fact that Razali was in fact not an employee of the Plaintiff Instead Razali was at all material times an employee of Lee Tat Property Dr Kaushik acknowledges this difficulty and therefore goes on to suggest that as between the Plaintiff and Lee Tat Property the corporate veil should be lifted such that the Plaintiff can be held liable for Razali s acts note 30 In furtherance of his submission that the corporate veil should be lifted Dr Kaushik cited the following facts note 31 First the employees of Lee Tat Property Annie and Collin Tan were sometimes confused as to who their employers were Lee Tat Property or the Plaintiff note 32 Second Razali was at one instance wrongly identified by the Plaintiff s solicitors as an employee of the Plaintiff even thought he was in fact an employee of Lee Tat Property note 33 Third during the trial Collin Tan continued to be confused in wrongly referring to Lee Tat Property when she meant the Plaintiff and vice versa note 34 Fourth apart from Lee Tat Property the rest of the companies in the Lee Tat group owned by Madam Ching only owned properties and did not have any employees or their own offices Fifth the other companies all shared the same office with Lee Tat Property Sixth the administration of all the companies was handled by Lee Tat Property Seventh all decisions for companies in the group were made by Madam Ching alone She is the director of all the companies in the group some of which are 99 owned by her others 100 Last the Plaintiff s letterhead bore a logo which showed the letters L T which stands for Lee Tat 41 I am not convinced that these factors are sufficient for the court to lift the corporate veil Dr Kaushik submits that the above factors show that the companies were run as a functional whole with unity of ownership and or control such that the corporate veil ought to be lifted It was surely with specific intent that Madam Ching arranged to have different companies hold different properties and to have them all managed by a different distinct company The starting point is that each company within what may be called a group remains a separate distinct entity In Adams and Others v Cape Industries Plc and Another 1990 1 Ch 433 Adams the English Court of Appeal confirmed that it is open for businessmen to structure their operations to insulate one part of a business from another at 544 per Slade LJ It is not suggested that the arrangements involved any actual or potential illegality or were intended to deprive anyone of their existing rights Whether or not such a course deserves moral approval there was nothing illegal as such in Cape arranging its affairs whether by the use of subsidiaries or otherwise so as to attract the minimum publicity to its involvement in the sale of Cape asbestos in the United States of America W e do not accept as a matter of law that the court is entitled to lift the corporate veil as against a defendant company which is the member of a corporate group merely because the corporate structure has been used so as to ensure that the legal liability if any in respect of particular future activities of the group and correspondingly the risk of enforcement of that liability will fall on another member of the group rather than the defendant company Whether or not this is desirable the right to use a corporate structure in this manner is inherent in our corporate law Slade LJ s statement was approved by the Singapore Court of Appeal in The Andres Bonifacio 1993 3 SLR R 71 Accordingly one commentator has noted that the legitimacy of setting up one ship companies in order to minimise the risk of sister ship actions has been repeatedly affirmed in Singapore Walter Woon on Company Law Tan Cheng Han SC gen ed Sweet Maxwell 3rd Rev Ed 2009 at para 2 65 42 In the present case Madam Ching was as a matter of law fully entitled to structure her companies the way they were and have separate companies hold different properties This was likely done so as to deal with situations such as the present If Razali was guilty of committing a tort and his employer Lee Tat Property had to be liable to a claimant the intention was that the other companies would be insulated from liability As clearly set out by Slade LJ in Adams there is nothing illegal about such an arrangement In the absence of compelling reasons such as the existence of fraud or serious abuse of the corporate form as was the case in New Line Productions Inc and another v Aglow Video Pte Ltd and others and other suits 2005 3 SLR R 660 cited by Dr Kaushik in his submissions the courts will be slow to treat companies in the same group as one legal entity merely because it would be convenient for a claimant s claim to do so The Plaintiff is therefore not vicariously liable for the alleged tort committed by Razali Dr Kaushik s argument on this point fails 43 If at the conclusion of this suit Dr Kaushik finds that he has suffered some loss and such loss may be attributable to Lee Tat Property under the doctrine of vicarious liability for the acts of Razali then its proper course is to bring an action against Lee Tat Property Lee Tat Property is not a party to the present suit so I will say no more on the issue Damages for trespass to land 44 The Plaintiff s claim in damages for trespass to land amounts to a sum of 352 704 being what it says is the market rent for the period Dr Kaushik was in occupation of the Property Of course the Plaintiff has clarified through Mr Balasubramaniam that it will give Dr Kaushik credit for the 54 000 already paid to it see 14 above The Plaintiff s claim is only for the wrongful occupation as it had on the second day of the trial dropped its other claim for reinstatement for physical damage to the Property In any case the Plaintiff unhelpfully says no more than simply asserting the claim for market rent The nature of damages for trespass to land must be unpacked to understand what exactly it constitutes The juridical nature of damages for trespass to land 45 The right to sue for damages based on the market rental value of a property wrongfully occupied is a principle well established in the law and one which has been described by Nicholls LJ in Stoke on Trent City Council v W J Wass Ltd 1988 3 All ER 394 as the user principle In this regard the English Court of Appeal case of Swordheath Properties Ltd v Tabet and Others 1978 1 WLR 285 is often cited for the proposition that at 288 when the plaintiff has established that the defendant has remained on as a trespasser in residential property he is entitled without bringing evidence that he could or would have let the property to someone else in the absence of the trespassing defendant to have as damages for the trespass the value of the property as it would fairly be calculated and in the absence of anything special in the particular case it would be the ordinary letting value of the property that would determine the amount of damages 46 The exact juridical nature of damages for trespass to land lay largely unarticulated for a long time Lord Denning MR planted the seed for the recognition of the restitutionary analysis for damages for trespass to land in Penarth Dock Engineering Co Ltd v Pounds 1963 1 Lloyd s Rep 359 when he used at 362 what may be described as restitutionary language in a case involving trespass to the claimant s dock The Penarth company would not seem to have suffered any damage so to speak of They have not had to pay any extra rent to the British Transport Commission The dock is of no use to them they would not have made any money out of it But in a case of this kind the test of the measure of damages is not what the plaintiffs have lost but what benefit the defendant has obtained by having the use of the berth emphasis added However it was only later in Ministry of Defence v Ashman 1993 66 P CR 195 Ashman that Hoffmann LJ decided to call a spade a spade and declared that a claim for mesne profit for trespass to land is a claim for restitution In doing so Hoffmann LJ distinguished the compensatory and restitutionary bases of damages for trespass to land at 200 201 A person entitled to possession of land can make a claim against a person who has been in occupation without his consent on two alternative bases The first is for the loss which he has suffered in consequence of the defendant s trespass This is the normal measure of damages in the law of tort The second is the value of the benefit which the occupier has received This is a claim for restitution The two bases of claim are mutually exclusive and the plaintiff must elect before judgment which of them he wishes to pursue emphasis added Admittedly the judicial opinion on the issue is not unanimous In Ashman itself Lloyd LJ disagreed taking the view that the claim was simply compensatory The defendant in Ashman was a wife of a Royal Air Force officer who had occupied the claimant s premises Her husband subsequently moved out leaving her and the children She refused to move out of the property instead holding over The claimant thus claimed damages for trespass to land The issue which fell for the Court of Appeal to decide was whether these damages should be assessed by reference to the market rent for such premises or by the subsidised rent which a serviceman would actually pay for the premises or by some other measure In taking the view that the damages are restitutionary in nature Hoffmann LJ held that it was the market rent that was recoverable In taking the view that the damages were compensatory Lloyd LJ held that it was the subsidised rent that the claimant could recover However in Inverugie Investments Ltd v Hackett 1995 1 WLR 713 Inverugie an appeal from the Commonwealth of the Bahamas heard by the Judicial Committee of the Privy Council Lord Lloyd of Berwick having been elevated to the position of Lord of Appeal in Ordinary since the decision in Ashman declared at 718 that the claim for mesne profits need not be characterised as exclusively compensatory or exclusively restitutionary it combines elements of both 47 The Singapore High Court in Yenty Lily trading as Access International Services v ACES System Development Pte Ltd 2013 1 SLR 577 Yenty Lily recently took the opportunity to explore the juridical basis of the user principle in the context of damages for the wrongful detention of goods After considering a number of authorities on the issue Judith Prakash J appears to have accepted at 66 69 the conclusion in Inverugie that the user principle comprised of both compensatory and restitutionary elements Prakash J s reticence in adopting a pure restitutionary approach appears at 66 to be because it is thought that by adopting such an analysis a defendant may argue that where he has not made any discernible use of the detained or misappropriated property he had not derived any benefit and therefore cannot be made to pay the plaintiff the market rent as damages Prakash J thus preferred to characterise the user principle as being a mix of both compensation and restitution Accordingly she held that the recognition that the user principle may also contain elements of restitution does not lead to the conclusion that a plaintiff cannot recover in a situation where the defendant has not made any discernible use of the plaintiff s detained or misappropriated property unless actual damage is proved What is important Prakash J opined may be the fact that by the detention or misappropriation the defendant gains the opportunity to use the property concerned whilst simultaneously depriving the owner of such opportunity such that the defendant s failure to exploit such opportunity is irrelevant 48 In Inverugie the defendant had wrongly ejected the claimant from a hotel complex and excluded them from it for a period of 15 years Over this period the occupancy of the hotel was only about 35 to 40 percent Facing a claim for trespass to land the defendant conceded that it was liable to pay the claimant reasonable rent The sole question for the Privy Council was how this should be assessed The Privy Council held that the defendant had to pay the claimant damages to be assessed by reference to the reasonable rent of all the apartments and not with reference to only the 35 to 40 percent rate of occupancy As noted by Professor Graham Virgo Professor Virgo in Graham Virgo The Principles of the Law of Restitution Oxford University Press 2nd Ed 2006 at p 468 the objection to calling the result reached in Inverugie as consistent with a restitutionary analysis is that the defendant was required to pay rent for the entire period despite the finding that it had not derived a benefit from the apartments all of the time This appears to be the very same objection held by Prakash J in her analysis in Yenty Lily However as Professor Virgo goes on to explain in his text the defendant s use of the hotel complex throughout the period should be regarded as it having obtained an objective benefit that is the opportunity to obtain income from the apartments Whether or not in fact the hotel was fully occupied is a matter which raises questions of subjective devaluation the concept of which is explained below at 54 56 which on the facts of that case did not apply Likewise in an action for wrongful detention of property even if a defendant has not made any discernible use of the detained or misappropriated property he has obtained an objective benefit thus entitling the plaintiff to recover damages measured by the market rent Similar to the case in Inverugie it is arguable that the defendant in Yenty Lily should not be permitted to subjectively devalue the benefit received on the basis of the failure to make discernible use of the goods When the plaintiff sought to claim ownership over the detained goods the defendant s response was to deny the same and to refuse to return them By refusing to return the property the defendant must be taken to have freely accepted that benefit and is therefore not entitled to subjectively devalue that benefit by saying that it had not made discernible use of the detained property Seen from this perspective a purely restitutionary analysis may not be contrary to the user principle 49 Why should a distinction be made between an award for compensation and an award for restitution in claims such as the present Different principles and different possibilities will flow from the different characterisations in different cases The distinction is not purely theoretical As Professor James Edelman who has since been appointed to the bench of the Supreme Court of Western Australia explained in James Edelman Gain based Damages Hart Publishing 2002 Edelman at p 66 In cases of wrongs where the wrongful transfer involves money the transfer of value might sometimes be equivalent to the loss suffered But the restitutionary damages award is not concerned with financial loss and opens other possibilities which will be seen below such as subjective devaluation of the award Thus even in cases where the quantum of compensatory and restitutionary damages might be the same it has been recognised that it is important to keep the two awards distinct emphasis added 50 I do not see any reason why we ought not to recognise that where a distinction can be made between a compensation based claim and a restitution based claim a claim for mesne profit market rent under the user principle or however one may choose to call the claim is a claim for a restitutionary remedy Is the Plaintiff s claim for compensation or restitution 51 Although the Plaintiff repeatedly asserts and is not wrong that a claimant in an action for trespass to land is entitled to market rent during the period of wrongful occupation by the defendant as envisaged by the above statement in Edelman see 49 above it is also necessary in the present case to consider whether the present claim is for compensatory damages or restitutionary damages 52 The evidence at trial showed that during the period of Dr Kaushik s wrongful occupation of the Property the Plaintiff was unable and unwilling to lease the Property to anyone else The evidence was that the Plaintiff and its controlling mind Madam Ching was unwilling to let the Property out for anything less than 10 000 because it was selective of its tenants and during the period of Dr Kaushik s wrongful occupation the Plaintiff did not receive a single offer satisfying the 10 000 minimum note 35 Put simply the Plaintiff was at all material times very happy to leave the Property unoccupied There was no indication that because of Dr Kaushik s occupation of the Property the Plaintiff was prevented from letting the Property to another tenant and as a result had to forego rent it would otherwise have collected Of course if this was the case the Plaintiff would have to elect between the compensatory measure and the restitutionary measure such election would likely be influenced by which is higher Likewise the Plaintiff s claim for reinstatement damages which has since been dropped would have been a claim for compensatory damages If the Plaintiff had had to pay extra taxes because of Dr Kaushik s occupation that would have been a claim for compensation as well I would only note that in these latter two examples because the compensatory claim is not incompatible with the restitutionary claim the Plaintiff would not need to elect and will be entitled to recover both However in the circumstances I would not characterise the Plaintiff s present claim of 352 704 as a claim for compensatory damages it is clearly claiming restitutionary damages in the form of the gain Dr Kaushik enjoyed in occupying the Property The Plaintiff s restitutionary claim and the damages it is entitled 53 Having characterised the Plaintiff s claim for damages for trespass to land as a claim for a restitutionary remedy what are the damages it is entitled The measure of damages is the benefit enjoyed by Dr Kaushik as a result of the wrongful occupation of the Property In its pleadings the Plaintiff asserts that it is entitled to a sum of 352 704 note 36 This it claims represents the market rent of the Property for the duration of Dr Kaushik s occupation It claims that this sum is arrived at by multiplying the strata area of the Property by the rate of 4 07 per square foot this figure being as per URA data during the last quarter of 2008 Aside from this bare assertion the Plaintiff adduced no further evidence in support of its contention that the sum it was claiming represented the market rent I therefore find that the Plaintiff has not shown on a balance of probabilities that the market rent for the period of the wrongful occupation amounted to 352 704 However given that Dr Kaushik was happy to have paid or to have caused I 2 MS Net to pay the sum of 9 000 every month to Razali as rent for the Property I am satisfied that at the very least the amount of 9 000 can be taken to be the market rent of the Property during the period of the wrongful occupation Mr Lim does not deny this in the submissions for Dr Kaushik note 37 Accordingly I would accept that the market rent of the Property for the relevant period of 34 months and 5 days from 1 December 2008 to 6 October 2011 would be 307 451 61 and not 352 704 as claimed by the Plaintiff Can Dr Kaushik subjectively devalue the benefit he derived 54 As I have alluded to above the characterisation of the present claim for trespass to land as restitutionary leads to different possibilities flowing 55 Dr Kaushik submits that he is entitled to subjectively devalue the benefit he derived from the wrongful occupation of the property The phrase subjective devaluation was first used by Professor Peter Birks and he explains the concept in Peter Birks An Introduction to the Law of Restitution Clarendon Press 1985 at p 109 as such The critical distinction is between money and benefits in kind Where the defendant received money it will be impossible on all ordinary facts for him to argue that he was not enriched For money is the very measure of enrichment By contrast benefits in kind are less unequivocally enriching because they are susceptible to an argument which for convenience can be called subjective devaluation It is an argument based on the presmiss sic that benefits in kind have a value to a particular individual only so far as he chooses to give them value What matters is his choice The fact that there is a market in the good which is in question or in other words that other people habitually choose to have it and thus create a demand for it is irrelevant to the case of any one particular individual He claims the right to dissent from that demand Market value is not his value Suppose that without his knowledge his car has been serviced or his roof mended There is a market in car servicing and roof mending It is easy to find the market value of work of that kind what the going rate is between reasonable people But he says that he had decided to go in for do it yourself or to take the risk of disaster by doing nothing Indeed to make his point he does not even have to say that he had actually decided let alone prove that he had decided to dissociate himself from the particular demand For his point is sufficiently made by saying that he has a continuing liberty to choose how to apply his particular store of value and that in the case of this car servicing or roof mending he simply had not made his choice More recently the concept was put in the following simple terms by Lord Nicholls of Birkenhead in the House of Lords in the case of Sempra Metals Ltd formerly Metallgesellschaft Ltd v Inland Revenue Commissioners and another 2008 1 AC 561 at 119 Here as elsewhere the law of restitution is sufficiently flexible to achieve a just result To avoid what would otherwise be an unjust outcome the court can in an appropriate case depart from the market value approach when assessing the time value of money or indeed when assessing the value of any other benefit gained by a defendant What is ultimately important in restitution is whether and to what extent the particular defendant has been benefited see Burrows The Law of Restitution 2nd ed 2002 p 18 A benefit is not always worth its market value to a particular defendant When it is not it may be unjust to treat the defendant as having received a benefit possessing the value it has to others In Professor Birks s language a benefit received by a defendant may sometimes be subject to subjective devaluation An Introduction to the Law of Restitution 1985 p 413 An application of this approach is to be found in the Court of Appeal decision in Ministry of Defence v Ashman 1993 2 EGLR 102 emphasis added 56 The concept of subjective devaluation was applied by Hoffmann LJ in Ashman There after finding that the claimant was ordinarily entitled to the market rent and not merely the subsidised rent see above at 46 Hoffmann LJ went on to hold at 201 that the defendant could subjectively devalue the benefit derived because the benefit was in fact worth less to the particular defendant Hoffmann LJ found two circumstances which justified such a conclusion First the defendant and her erstwhile husband had been occupying the premises at the subsidised rate Secondly the defendant had no choice but to stay in the premises until the local authority could re house her These factors led Hoffmann LJ to conclude that the benefit derived by the defendant was only worth the subsidised rate to her 57 On the basis of the above Dr Kaushik thus contends that by reason of him or rather his company I 2 MS Net having paid the full rent of 9 000 to Razali he is entitled to rely on the concept of subjective devaluation and should be taken as valuing the benefit he received as nil note 38 I do not think that Mr Lim fully grasps the concept Quite the contrary to his submission the fact that Dr Kaushik had paid or caused his company I 2 MS Net to pay the sum of 9 000 every month to Razali does not show that he valued the benefit any less What it in fact does show is that he did value the benefit at 9 000 because if that was not so he would not have been so willing to part with that sum The change of position defence The applicability of the change of position defence to a claim in trespass to land for restitutionary damages 58 Another corollary flowing from the characterisation of the present claim as restitutionary in nature is the applicability of certain defences Specifically the facts of the present case raise the possibility of the defence known as change of position being applicable The defence was formally recognised in the English common law in the speech of Lord Goff of Chieveley in the seminal House of Lords decision in Lipkin Gorman a firm v Karpnale Ltd 1991 2 AC 548 Lipkin Gorman at 579E F where an innocent defendant s position is so changed that he will suffer an injustice if called upon to repay or to repay in full the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution If the plaintiff pays money to the defendant under a mistake of fact and the defendant then acting in good faith pays the money or part of it to charity it is unjust to require the defendant to make

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  • Chu Said Thong and another v Vision Law LLC
    Court of Appeal then says at 76 is nevertheless a necessary element in any claim in negligence but as a threshold question to be fulfilled failing which the claim does not even take off Further when the Court of Appeal resolves the threshold question on the facts of Spandeck at 89 it frames its conclusion in normative terms and without inquiry into the defendant s subjective state of mind Thus the finding on this point is that the plaintiff s loss must have been foreseeable to the defendant emphasis added rather than a finding that it was in fact foreseen 138 This normative and objective approach is also consistent with Court of Appeal decisions following Spandeck These decisions interpret apply and determine the threshold question divorced both from the defendant s actual foresight and his personal characteristics Thus in Ngiam Kong Seng a case of psychiatric harm the threshold question was not satisfied because the Court of Appeal held that it cannot be said that a person who communicates distressing information carelessly ought to foresee that that communication could in itself cause psychiatric harm at 132 Similarly in Man Mohan Singh a case of pure economic loss albeit arising from a profoundly tragic double bereavement the Court of Appeal held that it cannot be said that a motorist who drives negligently ought reasonably to foresee that his negligence could kill all the children of a particular family Man Mohan Singh at 48 139 Deutsche Bank AG is one case in which it could be said that the Court of Appeal determined the threshold question subjectively and descriptively with no normative component That is not in my respectful view the correct reading of that case The alleged negligence in that case was a total failure to provide investment advice The Court of Appeal was therefore considering liability for an omission Deutsche Bank AG at 19 It was in that context that the Court of Appeal considered the threshold question at 31 d The Court of Appeal s subjective and descriptive analysis of the threshold question in that case was therefore directed to the question whether the defendant had any duty to act at all Having determined on the facts that it had no duty to act at 31 c the Court of Appeal nevertheless assumed that the threshold question was satisfied at 35 and went on obiter to apply the universal test 140 Finally a normative and an objective approach to the threshold question is consistent with the Court of Appeal s decision in See Toh Siew Kee VK Rajah JA delivering the principal judgment of the Court of Appeal in that case held that the law of negligence subsumes the body of common law rules in Singapore dealing with occupiers liability He then went on to map the prima facie duty of care arising under the universal test to the law of occupiers liability at 76 The prima facie duty of care of course comprises both the threshold question of reasonable foreseeability and the first stage of proximity Sundaresh Menon CJ and Chao Hick Tin JA delivered judgments concurring with VK Rajah JA in all material respects save for how the first stage of the universal test proximity should be mapped to the law of occupiers liability VK Rajah JA took the view that that mapping could be done a priori and de jure Sundaresh Menon CJ s view was that it should be done on a case by case basis Chao Hick Tin JA s view was that choosing between those two approaches should be left for future decision What is important for present purposes is that neither Sundaresh Menon CJ nor Chao Hick Tin JA disagreed with VK Rajah JA s approach to the threshold question He held that all occupiers are taken reasonably to foresee that if they do not take reasonable care to eliminate static or dynamic dangers on their premises lawful entrants to those premises will suffer damage at 77 Fixing the answer to the threshold question in this way shows clearly that the threshold question although a factual question is approached normatively and objectively The first stage proximity 141 The first stage of the universal test is proximity Proximity is a legal concept with normative force Sunny Metal at 46 and 48 Being a legal concept proximity involves a value judgment by the court about where the bounds of the law of negligence should be drawn Sunny Metal at 58 Spandeck at 79 The central inquiry in this stage is whether the closeness and directness of the relationship between the parties ought to give rise to a duty of care Spandeck at 77 Proximity has many aspects including physical proximity circumstantial proximity causal proximity a voluntary assumption of responsibility and reliance Sutherland Shire Council v Heyman 1985 60 ALR 1 Sutherland Shire at 55 approved in Spandeck at 79 142 The legal concept of proximity equates to a legal or normative finding of reasonable foreseeability Ngiam Kong Seng at 104 There is no need to address reasonable foreseeability on the facts separately in the proximity stage of the universal test because it is captured in the threshold element of the universal test which is an integral part of the process of ascertaining whether there is sufficient legal proximity between the plaintiff and the defendant albeit on a preliminary and factual level Ngiam Kong Seng at 106 The second stage policy 143 The second and final stage of the universal test is policy The universal test segregates the proximity inquiry from the policy inquiry to ensure transparency in duty of care decision making rather than leaving the impression that the courts decide duty of care questions based on unexpressed motives Spandeck at 85 The reference to policy in the second stage of the universal test is not the same conception of public policy which is captured in the maxim ex turpi causa non oritur actio What is involved at this stage of the universal test is the differential weighing and balancing of competing moral claims and broad social welfare goals Spandeck at 85 Thus at this stage the court looks at whether there are any broader community welfare or societal considerations which go beyond the imperative to do justice between the immediate parties and which militate against a duty of care which has ex hypothesi arisen at the first stage Spandeck at 83 See Toh Siew Kee at 87 88 144 The primary purpose of the policy stage is negative in nature as it serves to negate a prima facie duty of care Animal Concerns Research Education Society v Tan Boon Kwee 2011 2 SLR 146 Animal Concerns at 77 It is nevertheless legitimate to consider at the second stage whether there are any reasons of policy to support a finding of a duty of care Animal Concerns at 77 See Toh Siew Kee at 86 Deutsche Bank AG at 23 But policy can never be a basis in itself for a duty of care to arise under the universal test Policy is neither necessary nor sufficient for a duty of care to arise it must be accompanied by proximity Proximity is necessary but is not sufficient for a duty of care to arise it must be accompanied by factual foreseeability Spandeck is ultimately a framework not a test 145 I have referred to Spandeck as having laid down a universal test for the existence of a duty of care in the law of negligence In truth though the universal test operates at a sufficiently high level of abstraction to be more accurately characterised as a universal framework rather than as a universal test Spandeck at 28 As Sundaresh Menon CJ put it in See Toh Siew Kee at 130 the genius of Spandeck is that it presents a flexible framework that allows the court to assess each case according to the particular facts that arise and yet to do so in a consistent manner The flexibility of this framework and the level of abstraction at which it is pitched are features which enable the universal test to carry both explanatory force for established duty of care situations as well as normative force for novel ones But these very features make it essential to populate both of its stages with factors operating at a lower level of abstraction before it can be applied to yield a result on the facts of a particular case Voluntary assumption of responsibility and reliance 146 Spandeck identified two factors that populate the proximity stage of the universal test the defendant s voluntary assumption of responsibility towards the plaintiff and the plaintiff s reasonable reliance on the defendant Thus it is said the twin concepts of a voluntary assumption of responsibility and its mirror image of reasonable reliance in many cases constitute the best and most practical criteria for establishing whether or not there is proximity between the claimant and the defendant from a legal standpoint Sunny Metal at 63 This is particularly true in cases involving pure economic loss Ngiam Kong Seng at 100 But a voluntary assumption of responsibility is only one of the criteria which can lead to a finding of proximity Sunny Metal at 70 This is so even in a case involving negligent words or liability for economic loss Deutsche Bank AG at 36 b and 38 And a voluntary assumption of responsibility could depending on the precise facts of the case at hand be one of the criteria of proximity even in a case of psychiatric harm Ngiam Kong Seng at 100 It is the concept of proximity which is universal in our law of negligence not the criteria by which proximity is established in any particular case or in any particular class of cases Ngiam Kong Seng at 123 147 The concept of a legal duty resting on a voluntary assumption of responsibility traces its history back to the courts of equity and the decision in Nocton v Lord Ashburton 1914 AC 932 But it was Hedley Byrne which transplanted this concept from equity into the common law and into the law of torts Understanding what is meant by this concept therefore requires a closer analysis of Hedley Byrne Hedley Byrne 148 In Hedley Byrne the House of Lords held that a defendant will be liable in damages to a plaintiff if the defendant carelessly makes a false statement to the plaintiff in circumstances where i the defendant has voluntarily assumed a responsibility to the plaintiff to take reasonable care that the statement is true ii the plaintiff relies reasonably on that statement and iii the plaintiff thereby suffers loss 149 A voluntary assumption of responsibility as conceptualised by Hedley Byrne is a term of art and not a turn of phrase It means a contract minus only consideration Thus Lord Reid sees this species of liability as analogous to an agreement or undertaking to be careful which Hedley Byrne permits to yield a remedy in the English law of tort as it does in the Scots law of contract where consideration is not an essential element at 492 Lord Devlin too says that Hedley Byrne liability arises where there is an assumption of responsibility in circumstances in which but for the absence of consideration there would be a contract at 529 approved in Animal Concerns at 63 Thus Lord Devlin held a promise given without consideration to perform a service cannot be enforced as a contract by the promisee but if the service is in fact performed and done negligently the promisee can recover in an action in tort at 526 That remedy in tort which Hedley Byrne makes available for the broken promise makes it is unnecessary and undesirable to construct an artificial consideration to move the parties relationship into the province of contract simply so as to make a contractual remedy available at 528 T he cause of action is better regarded as arising from default in the performance of a voluntary undertaking independent of contract at 528 150 This undertaking analogous to contract gives rise to the special relationship which Hedley Byrne saw as a necessary condition for liability The similarities between Hedley Byrne liability and contract run deep Four of them are significant 151 First just like a contract the assumption of responsibility is voluntary in the sense that it springs from consent It is a responsibility that is voluntarily accepted or undertaken per Lord Devlin at 529 Thus the word voluntary is used not only in the sense which signifies the absence of consideration as in the maxim that equity will not assist a volunteer but also to indicate that the assumption of responsibility to take care is conscious and volitional Smith v Eric S Bush 1990 1 AC 831 Smith v Bush at 870C per Lord Jauncey 152 Second just like a contract the assumption of responsibility need not be express but can be implied Thus Lord Devlin says that it is not possible to formulate with exactitude all the conditions under which the law will in a specific case imply a voluntary undertaking any more than it is possible to formulate those in which the law will imply a contract at 530 A voluntary assumption of responsibility will readily be implied from certain categories of relationships between the parties like a solicitor client or customer banker relationship Where the parties are not in a relationship of that nature Responsibility can attach only to the single negligent act and only if the doing of that act implied a voluntary undertaking to assume responsibility per Lord Devlin at 529 cited with approval in Go Dante Yap v Bank Austria Creditanstalt AG 2011 4 SLR 559 at 32 153 Third just like a contract the defendant s conscious and volitional assumption of responsibility to be careful can be inferred from the special circumstances of the case Thus Lord Reid finds it persuasive to contrast a response to a mere inquiry with a case where there are special circumstances from which an undertaking to be careful can be inferred at 492 154 Fourth just like a contract where the assumption of responsibility is not express the court applies an objective test to determine whether an assumption of responsibility is implied or can be inferred from the parties outward manifestations of their intent rather than their subjective intent Caparo Industries plc v Dickman 1990 2 AC 605 Caparo at 637 per Lord Oliver Henderson v Merrett Syndicates Ltd 1995 2 AC 145 at 181 per Lord Goff Williams v Natural Life Health Foods Ltd 1998 1 WLR 830 at 835 per Lord Steyn 155 A voluntary assumption of responsibility as conceived in Hedley Byrne can thus be express or implied or can be inferred from the special circumstances But springing as it must from the defendant s volition it cannot be imposed by the law or imputed by the court As Lord Devlin says it is not a responsibility imposed by law upon certain types of persons or in certain sorts of situations Lord Goff s remark to the contrary in White v Jones 1995 2 AC 207 does not reflect the weight of authority 156 The proto contractual nature of Hedley Byrne liability is the only way to explain two of its features which are unique in the law of negligence and which are otherwise inexplicable The most significant feature and the one which was decisive in Hedley Byrne itself is that a defendant is able to escape this type of liability altogether by making its performance of its promise to take care subject to a unilateral and suitably worded disclaimer That would be a startling result in any other branch of the law of negligence It would be absurd to suggest that a motorist can escape liability for negligent driving by displaying a prominent notice on top of his car disclaiming all liability for damage suffered by those with whom he collides Harris v Wyre Forest District Council 1988 QB 835 Wyre Forest District Council at 853 per Kerr LJ That is so even if the victim of the motorist s negligence actually read and understood the disclaimer before the collision Second Hedley Byrne liability does not arise if the negligent misrepresentation is made in a casual or perfunctory conversation Hedley Byrne at 495 on a social or informal occasion at 482 or without deliberation at 539 In other branches of the law of negligence all of these factors would be prima facie evidence of a lack of care rather than factors negating liability 157 Both of these features are easily explained by the rights based approach to the law of torts The true and lasting significance of Hedley Byrne is to recognise that breaking a promise to take care in doing an act is if the act is actually performed and is reasonably relied upon an aspect of the silver rule That is so whether that promise is made by words or conduct and whether the promise is express or implied or can be inferred from the special circumstances Through Hedley Byrne liability the law of negligence vindicates the promisee s interest in that promise to take care by imposing legal liability on the promisor for breaking it even if the promise is unsupported by consideration and therefore does not amount to a contract 158 This result is derived by working backwards from the Hedley Byrne duty to see what correlative right vested in the plaintiff it necessarily implies The key feature here is that the assumption of responsibility necessary for this species of liability has been framed from the outset in Hedley Byrne by analogy with contract Once that is appreciated it becomes clear that the right which Hedley Byrne liability protects is the same right that the law of contract protects a plaintiff s interest in a promise to him being kept The key difference is that Hedley Byrne liability protects the plaintiff s interest only in a promise by the defendant to take care in the doing of an act not the promise to do the act in itself That has at least two consequences First the defendant has no liability if the act is not done at all The defendant is liable if and only if the act is performed and is performed without reasonable care per Lord Devlin at 526 Second the law offers a remedy only for the actual loss which is caused by the negligent performance of the promise There is no remedy for expectations engendered by the promise which are defeated by its breach 159 Once it is grasped that the promise to take care is the very root of this type of liability the two unique features of Hedley Byrne liability resolve themselves quite easily They can be explained readily on the basis that they go to the promise to take care and prevent any assumption of responsibility from arising in the first place Smith v Bush at 848D per Lord Templeman at 856H per Lord Griffiths and at 873G per Lord Jauncey Thus the defendant s unilateral disclaimer is effective because it prevents a promise to take care from arising at all It shows that the defendant never intended to assume a responsibility to take care The disclaimer does not operate as a defence by qualifying or nullifying a promise to take care after it has been made So too a casual response to a mere inquiry or a perfunctory response on a social occasion are all examples of circumstances which will typically operate to negate any express or implied promise to take care or which militate against inferring a promise to take care 160 These fundamental differences between Hedley Byrne liability and other liability for negligence cannot be explained on any other basis They cannot be explained on the basis that Hedley Byrne deals with careless words The House of Lords supported its decision in Hedley Byrne by relying on cases where loss was caused by conduct as well as cases where it was caused by words Indeed one of the necessary results of Hedley Byrne was to eliminate the distinction between liability for careless words and liability for careless conduct And Hedley Byrne liability extends to the negligent performance of a service whether by careless words or conduct Henderson v Merrett Syndicates Ltd 1995 2 AC 145 Finally both Spandeck and the English Court of Appeal case on which it relies heavily Pacific Associates Inc v Baxter 1990 1 QB 993 are cases applying Hedley Byrne principles to negligent conduct certification rather than to negligent words 161 These fundamental differences cannot also be explained on the basis as Kerr LJ attempted to do in Wyre Forest District Council that a disclaimer is ineffective for a well established duty of care like a motorist s whereas it is effective for a novel duty of care such as the Hedley Byrne duty The motorist s duty of care was a novel duty at one time Yet it has never possessed these features Hedley Byrne liability is over 50 years old and is by now well established Yet it continues to possess these features 162 On this rights based view of Hedley Byrne liability the importance of reliance recedes from the liability question It remains the case that reliance will often be present on the facts simply because that is what a promisor s promise to take care naturally engenders in a promisee And reliance remains essential for liability as the necessary causative link between the promise and the loss But reliance is no longer essential to trigger prima facie liability That trigger is the promise to take care However on a loss based approach reliance remains an essential requirement of the duty question That is a particularly important requirement in English law because Hedley Byrne is the primary exception to the rule there which bars recovery for pure economic loss Integrating Hedley Byrne liability with the universal test 163 It is not easy to integrate the test for a Hedley Byrne duty of care with our universal test for a duty of care I say this for four reasons First Hedley Byrne establishes a voluntary assumption of responsibility coupled with reliance as the sole indicia of a Hedley Byrne duty of care What role then do the three components of the universal test factual foreseeability proximity and policy play in establishing a duty of care in these cases Second if a voluntary assumption of responsibility is to be integrated into the universal test as a proximity factor of general application in the first stage what is its content Third given that a voluntary assumption of responsibility coupled with reliance are sufficient in themselves to give rise to a Hedley Byrne duty of care where does that leave other proximity factors which are universally recognised as being legitimate in other areas of the tort of negligence Examples are those identified by Deane J in Sutherland Shire see 141 above Finally given that the purpose of Hedley Byrne liability in English law is to define the principal exception to their general rule barring recovery in negligence for pure economic loss and given that Singapore has no such general rule in what class of cases in Singapore should a voluntary assumption of responsibility be a necessary or even a relevant proximity factor How does Hedley Byrne map to the universal test 164 I can deal easily with the first question Hedley Byrne preceded the more granular approach to duty of care taken in English law in both Anns v Merton London Borough Council 1978 AC 728 and Caparo and our synthesis in Spandeck Hedley Byrne can now easily be mapped to the more granular universal test The threshold question is satisfied because factual foreseeability is inevitable from the mere fact that the defendant has voluntarily assumed a responsibility to the plaintiff to take care It is reasonably foreseeable from that fact alone that harm to the plaintiff will follow if the defendant fails to take care Other aspects of reasonable foreseeability are resolved under the rules of causation and remoteness At the first stage of proximity the Hedley Byrne voluntary assumption of responsibility becomes a proximity factor At the second stage policy remains a relevant consideration But the policy considerations in the paradigm Hedley Byrne case are a priori embedded in the Hedley Byrne duty rule So in cases at the core of Hedley Byrne the policy analysis will be truncated or can be dispensed with entirely But in cases which are at the fringes of Hedley Byrne liability or which involve extending it there may still need to be a detailed policy analysis at the second stage What is the content of a voluntary assumption of responsibility as a proximity factor 165 The second question is more problematic In integrating a voluntary assumption of responsibility into the universal test as a proximity factor to be considered at the first stage it is important not to impute it That would amount to framing the inquiry as one into whether a defendant ought to be deemed to have assumed a responsibility not to cause harm to others by his negligence with others relying on him to fulfil that responsibility That application of the concept makes it so general as to apply to every case of negligently inflicted harm of whatever kind And applying the concept as something imputed by law rather than as something which is the product of the defendant s conscious will makes the concept conclusory equivalent to the entire proximity question and perhaps even the entire duty question That in turn deprives the concept of meaning and of utility as an indicator of proximity It also deprives the concept of its explanatory force for the unique features in the Hedley Byrne line of cases see 156 161 above 166 The question is not whether the defendant accepted or ought to be held to accept legal liability for a failure to take care but whether the defendant voluntarily ie consciously and without consideration assumed a responsibility to take care in performing a task White v Jones at 274H per Lord Browne Wilkinson It is because Lord Griffiths interpreted this concept in the former sense that he rejected it as an unhelpful test for liability in Smith v Bush at 862E see also Caparo at 628F per Lord Roskill and at 637G per Lord Oliver and fell back on the three part test in English law which has since become known as the Caparo test at 865A 167 For the concept of a voluntary assumption of responsibility to have any analytical use as a proximity factor whether in the three part test or in the universal test it must therefore have a less abstract and more fact specific meaning It must ask did this defendant expressly or impliedly actually assume responsibility to this plaintiff to take care in performing the task in question such that the defendant s undertaking to do so would have amounted to a contract if the plaintiff had given consideration for it If not are there circumstances from which the court can infer that the defendant did so The distinction between implication and inference on the one hand and imputation on the other is a fine one But that distinction must be observed if this concept is to have analytical utility for particular cases explanatory utility for past cases and normative utility for novel cases Worse still blurring that distinction runs the risk of making the unique Hedley Byrne defences available to a defendant even though the basis for the defence no longer applies because the analytical inquiry has shifted from an actual voluntary assumption of responsibility to an imputed assumption of responsibility see 173 177 below Do other proximity factors play a role in Hedley Byrne liability 168 The third question is rather more difficult to answer Hedley Byrne proceeded on the basis that a voluntary assumption of responsibility as conceived in that case coupled with the plaintiff s reasonable reliance on the defendant s undertaking to take care was sufficient to establish the Hedley Byrne duty of care Mapped to the universal test that seems to leave no room to consider at the same level of generality any other proximity factors which would ordinarily be taken into account in the first stage That said there can obviously be no objection to using proximity factors to ascertain if a voluntary assumption of responsibility can be implied or inferred if it is not express Further once there is a finding that a defendant has voluntarily assumed responsibility there can be no objection in principle to relying on other proximity factors that the same level of generality as support for that finding 169 Hedley Byrne proceeded on the basis that a voluntary assumption of responsibility coupled with reasonable reliance was not only sufficient but also necessary for Hedley Byrne duty of care to arise But English law now recognises that a Hedley Byrne duty can arise so long as there is a finding that the parties relationship remains akin to contract In Smith v Bush the House of Lords held that a surveyor who valued a property for a mortgagor knowing that the valuation would be passed on to the mortgagee owed a duty of care to the mortgagee in preparing that valuation The surveyor s express disclaimer of liability to the mortgagee was ineffective because it failed the test of reasonableness under the Unfair Contract Terms Act 1977 Though ineffective in law the disclaimer made it impossible to find as a fact that the valuer had voluntarily assumed any responsibility to take care as against the mortgagee 170 The House of Lords held that the surveyor nevertheless owed a duty of care to the mortgagee because the surveyor and the mortgagee were in a relationship akin to contract The mortgagee paid or contributed to the surveyor s fees thereby making the case not far removed from that of a direct contract between the surveyor and the purchaser at 859F per Lord Griffiths see also at 843H 846C and 847D per Lord Templeman This is simply an application of Lord Devlin s observation in Hedley Byrne that It may often be material to consider whether the adviser is acting purely out of good nature or whether he is getting his reward in some indirect form Thus in English law a Hedley Byrne duty may arise from the circumstances of the case even if a voluntary assumption of responsibility is absent or negatived so long as the relationship remains akin to contract So too under our universal test a voluntary assumption of responsibility is not necessary for a Hedley Byrne duty of care to arise What is the scope of the Hedley Byrne duty in Singapore law 171 That brings me to the last and most difficult question I have until now spoken of Hedley Byrne liability or a Hedley Byrne duty without considering precisely what that means In English law it is clear what that means Hedley Byrne defines the principal exception to the general rule in English law which bars recovery for negligently inflicted pure economic loss That rule exception relationship is sufficient to distinguish Hedley Byrne liability from all other liability in the English law of negligence 172 That distinction is neither necessary nor available in Singapore law We do not have a general rule which bars recovery for pure economic loss So Singapore law cannot use the type of harm to distinguish Hedley Byrne liability from general liability in negligence A plaintiff in Singapore seeking damages for negligently inflicted pure economic loss does not have to fit his case through a Hedley Byrne exception to win He can simply invite the court to apply the universal test Spandeck could thus have side stepped Hedley Byrne entirely and left it to the ordinary application of the universal test to control liability for pure economic loss But that is not what Spandeck did Spandeck accepts the twin criteria of voluntary assumption of responsibility and reasonable reliance as the indicia of proximity in pure economic loss cases rather than as merely one set of indicia sufficient for a finding of proximity arising from applying the universal test in the usual way 173 The risk which arises from the lack of a dividing line in Singapore law between Hedley Byrne liability and general liability in negligence is that that makes it easier for the concept of a voluntary assumption of responsibility to escape from pure economic loss cases where it was developed and become thought of as a necessary indicia of proximity of general application The result would be to distort both liability for pure economic loss and liability for negligence generally 174 The phrase voluntary assumption of responsibility can be used in two senses i first in the proto contractual sense in Hedley Byrne springing from an outward manifestation of agreement whether express implied or inferred and ii second in the sense of a legal imputation of responsibility 175 A voluntary assumption of responsibility in the first sense cannot be either a necessary or a sufficient condition for a finding of proximity generally If it were either a unilateral disclaimer of liability would suffice generally to prevent a duty from arising and negligence on a casual occasion would negate liability That would mean for example that the driver in the example posited by Kerr LJ see 156 above would escape liability It is significant that Spandeck and the subsequent Court of Appeal cases which have interpreted and applied its universal test are all cases of pure economic loss with two exceptions This is also true of Sunny Metal a decision at first instance which although it was reversed in its result on appeal heavily influenced the Court of Appeal s reasoning in the later decision in Spandeck It is for this reason that these cases use the twin criteria of a voluntary assumption of responsibility by the defendant and reliance on that assumption by the plaintiff when analysing the proximity stage of the universal test None of these cases establish these twin criteria as necessary or even sufficient factors to establish proximity in all negligence cases Notably the two exceptions which do not rely on these proximity factors are both cases not involving pure economic loss Ngiam Kong Seng psychiatric harm and See Toh Siew Kee personal injuries 176 The alternative sense of a voluntary assumption of responsibility is that it is an assumption imputed by the court Using assumption of responsibility in that sense reduces it to a mere shorthand for a decision to impose liability Distorting the concept of a voluntary assumption of responsibility to encompass an imputed assumption of responsibility may perhaps be understandable in those jurisdictions like England where recovery for pure economic loss is by and large barred unless a case can be made to fit through the Hedley Byrne exception Singapore is not such a jurisdiction we have no general rule barring recovery for pure economic loss Distorting that concept in that way is unnecessary in Singapore and worse deprives it of its very strong explanatory force 177 Thus proximity in Singapore law is a much broader inquiry in the general case than merely a search for a voluntary assumption of responsibility and reliance Those two concepts may be sufficient in Singapore law for a finding of proximity where loss is caused by a promise to take care which is broken on the rights based approach or involving pure economic loss on the loss based approach But because Singapore s law of torts has no general rule barring recovery in cases of pure economic loss and because liability for all negligence in Singapore law is mediated by a single universal test there is no reason in Singapore law why these two concepts from Hedley Byrne must be necessary for a finding

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  • Ch.17 Corporate Finance and Securities Regulation
    book building road shows and research reports 3 Consequences of Issuing a Misleading Prospectus 17 4 7 If there is any false or misleading statement or non disclosure of a material fact in a prospectus those persons see Section 17 4 8 below that were involved in the preparation of the prospectus will be liable to prosecution A person may escape criminal liability only if the statement or non disclosure was not materially adverse from the point of view of the investor or he had made all inquiries if any that were reasonable in the circumstances and after doing so had reasonable ground to believe that the statement was true or not misleading this is also a defence to civil liability or he had reasonably relied on information given to him by someone other than his employee or agent and where the person is a corporation its director this is also a defence to civil liability 17 4 8 In addition to criminal liability section 254 of the Securities and Futures Act provides for civil liability in respect of false or misleading statements and non disclosures of material facts If there is a false or misleading statement or a non disclosure of a material fact in any prospectus then the following persons are liable to pay compensation to all persons who subscribe for or purchase shares in the corporation on the faith of that prospectus in respect of any loss or damage sustained by reason of the false or misleading statement or non disclosure The person making the offer or invitation If the offeror is an entity the directors or equivalent persons of the entity If the offeror is an entity and the entity is also the issuer the persons who were named in the prospectus with their consent as proposed directors or equivalent persons of the entity Where the issuer is controlled by the offeror one or more related parties of the offeror the issuer the director or equivalent persons of the issuer and persons who were named in the prospectus with their consent as proposed directors or equivalent persons of the issuer An issue manager to the offer of securities name in the prospectus with his consent for criminal liability this is only if the misstatement was made intentionally or recklessly An underwriter but not a sub underwriter named in the prospectus with his consent for criminal liability this is only if the misstatement was made intentionally or recklessly A person named in the prospectus with his consent as having made a statement that is included in the prospectus or on which a statement in the prospectus is based but only in respect of the inclusion of that statement for criminal liability this is only if the misstatement was made intentionally or recklessly Any other person who made the false or misleading statement or omission but only in respect of the inclusion of the statement of the omission to state the information or circumstance for criminal liability this is only if there is deceit If the misrepresentation is made negligently there may be recovery of damages in negligence if the investor can establish that a duty of care was owed to him The persons liable will usually be the directors of the company who authorised the issue of the prospectus or the company itself Experts who made inaccurate statements in the prospectus may also be liable A Exemptions from the Requirement to Issue a Prospectus 17 4 10 The MAS may exempt a person from any requirements of the Act pertaining to the form or content of a prospectus if compliance with the requirement is unduly burdensome The MAS also has power to dispense with the issue of a prospectus altogether in the case of an offer or invitation or a class of offers or invitations to which that offer or invitation belongs 17 4 11 Under the Securities and Futures Act all offers of securities must prima facie be accompanied by a prospectus unless the offer is excluded or exempted from the prospectus requirements The Securities and Futures Act provides for certain situations in which a prospectus may be dispensed with such as An issue or transfer of securities for no consideration Small personal offers where the total amount raised from such offers within any 12 month period does not exceed 5 million or such other amounts as may be prescribed by the MAS An offer to no more than 50 persons within any period of 12 months and under certain conditions An underwriting agreement relating to securities certain offers of securities of an entity made to existing members or debenture holders of that entity A compromise or scheme of arrangement in a winding up or a takeover scheme An offer to qualifying persons like employees of the corporation or its related corporations under the specified conditions An offer to institutional investors An offer to specified persons including accredited investors An offer of securities by a company whose securities are already listed for quotation whether by means of a rights issue or otherwise An offer information statement in the form prescribed in the Sixteenth Schedule of the Securities and Futures Offers of Investment Shares and Debentures Regulations 2005 has to be lodged with the MAS This statement is treated as a prospectus for the purposes of liability under the Securities and Futures Act An offer of international debentures The debentures must be issued by a corporation incorporated outside Singapore whose shares are listed on a recognized stock exchange The debentures must be denominated in foreign currency with a face value equivalent to US 5 000 or its equivalent in another currency or An offer of debentures by the government or an international financial institution of which Singapore is a member 17 4 12 The MAS may revoke any exemption it considers necessary in the public interest or for the protection of investors Return to the top SECTION 5 SECURITIES REGULATION A Continuing Disclosure Requirements 1 The importance of price sensitive information 17 5 1 Once a company is listed it becomes subject to the jurisdiction of the SGX Timely disclosure of price sensitive information is the cornerstone of SGX s regulatory policy To ensure that such information is released to the market on a timely basis listed companies are obliged to comply with the rules relating to corporate disclosure in Chapter 7 of the SGX Listing Manual and SGX s Corporate Disclosure Policy in Appendix 7 1 of the of the SGX Listing Manual 2 Non exclusive list of situations requiring immediate public announcements 17 5 2 Rule 703 requires a listed company to keep its shareholders and the SGX informed of any material information relating to the group s activities in order to avoid the establishment of a false market in its securities or that might be price sensitive Paragraph 8 of Appendix 7 1 provides a non exclusive list of matters which are considered to require immediate public announcement A joint venture merger or acquisition The declaration or omission of dividends or the determination of earnings Firm evidence of significant improvement or deterioration in near term earnings prospects A sub division of shares or stock dividends The acquisition or loss of a significant contract The purchase or sale of a significant asset A significant new product or discovery The public or private sale of a significant amount of additional securities A change in effective control or a significant change in management A call of securities for redemption The borrowing of a significant amount of funds Events of default under financing or sale agreements A significant litigation A significant change in capital investment plans A significant dispute or disputes with sub contractors customers or suppliers or with any parties A tender offer for another company s securities A valuation of real assets that has a significant impact on the financial position and or performance 17 5 3 The continuous disclosure requirements in the listing rules are given statutory backing by Section 203 of the Securities and Futures Act Under this section non disclosure attracts both civil and criminal liability depending on the state of mind of the disclosing entity A Disclosure of Substantial Shareholdings 17 5 4 A listed company must maintain a register of substantial shareholders The register of substantial shareholders will contain the names of the company s substantial shareholders together with details of these shareholders interest in the shares of the company A substantial shareholder is a person who has an interest in 5 or more of the voting shares of a company This includes both natural persons whether citizens or non citizens and artificial persons even if they are not resident or carrying on business in Singapore 17 5 5 The concept of an interest in shares or securities goes beyond being registered as the holder It includes beneficial ownership through nominees or a trust as well as control over voting or disposition of a share 17 5 6 Failure to give notice to the company of a person s acquisition of or changes in substantial shareholdings is an offence In addition a Court may on the application of the Minister make certain orders including restraining the defaulting shareholder from dealing in the shares in which he has an interest restricting his voting rights or entitlement to dividends or selling the shares in question B Register of Directors Shareholdings 17 5 7 The Companies Act requires directors of all companies to notify the company of their interests in its securities which is a wider concept than voting shares All companies must maintain a register of directors shareholdings The register is open to inspection by the public and must be produced at each AGM Changes in a director s interests have to be notified within 2 days With the coming into effect of the Companies Amendment Act 2014 even chief executive officers who are not directors of unlisted companies will have to disclose their interests in certain securities 17 5 8 In the case of listed entities the Securities and Futures Act requires both directors and chief executive officers of corporations listed on the SGX to notify their companies of their interests in securities The Securities and Futures Act also requires a listed company which has been notified by a director chief executive officer or substantial shareholder to as soon as practicable and in any case no later than the end of the business day following the day on which the corporation received the notice announce or inform the SGX of the details of such notifications received Return to the top SECTION 6 FRAUD MARKET MANIPULATION AND INSIDER TRADING A Insider Trading 17 6 1 The most important of the provisions regulating insider trading is Section 219 of the Securities and Futures Act which adopts an information connected approach towards insider trading Previously a person connected approach was used in that a series of connections between a body corporate and an insider and in the case of a person not connected with the company ie a tippee an arrangement or association between an insider and that tippee for the communication of information had to be established B Elements of the Prohibition 17 6 2 The prohibited act is proved by Possession of information concerning securities that is not generally available and materially price sensitive and Subscribing purchasing or selling those securities or procuring another person to subscribe purchase or sell those securities or communicating the information where the securities are listed on an exchange and the insider knows or ought reasonably to know that the tippee would be likely to subscribe purchase or sell the securities or procure another person to do so C Proof of Knowledge 17 6 3 Section 219 of the Securities and Futures Act also provides that it must be shown that the insider knew of the nature of the information that was possessed although Section 220 of the Securities and Futures Act specifically states that there is no need to prove an intention to use that information Connected persons like directors control the mechanisms for disclosure in the company and may choose to self deal based on undisclosed information Section 218 of the Securities and Futures Act reverses the burden of proof in such cases so that all that need be shown is that they were in possession of inside information In such an instance a presumption arises that they knew or ought to have known of the nature of that information when they traded D Defences 17 6 4 It is a defence to any prosecution under section 218 and 219 of the Securities and Futures Act to show that the other party to the transaction knew or ought reasonably to have known of the information before entering into the transaction 17 6 5 Other formal defences are provided in the Securities and Futures Act as well as its Regulations The most important of these is the Chinese Wall defence The Act provides an exception for corporations and partnerships where despite the attribution of knowledge to a corporation or partnership of the knowledge of its officer or partner respectively the corporation or partnership will not be found to have breached the insider trading prohibition The following requirements must be satisfied the decision to enter into the transaction or agreement was taken by a person other than the officer or partner who was in possession of the information the corporation or partnership had arrangements that could reasonably be expected to ensure that the information was not communicated to the person who made the decision and that no advice with respect to the transaction or agreement was given to that person by a person in possession of the information and the information was not communicated and no such advice was given to the decision maker 17 6 6 The Securities and Futures Amendment Act 2009 has introduced a further requirement that corporate entities take reasonable steps to prevent market misconduct which includes insider trading by their employees Rule 1207 of the SGX ST Listing Manual also provides that a listed company should state in its annual report whether and how the company has adopted an internal compliance code to provide guidance to its officers with regard to dealings by the company and its officers in its securities The annual report should also state whether the listed company and its officers dealt in the company s securities during the no dealing period which commences two weeks before the announcement of the issuer s results for the first three quarters of its financial year or one month before the announcement of the half year or financial year results as the case may be and ending on the date of announcement of the relevant results However adherence to the guidelines and to any additional internal codes adopted by the company does not provide a defence to an action for insider trading under s 218 and 219 of SFA E False Trading and Market Rigging 17 6 7 This is covered generally by section 197 of the Securities and Futures Act which prohibits the following activities Creation of a false or misleading appearance of active trading in any securities on a securities exchange in Singapore with the purpose of so doing or where the person knew or was reckless as to the effect of his conduct Creation of a false or misleading appearance with respect to the market for or price of any securities on a securities exchange in Singapore with the purpose of so doing or where the person knew or was reckless as to the effect of his conduct Affecting the price of securities by way of purchases or sales that do not involve a change in the beneficial ownership of those securities Affecting the price of securities by means of any fictitious transactions or devices 17 6 8 The object of the prohibition is to ensure that the market reflects the forces of genuine supply and demand For the purposes of section 197 of the Securities and Futures Act a purchase or sale of securities does not involve a change in the beneficial ownership of securities if the person who had an interest in the securities before the purchase or sale or a person associated with him has an interest in those securities after the completion of the transaction F Stock Market Manipulation 17 6 9 Section 198 1 of the Securities and Futures Act provides that a person shall not carry out two or more transactions in securities of a corporation which will have the effect of affecting or maintaining the price of the securities with intent to induce other persons to subscribe for purchase or sell securities of the corporation or of a related corporation Section 198 2 provides that a transaction includes the making of offers to buy or sell securities and invitations to treat G Dissemination of False Information 17 6 10 Section 199 of the Securities and Futures Act prohibits a person from knowingly or recklessly making or disseminating false or misleading information and statements that are likely to induce subscription of or the sale or purchase of securities or which are likely to affect the market price of securities 17 6 11 Section 200 of the Securities and Futures Act deals with the situation where a person fraudulently induces other persons to deal in securities The accused must have made or published a statement promise or forecast that was misleading either recklessly or with knowledge that it was misleading 17 6 12 Section 202 of the Securities and Futures Act prohibits circulation or dissemination of any statement or information to the effect that the price of any securities of a corporation will rise fall or be maintained by reason of transactions entered into in contravention of any of the provisions of Sections 197 to 201 of the Securities and Futures Act H Employment of Manipulative or Deceptive Devices 17 6 13 Section 201 of

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  • Ch.17 Corporate Finance and Securities Regulation
    before and after the prospectus has been registered and also specific exceptions for book building road shows and research reports 3 Consequences of Issuing a Misleading Prospectus 17 4 7 If there is any false or misleading statement or non disclosure of a material fact in a prospectus those persons see Section 17 4 8 below that were involved in the preparation of the prospectus will be liable to prosecution A person may escape criminal liability only if the statement or non disclosure was not materially adverse from the point of view of the investor or he had made all inquiries if any that were reasonable in the circumstances and after doing so had reasonable ground to believe that the statement was true or not misleading this is also a defence to civil liability or he had reasonably relied on information given to him by someone other than his employee or agent and where the person is a corporation its director this is also a defence to civil liability 17 4 8 In addition to criminal liability section 254 of the Securities and Futures Act provides for civil liability in respect of false or misleading statements and non disclosures of material facts If there is a false or misleading statement or a non disclosure of a material fact in any prospectus then the following persons are liable to pay compensation to all persons who subscribe for or purchase shares in the corporation on the faith of that prospectus in respect of any loss or damage sustained by reason of the false or misleading statement or non disclosure The person making the offer or invitation If the offeror is an entity the directors or equivalent persons of the entity If the offeror is an entity and the entity is also the issuer the persons who were named in the prospectus with their consent as proposed directors or equivalent persons of the entity Where the issuer is controlled by the offeror one or more related parties of the offeror the issuer the director or equivalent persons of the issuer and persons who were named in the prospectus with their consent as proposed directors or equivalent persons of the issuer An issue manager to the offer of securities name in the prospectus with his consent for criminal liability this is only if the misstatement was made intentionally or recklessly An underwriter but not a sub underwriter named in the prospectus with his consent for criminal liability this is only if the misstatement was made intentionally or recklessly A person named in the prospectus with his consent as having made a statement that is included in the prospectus or on which a statement in the prospectus is based but only in respect of the inclusion of that statement for criminal liability this is only if the misstatement was made intentionally or recklessly Any other person who made the false or misleading statement or omission but only in respect of the inclusion of the statement of the omission to state the information or circumstance for criminal liability this is only if there is deceit If the misrepresentation is made negligently there may be recovery of damages in negligence if the investor can establish that a duty of care was owed to him The persons liable will usually be the directors of the company who authorised the issue of the prospectus or the company itself Experts who made inaccurate statements in the prospectus may also be liable A Exemptions from the Requirement to Issue a Prospectus 17 4 10 The MAS may exempt a person from any requirements of the Act pertaining to the form or content of a prospectus if compliance with the requirement is unduly burdensome The MAS also has power to dispense with the issue of a prospectus altogether in the case of an offer or invitation or a class of offers or invitations to which that offer or invitation belongs 17 4 11 Under the Securities and Futures Act all offers of securities must prima facie be accompanied by a prospectus unless the offer is excluded or exempted from the prospectus requirements The Securities and Futures Act provides for certain situations in which a prospectus may be dispensed with such as An issue or transfer of securities for no consideration Small personal offers where the total amount raised from such offers within any 12 month period does not exceed 5 million or such other amounts as may be prescribed by the MAS An offer to no more than 50 persons within any period of 12 months and under certain conditions An underwriting agreement relating to securities certain offers of securities of an entity made to existing members or debenture holders of that entity A compromise or scheme of arrangement in a winding up or a takeover scheme An offer to qualifying persons like employees of the corporation or its related corporations under the specified conditions An offer to institutional investors An offer to specified persons including accredited investors An offer of securities by a company whose securities are already listed for quotation whether by means of a rights issue or otherwise An offer information statement in the form prescribed in the Sixteenth Schedule of the Securities and Futures Offers of Investment Shares and Debentures Regulations 2005 has to be lodged with the MAS This statement is treated as a prospectus for the purposes of liability under the Securities and Futures Act An offer of international debentures The debentures must be issued by a corporation incorporated outside Singapore whose shares are listed on a recognized stock exchange The debentures must be denominated in foreign currency with a face value equivalent to US 5 000 or its equivalent in another currency or An offer of debentures by the government or an international financial institution of which Singapore is a member 17 4 12 The MAS may revoke any exemption it considers necessary in the public interest or for the protection of investors Return to the top SECTION 5 SECURITIES REGULATION A Continuing Disclosure Requirements 1 The importance of price sensitive information 17 5 1 Once a company is listed it becomes subject to the jurisdiction of the SGX Timely disclosure of price sensitive information is the cornerstone of SGX s regulatory policy To ensure that such information is released to the market on a timely basis listed companies are obliged to comply with the rules relating to corporate disclosure in Chapter 7 of the SGX Listing Manual and SGX s Corporate Disclosure Policy in Appendix 7 1 of the of the SGX Listing Manual 2 Non exclusive list of situations requiring immediate public announcements 17 5 2 Rule 703 requires a listed company to keep its shareholders and the SGX informed of any material information relating to the group s activities in order to avoid the establishment of a false market in its securities or that might be price sensitive Paragraph 8 of Appendix 7 1 provides a non exclusive list of matters which are considered to require immediate public announcement A joint venture merger or acquisition The declaration or omission of dividends or the determination of earnings Firm evidence of significant improvement or deterioration in near term earnings prospects A sub division of shares or stock dividends The acquisition or loss of a significant contract The purchase or sale of a significant asset A significant new product or discovery The public or private sale of a significant amount of additional securities A change in effective control or a significant change in management A call of securities for redemption The borrowing of a significant amount of funds Events of default under financing or sale agreements A significant litigation A significant change in capital investment plans A significant dispute or disputes with sub contractors customers or suppliers or with any parties A tender offer for another company s securities A valuation of real assets that has a significant impact on the financial position and or performance 17 5 3 The continuous disclosure requirements in the listing rules are given statutory backing by Section 203 of the Securities and Futures Act Under this section non disclosure attracts both civil and criminal liability depending on the state of mind of the disclosing entity A Disclosure of Substantial Shareholdings 17 5 4 A listed company must maintain a register of substantial shareholders The register of substantial shareholders will contain the names of the company s substantial shareholders together with details of these shareholders interest in the shares of the company A substantial shareholder is a person who has an interest in 5 or more of the voting shares of a company This includes both natural persons whether citizens or non citizens and artificial persons even if they are not resident or carrying on business in Singapore 17 5 5 The concept of an interest in shares or securities goes beyond being registered as the holder It includes beneficial ownership through nominees or a trust as well as control over voting or disposition of a share 17 5 6 Failure to give notice to the company of a person s acquisition of or changes in substantial shareholdings is an offence In addition a Court may on the application of the Minister make certain orders including restraining the defaulting shareholder from dealing in the shares in which he has an interest restricting his voting rights or entitlement to dividends or selling the shares in question B Register of Directors Shareholdings 17 5 7 The Companies Act requires directors of all companies to notify the company of their interests in its securities which is a wider concept than voting shares All companies must maintain a register of directors shareholdings The register is open to inspection by the public and must be produced at each AGM Changes in a director s interests have to be notified within 2 days With the coming into effect of the Companies Amendment Act 2014 even chief executive officers who are not directors of unlisted companies will have to disclose their interests in certain securities 17 5 8 In the case of listed entities the Securities and Futures Act requires both directors and chief executive officers of corporations listed on the SGX to notify their companies of their interests in securities The Securities and Futures Act also requires a listed company which has been notified by a director chief executive officer or substantial shareholder to as soon as practicable and in any case no later than the end of the business day following the day on which the corporation received the notice announce or inform the SGX of the details of such notifications received Return to the top SECTION 6 FRAUD MARKET MANIPULATION AND INSIDER TRADING A Insider Trading 17 6 1 The most important of the provisions regulating insider trading is Section 219 of the Securities and Futures Act which adopts an information connected approach towards insider trading Previously a person connected approach was used in that a series of connections between a body corporate and an insider and in the case of a person not connected with the company ie a tippee an arrangement or association between an insider and that tippee for the communication of information had to be established B Elements of the Prohibition 17 6 2 The prohibited act is proved by Possession of information concerning securities that is not generally available and materially price sensitive and Subscribing purchasing or selling those securities or procuring another person to subscribe purchase or sell those securities or communicating the information where the securities are listed on an exchange and the insider knows or ought reasonably to know that the tippee would be likely to subscribe purchase or sell the securities or procure another person to do so C Proof of Knowledge 17 6 3 Section 219 of the Securities and Futures Act also provides that it must be shown that the insider knew of the nature of the information that was possessed although Section 220 of the Securities and Futures Act specifically states that there is no need to prove an intention to use that information Connected persons like directors control the mechanisms for disclosure in the company and may choose to self deal based on undisclosed information Section 218 of the Securities and Futures Act reverses the burden of proof in such cases so that all that need be shown is that they were in possession of inside information In such an instance a presumption arises that they knew or ought to have known of the nature of that information when they traded D Defences 17 6 4 It is a defence to any prosecution under section 218 and 219 of the Securities and Futures Act to show that the other party to the transaction knew or ought reasonably to have known of the information before entering into the transaction 17 6 5 Other formal defences are provided in the Securities and Futures Act as well as its Regulations The most important of these is the Chinese Wall defence The Act provides an exception for corporations and partnerships where despite the attribution of knowledge to a corporation or partnership of the knowledge of its officer or partner respectively the corporation or partnership will not be found to have breached the insider trading prohibition The following requirements must be satisfied the decision to enter into the transaction or agreement was taken by a person other than the officer or partner who was in possession of the information the corporation or partnership had arrangements that could reasonably be expected to ensure that the information was not communicated to the person who made the decision and that no advice with respect to the transaction or agreement was given to that person by a person in possession of the information and the information was not communicated and no such advice was given to the decision maker 17 6 6 The Securities and Futures Amendment Act 2009 has introduced a further requirement that corporate entities take reasonable steps to prevent market misconduct which includes insider trading by their employees Rule 1207 of the SGX ST Listing Manual also provides that a listed company should state in its annual report whether and how the company has adopted an internal compliance code to provide guidance to its officers with regard to dealings by the company and its officers in its securities The annual report should also state whether the listed company and its officers dealt in the company s securities during the no dealing period which commences two weeks before the announcement of the issuer s results for the first three quarters of its financial year or one month before the announcement of the half year or financial year results as the case may be and ending on the date of announcement of the relevant results However adherence to the guidelines and to any additional internal codes adopted by the company does not provide a defence to an action for insider trading under s 218 and 219 of SFA E False Trading and Market Rigging 17 6 7 This is covered generally by section 197 of the Securities and Futures Act which prohibits the following activities Creation of a false or misleading appearance of active trading in any securities on a securities exchange in Singapore with the purpose of so doing or where the person knew or was reckless as to the effect of his conduct Creation of a false or misleading appearance with respect to the market for or price of any securities on a securities exchange in Singapore with the purpose of so doing or where the person knew or was reckless as to the effect of his conduct Affecting the price of securities by way of purchases or sales that do not involve a change in the beneficial ownership of those securities Affecting the price of securities by means of any fictitious transactions or devices 17 6 8 The object of the prohibition is to ensure that the market reflects the forces of genuine supply and demand For the purposes of section 197 of the Securities and Futures Act a purchase or sale of securities does not involve a change in the beneficial ownership of securities if the person who had an interest in the securities before the purchase or sale or a person associated with him has an interest in those securities after the completion of the transaction F Stock Market Manipulation 17 6 9 Section 198 1 of the Securities and Futures Act provides that a person shall not carry out two or more transactions in securities of a corporation which will have the effect of affecting or maintaining the price of the securities with intent to induce other persons to subscribe for purchase or sell securities of the corporation or of a related corporation Section 198 2 provides that a transaction includes the making of offers to buy or sell securities and invitations to treat G Dissemination of False Information 17 6 10 Section 199 of the Securities and Futures Act prohibits a person from knowingly or recklessly making or disseminating false or misleading information and statements that are likely to induce subscription of or the sale or purchase of securities or which are likely to affect the market price of securities 17 6 11 Section 200 of the Securities and Futures Act deals with the situation where a person fraudulently induces other persons to deal in securities The accused must have made or published a statement promise or forecast that was misleading either recklessly or with knowledge that it was misleading 17 6 12 Section 202 of the Securities and Futures Act prohibits circulation or dissemination of any statement or information to the effect that the price of any securities of a corporation will rise fall or be maintained by reason of transactions entered into in contravention of any of the provisions of Sections 197 to 201 of the Securities and Futures Act

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  • Ch.18 Equity and Trusts
    see Bristol West Building Society v Mothew 1998 1 Ch 16 5 Causation and remoteness of loss 18 3 8 Even where a breach of fiduciary has occurred the plaintiff must show that the consequences complained of flowed from the breach of fiduciary duty see Ohm Pacific Sdn Bhd v Ng Hwee Cheng Doreen 1994 2 SLR R 633 Target Holdings v Redfern 1996 AC 421 However in Kumagai Zenecon Construction Pte Ltd another v Low Hua Kin 1999 3 SLR R 1049 it was said that the principles of causation foreseeability and remoteness do not readily apply in considering the fiduciary s liability to make restitution But on appeal in Low Hua Kin v Kumagai Zenecon Construction Pte Ltd in liquidation and another 2000 2 SLR R 689 the Court of Appeal while not commenting on this part of the judgment embarked on a careful analysis of whether the chain of causation had in fact been broken It would seem that the Court of Appeal s approach implicitly recognises that matters of causation do come into play in deciding the fiduciary s obligation to make restitution see also John While Springs S Pte Ltd and another v Goh Sai Chuah Justin and others 2004 3 SLR 596 The position on causation and remoteness is unsettled see Maryani Sadeli v Arjun Permanand Samtani and another and other appeals 2014 SGCA 55 6 Remedies 18 3 9 The remedies against a fiduciary who makes an unauthorised profit may be personal or proprietary A fiduciary may in appropriate circumstances be made to account for an unauthorised profit or to hold a property acquired in breach of a fiduciary duty on constructive trust for the plaintiff Furthermore a fiduciary may be ordered to make equitable compensation to the principal for losses suffered C Obligations in relation to confidential information 18 3 10 A person breaches a duty of confidence if it can be shown that a there was unauthorised use of information to the detriment of the person communicating it b the information had the necessary quality of confidence and c the information was imparted in circumstances importing an obligation of confidence see X Pte Ltd and Another v CDE 1992 2 SLR R 596 and Invenpro M Sdn Bhd v JCS Automation Pte Ltd and another 2014 2 SLR 1045 1 Need to particularise the confidential information 18 3 11 It has been said in the context of an allegation of a breach of confidence by an employer against an employee an employer must particularize the confidential information which he seeks to protect It is oppressive for him to rely on a general statement that the information is confidential or to delay the giving of particulars until after discovery per Lai J in Tang Siew Choy and Others v Certact Pte Ltd 1993 1 SLR R 835 See also Chiarapurk Jack and others v Haw Par Brothers International Ltd and another and another appeal 1993 2 SLR R 620 Flamelite S Pte Ltd v Lam Heng Chung 2001 SGHC 66 Flamelite An appeal in Flamelite was lodged to the Court of Appeal on other grounds see Flamelite S Pte Ltd and Others v Lam Heng Chung and Others 2001 3 SLR R 610 2 Remedies 18 3 12 Remedies for a breach of confidence include injunctions account of profits delivery up and possibly monetary compensation There is also some Commonwealth authority suggesting that a court can declare a constructive trust as a remedy for a breach of confidence see Lac Minerals v International Corona Resources 1989 61 DLR 4th 14 Cf HW Tang Confidence and the Constructive Trust 2003 23 Legal Studies 135 D Knowing receipt where property is transferred in breach of trust with the defendant s knowledge 18 3 13 The elements required to establish knowing receipt are a a disposal of the plaintiff s assets in breach of fiduciary duty b the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff and c knowledge on the part of the defendant that the assets received are traceable to a breach of fiduciary duty see George Raymond Zage III and another v Ho Chi Kwong and another 2010 2 SLR 589 at 23 per VK Rajah JA 1 Competing theories on knowing receipt 18 3 14 At the moment there are three competing theories to explain liability for knowing receipt of trust property They are Knowing receipt is premised on the principle of unjust enrichment and hence liability is strict upon proof of receipt of trust property It would be confined to restoring an unjust gain Change of position would be available as a defence accordingly per Lord Nicholls Knowing Receipt The Need for a New Landmark in Restitution Past Present and Future Cornish et al eds Hart 1998 at p244 Knowing receipt is premised on the concept of unconscionability Nourse LJ in Bank of Credit and Commerce International Overseas Ltd v Akindele 2001 Ch 437 at 455 noted H Tjio No Stranger to Unconscionability 2001 JBL 299 said that a ll that is necessary is that the recipient s state of knowledge should be such as to make it unconscionable for him to retain the benefit of the receipt and Knowing receipt is better viewed as equity s cousin to the common law action of conversion It is a response to the interference with the plaintiff s equitable title see L Smith W h ither Knowing Receipt 1998 114 LQR 394 L Smith Unjust Enrichment Property and the Structure of Trusts 2000 116 LQR 412 Since an equitable title is always susceptible to being defeated by a bona fide purchaser for value without notice some degree of knowledge must be present before liability attaches 2 Position in Singapore based on unconscionability 18 3 15 In Singapore relevant test was that was laid down by Nourse LJ in Bank of Credit and Commerce International Overseas Ltd v Akindele 2001 Ch 437 at 455E who said T he recipient s state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt has been accepted see George Raymond Zage III v Ho Chi Kwong 2010 2 SLR 589 The salient points on knowing receipt are as follows The degree of knowledge required to impose liability will necessarily vary from transaction to transaction George Raymond Zage III v Ho Chi Kwong 2010 2 SLR 589 at 32 In situations where there is no settled practice of making routine enquiries and prompt resolution of the transaction is required clear evidence of the degree of knowledge and faulty must be demonstrated at 32 Unconscionability does not mean actual knowledge The test of unconscionability is a flexible and factually based inquiry at 32 In the absence of actual knowledge a defendant may be found liable for knowing receipt if there are circumstances that are so unusual or so contrary to be accepted commercial practice that it would be unconscionable to allow a defendant to retain the benefit of receipt at 32 Constructive notice in the context of knowing receipts should not be understood as the doctrine of constructive notice as developed in transactions in real estate However the court should not be precluded from considering the objective circumstances and peculiar practices if any of each type of commercial transaction bearing in mind the need for expediency and certainty in commerce when assessing liability for knowing receipt at 39 Thus in certain circumstances liability may still attach even if actual knowledge of a breach of trust is missing Liability for knowing receipt may also be imposed if a person possessing all the relevant facts to a given matter fails to appreciate or infer their factual or legal significance at 40 C ourts should be slow in imputing knowledge of wrongdoing when assessing the propriety of commercial transactions In the absence of established commercial practices or obviously questionable conduct on the part of a counter party merchants are not ordinarily expected to make searching inquiries into their customers source of funds To demand such diligence in the course of ordinary commercial transactions would unduly constrict trading activities at 52 E Dishonest assistance 18 3 16 The elements which must be proved to establish dishonest assistance are a that there has been a disposal of the plaintiff s assets in breach of trust or fiduciary duty b the defendant assisted or procured that breach of duty c the defendant acted dishonestly and d the plaintiff suffered a loss Caltong Australia Pty Ltd v Tong Tien See Construction 2002 3 SLR 241 George Raymond Zage III v Ho Chi Kwong 2010 2 SLR 589 18 3 20 In Singapore for a defendant to be liable for dishonest assistance he must have knowledge of the irregular shortcomings of the transaction that ordinary honest people would consider it to be a breach of standards of honest conduct if he failed to adequately query them per VK Rajah JA George Raymond Zage III and another v Ho Chi Kwong and another 2010 2 SLR 589 SGCA 4 Return to the top SECTION 4 EQUITABLE REMEDIES AND DEFENCES A Specific performance of a promissory obligation 18 4 1 Specific performance is a discretionary equitable remedy whereby the court decrees that the defendant has to perform a promissory obligation Specific performance is usually only decreed if there is no adequate remedy at law see G Jones and W Goodhart Specific Performance Butterworths 1996 B Injunctions restraining a wrongful act or ordering a particular act to be done 18 4 2 An injunction is a discretionary equitable remedy whereby the court restrains the doing of a wrongful act a prohibitory injunction or orders a particular act to be done a mandatory injunction An injunction is usually only ordered if damages are an inadequate remedy see Bengawan Solo Pte Ltd and another v Season Confectionery Co Pte Ltd 1994 1 SLR R 448 C Declaratory relief declaring the rights and obligations of the parties 18 4 3 A declaratory relief is an order made by a court which declares with finality the rights and obligations of the parties with regard to the dispute before it Although this remedy historically originated in Equity the modern declaratory remedy is governed by statute see e g Lim Kim Cheong v Lee Johnson 1992 2 SLR R 688 Salijah bte Ab Latef v Mohd Irwan bin Abdullah Teo 1995 3 SLR R 233 Cheong Yoke Kuen and others v Cheong Kwok Kiong 1999 1 SLR R 1126 D Anton Piller orders made to preserve property or documents before action is concluded 18 4 4 An Anton Piller order is an order of court made to preserve property or documents which are the subject of a proposed or pending action The name of this order is derived from the case of Anton Piller v Manufacturing Processes 1976 Ch 55 It has been said that the Anton Piller order is a draconian remedy and has very drastic effect and far reaching consequences As such it should be granted only in exceptional cases see Computerland Corp v Yew Seng Computers 1991 SLR R 379 Asian Corporate Services SEA Pte Ltd v Impact Pacific Consultants Pte Ltd and Others 2005 4 SLR 61 E Mareva injunctions restraints a defendant from dealing with his assets 18 4 5 A Mareva injunction restrains a defendant from dealing with his assets to prevent their dissipation from the jurisdiction of the courts The name of this order is derived from the case of Mareva Compania Naviera v International Bulkcarriers SA 1980 1 All ER 213n See e g Guan Chong Cocoa Manufacturer v Pratiwi Shipping SA 2003 1 SLR R 157 for guidance on the factors that are relevant to the granting of a Mareva injunction F Delivery up and cancellation destruction of relevant property 18 4 6 Delivery up and cancellation is an equitable remedy leading to the destruction of relevant property G Monetary compensation unclear if local courts have jurisdiction 18 4 7 With regard to equitable damages it is not entirely clear whether the Singapore courts have the jurisdiction to order such damages see Shiffon Creations Singapore Pte Ltd v Tong Lee Co Pte Ltd 1987 SLR R 730 Cf K B Soh Jurisdiction to Award Equitable Damages in Singapore 1980 30 Mal L Rev 79 H Rescission setting aside tainted transactions ab initio 18 4 8 Rescission is an equitable remedy enabling transactions like contracts or other dispositions of property to be set aside at the instigation of one party if the transaction was tainted by a vitiating element like misrepresentation undue influence mistake duress or fraud Rescission operates retrospectively and avoids the transaction ab initio see e g Forum Development Pte Ltd v Global Accent Trading Pte Ltd and another appeal 1994 3 SLR R 1097 I Rectification correcting instruments that do not accurately reflect the intention of the parties 18 4 9 Rectification is an equitable remedy to correct instruments or deeds which do not accurately reflect the continuing common intention of the parties The plaintiff must show convincing proof of a continuing common intention that contradicts the written instrument see Kok Lee Kuen and another v Choon Fook Realty and others 1996 3 SLR R 182 In exceptional circumstances rectification may be allowed on a party s unilateral mistake e g the other party was guilty of fraud or the other party knew of the mistake or the transaction is a voluntary transaction J Promissory estoppel rights cannot be enforced if inequity results 18 4 10 The doctrine of promissory estoppel is classically stated in two well known passages The first of these is that it is the first principle upon which all Courts of Equity proceed that if parties who have entered into definite and distinct terms involving certain legal results certain penalties or legal forfeiture afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense or held in abeyance the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties The second passage is that if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time those persons will not be allowed by a Court of Equity to enforce the rights until such time has elapsed without at all events placing the parties in the same position as they were before see Halsbury s Laws of Singapore vol 9 2 LexisNexis 2003 at para 110 277 This passage was cited in QBE Insurance International Ltd v Winterthur Insurance Far East Pte Ltd 2005 1 SLR R 711 K Estoppel by convention where both parties transact on a shared assumption and it is unjust for one party to go back on that assumption 18 4 11 Estoppel by convention operates w hen the parties to a transaction proceed on the basis of an underlying assumption either of fact or law whether due to misrepresentation or mistake makes no difference on which they have conducted the dealings between them neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so see Amalgamated Investment Property Co Ltd v Texas Commerce International Bank Ltd 1982 QB 84 122 The following are elements to estoppel by convention a that there must be a course of dealing between the two parties in a contractual relationship b that the course of dealing must be such that both parties must have proceeded on the basis of an agreed interpretation of the contract and c that it must be unjust to allow one party to go back on the agreed interpretation see Singapore Island Country Club v Hilborne 1996 3 SLR R 418 See also MAE Engineering Ltd v Fire Stop Marketing Services Pte Ltd 2005 1 SLR 379 L Issue estoppel 18 4 12 The elements of issue estoppel are as follows a there needs to be a final and conclusive judgment on the merits b that judgment has to be by a court of competent jurisdiction c there has to be identity between the parties to the two actions that are being compared and d there must be an identity of subject matter in the two proceedings see Lee Tat Development Pte Ltd v Management Corporation of Management Corporation of Strata Title No 301 2005 3 SLR R 157 M Laches disentitling a plaintiff from relief due to unreasonable delays or negligence 18 4 13 Laches is an equitable doctrine which disentitles a plaintiff to relief in circumstances when there has been unreasonable delay or negligence in pursuing a right or claim Two important factors in laches are the length of the delay and the acts done during that time It has been said that laches is an equitable doctrine which only applies to equitable claims see Syed Ali Redha Alsagoff administrator of the estate of Mohamed bin Ali bin Faraj Basalamah deceased v Syed Salim Alhadad bin Syed Ahmad Alhadad and others and another matter 1996 3 SLR 410 eSys Technologies Pte Ltd v nTan Corporate Advisory Pte Ltd 2013 2 SLR 1200 However the Court of Appeal has considered the applicability of laches in a restitution claim which is a common law claim see Management Corporation Strata Title Plan No 473 v De Beers Jewellery Pte Ltd 2002 1 SLR R 418 This position may not be tenable the next time this matter is seriously re

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  • Ch.18 Equity and Trusts
    attract equitable rules but is governed by tort principles see Bristol West Building Society v Mothew 1998 1 Ch 16 5 Causation and remoteness of loss 18 3 8 Even where a breach of fiduciary has occurred the plaintiff must show that the consequences complained of flowed from the breach of fiduciary duty see Ohm Pacific Sdn Bhd v Ng Hwee Cheng Doreen 1994 2 SLR R 633 Target Holdings v Redfern 1996 AC 421 However in Kumagai Zenecon Construction Pte Ltd another v Low Hua Kin 1999 3 SLR R 1049 it was said that the principles of causation foreseeability and remoteness do not readily apply in considering the fiduciary s liability to make restitution But on appeal in Low Hua Kin v Kumagai Zenecon Construction Pte Ltd in liquidation and another 2000 2 SLR R 689 the Court of Appeal while not commenting on this part of the judgment embarked on a careful analysis of whether the chain of causation had in fact been broken It would seem that the Court of Appeal s approach implicitly recognises that matters of causation do come into play in deciding the fiduciary s obligation to make restitution see also John While Springs S Pte Ltd and another v Goh Sai Chuah Justin and others 2004 3 SLR 596 The position on causation and remoteness is unsettled see Maryani Sadeli v Arjun Permanand Samtani and another and other appeals 2014 SGCA 55 6 Remedies 18 3 9 The remedies against a fiduciary who makes an unauthorised profit may be personal or proprietary A fiduciary may in appropriate circumstances be made to account for an unauthorised profit or to hold a property acquired in breach of a fiduciary duty on constructive trust for the plaintiff Furthermore a fiduciary may be ordered to make equitable compensation to the principal for losses suffered C Obligations in relation to confidential information 18 3 10 A person breaches a duty of confidence if it can be shown that a there was unauthorised use of information to the detriment of the person communicating it b the information had the necessary quality of confidence and c the information was imparted in circumstances importing an obligation of confidence see X Pte Ltd and Another v CDE 1992 2 SLR R 596 and Invenpro M Sdn Bhd v JCS Automation Pte Ltd and another 2014 2 SLR 1045 1 Need to particularise the confidential information 18 3 11 It has been said in the context of an allegation of a breach of confidence by an employer against an employee an employer must particularize the confidential information which he seeks to protect It is oppressive for him to rely on a general statement that the information is confidential or to delay the giving of particulars until after discovery per Lai J in Tang Siew Choy and Others v Certact Pte Ltd 1993 1 SLR R 835 See also Chiarapurk Jack and others v Haw Par Brothers International Ltd and another and another appeal 1993 2 SLR R 620 Flamelite S Pte Ltd v Lam Heng Chung 2001 SGHC 66 Flamelite An appeal in Flamelite was lodged to the Court of Appeal on other grounds see Flamelite S Pte Ltd and Others v Lam Heng Chung and Others 2001 3 SLR R 610 2 Remedies 18 3 12 Remedies for a breach of confidence include injunctions account of profits delivery up and possibly monetary compensation There is also some Commonwealth authority suggesting that a court can declare a constructive trust as a remedy for a breach of confidence see Lac Minerals v International Corona Resources 1989 61 DLR 4th 14 Cf HW Tang Confidence and the Constructive Trust 2003 23 Legal Studies 135 D Knowing receipt where property is transferred in breach of trust with the defendant s knowledge 18 3 13 The elements required to establish knowing receipt are a a disposal of the plaintiff s assets in breach of fiduciary duty b the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff and c knowledge on the part of the defendant that the assets received are traceable to a breach of fiduciary duty see George Raymond Zage III and another v Ho Chi Kwong and another 2010 2 SLR 589 at 23 per VK Rajah JA 1 Competing theories on knowing receipt 18 3 14 At the moment there are three competing theories to explain liability for knowing receipt of trust property They are Knowing receipt is premised on the principle of unjust enrichment and hence liability is strict upon proof of receipt of trust property It would be confined to restoring an unjust gain Change of position would be available as a defence accordingly per Lord Nicholls Knowing Receipt The Need for a New Landmark in Restitution Past Present and Future Cornish et al eds Hart 1998 at p244 Knowing receipt is premised on the concept of unconscionability Nourse LJ in Bank of Credit and Commerce International Overseas Ltd v Akindele 2001 Ch 437 at 455 noted H Tjio No Stranger to Unconscionability 2001 JBL 299 said that a ll that is necessary is that the recipient s state of knowledge should be such as to make it unconscionable for him to retain the benefit of the receipt and Knowing receipt is better viewed as equity s cousin to the common law action of conversion It is a response to the interference with the plaintiff s equitable title see L Smith W h ither Knowing Receipt 1998 114 LQR 394 L Smith Unjust Enrichment Property and the Structure of Trusts 2000 116 LQR 412 Since an equitable title is always susceptible to being defeated by a bona fide purchaser for value without notice some degree of knowledge must be present before liability attaches 2 Position in Singapore based on unconscionability 18 3 15 In Singapore relevant test was that was laid down by Nourse LJ in Bank of Credit and Commerce International Overseas Ltd v Akindele 2001 Ch 437 at 455E who said T he recipient s state of knowledge must be such as to make it unconscionable for him to retain the benefit of the receipt has been accepted see George Raymond Zage III v Ho Chi Kwong 2010 2 SLR 589 The salient points on knowing receipt are as follows The degree of knowledge required to impose liability will necessarily vary from transaction to transaction George Raymond Zage III v Ho Chi Kwong 2010 2 SLR 589 at 32 In situations where there is no settled practice of making routine enquiries and prompt resolution of the transaction is required clear evidence of the degree of knowledge and faulty must be demonstrated at 32 Unconscionability does not mean actual knowledge The test of unconscionability is a flexible and factually based inquiry at 32 In the absence of actual knowledge a defendant may be found liable for knowing receipt if there are circumstances that are so unusual or so contrary to be accepted commercial practice that it would be unconscionable to allow a defendant to retain the benefit of receipt at 32 Constructive notice in the context of knowing receipts should not be understood as the doctrine of constructive notice as developed in transactions in real estate However the court should not be precluded from considering the objective circumstances and peculiar practices if any of each type of commercial transaction bearing in mind the need for expediency and certainty in commerce when assessing liability for knowing receipt at 39 Thus in certain circumstances liability may still attach even if actual knowledge of a breach of trust is missing Liability for knowing receipt may also be imposed if a person possessing all the relevant facts to a given matter fails to appreciate or infer their factual or legal significance at 40 C ourts should be slow in imputing knowledge of wrongdoing when assessing the propriety of commercial transactions In the absence of established commercial practices or obviously questionable conduct on the part of a counter party merchants are not ordinarily expected to make searching inquiries into their customers source of funds To demand such diligence in the course of ordinary commercial transactions would unduly constrict trading activities at 52 E Dishonest assistance 18 3 16 The elements which must be proved to establish dishonest assistance are a that there has been a disposal of the plaintiff s assets in breach of trust or fiduciary duty b the defendant assisted or procured that breach of duty c the defendant acted dishonestly and d the plaintiff suffered a loss Caltong Australia Pty Ltd v Tong Tien See Construction 2002 3 SLR 241 George Raymond Zage III v Ho Chi Kwong 2010 2 SLR 589 18 3 20 In Singapore for a defendant to be liable for dishonest assistance he must have knowledge of the irregular shortcomings of the transaction that ordinary honest people would consider it to be a breach of standards of honest conduct if he failed to adequately query them per VK Rajah JA George Raymond Zage III and another v Ho Chi Kwong and another 2010 2 SLR 589 SGCA 4 Return to the top SECTION 4 EQUITABLE REMEDIES AND DEFENCES A Specific performance of a promissory obligation 18 4 1 Specific performance is a discretionary equitable remedy whereby the court decrees that the defendant has to perform a promissory obligation Specific performance is usually only decreed if there is no adequate remedy at law see G Jones and W Goodhart Specific Performance Butterworths 1996 B Injunctions restraining a wrongful act or ordering a particular act to be done 18 4 2 An injunction is a discretionary equitable remedy whereby the court restrains the doing of a wrongful act a prohibitory injunction or orders a particular act to be done a mandatory injunction An injunction is usually only ordered if damages are an inadequate remedy see Bengawan Solo Pte Ltd and another v Season Confectionery Co Pte Ltd 1994 1 SLR R 448 C Declaratory relief declaring the rights and obligations of the parties 18 4 3 A declaratory relief is an order made by a court which declares with finality the rights and obligations of the parties with regard to the dispute before it Although this remedy historically originated in Equity the modern declaratory remedy is governed by statute see e g Lim Kim Cheong v Lee Johnson 1992 2 SLR R 688 Salijah bte Ab Latef v Mohd Irwan bin Abdullah Teo 1995 3 SLR R 233 Cheong Yoke Kuen and others v Cheong Kwok Kiong 1999 1 SLR R 1126 D Anton Piller orders made to preserve property or documents before action is concluded 18 4 4 An Anton Piller order is an order of court made to preserve property or documents which are the subject of a proposed or pending action The name of this order is derived from the case of Anton Piller v Manufacturing Processes 1976 Ch 55 It has been said that the Anton Piller order is a draconian remedy and has very drastic effect and far reaching consequences As such it should be granted only in exceptional cases see Computerland Corp v Yew Seng Computers 1991 SLR R 379 Asian Corporate Services SEA Pte Ltd v Impact Pacific Consultants Pte Ltd and Others 2005 4 SLR 61 E Mareva injunctions restraints a defendant from dealing with his assets 18 4 5 A Mareva injunction restrains a defendant from dealing with his assets to prevent their dissipation from the jurisdiction of the courts The name of this order is derived from the case of Mareva Compania Naviera v International Bulkcarriers SA 1980 1 All ER 213n See e g Guan Chong Cocoa Manufacturer v Pratiwi Shipping SA 2003 1 SLR R 157 for guidance on the factors that are relevant to the granting of a Mareva injunction F Delivery up and cancellation destruction of relevant property 18 4 6 Delivery up and cancellation is an equitable remedy leading to the destruction of relevant property G Monetary compensation unclear if local courts have jurisdiction 18 4 7 With regard to equitable damages it is not entirely clear whether the Singapore courts have the jurisdiction to order such damages see Shiffon Creations Singapore Pte Ltd v Tong Lee Co Pte Ltd 1987 SLR R 730 Cf K B Soh Jurisdiction to Award Equitable Damages in Singapore 1980 30 Mal L Rev 79 H Rescission setting aside tainted transactions ab initio 18 4 8 Rescission is an equitable remedy enabling transactions like contracts or other dispositions of property to be set aside at the instigation of one party if the transaction was tainted by a vitiating element like misrepresentation undue influence mistake duress or fraud Rescission operates retrospectively and avoids the transaction ab initio see e g Forum Development Pte Ltd v Global Accent Trading Pte Ltd and another appeal 1994 3 SLR R 1097 I Rectification correcting instruments that do not accurately reflect the intention of the parties 18 4 9 Rectification is an equitable remedy to correct instruments or deeds which do not accurately reflect the continuing common intention of the parties The plaintiff must show convincing proof of a continuing common intention that contradicts the written instrument see Kok Lee Kuen and another v Choon Fook Realty and others 1996 3 SLR R 182 In exceptional circumstances rectification may be allowed on a party s unilateral mistake e g the other party was guilty of fraud or the other party knew of the mistake or the transaction is a voluntary transaction J Promissory estoppel rights cannot be enforced if inequity results 18 4 10 The doctrine of promissory estoppel is classically stated in two well known passages The first of these is that it is the first principle upon which all Courts of Equity proceed that if parties who have entered into definite and distinct terms involving certain legal results certain penalties or legal forfeiture afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense or held in abeyance the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties The second passage is that if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time those persons will not be allowed by a Court of Equity to enforce the rights until such time has elapsed without at all events placing the parties in the same position as they were before see Halsbury s Laws of Singapore vol 9 2 LexisNexis 2003 at para 110 277 This passage was cited in QBE Insurance International Ltd v Winterthur Insurance Far East Pte Ltd 2005 1 SLR R 711 K Estoppel by convention where both parties transact on a shared assumption and it is unjust for one party to go back on that assumption 18 4 11 Estoppel by convention operates w hen the parties to a transaction proceed on the basis of an underlying assumption either of fact or law whether due to misrepresentation or mistake makes no difference on which they have conducted the dealings between them neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so see Amalgamated Investment Property Co Ltd v Texas Commerce International Bank Ltd 1982 QB 84 122 The following are elements to estoppel by convention a that there must be a course of dealing between the two parties in a contractual relationship b that the course of dealing must be such that both parties must have proceeded on the basis of an agreed interpretation of the contract and c that it must be unjust to allow one party to go back on the agreed interpretation see Singapore Island Country Club v Hilborne 1996 3 SLR R 418 See also MAE Engineering Ltd v Fire Stop Marketing Services Pte Ltd 2005 1 SLR 379 L Issue estoppel 18 4 12 The elements of issue estoppel are as follows a there needs to be a final and conclusive judgment on the merits b that judgment has to be by a court of competent jurisdiction c there has to be identity between the parties to the two actions that are being compared and d there must be an identity of subject matter in the two proceedings see Lee Tat Development Pte Ltd v Management Corporation of Management Corporation of Strata Title No 301 2005 3 SLR R 157 M Laches disentitling a plaintiff from relief due to unreasonable delays or negligence 18 4 13 Laches is an equitable doctrine which disentitles a plaintiff to relief in circumstances when there has been unreasonable delay or negligence in pursuing a right or claim Two important factors in laches are the length of the delay and the acts done during that time It has been said that laches is an equitable doctrine which only applies to equitable claims see Syed Ali Redha Alsagoff administrator of the estate of Mohamed bin Ali bin Faraj Basalamah deceased v Syed Salim Alhadad bin Syed Ahmad Alhadad and others and another matter 1996 3 SLR 410 eSys Technologies Pte Ltd v nTan Corporate Advisory Pte Ltd 2013 2 SLR 1200 However the Court of Appeal has considered the applicability of laches in a restitution claim which is a common law claim see Management Corporation Strata Title Plan No 473 v De Beers Jewellery Pte Ltd 2002 1 SLR R 418 This position may not be

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