Court of Appeal · Decided 29 May 2014

Anwar Patrick Adrian and another v Ng Chong & Hue LLC and another

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[2014] SGCA 34Case no. Civil Appeal No 138 of 2013

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Grounds of decision

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Andrew Phang Boon Leong JA (delivering the judgment of the court):
Introduction
[1] The present appeal centres on the alleged liability of a lawyer and his law firm (“the Respondents”) in an action brought by two brothers (“the Appellants”). The Appellants’ action is premised upon two possible bases which are independent of each other:
(a) in contract, the breach of an alleged implied retainer that existed between the Appellants and Respondents and;
(b) in tort, the breach of a duty of care said to be owed by the lawyer concerned (“the Second Respondent”) and, consequently, his law firm (“the First Respondent”), to the Appellants.
[2] In the court below, the High Court judge (“the Judge”) found in favour of the Respondents, holding that the Second Respondent did not have a solicitor-client relationship with the Appellants and that the Respondents did not owe a duty of care in tort to the Appellants. The Judge’s grounds of decision can be found in Anwar Patrick Adrian and another v Ng Chong & Hue LLC and another [2013] SGHC 202 (“the Judgment”).
[3] Whilst the basic issues, characterised in the way that we have, might appear straightforward, they raise important issues of law. Of particular importance is the relevance (if any) of the seminal House of Lords decision in White v Jones [1995] 2 AC 207 (“White”) under the overarching duty of care framework in Singapore as set out in Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] 4 SLR(R) 100 (“Spandeck”). There is also, parenthetically and in addition to the aforementioned issues in contract and tort, a third basic issue concerning the legal entitlement of the Appellants to the reliefs (in the form of damages) claimed, assuming that they can establish the liability of the Respondents in contract and/or tort in the first place.
[4] This case is also complicated by the peculiar factual circumstances which the Appellants say give rise to a claim by them against the Respondents. The connection between the Appellants and Respondents is the Appellants’ father, Agus Anwar (“Agus”), with whom the Respondents have had a long-standing professional relationship. It was in the course of advising Agus that the Respondents took on the contractual and/or tortious duties to the Appellants, or so the latter claim. There is no doubt, as the Judge also noted (see the Judgment at [13]), as to Agus’s deep involvement in the relevant events that transpired and to which the Appellants are now referring in order to establish their claim against the Respondents. As we shall see, Agus’s role is of potentially important legal significance even though he is not technically a party to the action.
[5] With that in mind, we proceed with a background of the salient facts of this case.
The facts
The parties
[6] The Second Respondent is Ng Soon Kai (“Ng”), a lawyer of 21 years standing. He practises in, and is also one of, the directors of Ng Chong & Hue LLC (“NCH”), the First Respondent. As nothing turns on a separation of Ng and NCH’s individual identities and as the dispute involves allegations against Ng primarily, unless the circumstances necessitate otherwise, our reference to Ng is generally a collective reference to the Respondents.
[7] Ng met Agus, the chief protagonist in the entire dispute, sometime in 2000 or 2002, at which point Agus became his client and a client of NCH. Agus was an astute investor who used to have numerous investments. He is also extremely familiar with the world of finance and banking, having been in the top management in banks previously. In his own words, he was a “well-known businessman”.
[8] Patrick Adrian Anwar (“Adrian”), the First Appellant, and Andrew Francis Anwar (“Francis”), the Second Appellant, are Agus’s sons. When Agus approached Ng in 2008 to assist him in relation to the financial difficulties he was facing, Adrian was 28 years old and Francis was 25 years old. Adrian had already begun working but Francis was still schooling in the US.
The Four Properties
[9] Ng had been assisting Agus in numerous transactions over the years, including representing Agus in a dispute in Indonesia, as well as in the purchase of other properties. One matter which Ng advised Agus on was the purchase of five properties in 2006 and 2007. Save for one property, the other four properties were purchased in the names of his two sons and two other companies in the following manner:
(a) 57A Devonshire Road, #21-03 was held by Adrian;
(b) 57A Devonshire Road, #18-03 was held by Francis;
(c) 8 Scotts Road, #35-08 was held by Scotts Island Trust Pte Ltd (“SITPL”) of which Adrian is the sole shareholder and director; and
(d) 8 Scotts Road, #36-04 was held by Scotts Skyline Trust Pte Ltd (“SSTPL”) of which Adrian is the sole shareholder and director.
[10] There is no dispute that the instructions to purchase these properties came from Agus. The four properties listed above will be referred to collectively, where necessary, as “the Four Properties”.
[11] The subject-matter of the action concerns the mortgage of the Four Properties to the Singapore branch of Société Générale Bank & Trust (“SGBT”). SGBT is a wholly-owned subsidiary of the French banking group, Société Générale SA.
Dispute with SGBT
[12] Agus had a credit facility with SGBT. As part of the credit facility, Agus pledged, amongst other things, certain Singapore shares. When the stock markets crashed in July 2008, the market value of his collateral likewise crashed. Around July 2008, SGBT requested Agus to provide additional collateral. At the same time, other institutions which Agus had credit facilities with also requested that Agus make good on the shortfall which resulted from the economic turmoil. Needless to say, Agus did not find himself in a satisfactory situation.
[13] In October 2008, with global share prices still falling, SGBT sold off some of Agus’s pledged shares. He was informed of this personally by a letter from SGBT’s solicitors, Allen & Gledhill LLP (“A&G”), on 6 October 2008. However, the sale was insufficient to meet the shortfall which had snowballed to approximately US$8m. SGBT demanded Agus pay this sum or provide collateral of the same value by 9 October 2008.
Early to mid-October 2008
[14] Agus approached Ng to act for him. On 7 October 2008, on Agus’s instructions, Ng wrote to A&G and informed them that Agus would provide further collateral in the form of mortgages over the Four Properties. Negotiations then took place between A&G and Ng. There were also separate negotiations between Agus and SBGT’s officers directly which Ng was not involved in. On 10 October, A&G informed Ng of a new proposal by SGBT under which:
(a) Agus would pay SGBT $4m or provide additional collateral of an equivalent value by 15 October 2008;
(b) Agus would procure mortgages over the Four Properties by 13 October 2008; and
(c) Adrian, Francis, SITPL and SSTPL being owners of the Four Properties would provide personal and corporate guarantees, respectively, by 15 October 2008.
[15] On 14 October 2008, Ng, on Agus’s instructions, informed A&G that Agus was agreeable to the proposal except for the condition that the Appellants each provide personal guarantees. Agus said that his sons would “hardly [be] able to provide any real security to your clients” as they were just “2 young boys”.
[16] In A&G’s reply on 14 October 2008, SGBT essentially agreed to put the personal guarantee requirement on hold on condition that Agus satisfied the other requirements by 15 October 2008. Agus was unable to do so, and, on 16 October 2008, A&G informed Ng that SGBT would “proceed as necessary”. On that same day, SGBT sent a letter to Agus informing him that as he had defaulted on the credit facility, SGBT was demanding repayment of approximately $17m immediately.
20 October 2008 and SGBT’s change of position
[17] On 20 October 2008, Ng, again on the instructions of Agus, informed A&G of a new proposal which included the provision of additional security in the form of a mortgage over another property, Agus’s Ferrari, as well as authorisation to sell shares pledged by Agus and held by SGBT. SGBT deemed Agus’s latest proposal inadequate through a reply by A&G on that same day.
[18] However, A&G conveyed to Ng that SGBT would hold its hand if Agus, amongst other things, furnished even more security which included mortgages over other properties in addition to the Four Properties, and corporate guarantees from the companies which were the legal owners of the relevant properties. There was no requirement that the Appellants provide personal guarantees in this latest counter-proposal. On the surface, this was a significant change of position.
[19] Agus could not meet some of the requirements, resulting in further back-and-forth negotiations between A&G and Ng.
Further negotiations and the Forbearance Agreement
[20] The further negotiations came to a head on 22 October 2008 when A&G sent a draft agreement to Ng for execution by Agus, Adrian, Francis, SITPL and SSTPL. Under this draft agreement, SGBT would forbear from taking immediate legal action against Agus provided that Agus satisfied the conditions – which had been the subject-matter of the prior negotiations – set out in the agreement (“the Forbearance Agreement”). Again, as had been set out in the 20 October 2008 correspondence, the Appellants were not required to give personal guarantees under this draft Forbearance Agreement.
[21] As with all previous correspondence from A&G, Ng forwarded the letter to Agus. In the cover letter, Ng briefly explained the contents of the draft Forbearance Agreement. One of the points highlighted concerned the guarantees which were required from SITPL and SSTPL. Thereafter, a couple of further minor amendments were made to the draft Forbearance Agreement, including an offer by Agus to replace the Appellants as the directors of SITPL and SSTPL so that the signing of the relevant documents involving the two companies could be expedited.
[22] Eventually, by 30 October 2008, the draft Forbearance Agreement and the other relevant documentation were signed and executed by all the relevant parties.
[23] It is apposite, at this juncture, to mention that at least some of the communications between Agus and his sons were facilitated by Agus’s staff. For example, it was one of his staff who sent the Forbearance Agreement and the necessary documents to Francis for his signature. Communications between Agus and Ng were also sometimes effected through Agus’s staff.
The Security Documents
[24] Two of the relevant documents which were signed by the Appellants are the Mortgage Document and the Deed of Assignment (“the Security Documents”). These covered the mortgage of the two Devonshire properties under the Appellants’ respective names (see above at [9]). The Mortgage Document and the Deed of Assignment each contains a clause providing that the mortgagor of the property shall pay SGBT on demand all sums due and owing to SGBT by Agus (“the Personal Guarantee Clause”).
[25] How and why this clause came to be in the Security Documents without warning from A&G or SGBT despite earlier intimations that the Appellants would not be made to give personal guarantees is effectively the cause of the present action. It is Ng’s failure to advise the Appellants of the existence and implication of this clause – which Ng does not dispute he did not do – that the Appellants are claiming amounts to a breach of an implied retainer or, alternatively, a breach of a duty of care in tort.
[26] The Security Documents were prepared by Tan Peng Chin LLC (“TPC”), another law firm engaged by SGBT. They were sent to Ng on 23 October 2008. Ng forwarded the documents the next day by personal service to Agus’s office for the attention of the owners of the Four Properties, ie, Adrian, Francis, SITPL and SSTPL. It is common ground that it was Agus’s staff who then forwarded the documents to the Appellants. Ng’s cover letter referred to the Security Documents and set out the portions of the documents where Adrian, Francis and Agus should append their signatures. As mentioned above, the Security Documents were eventually signed by Adrian, Francis as well as Agus.
[27] Despite the provision of additional security under the Forbearance Agreement, Agus still could not meet his obligations under the credit facility to SGBT. This led to a suit in April 2009 by SGBT against Agus, the Appellants, as well as SITPL and SSTPL for the outstanding sums due under the credit facility. SGBT’s claim against the Appellants, which was premised on the Personal Guarantee Clause, was settled for US$1m in April 2011.
[28] The Appellants then commenced this action against the Respondents for failing to bring the Personal Guarantee Clause to their attention and/or advising them on the clause before they signed the Security Documents.
[29] In the meantime, Agus was unable to settle his debts and was adjudged bankrupt on 3 March 2011, and remains undischarged to date.
The parties’ pleaded cases
Appellants’ pleaded claims
[30] The basis of the Appellants’ contractual claim is an implied retainer between the Appellants and Ng (and consequently, NCH) which imposed on Ng certain duties that he failed to carry out. The second cause of action pleaded was tortious, namely, that as Ng was advising Agus in the course of the negotiations with A&G, he should have known that the Appellants would rely on him to look after their interests and he (and consequently, NCH) therefore owed a duty of care to take certain steps to protect the Appellants, which was not done.
[31] The Appellants aver that Ng, pursuant to either his contractual or tortious duty, ought to have done but failed to do the following:
(a) take reasonable steps to ensure that the Security Documents did not contain the Personal Guarantee Clause;
(b) adequately read through the Security Documents before forwarding them to Agus for onward execution by the Appellants;
(c) consider the possibility that Security Documents were standard forms which might contain the Personal Guarantee Clause;
(d) take steps to safeguard against the risk that Agus would tell the Appellants that they would not suffer any personal liability by signing the Security Documents;
(e) query TPC on the presence of the Personal Guarantee Clause which was inconsistent with SGBT’s earlier position that it would not insist on requiring personal guarantees from the Appellants;
(f) draw the Personal Guarantee Clause to the attention of the Appellants or Agus, and explain and advise the effect of the clause before they signed the Security Documents; and/or
(g) take steps to rescind or rectify the Security Documents when SGBT sought to enforce the Personal Guarantee Clause.
[32] The Appellants claim that they would not have signed the Security Documents had they been aware of and appreciated the effect of the Personal Guarantee Clause. The losses which they are claiming in the action comprise:
(a) the US$1m settlement payment;
(b) legal fees paid to the Respondents for work done in connection with the Security Documents and legal fees incurred in defending SGBT’s claim; and
(c) Adrian’s loss of business opportunity as a result of summary judgment being entered against him at an earlier stage of the action.
Respondents’ pleaded defence
[33] Ng admits that he was instructed by Agus on specific matters but these did not extend to matters related to Agus’s family and their companies generally. Any instructions by Agus were for himself personally and not on behalf of his family members. At all material times, Ng was only acting on behalf of Agus, and not the Appellants.
[34] Ng also avers that he did not conduct himself in any way that led or would lead the Appellants to believe that he was acting for them, or would be looking after their interests. Apart from a single instance of forwarding the Security Documents to Agus’s office for onward transmission to the Appellants for their execution, Ng had no other dealings and communications with the Appellants. This act of forwarding the Security Documents, Ng says, was part of his duty to Agus as his solicitor.
[35] Ng denies that Agus conveyed to him that the Appellants were not to incur personal liability. Further, Ng claims that neither he nor NCH was ever instructed to advise the Appellants on the effect of the Security Documents. The scope of his duties to Agus only extended to implementing the Security Documents as required under the Forbearance Agreement; Agus never instructed him to provide advice to the Appellants. Hence, he did not owe the Appellants any duty nor was he under any obligation to check or advise on the Security Documents for the purposes of protecting the interests of the Appellants.
[36] Ng also claims that, in any event, the Appellants were aware of the obligations in the Security Documents, and had signed the documents with full knowledge and understanding of the risks involved. In other words, the Appellants were not looking to Ng or anyone else in NCH’s employ to provide any advice. Ng also points out that when Agus and the Appellants were sued by SGBT, their original defence was related to problems with the financing of another of Agus’s property. Neither Agus nor the Appellants had put any blame on Ng for his role in the execution of the Security Documents. The present proceedings were an afterthought.
[37] Liability for the settlement sum, legal fees and Adrian’s alleged loss of business opportunity was also denied.
The decision in the court below
[38] As there was a substantial amount of dispute on the facts, the Judge made it a point to note that he found Agus’s and the Appellants’ evidence to be self-serving and unreliable. He gave examples showing that the Appellants were capable of giving and did in fact give, contradictory evidence at different points in the proceedings against SGBT, depending on whether it suited them. He also found Agus’s testimony unusually convenient; he was clear and forceful in matters that aided his sons’ claims, but, where they did not, he suffered acute bouts of amnesia (see [12] of the Judgment).
[39] Consequently, and in tandem with the documentary evidence before him, the Judge was of the view that the Ng did not have a solicitor-client relationship with the Appellants, and that there was therefore no retainer which was breached by Ng. Agus was the sole person who had instructed Ng. The Judge also held that Ng also did not owe the Appellants a duty of care in tort.
[40] Notwithstanding the above, the Judge made two observations. The first was that Ng could have done more to make clear who he really acted for. The second was that Ng was not careful in spotting the inclusion of the Personal Guarantee Clause. The Appellants perhaps perceived this as an invitation to appeal, and that was what they did.
The parties’ cases on appeal
Appellants’ case
[41] In so far as the issue of a breach of contract under an alleged implied retainer is concerned, the Appellants submit that there must have been and was in fact a solicitor-client relationship between Ng and the Appellants during the relevant period, given the following facts:
(a) Ng had acted for the Appellants in the purchase of the Devonshire properties in 2006 and the sub-sale in 2009. In fact, Ng had billed the Appellants, not Agus, for work done in relation to the Devonshire properties in 2009.
(b) TPC, who acted for SGBT in relation to the execution of the Security Documents, also thought that the Ng was acting for the Appellants. Ng accepts that TPC had such an impression.
(c) Ng signed off on the mortgage documents as solicitor for the mortgagor. As the Appellants were the mortgagors, it follows that Ng was the solicitor for the Appellants, and the Appellants were entitled to think so.
(d) Ng did not advise the Appellants to obtain independent legal advice. If he was not their lawyer, he should have informed them that they should obtain independent legal advice.
[42] In so far as the existence of an alleged tortious duty of care is concerned, the Appellants submit that there was such a duty which was breached because the law imposes a duty of care on a solicitor towards a third party in circumstances where the solicitor’s client intended to confer a benefit on the third party. Agus intended to confer a benefit on the Appellants inasmuch as he did not want the Appellants to have any personal liability. This formed part of Ng’s instructions. Such a duty of care towards the Appellants is also justified by the Spandeck framework of factual foreseeability, proximity, and the absence of negativing policy reasons.
[43] Finally, on the issue of damages, the Appellants are no longer pursuing the claim with regard to Adrian’s loss of business opportunity. Focusing their submissions, instead, on the reasonableness of the US$1m which they had paid to SGBT as a settlement, the Appellants contend that US$1m was reasonable, given that the difference between SGBT’s proof of debt and the value of the remaining assets held as collateral was in the region of $7.6m. Further, although the US$1m was raised with the help of gifts by third parties, that did not prevent the Appellants from claiming against the Respondents.
[44] Together with $325,287.71 claimed as total legal fees expended, the Respondents are potentially liable for up to the aggregate of US$1m and $325,287.71 in this appeal.
Respondents’ case
[45] On the contractual allegations, the Respondents submit there was no solicitor-client relationship between the Appellants and himself as:
(a) Ng’s only client was Agus. The execution of the Security Documents was unconnected to the Appellants’ purchase or subsequent sub-sale of the Devonshire properties.
(b) Even if TPC was misled by the Ng’s representation, it had nothing to do with the Appellants. It is not their case that they had relied on Ng’s representation to TPC and that their reliance somehow founds a contractual retainer.
(c) Ng only signed off as the solicitor for the Appellants qua mortgagors as he was assisting Agus to perfect the Forbearance Agreement.
(d) Ng did not advise the Appellants to seek independent legal advice because there was no obligation for Ng to have given such advice to the Appellants in the first place. It was not, for instance, a case of conflict of interest.
(e) There was never any direct communication between Ng and the Appellants. The Security Documents were sent to Agus’s office and it was his staff that liaised with the Appellants on their execution. Neither Agus nor the Appellants ever informed Ng that they did not understand the contents of the Forbearance Agreement (or the Security Documents) or that they objected to the terms in those documents.
(f) In their defence against SGBT’s claim, the Appellants never once made any adverse claims against the Respondents, even after they were alive to the possibility of negligence by the Respondents. Instead, they preferred to allege undue influence and misrepresentation against their father, Agus.
[46] On the tortious claim, the Respondents submit that there was no duty of care towards the Appellants as:
(a) There was no proximity between the parties, given that the Appellants had not relied on Ng in the course of deciding whether to execute the Security Documents. They had agreed to such execution because they were told to do so by Agus.
(b) Ng was not aware of the negotiations between SGBT and Agus, in particular, the fact that SGBT had agreed to withdraw their demand that the Appellants would not have any personal liability. He thought that SGBT had not shifted from its original position that the Appellants should be personally liable as well.
(c) The Appellants signed the Security Documents because Agus told them that he needed the Devonshire properties as collateral. They did not verify any of the details with Ng. The Appellants neither treated Ng as their solicitor nor relied on him.
[47] Last but not least, on the issue of damages, Ng submits that the loss claimed by the Appellants was provided by third parties and that to award the Appellants damages for this loss would offend the principle against double recovery. The settlement sum of US$1m was also not reasonable because the Appellants have not demonstrated what their liability would otherwise have been and why such a figure was realistic.
The issues in this appeal
[48] As framed by both sets of submissions, the main issues before the court are as follows:
(a) whether there was a contractual solicitor-client relationship between the Appellants and Ng;
(b) whether Ng owed the Appellants a duty of care in tort (and, if so, whether there was a breach of that duty of care); and
(c) if there is liability either in contract and/or tort, whether the damages claimed by the Appellants are recoverable.
Our decision
Was there an implied retainer between the Appellants and Ng?
[49] The considerations which should feature in a question of the existence of implied retainer can be found in the Singapore Court of Three Judges’ decision in Law Society of Singapore v Ahmad Khalis bin Abdul Ghani [2006] 4 SLR(R) 308 (“Ahmad Khalis”) at [66]. The court cited with approval the following summary in Cordery on Solicitors (Anthony Holland gen ed) (LexisNexis UK, 9th Ed, 1995, 2004 release) at para E 425:
[50] The solicitor in Ahmad Khalis was held by the court to have been engaged under an implied retainer because of a variety of reasons, one of which was that he had given express advice on the relevant documents to the putative clients (see Ahmad Khalis at [67]). The present facts are perhaps even more similar to those in the English Court of Appeal decision of Dean v Allin & Watts [2001] 2 Lloyd’s Rep 249 (“Dean”). In that case, the solicitor did not give any advice to the putative client, and only had minimal communication with the putative client. It was held that there was no implied retainer.
[51] It is undisputed that Ng did not directly advise the Appellants. However, we are not persuaded that the inquiry should end there. Although the absence of giving of advice, or even the absence of any meaningful contact, is in many cases helpful in enabling the court to infer that no implied retainer had arisen on those facts, that fact alone cannot be decisive.
[52] The reason is simple. The giving of advice is itself part of the duty under an implied retainer. If a solicitor gives advice to a third party, there is a strong inference that the solicitor and the third party had regarded themselves as being in some kind of contractual relationship. However, the fact that the solicitor did not give advice cannot give rise to the converse inference. The absence of any proof of advice given could equally be evidence of a breach of an implied retainer if the other objective evidence points towards the existence of an implied retainer. Therefore, in circumstances such as these where the allegation is that the solicitor ought to have given advice directly to the Appellants because there was an implied retainer, it would be putting the cart before the horse to rely solely on the fact that no advice was provided.
[53] The crux of the matter, as the court in Ahmad Khalis observed, is whether the circumstances are such that a contractual relationship “ought fairly and properly” be imputed to all the parties. In our judgment, we agree with the Appellants that there was an implied retainer for a very specific and limited purpose, that is, to act as solicitors for the Appellants in the mortgaging of the respective properties that they held pursuant to the Forbearance Agreement.
[54] Despite its apparent simplicity, having regard to the relevant facts and circumstances, we find that an implied retainer ought properly and fairly be imputed to all the parties. First, Ng conceded that he signed off on the Security Documents as “solicitor for the mortgagors” on the Certificate of Correctness which formed part of the Security Documents. The immediate inference when a solicitor signs off on an official, formal record is that he means what he says. Ng’s defence was that he did so in the course of his retainer as Agus’s solicitor; to him, the Appellants were only holding the properties as Agus’s nominees.
[55] Secondly, whilst we acknowledge that what Ng claimed at the end of the preceding paragraph might sometimes be the case, especially when the solicitor is advising the patriarch of a close-knit family, this was not any ordinary official record. The Certificate of Correctness is an instrument prescribed by the Land Titles Act (Cap 157, 2004 Rev Ed) (“LTA”) that must be filed before a dealing with land will be recognised under the LTA. One of the implications of the certificate is that the matters set forth in the underlying instrument dealing with land are substantially correct (see s 59(2)(b) of the LTA). More importantly for our present purposes, the certificate must be signed by a solicitor if one has been employed by a party to the instrument (see s 59(3) of the LTA). The Certificate of Correctness therefore bore not just Ng’s signature, but also the signature of SGBT’s solicitors.
[56] The effect of a solicitor’s signature on the Certificate of Correctness is spelt out in s 59(3A) in no uncertain terms:
[57] We cannot overstate the importance of the Certificate of Correctness. As was noted by G P Selvam J in the Singapore High Court decision of United Overseas Finance Ltd v Victor Sakayamary and others [1996] 2 SLR(R) 20 at [97], an accurate certificate of correctness for registration is of paramount importance because the Registrar of Titles and the public place enormous faith on it – especially when it emanates from an advocate and solicitor.
[58] From the perspective of the solicitor, Ng, a seasoned solicitor, must be taken to have known of the importance of his signing the Certificate of Correctness for the purposes of the mortgage of the properties held by the Appellants. From any objective standpoint, he must have thought that he had the authority to act for the Appellants, and that he was their agent. In fact, he was their solicitor for the mortgage; there is no other way of characterising it. He may, in his own mind, have thought that he was their solicitor for the mortgage only because he was advising Agus on the broader transaction, but that does not detract from the fact that he must have held the view that he was officially the Appellants’ solicitor for the mortgage.
[59] From the perspective of the clients, the Appellants would also have legitimately considered Ng to be their solicitor. This is not premised solely on his signing off as their solicitor on the Certificate of Correctness. More than that, they knew that he was involved in the execution of this particular document; he was the only legally trained person on their side (ie, Agus and the Appellants) involved in the execution and the other side had a solicitor representing them as well. Indeed, this was a mortgage transaction that was part of a larger commercial transaction that ostensibly had legal implications which therefore required legal expertise. Looked at in its totality, the Appellants must have thought – or at any rate were entitled to think – that Ng was their solicitor on record (which he was). He was the one who would help them through this transaction.
[61] Nonetheless, as the Appellants’ alternative case in tort presents novel and intricate questions of law in the Singapore context, it would be beneficial to consider what the situation would be if there had been no implied retainer.
Did Ng owe the Appellants a duty of care in tort?
Duty of care in tort and contract
[62] Although the Judge appears to have adopted a contrary approach, the absence of a contractual retainer does not of itself conclude the issue of the Respondents’ potential legal liability in tort for negligence. Indeed, the whole point of the law of negligence (which has its modern genesis in the landmark decision of the House of Lords in Donoghue v Stevenson [1932] AC 562) was that it enabled liability to be fixed on the defendant in a principled fashion and (more importantly) in a situation where there would not otherwise be liability in contract for the simple reason that there was no contractual relationship between the defendant and the plaintiff in the first place.
[63] The distinction in the modern view between a finding of duty of care in contract and tort may be stated thus (see the English Court of Appeal decision of Jarvis v Moy, Davies, Smith, Vandervell & Co [1936] 1 KB 399 at 405):
[64] The question, thus, is whether there can be a duty of care in tort owing by Ng to the Appellants that is independent of any implied retainer.
The position under English law
(1) Hedley Byrne: the pre-White position
[65] We now know that in the broader context of solicitor’s negligence under English law, since at least the 1980s, a solicitor could owe a non-client a duty of care. This was the consequence of the decision of the English High Court in Ross v Caunters [1980] 1 Ch 297 (“Ross”), where Sir Robert Megarry VC confirmed that not only was there no rule that a solicitor owed a duty in respect of professional work solely in contract, but also that a solicitor could be liable in negligence to a client, as well as to a third party, where a prima facie duty of care to the latter could be established (see also Charlesworth & Percy on Negligence (Christopher Walton gen ed) (Sweet & Maxwell, 12th Ed, 2010) (“Charlesworth & Percy”) at para 9-219).
[66] In Ross, solicitors who prepared a will failed to warn the testator, when they sent it to him for execution, that it must not be witnessed by the spouse of a beneficiary. One of the witnesses was the husband of a residuary beneficiary. The gift to the beneficiary was rendered void as a result. When sued, the solicitors accepted that they had been guilty of negligence, but argued that they only owed that duty to the testator, and not the claimant who was the dissatisfied beneficiary. The court held that liability to the beneficiary was made out.
[67] Ross, however, was doubted in White by both the majority and minority (at 260–261 and 268 per Lord Goff of Chieveley; and at 282–283 per Lord Mustill), even though the outcome in White was the same as in Ross. A view exists that the trend in Ross culminated in White but that in our view is not strictly correct because the reasoning in White was clearly different and in some ways opposed to that in Ross (see in this regard the succinct analysis by Dawson J in Hill v Van Erp (1997) 188 CLR 159 (“Van Erp”) at 174–175, a decision of the High Court of Australia).
[68] Before we delve deeper into the analysis and reasoning in White, it is apposite to briefly mention the relevance of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (“Hedley Byrne”), the seminal House of Lords decision which held (at 486) that a reasonable man who, knowing that he was being trusted or that his skill and judgment were being relied on, gives the information or advice sought without any qualification of responsibility, will be taken to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require.
[69] Hedley Byrne has undoubtedly been accepted by our courts as forming part of Singapore law. More importantly, it can be and has been explained under the Spandeck framework. This was done in the decision of this court in Go Dante Yap v Bank Austria Creditanstalt AG [2011] 4 SLR 559 (“Go Dante Yap”). Thus, if the Hedley Byrne principle applied to the present facts, there would be no real point of controversy.
[70] The problem is that Hedley Byrne is not directly engaged on the facts; indeed, that may be why the Appellants did not cite that authority in support of their position. The twin criteria for the Hedley Byrne principle to apply are: (a) an assumption of responsibility (sometimes referred to as voluntary assumption of responsibility (although we think such terminology to be ex abundanti cautela)) by the defendant; and (b) reliance by the plaintiff (see Go Dante Yap at [32] and [39]).
[71] Applying the Hedley Byrne principle to our facts and indeed to similar fact patterns generally, it would be pushing the boundaries of sensible argument to suggest that a solicitor in advising his client, with such advice potentially being of benefit to a third-party associate of the client, had undertaken to that third party a responsibility to take care in the giving of his advice. Similarly, it would strain the realm of reasonableness to argue that such a third party who might have been ignorant of the solicitor’s existence (as was the case in White) had in fact relied on the solicitor’s exercise of due care and skill in advising his client. However, this does not necessarily mean that the concept of assumption of responsibility as such has no legal significance for the present case whatsoever – a point to which we will return in a moment when discussing the actual analysis in White itself.
(2) The principle in White
[72] These limits of Hedley Byrne were adverted to by Lord Goff in White who, for precisely those reasons, held (at 262 and 268) that Hedley Byrne was not an authority in support of the beneficiaries who had sued the defendants (a legal executive and the solicitors firm which had been instructed) for the latter’s negligence in preparing a will for its client, the testator.
[73] In essence, the testator had given his solicitors instructions to prepare a will under which his two daughters would receive £9,000 each. The legal executive did nothing to implement those instructions and the testator died without the will having been executed. The daughters then sued and were given judgment for £9,000 each by a majority of the House of Lords.
[74] It is clear from Lord Goff’s analysis that he found the circumstances of the case unique and not addressed squarely by any existing authority. Lord Goff objected to the wide proposition established by Ross on the ground that “it would be impossible to place any sensible bounds” (see White at 257). In other words, he was concerned about the prospect of indeterminate liability that might follow. His other concern was that in providing relief for pure economic loss, Ross had departed from orthodox tortious principles which placed strict restrictions on claiming for pure economic loss (see White at 257). Cases of assumption of responsibility falling under the Hedley Byrne principle were, at that time, one of the very few exceptions that did not offend the general prohibitions against relief for pure economic loss (see White at 257).
[75] Yet, notwithstanding these conceptual difficulties, Lord Goff was clearly persuaded that the disappointed beneficiaries in these situations had to have a remedy. The law had a lacuna which needed to be filled (see White at 259–260). The remedy to be “fashion[ed]” ultimately took the form of an extension (in contradistinction to application) of the Hedley Byrne principle. The concept of liability for assumption of responsibility should be, he held (at 268):
[76] That said, we must read White in its proper context. Whilst it was a momentous decision and remains so, that a solicitor can be sued by a third party beneficiary is actually an exception rather than a general principle. As Lord Goff explained in that very case (at 256):
[77] It should also be noted that the actual decision in White itself was by a bare majority decision of three to two. That having been said, the minority (comprising Lord Mustill and Lord Keith of Kinkel) focused on the fact that to permit the third party beneficiaries in that case a remedy would be to confer on them a benefit which they would not otherwise have received because of the doctrine of privity of contract (although it should also be pointed out that Lord Mustill rejected the extension of Hedley Byrne because he adopted viewed the concept of voluntary assumption of responsibility as being a direct one (see White at 289)).
[78] With respect, though, this is precisely one of the main issues before the court: could practical justice be done in light of the fact that the doctrine of privity of contract would otherwise preclude any remedy in favour of the plaintiffs in that case? This, in turn, raised the issue as to whether or not a remedy lay in the law of tort instead (which was, as we have seen, the approach adopted by the majority). As we shall see, there is yet another issue – whether or not there could nevertheless be an (alternative) remedy in the contractual sphere (see below at [102]–[114]).
Rationalising the principle in White v Jones
[79] Looking at the judgments in White, there is unfortunately, and we say this with respect, not much explanation on what is meant by the extension of the concept of assumption of responsibility (see above at [75]). There are two possible (and alternative) analyses and bases for the principle in White:
(a) first, in addition to owing a duty of care to the client, the solicitor also owes a duty of care to the third party, having assumed responsibility to the third party to exercise care in the performance of the underlying substantive obligation owed to the client; or
(b) secondly, the duty of care is still owed only to the client, but that the enforcement of that duty of care is extended to the third party.
[80] We derive these two equally possible views from the ratio decidendi of White which can be found in Lord Goff’s judgment (at 268):
[81] The main reason for the two possible interpretations can be ascribed to just one word: “extend”. In particular, a remedy extending the solicitor’s assumption of responsibility to the client to the third party could mean either finding that the solicitor has assumed responsibility directly to the third party or that the client’s remedy for a solicitor’s breach of duty is extended to the third party. We cannot conclude with confidence which of the two interpretations was intended by Lord Goff.
[82] This ambiguity is, with respect, unfortunate, occurring as it does in an otherwise excellent as well as forward-looking judgment. That having been said, looking at both the language and context of White itself, Lord Goff was more likely than not referring to the first interpretation or characterisation. As we shall see, this particular interpretation is not a wholly untenable one and can be (perhaps, better) rationalised (albeit somewhat differently) within the two-stage test laid down by this court in Spandeck. However, as we shall also see, whether Lord Goff intended it or not, there is another alternative interpretation that has its roots, instead, in contract (instead of tort), and which is, in fact, a rationalisation of the second interpretation just mentioned (see below at [102]–[114]).
[83] We do not, strictly speaking, have to decide this particular issue, that is, which of the two bases is more coherent. This is because the parties in our present case have presented their submissions on the basis that White stands for the proposition that a duty of care may be owed by the solicitor to the third party directly. Ng does not dispute this principle; his contention is that the requisite proximity or nexus between him and the Appellants is not made out. In his submissions, Ng helpfully concedes that whether a duty of care and liability for a breach of that duty is visited upon him will be determined by the principles in the case of Spandeck. He agreed that the “the decision [in White] is correct given that the intended beneficiary would suffer the loss of an inheritance if an intended will is not provided”.
[84] We do, however, want to make some observations on White, in part, because it might provide some guidance for the future. We also think that some attempt at clarification may assist other courts and commentators who have been divided on which is the better view to take.
(1) Duty of care owed to third party
[85] It is safe to say that the first characterisation, which clearly locates the relevant legal principle in the context of the law of tort and which results in a duty of care being owed by the defendant to the plaintiff in the law of negligence, probably has stronger support. This can be inferred from the fact that the preponderance of authorities still view the remedy in White as tortious, in the sense that the solicitor owes the third party a duty of care directly: see, for example, the English decisions of Groom v Selby [2001] Lloyd’s Rep Med 39 at 42; Robinson v PE Jones (Contractors) Ltd [2011] 1 BLR 206 at [72]; and JD (FC) v East Berkshire Community Health NHS Trust and Others [2005] Lloyd’s Rep Med 263 at [36]. The leading treatises, Charlesworth & Percy (at paras 9-217–9-229) and Clerk & Lindsell on Torts (Sweet & Maxwell, 20th Ed, 2010) (“Clerk & Lindsell”) (generally at paras 10-112 to 10-118), to name but a few, also categorically consider White as a case of professional negligence in tort. It should be mentioned, at this juncture, that the second interpretation or characterisation referred to above also locates (in the first instance at least) the relevant legal principle in the context of the law of tort, although this particular characterisation renders it more awkward – thus suggesting a contractual approach instead and which is a point which is dealt with below (see below at [102]–[114]).
[86] The English Court of Appeal decision of Carr-Glynn v Frearsons (a firm) [1999] 1 Ch 326 (“Carr-Glynn”) provides one of the clearest examples of the first characterisation. That case concerned a claim by a legatee against solicitors who had been allegedly negligent in advising the testatrix. The testatrix had executed a will drawn up by the defendant solicitors in which she left the plaintiff legatee her share in a property which she jointly owned with her nephew. However, the testatrix died without severing the joint tenancy, with the result that her share in the property automatically vested in her nephew. The gift to the plaintiff therefore became ineffective. The plaintiff sued the defendants for breach of a duty of care owed to her (the plaintiff), to ensure that the testatrix was properly advised of the need to severe the joint tenancy in order for the gift in her will to take effect.
[87] The plaintiff’s claim was allowed by the court. Chadwick LJ (with whom Butler-Sloss and Thorpe LJJ agreed) had this to say (at 337):
[88] The imposition on the solicitor of a duty of care which is owed to the third party (the legatee under a will in that case) cannot be any clearer. The third party, therefore, has a freestanding cause of action in tort against the solicitor. This was also the position taken in a recent New South Wales Court of Appeal decision, Vagg v McPhee [2013] NSWCA 29 at [48]. The language used there was “duty of care to the beneficiaries” [emphasis added].
[89] Nevertheless, the first characterisation is, with respect, problematic, not least because there is no real explanation for how this new obligation arises. One possible explanation is that the assumption of responsibility towards the client is transferred to the third party. Arguably, that is what Lord Goff might have meant when he justified his decision on an extension of Hedley Byrne. If that is so, Lord Goff appears to have ignored the conceptual difficulties as to how the solicitor can be said to have assumed responsibility to the third party or how the latter can be said to have relied on the skill and expertise of the solicitor (see above at [71]). Indeed, it is clear that the concept of assumption of responsibility set out in White cannot, looked at in this light, be a direct or conventional one (which is one reason why Lord Mustill differed from the views of the majority (see White at 289 as well as above at [77]); reference may also be made to Gary Chan Kok Yew & Lee Pey Woan, The Law of Torts in Singapore (Academy Publishing, 2011) (“Chan”) at paras 04.082 and 04.084). That this is the case is confirmed in White itself, where it was conceded that this extension of Hedley Byrne did not entail a (corresponding) reliance by the third party beneficiaries on the solicitor concerned (see, for example, per Lord Browne-Wilkinson in White at 275; reference may also be made to Chan at para 04.082).
[90] At least one commentator takes the view that Lord Goff “himself found it impossible to divine an assumption of responsibility [to the beneficiaries]” (see Jonathan Morgan, “The Rise and Fall of the General Duty of Care” (2006) 22(4) PN 206 at p 208).
[91] We do not think that simply stating that the extension is a legal imperative, necessitated by the need to do practical justice or fill what was perceived to be an undesirable lacuna, suffices to get around the conceptual difficulties inherent in recognising that a solicitor in the circumstances of White as well as the present case had assumed responsibilities towards a third party. At this juncture, it would be appropriate to note that this concern in White to do practical justice, whilst laudable and needful on the facts of the case itself, can raise other concerns. For example, it was observed in Jackson & Powell on Professional Liability (Sweet & Maxwell, 7th Ed, 2012) (“Jackson & Powell”) (at para 17-071, note 460) that “care needs to be taken in applying [the] principle [in White]” as “White v Jones was an exceptional case in which the House of Lords fashioned a remedy in order to avoid injustice”.
[92] More pertinently, perhaps, Assoc Prof Gary Chan, in his seminal work on the law of tort in Singapore, not only viewed White as involving a “fairly unique scenario” (see Chan at para 04.180) but also suggests that the focus of the majority in that case on practical justice entailed a core reasoning from policy (see Chan at paras 04.180 and 03.065). Whilst such a view is very interesting and not without force, we will suggest below that the decision in White (and, indeed, the present case) is not merely premised on what is the second stage in the two-stage test in Spandeck but can, instead, be rationalised along rather more conventional reasoning which focuses on the first stage of that test instead (relating to proximity; see also generally below at [115]–[181]). We pause to observe that this approach is preferable as it is inadvisable (given its very nature) to focus on policy in the first instance, although it still has a role to play under the second stage of the two-stage test in Spandeck.
[93] Nevertheless, in our view, the outcome in White can be justified on principles of the law of negligence that are more developed and nuanced than they were when White was decided in 1995. We are constantly and aptly reminded by the observation by Lord Walker of Gestingthorpe in the House of Lords decision of Customs and Excise Commissioners v Barclays Bank plc [2007] 1 AC 181 at [69] that the development of the tort of negligence has never been steady and will probably continue to be bumpy:
[94] The tortious nature of the remedy in White will become clearer when we explain the general fact pattern in White under the two-stage test in Spandeck which focuses on factual foreseeability and proximity followed by policy considerations (see below at [115]–[167]). Indeed, as we shall see, the two-stage test in Spandeck (in particular the requirement of proximity) better accommodates even Lord Goff’s first interpretation (centring on assumption of responsibility), albeit in a somewhat modified form (see below at [146]–[162]).
[95] It will suffice for the present time to note that, to the extent that the concept of assumption of responsibility is merely a factor to be considered pursuant to the application of the first stage of the two-stage test in Spandeck (in relation to the requirement of proximity), this approach which locates assumption of responsibility within the overarching concept of proximity is, with respect, preferable to that adopted in White (see also below at [159]). To elaborate, in White, the concept of assumption of responsibility was taken as a legal test in and of itself. With respect, this constitutes a less satisfactory approach – not least because of the various difficulties briefly set out above (especially at [89]).
(2) Duty of care owed to client but enforceable by third party
[96] Turning, then, to the second interpretation or rationalisation, we do find that particular characterisation attractive as well. It also has its supporters. The decision of Neuberger J (as he then was) in the English High Court decision of X (an infant) v Woollcombe Yonge (a firm) [2001] Lloyd’s Rep PN 274, in particular, cannot be ignored. With typical clarity, he said (at 277):
[97] Neuberger J also referred to the following exposition of White in Chadwick LJ’s judgment in the decision of the English Court of Appeal of Worby and Ors v Rosser [1999] PNLR 972 at 977:
[98] There are also others who have proposed the same rationalisation. In so far as White is concerned, the following extract in Professional Negligence and Liability (Mark Simpson QC and Lord Hoffmann eds) (Informa, 2013) at para 9.52 may be usefully noted:
[99] Notwithstanding this, the learned authors of Professional Negligence and Liability concede that the tortious, first characterisation of White is dominant. Immediately following the above extract is the following passage:
[100] The extracts just quoted illustrate the difficulties in deciding, in principle, which of the two characterisations is more appropriate.
[101] In any event, like the first characterisation, this second characterisation also has its own problems. In the main, there is great uncertainty over which area of law the remedy would fall under. Where the solicitor does not owe a duty of care to the third party, and the latter’s right is not premised on a breach of a duty by the solicitor to him, some mental and intellectual gymnastics would be required to declare the third party’s claim one based on negligence. But if it is not a claim premised on the law of tort, what could it be?
(3) A possiblecontractual analysis?
[102] This brings us then to a third possible way of construing the remedy, that is, White may arguably be more appropriately situated within the domain of contract law. Indeed, looked at from another perspective, this third characterisation is merely one way of explaining or rationalising the second interpretation, albeit by way of the contractual (instead of the tortious) route. We should caution before proceeding further that our views on this point are at this juncture only tentative as we have not had the benefit of full arguments in this particular regard. In any event, given our analysis below (at [115]–[181]), it is unnecessary, on the facts of the present case, to arrive at a definitive conclusion with respect to this particular approach.
[103] This so-called third characterisation (or, as the case may be, explanation of the second interpretation referred to above) was not possible at the time the case was decided because of the rootedness of the doctrines of privity (and consideration) (see below at [108]). Many commentators have pointed to English law’s traditional, restrictive doctrine of privity as the principal explanation for the expansion of the tort of negligence in the field of pure economic loss in the late 20th century (see, for example, Basil Markesinis, “An Expanding Tort Law – the Price of a Rigid Contract Law” (1987) 103 LQR 354 and Simon Whittaker, “Privity of Contract and the Tort of Negligence” (1996) 16 OJLS 191 (although it should be noted that the latter author does acknowledge (at p 217) that possible reform could be effected via legislative means instead)). Dr Janet O’Sullivan certainly seems to think that the court in White were obvious in using the law of tort to get around the strictures of privity (see Janet O’Sullivan, “Suing in Tort Where No Contractual Claim Will Lie – A Bird’s Eye View” (2007) 22(3) PN 165 at p 172).
[104] Subsequent developments in the law of contract that took place in the UK after White, namely, the 1999 Contracts (Rights of Third Parties) Act (c 31) (“the CRTPA”), now make this alternative contractual interpretation possible, at least more so than in 1995 when White was decided. Singapore has its own Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed) which, for all intents and purposes, is similar to its UK counterpart.
[105] The relationship to the CRTPA should be obvious by now. If White is seen as a case giving a right of enforcement to third parties who had a benefit accruing to them pursuant to the relationship between two other contracting parties, that would almost but not entirely be analogous to the law under the CRTPA which confers on a third party the right to enforce a contractual term if the term purports to confer on him a benefit.
[106] The reason, however, why it may not be entirely analogous is because it has been said that the distinction between the situation in White and the CRTPA is that the retainer between the client and the solicitor does not itself “purport to confer a benefit” on a third party directly, but is, rather, “a contract to enable the client, at his discretion to confer a benefit” (see Andrew Burrows, “Reforming Privity of Contract: Law Commission Report No 242” [1996] LMCLQ 467 at p 473). Under the CRTPA, the right of a third party to enforce a term is predicated on the contract expressly providing that he may or if that term “purports to confer a benefit on him”. An incidental accrual of benefit is therefore insufficient to engage the CRTPA (in this regard, see Yeo Tiong Min, “When do Third Party Rights Arise Under the Contracts (Rights of Third Parties) Act 1999 (UK)?” (2001) 13 SAcLJ 34 at p 49).
[107] Thus, in its Report on the reform of the doctrine of privity, the Law Commission of England and Wales (“the Law Commission”) considered but rejected changing the prerequisite of conferment of benefit to allow a third party to avail itself of the CRTPA as long as the contract contains a promise that is of benefit to the third party (see Law Commission, Privity of Contract: Contracts for the Benefit of Third Parties (Law Com No 242, 1996) (“Law Commission 1996”) at para 7.25). The Law Commission thought that White was sufficient in itself and had obviated the need for separate statutory reform. However, had the House of Lords decided against the beneficiaries, the Law Commission intimated (at para 7.27) that it would have “seriously contemplated a separate provision – outside [their] general reform – giving prospective beneficiaries a right to sue the negligent solicitor for breach of contract”.
[108] What is interesting is the Law Commission’s view that, on a theoretical level, the right of the prospective beneficiaries in situations such as White more properly belongs within the realm of contract than tort (see Law Commission 1996 at para 7.27). A contractual characterisation of White is not, in fact, far off from what Lord Goff had originally contemplated. The possibility that the remedy could be fashioned under the law of contract was something that had evidently crossed his mind. He even found that solution “simpler” and “attractive” (see White at 266). What stopped him, however, were the shackles of the doctrine of consideration and privity which he considered to be fundamental and best left to Parliament to legislate. One wonders if Lord Goff might have changed his mind in the light of the observations of the subsequent Law Commission Report (see Law Commission at Part IV on the issue of consideration), and the subsequent enactment of the CRTPA.
[109] Admittedly, this question is somewhat speculative in light of Lord Goff’s rejection of the possible application of a common law exception referred to below (at [111]), although this might have been due to his view that, on the facts of White itself, this exception was not applicable (see White at 266–267). That having been said, we note that there has been a persuasive critique of Lord Goff’s rejection of this particular exception in White itself – a point to which we shall return after we have briefly set out the nature and scope of the common law exception just mentioned (see below at [113]).
[110] On the whole, we think that this approach might deserve further consideration and exploration at an appropriate juncture in the future, particularly as contract and tort law are much more developed and sophisticated than 20 years ago. But until another case with fuller arguments comes before the courts, that task is best left to academics and law reform committees. Suffice it to state that, given the conceptual problems that afflict the tort characterisation, profit may be had in exploring a different characterisation. A contractual analysis may avoid some of those problems, but we hasten to emphasise that this is only one possibility. There could yet be others.
[111] We pause to note briefly that a possible contractual analysis could entail the development of an entirely new exception at common law. However, it is also possible that a court might have recourse to an existing exception which is embodied within the line of English House of Lords decisions (which include The Albazero [1977] AC 774; Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85; and Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 (reference may also be made to the English Court of Appeal decision of Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68)) and which has also been considered by this court (see Prosperland Pte Ltd v Civic Construction Pte Ltd and others [2004] 4 SLR(R) 129 and Family Food Court (a firm) v Seah Boon Lock and another (trading as Boon Lock Duck and Noodle House) [2008] 4 SLR(R) 272 (“Family Food Court”)).
[112] This particular exception has been discussed elsewhere (see generally The Law of Contract in Singapore (Academy Publishing, 2012) at paras 15.087–15.109). It comprises two grounds – the narrow ground and the broad ground, respectively – and was described as follows in Family Food Court (at [31]):
[113] It has, however, already been noted (see above at [108]) that Lord Goff did in fact consider and reject the exception just mentioned in White itself. This was, presumably, based on the facts in White. However, as also noted above, there has been a persuasive critique in a characteristically perceptive note on White by Tony Weir, who observed as follows (see Tony Weir, “A Damnosa Hereditas?” (1995) 111 LQR 357 at pp 358–359; cf also Peter Benson, “Should White v Jones Represent Canadian Law: A Return to First Principles” in Emerging Issues in Tort Law (Hart Publishing, 2007) (Jason W Nyers, Erika Chamberlain & Stephen G A Pitel eds), at pp 171–189):
It is clear, however, that the precise fact situation will be of the first importance (a point which prompted Weir to also note, in fairness, the difficulties in applying a contractual approach). It should also be borne in mind that this particular exception to the doctrine of privity of contract at common law is also subject to one important prerequisite – that the contracting party concerned is willing to sue the party in breach in the first place (with such party being also willing to then transfer the damages obtained from the party in breach to the third party).
[114] However, unless and until White is regarded as embodying a contractual remedy, the tortious explanation remains the legal position (in this regard, see also Hannes Unberath, Transferred Loss: Claiming Third Party Loss in Contract Law (Hart Publishing, 2003) at p 15). That is also the route which we shall adopt, not only because the parties have treated White as such, but also because the case is consistent with and can be accommodated within the two-stage test in Spandeck – to which our attention now turns. Before proceeding to do so, however, we note that there is at least one decision in the Singapore context (which antedated the House of Lords decision in White) in which it was held that a legal assistant had assumed the responsibility of acting as a solicitor for a plaintiff and her husband even though he had not met them and had not raised any bill against them (see the Singapore High Court decision of Lee Siew Chun v Sourgrapes Packaging Products Trading Pte Ltd and others [1992] 3 SLR(R) 855 at [81]). This decision by Michael Hwang JC was, in many ways, ahead of its time. However, it must now be read in light of the two-stage test in Spandeck which, as we shall see, furnishes a coherent legal basis for the establishment of a duty of care in this particular area of the law of negligence for pure economic loss in the Singapore context.
Did Ng owe the Appellants a duty of care under the Spandeck test?
[115] Spandeck undoubtedly represents the modern interpretation of the law of negligence in Singapore. As with any major decision, Spandeck has been discussed, applied and elaborated on in several subsequent cases. A comprehensive examination of this branch of the law is captured in a recent compendious and insightful article by Assoc Prof David Tan and Asst Prof Goh Yihan entitled “The Promise of Universality – The Spandeck Formulation Half a Decade on” (2013) 25 SAcLJ 510 (“Tan & Goh”). We will return to this article in due course.
[116] A more succinct description of the two-stage Spandeck test which is sufficient for our present purposes can be borrowed from this court’s decision in Go Dante Yap where it was observed as follows (at [28]):
[117] The core of the test lies in the first stage, a consideration of the proximity and nexus between the parties; and in the second stage, policy considerations. Significantly, the test of proximity (which is a legal one) could be applied on the basis of a number of possible criteria. These criteria include the concepts of reliance as well as assumption of responsibility. We also pause to note that, before the two-stage test in Spandeck is administered, there is a threshold requirement that there is factual foreseeability – a requirement that, in the nature of things, is (as is the case here) virtually always satisfied.
[118] Before we address any issue of factual foreseeability of harm to the third party, the specific alleged duty of care owed by Ng to the Appellants ought to be formulated with care. In our view, the correct formulation can be found in Carr-Glynn. There, the solicitor’s duty to the third party was to take reasonable care to ensure that the client’s instructions are carried into effect (see above at [87]).
[119] At a higher level of generality, the solicitor’s duty to the third party in these situations is to take reasonable care in performing his original undertakings to the client. It is, in other words, the same duty of care that the solicitor owed to their client. This makes eminent sense for it is the solicitor’s failure to carry out his client’s instructions, or to perform his undertakings with care, that results in the harm to the third party. The only expectation that the third party can reasonably have as against the solicitor is for the latter to take reasonable care in carrying out his duties owed to the client. Put simply, the content of the duty of care owed by the solicitor to the third party must – in the absence of an express or implied retainer between them – necessarily be ascertained by reference to the duty of care which the solicitor owes to the client itself (cf also Jackson & Powell at para 11-053).
[120] What then is the breach of duty to Agus that the Appellants are saying is also owed to them? This is essentially an incidental question as to the scope of the solicitor’s undertakings and obligations to the client.
(1) Incidental question: existence and scope of Ng’s retainer with Agus
[121] On the Appellants’ case, Ng’s instructions included advising Agus of the existence and effects of the Personal Guarantee Clause. In our judgment, Ng did owe Agus this obligation.
[122] The scope of a solicitor’s contractual duties to his client is informed by the terms of the retainer between the solicitor and the client. Whilst there is a need to ensure the highest standards in the legal profession, it is also well-established at the same time that the duties of a solicitor to his client are confined to the retainer between them (see, for example, the English High Court decision of Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 at 402). The retainer, in turn, is to be defined by reference to what the solicitor is instructed to do by the client and how he is expected to discharge his responsibilities in accordance with the notion of a reasonably competent solicitor (see, for example, the Singapore High Court decision of Lie Hendri Rusli v Wong Tan & Molly Lim (a firm) [2004] 4 SLR(R) 594 (“Lie Hendri”) at [45]).
[123] By way of illustration, in the Privy Council decision of Pickersgill v Riley [2004] PNLR 31, R owned M Ltd and guaranteed its liabilities under a 28-year lease. When R wanted to sell M Ltd, he was unsuccessful in persuading the landlord to release him from the guarantee. R then sold his shares in M Ltd to a third party for £125,000 and obtained a counter indemnity from the third party indemnifying him if he became liable under his guarantee to the landlord. The solicitor who was sued acted for R in the sale of his shares to W.
[124] At the time of the sale both the solicitor and R thought W was a company of substance but neither carried out any checks on W’s financial status. A few years later, M Ltd became insolvent and R had to pay the landlord £56,152 under his guarantee. R looked to W but found that W had always been a shell company with no assets. R then sued the solicitor for negligence.

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Anwar Patrick Adrian and another v Ng Chong & Hue LLC and another

Grounds of decision

Introduction

The facts

The parties

The Four Properties

Dispute with SGBT

Early to mid-October 2008

20 October 2008 and SGBT’s change of position

Further negotiations and the Forbearance Agreement

The Security Documents

The parties’ pleaded cases

Appellants’ pleaded claims

Respondents’ pleaded defence

The decision in the court below

The parties’ cases on appeal

Appellants’ case

Respondents’ case

The issues in this appeal

Our decision

Was there an implied retainer between the Appellants and Ng?

Did Ng owe the Appellants a duty of care in tort?

Duty of care in tort and contract

The position under English law

(1) Hedley Byrne: the pre-White position

(2) The principle in White

Rationalising the principle in White v Jones

(1) Duty of care owed to third party

(2) Duty of care owed to client but enforceable by third party

(3) A possiblecontractual analysis?

Did Ng owe the Appellants a duty of care under the Spandeck test?

(1) Incidental question: existence and scope of Ng’s retainer with Agus