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

Choo Han Teck J:

[1] The facts of this case have been set out in my judgment in [2013] SGHC 202 and also in the Court of Appeal (“CA”) judgment in the same case in [2014] 3 SLR 761. For the purposes of following this judgment, the story, briefly, is as follows. Agus Anwar (“Anwar”), a businessman purchased several properties in Devonshire Road and Scotts Road. Some of those properties were purchased in the names of the plaintiffs who are his two young sons, one of whom was still a student in America at the time, and the other had just started work. On 16 October 2008, Society Generale Bank & Trust (referred to as “SGBT” by the CA) demanded payment of about US$17m due by Anwar to it.

[2] Anwar began negotiating with SGBT through the second defendant, Ng Soon Kai. The second defendant is a lawyer practising under the name of the 1st defendant, Ng Chong & Hue LLC. Allen & Gledhill LLP (“A & G”) acted for SGBT and negotiations took place with Anwar taking an active part, sometimes contacting A & G directly, and sometimes with SGBT directly. Anwar informed SGBT that one of the Devonshire Road properties was being held by him in trust for a third party. Anwar, however, agreed to mortgage the remaining properties as further security to stay SGBT’s hand. In addition to the properties, SGBT also asked for personal guarantees to be executed in its favour by the plaintiffs. Anwar secured SGBT’s consent to waive the requirement for the plaintiffs’ personal guarantees. Anwar declared to SGBT that “the guarantees from the two young boys are not going to be worth anything”.

[4] I found that the defendants did not owe the plaintiffs a duty of care on the ground that the second defendant was acting for Anwar only, and that the two sons were only nominees of Anwar. I found that the second defendant was acting as the lawyer for Anwar only. On appeal, the CA held that the absence of any contractual connection between the plaintiffs and the defendants did not prevent a duty of care in tort from arising in respect of the defendants to the plaintiffs, if the second defendant knew that the plaintiffs would rely on his advice.

[5] What was this advice? The plaintiffs ought to have been advised that if the loans were not repaid, the properties in their names would be forfeited by SGBT because the personal guarantee clause was part of the terms of conditions in the mortgage documents executed by the plaintiffs. Was this advice necessary? At the trial I found that this advice was not necessary because it was evident from that Anwar was an experienced businessman and must know that this would be the case. I disbelieved him when he testified that he could not remember if he had sent SGBT’s demands to his sons, the plaintiffs.

[6] No one at the time thought it necessary to discuss the security arrangements (and advice relating to it) was necessary because everyone – SGBT, Anwar, the plaintiffs and the defendants assumed that Anwar alone had the authority to deal with the properties. More importantly, the plaintiffs’ testimonies under cross-examination showed that they would have signed the documents without question.

[8] Mr Tan Cheng Han, SC and Mr Michael Khoo, SC who acted for the plaintiffs and defendants at trial continued to represent their respective clients. They are of the view that no further evidence needs to be adduced. They then submitted written arguments in their clients’ favour. The plaintiffs’ case is summed up in Mr Tan’s submission that “when the Court of Appeal in the present case said that the settlement sum of US$1 million would seem to be a commercially sensible decision in light of the Plaintiffs’ obligations as guarantors, the Court of Appeal was expressing the view that it was a logical basis for the sum to be arrived at and the Plaintiffs were acting reasonably given their potential liabilities to SGBT”.

[9] On the contrary, my understanding of the CA judgment is that it might have been sensible for the plaintiffs to settle as they did but that did not mean that the settlement was a reasonable one. The question of reasonableness of the settlement has more than a single perspective. The first concerns reasonableness as between the plaintiffs and SGBT. SGBT is not a party here nor was it a party at trial. It has not complained that the settlement was unreasonable – and the defendants initially did not say that the settlement was unreasonable although they argued that the plaintiffs did not pay the money themselves and thus suffered no damage. More importantly, the settlement was a contractual arrangement reached between two contracting parties (both represented by lawyers). The sanctity of contract may be vulnerable to public policy and illegality, but otherwise, the commercial world expects the contracts to be respected. If a man wishes to sell his property way below market value, his decision must be respected. No officious bystander, including the court, should tell him that his contract will not be enforced because it was unreasonable to sell at that price. For the above reasons, I am of the view that the reasonableness of the settlement as between SGBT and the plaintiffs is not the aspect I should inquire into.

[11] Before me now counsel for the defendants submitted that only the plaintiffs are in a position to adduce evidence to show that the settlement was reasonable and in the absence of which no one is able “to consider if there were any possibility of a discount being applied to the original claimed sum by SGBT”. Alternatively, whether there was any possibility that “the original outstanding sum might have been set off against the collateral held by SGBT”. We do not have any evidence how the settlement was concluded, and so far as reasonableness in the conduct of the parties (plaintiffs and SGBT) is concerned, there is no evidence for me to consider.

[12] I do, however, have the evidence at trial in which the plaintiffs claimed that at least some $300,000 came from a loan by their father’s unnamed friend and that that loan need not be repaid. It was unclear whether that $300,000 was in US or Singapore currency because the plaintiffs did not know. Indeed, we have no evidence exactly as to how the US$1m was paid to SGBT. I found as a fact and have no reason to believe otherwise, even now, that the plaintiffs did not make any payment to SGBT. The matter might have been settled, but the settlement was made effective by Anwar alone.

[13] There is one more crucial point. The plaintiffs fought all the way to the CA in Suit 365 of 2009 to maintain that they had a strong defence against SGBT’s claim. That defence did not include their reliance on the defendants’ negligent advice. The plaintiffs had declared that they settled with SGBT because paying US$1m was clearly preferable to the prospect of a judgment for US$17m. But as counsel for the defendants points out, the actual amount owing was not US$17m but a lower sum. The plaintiffs did not act reasonably, counsel argues, in failing to ascertain the true amount of debt and thus failed to consider whether it was a reasonable quantification of the damage suffered by the plaintiffs. I accept that argument.