High Court · Decided 11 August 2014

Su Ah Tee and others v Allister Lim and Thrumurgan (sued as a firm) and another (William Cheng and others, third parties)

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[2014] SGHC 159Case no. Suit No 663 of 2011

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Belinda Ang Saw Ean J:
Introduction
[1] In this action, the plaintiffs are claiming damages for breach of contract and negligence from the defendants who acted as their solicitors in the purchase of a Housing Development Board (“HDB”) shophouse situated at Blk 63 Kallang Bahru, #01-423, Singapore (“the Property”). The plaintiffs allege that it was only sometime after the purchase was completed that they learnt that: (a) they had paid $900,000 for a property which had only 17 years remaining out of a 30-year lease, instead of what they had expected, which was a property with 62 years of its lease remaining (“the tenure problem”), and (b) the Property was subject to a head tenancy agreement instead of two separate tenancy agreements which the first plaintiff had received with the option to purchase (“the tenancy problem”). The plaintiffs allege that the defendants, inter alia, failed to advise or inform them of the tenure problem before completion or at all, and further, failed to advise them on the head tenancy to which the sale of the Property was subject. The plaintiffs claim that these breaches have caused them to suffer loss and damage, including overpayment for the Property.
[2] The scope of the defendants’ professional duty to the plaintiffs is central to the plaintiffs’ claim against the defendants (“the main action”) since the starting point of any discussion on liability for damages must be the precise nature of the duty which has allegedly been breached. In this judgment, the content of the defendants’ professional duty to the plaintiffs and an understanding of the facts and circumstances giving rise to that duty will be examined.
[3] Regrettably, through an unfortunate coincidence of events and sheer bad luck, the real position on the Property’s leasehold tenure was not appreciated before completion of the conveyancing transaction. The facts reveal that the defendants carried out a Singapore Land Authority (“SLA”) title search on the Property before the option to purchase was exercised on 7 April 2011, and they learnt from the search results that the Property had a 30-year lease with effect from 1 August 1998, of which only 17 years remained at the time the option was purchased. However, that particular piece of information was not passed on to the plaintiffs. Ironically, the defendants, in their capacity as solicitors for the lender-bank, provided the latter with a report on the Property’s title that mentioned the Property’s leasehold tenure of 30 years with effect from 1 August 1998. For unknown reasons, despite that report, the lender-bank offered and the plaintiffs accepted a 30-year term loan that was secured by a property (ie, the Property) with only 17 years remaining out of its 30-year lease.
[4] Interestingly, as can be seen from the brief narration at [3] above, this case is not about losses incurred as a result of the plaintiffs’ reliance on erroneous or inaccurate information provided by the defendants. Rather, it is about losses incurred following the defendants’ failure to provide the plaintiffs the requisite information for them to make an informed decision as to whether to proceed with the purchase of the Property. This distinction is relevant to the evidential burden which the plaintiffs have to discharge. If the plaintiffs’ case had been based on reliance on erroneous or inaccurate information from the defendant, it would have been sufficient for the plaintiffs, in order to prove their case, to demonstrate that they had relied on the defendants’ information. However, in view of how the plaintiffs have pleaded their case, the plaintiffs must satisfy the court, on a balance of probabilities, that they would not have purchased the Property at $900,000 if the defendants had conveyed to them relevant information on the tenure problem and the tenancy problem (collectively “the tenure & tenancy problems”) at any time before completion.
[5] The defendants have brought third party proceedings (“the third party action”) for an indemnity, or alternatively a contribution under s 15 of the Civil Law Act (Cap 43, 1999 Rev Ed) (“the Civil Law Act”) from (a) the vendor of the Property, William Cheng (“Cheng”); (b) the plaintiff’s property agent, Ng Sing; and (c) Ng Sing’s then-employer, SGR Property Pte Ltd (“SGR Property”). The defendants’ case against the third parties is that they had each, amongst other things, fraudulently and/or negligently misstated that the Property had 62 years of its lease remaining and was being sold subject to two tenancy agreements when that was clearly not the true position.
[6] On the first day of the trial, Cheng, the first third party, withdrew his counterclaim against the defendants. Hence, the claims which this court has to deal with in this judgment are confined to: (a) the plaintiffs’ claims against the defendants in the main action vis-à-vis the latter’s handling of the conveyancing transaction; and (b) the defendants’ indemnity and contribution claims against the third parties in the third party action.
[7] In the course of the arguments presented in the main action and in the third party action, a number of subsidiary matters were ventilated and many authorities were cited. It is unnecessary for me to address in this judgment every subsidiary matter that was raised as some have little or no bearing on the claims whilst others merely add to the chronology of events. Therefore, I will make findings on these subsidiary matters where necessary in this judgment, but my focus will be on the core issues in dispute.
The parties
[8] The first plaintiff, Su Ah Tee (“Su”), is a businessman. His son, Su Hong Quan (“Hong Quan”), and his wife, Lye Yin (“Lye”), are the second and third plaintiffs respectively. It is not disputed that: (a) at all material times, Su had a personal interest in the purchase of the Property and was the person who had negotiated (through Ng Sing) with Cheng; and (b) it was Su who had engaged the defendants to act for the plaintiffs in the conveyancing transaction. It is also not disputed that Su made use of the names of his son and his wife to purchase the Property and provided all the funds for the purchase aside from the money obtained from a bank loan. In short, Hong Quan and Lye were Su’s nominees. The defendants accept that they had a solicitor-client relationship not only with Su, but also his nominees. Only Su and Hong Quan testified at the trial.
[9] The particular solicitor who had conduct of the plaintiffs’ conveyancing transaction is the second defendant, Allister Lim (“Lim”), a partner in the first defendant, M/s Allister Lim & Thrumurgan (“ALT”). Lim qualified as a lawyer in 1999, and his practice has included conveyancing since 2004. The defendants had previously acted for Su in other conveyancing transactions. According to Su, Lim was the solicitor whom he had instructed to act on his behalf in relation to other conveyancing transactions from December 2010 to 2011.
[10] Cheng, the first third party, is the vendor of the Property. He is a semi-retired cleaning supervisor and was the registered owner of the Property before it was sold to the plaintiffs.
[11] Ng Sing is the second third party. He was employed by the last third party, SGR Property, at the material time. As stated, Ng Sing was Su’s property agent in relation to the sale and purchase of the Property. He testified on behalf of the plaintiffs.
[12] Other persons who testified at the trial were:
(a) Oh Seng Lee (“Sam Oh”), a property agent with PropNex Realty Pte Ltd at the material time, who now works as a warehouse supervisor. Sam Oh, who purportedly acted as Cheng’s agent in the sale and purchase of the Property, was also a co-broker with Ng Sing in the transaction;
(b) Fu Lee Ping (“Fu”), ALT’s conveyancing clerk at the material time;
(c) Boldwin Sim (“Sim”), a home loan manager at a branch office of the lender-bank who dealt with Su’s loan application;
(d) Derrick Wong (“Wong”), the plaintiffs’ expert witness on conveyancing practices; and
(e) the respective parties’ expert who gave evidence on the value of the Property.
Cheng’s solicitors for the transaction, M/s Esvaran & Tan (“E&T”), did not testify at the trial.
[13] The plaintiffs’ counsel is Mr Thomas Lei (“Mr Lei”) while the defendants’ counsel is Mr Christopher Anand Daniel (“Mr Daniel”). Cheng is represented by Mr Subbiah Pillai (“Mr Pillai”), and Ng Sing (the second third party) by Mr Joseph Chai. SGR Property filed its defence in the third party action, but was neither present nor represented at the trial.
The arguments in the main action
[14] Essentially, the plaintiffs’ case is that if they had known of the tenure & tenancy problems, they would not have gone ahead with the purchase of the Property as the purchase price of $900,000 was too high for the Property. The plaintiffs invite the court to find the following facts as proved in respect of the aforementioned problems:
The tenure problem
(a) The defendants were aware that Su had been told that there were 62 years remaining on the lease of the Property as Su had conveyed the same information to Fu in March 2011.
(b) The defendants became aware on 5 April 2011 that the Property’s leasehold tenure was a 30-year term of which only 17 years remained.
(c) The defendants failed to inform, communicate with or advise the plaintiffs on the tenure problem prior to the exercise of the option to purchase or at any time thereafter before the completion of the sale and purchase of the Property.
The tenancy problem
(a) The defendants knew that the Property was to be sold subject to tenancy, but failed to appreciate that the sale and purchase of the Property was subject to a head tenancy and that the two tenancy agreements which they had earlier received from Su were sub-tenancies.
(b) The defendants failed to explain the legal effect and implications of all three tenancy agreements to the plaintiffs.
[15] The defendants deny any breach of duty owed to the plaintiffs and argue that Su was committed to the transaction from the start. They allege that Su was eager to complete the transaction and was willing to bend over backwards to get the deal done. Specifically, their defence is as follows:
The tenure problem
(a) Su did not communicate to Fu that the Property had 60-plus years remaining on its lease.
(b) Defendants were not given any specific instructions to look into the remainder and duration of the lease on the Property.
(c) There was no duty (whether specific or general) on the defendants’ part to inform the plaintiffs about the particulars of the Property’s leasehold tenure or to pass on to the latter the results of the SLA title search on the Property.
The tenancy problem
(d) The head tenancy to which the sale of the Property was subject was passed to the defendants less than a week before the completion of the sale and purchase of the Property.
(e) The plaintiffs did not inform the defendants that they had any issues with any of the tenancy agreements that required the defendants’ legal advice or assistance.
(f) Given Lim’s standing arrangement with Su (see [106] below), the defendants did not owe any duty to explain to the plaintiffs the effect of the head tenancy agreement and its implications on the two sub-tenancy agreements.
[16] The defendants’ alternative contention is that even if they are liable, the plaintiffs are only entitled to recover the difference in the price (ie, the difference between the contract price and the market value) attributable to the Property at a later date and not at date of the breach. In this respect, the defendants contend that any upward appreciation in the value of the Property should be taken into consideration.
The arguments in the third party action
[17] In the event that the plaintiffs succeed in the main action, the defendants’ case for an indemnity or contribution from the third parties is that they had each, inter alia, fraudulently and/or negligently misstated that there were 62 years remaining on the lease and that the Property was being sold subject to two tenancies instead of a head tenancy, when that was clearly not the true position. These misstatements caused the plaintiffs to suffer the same loss.
[18] In denying any obligation to indemnify the defendants or contribute to the damages which the defendants may be liable to pay the plaintiffs, the third parties each contend that they never met or spoke to the defendants and, hence, never made any representations to the defendants. More importantly, the third parties argue that the defendants have no reasonable prospect of establishing a successful claim under s 15 of the Civil Law Act since the third parties are not liable for “the same damage” as the defendants. Under s 15(1), in order for the defendants to be able to claim contribution at all from the third party, it is necessary that the third parties and the defendants are, at least to some extent, liable and responsible to the plaintiffs for “the same damage”. On this point, this court will have to decide with reference to the facts and circumstances of this case, what exactly “the same damage” is and to what extent the defendants and the third parties are liable for “the same damage”.
[19] For the purposes of the third party action, the legal issues relate to the interpretation of the phrases “the same damage” and “the damage in question” in ss 15(1) and 16(1) of the Civil Law Act respectively.
Preliminary points to note in relation to the evidence
[20] The following issues are preliminary points to note in relation to the evidence as they are relevant to both the main action and the third party action.
The Property was purchased in the names of Su’s nominees
[21] With regard to Su and his expectations after having instructed the defendants to handle the conveyancing transaction, it is important to note some facts. First, Su bought the option to purchase the Property which was dated 18 March 2011, before engaging the defendants. I will hereafter refer to this option to purchase as “the SGR-Option” as it was prepared and typed on the letterhead of SGR Property by Ng Sing. The SGR-Option was received and accepted by Su from Ng Sing on or around 18 March 2011, and a cheque for $9,000 (being 1% of the purchase price of $900,000) was issued in favour of Ng Sing, who had earlier advanced the 1% of the purchase price to Cheng as the option fee for the SGR-Option.
[22] Second, Su was the intended purchaser named in the version of the SGR-Option that Su received on or around 18 March 2011. That version of the SGR-Option did not provide for the option to be exercised by Su’s nominees.
[23] Third, the second and third plaintiffs eventually became the named purchasers (see [24] below). Initially, when the SGR-Option was exercised on 7 April 2011 in the names of Su’s nominees, Cheng rejected it. Cheng subsequently agreed to accept the exercise of the SGR-Option in the names of Su’s nominees upon Su paying an additional deposit of 5% of the purchase price (ie, a sum of $45,000) on 14 April 2011. The point to note is that the defendants were not involved in the negotiations to add Su’s nominees to the SGR-Option; that was a matter negotiated by Su through Ng Sing.
[24] For convenience, the material portions of the version of the SGR-Option that was eventually used for the completion of the sale and purchase of the Property are reproduced below. The portions of the SGR-Option that are double underlined were not in the version of the SGR-Option that Su received from Ng Sing on or around 18 March 2011, but were unilaterally added in later by Ng Sing before the option was exercised. All portions that are single underlined were handwritten into the version of the SGR-Option that Su received on or around 18 March 2011.
[25] The completion date for the sale and purchase of the Property was 22 June 2011. The purchase price was $900,000.
The SGR-Option stated that the Property was to be sold subject to tenancy
[26] The SGR-Option identified the Property by its Kallang Bahru address. It did not expressly stipulate the nature of the legal tenure that Cheng had contracted to sell. It is, however, common ground that the subject matter of the SGR-Option was a leasehold interest in an identified HDB shophouse. As regards Su’s belief that there were 62 years remaining on the lease, there was no allegation that Cheng had represented the Property’s leasehold tenure to be either 78 or 99 years. I digress to elaborate that the term of the leasehold tenure for other shophouses located in the same block as the Property in Kallang Bahru is 78 years commencing 1 August 1995, and not 99 years (see [47] below). The Property is “unique” in that it is the only shophouse in Block 63 whose term of the leasehold tenure is 30 years.
[27] Clause 4 of the SGR-Option expressly stated that the sale of the Property was “subject to existing tenancy agreement”. No tenancy agreement was “attached” to the SGR-Option contrary to what was stated in cl 4. Neither was the amount of the monthly rent stated in that clause. However, the plaintiffs’ pleaded case, which is borne out by the evidence, is that the SGR-Option was handed to Su by Ng Sing on or around 18 March 2011 at Su’s residence together with copies of the two tenancy agreements described at [30(a)] and [30(b)] below.
[28] A point to note here is that the first time Su e-mailed copies of the same two tenancy agreements to the defendants was on 25 April 2011 after the SGR-Option was exercised (on 7 April 2011) and after the further payment of $45,000 to Cheng (on 14 April 2011). There was no averment in the pleadings that copies of these two tenancy agreements were handed over to Fu on or about 24 or 25 March 2011 when Su (so he alleges) had first met Fu to instruct the defendants to handle the conveyancing transaction. Copies of the two tenancy agreements were subsequently e-mailed to the defendants on 11 May and 15 June 2011.
[29] A third tenancy agreement (which is hereafter referred to as “the head tenancy” or “the Invoice Factoring Tenancy”) was disclosed to Su on 20 June 2011, two days before the scheduled completion on 22 June 2011. It transpired that on 15 June 2011, E&T faxed three tenancy agreements to the defendants, and Fu sent them on to Su on 20 June 2011. Unlike the initial completion account that E&T sent on 10 June 2011, which referred to two tenancy agreements (ie, the two that Su received on or around 18 March 2011 with the SGR-Option), the final version of the completion account that E&T sent to ALT on 20 June 2011 referred to only one tenancy agreement, namely the Invoice Factoring Tenancy (see [30(c)] below). This was to take into account the head tenancy which E&T sent to ALT on 15 June 2011. Cheng did not call E&T to testify despite his claim that he had told E&T about all three tenancies as early as April 2011. On the evidence before this court, I am of the view that E&T received the Invoice Factoring Tenancy only sometime between 10 and 15 June 2011 after it was stamped on 10 June 2011.
[30] For convenience, the three tenancy agreements mentioned above are as follows:
(a) A tenancy agreement dated 22 February 2011 between one “Invoice Factoring” (as landlord) and one Lochen International Pte Ltd (“Lochen”) and Chen Bo (as tenants) for the use of the first storey of the Property (“the Lochen Tenancy”). The tenancy was for two years from 1 March 2011 to 28 February 2013 at a monthly rent of $2,200. The rental deposit was $2,200. This tenancy agreement was not stamped and was received by Su with the SGR-Option.
(b) A tenancy agreement dated 15 March 2011 between Cheng (as landlord), trading as “Invoice Factoring LLP”, and one Mdm Erniwati (as tenant). This tenancy was for the second storey of the Property (“the Erniwati Tenancy”). It transpired that Mdm Erniwati was Cheng’s daughter-in-law. The Erniwati Tenancy was for one year from 1 April 2011 to 31 March 2012, with an option to extend the tenancy for two more years. The rent was $1,600 a month and the rental deposit was $1,600. This tenancy agreement was not stamped and was received by Su with the SGR-Option.
(c) A tenancy agreement dated 22 February 2011 between Cheng (as landlord) and “Invoice Factoring” (as tenant) in respect of the whole of the Property. This is the Invoice Factoring Tenancy or the head tenancy referred to at [29] above. The tenancy period was for three years from 1 March 2011 to 1 March 2014, with an option to extend the tenancy for a minimum of three years. The deposit was $3,800. Rent was $2,000 a month with an additional $1,800 per month for utilities. The head tenancy was stamped on 10 June 2011.
[31] The Invoice Factoring Tenancy was the head tenancy and it purported to give Cheng an interest in the Property as head tenant even after the sale. This also meant that the Erniwati Tenancy and the Lochen Tenancy (collectively “the two Tenancy Agreements”) were sub-tenancy agreements, and the plaintiffs would be landlords only to Invoice Factoring. Completion took place on the footing that the Invoice Factoring Tenancy was the applicable tenancy (see [29] above).
[32] Both the plaintiffs and the defendants invited me to consider the validity of the Invoice Factoring Tenancy. The defendants and the plaintiffs both submit that Cheng was guilty of self-dealing by contracting with Invoice Factoring and this consequently meant that it was invalid. This argument will be dealt later in relation to the tenancy problem as this issue of validity only matters as a factor in considering the defendants’ breach of duty (see [104] below).
Cheng’s relationship with Sam Oh and Ng Sing
[33] Cheng denied that Sam Oh was appointed as his agent to sell the Property. Furthermore, Cheng claimed that Sam Oh knew from the outset that there were only 17 years remaining out of the Property’s 30-year lease and that the Invoice Factoring Tenancy was made known to Su at an early stage. In my view, this assertion was Cheng’s way of dispelling Sam Oh’s and Ng Sing’s evidence that it was Cheng who had informed them that there were 62 years remaining on the lease of the Property.
[34] In my view, Cheng’s challenge that Sam Oh was not his agent in the sale and purchase transaction fails. I am satisfied that Sam Oh acted as Cheng’s agent and that the $9,000 paid as commission was shared between Sam Oh and Ng Sing because of the co-brokering arrangement between the two agents. Sam Oh’s claim that he acted as agent for Cheng is borne out by the documentary evidence. Besides cl 10 in the SGR-Option that promised a commission of 1% of the purchase price ($9,000) to SGR Property upon completion of the sale and purchase of the Property, there is also an SGR Property co-brokering agreement signed by both Sam Oh and Ng Sing on 18 March 2013 stating that $4,500 was to be paid to SGR Property as commission upon the purchaser’s receipt of the Property. The veracity of this document and its contents were not challenged by Cheng. A handwritten note disclosed by Cheng, which was identified to have been written by him and one of the co-brokers (either Ng Sing or Sam Oh), stated that Cheng had paid $4,500 as commission and a balance of $4,500 was to be paid upon completion. An SGR Property invoice was later issued to Cheng on 28 June 2011 for a commission amount of $9,000.
[35] I reached this conclusion about Sam Oh’s status despite Cheng’s testimony on how he met Sam Oh and that the latter was aware of the remaining duration of the Property’s leasehold tenure from the outset. According to Cheng, it was Sam Oh who approached him to buy the Property in December 2010 (ie, Sam Oh was first interested buyer), and he had shown Sam Oh a copy of a letter from HDB that clearly stated that the leasehold tenure of the Property was for 30 years commencing, 1 August 1998. It was only in late January or early February 2011 that Sam Oh revealed to Cheng that he was an estate agent and that his friend was interested in buying the Property at $900,000. Ng Sing was then introduced to Cheng as the second interested buyer on or around 18 March 2011.
[36] Cheng’s evidence is that Ng Sing issued a cheque of $9,000 in exchange for an option to purchase that was prepared by Cheng (“the Cheng- Option”). The Cheng-Option, dated 18 March 2011, was made out to Ng Sing and/or his nominees and was to expire on 1 April 2011. A copy of the head tenancy was also attached to the Cheng-Option. Cheng denied that there were 62 years remaining on the lease of the Property and relied on the Cheng-Option which stated that the leasehold tenure of the Property was for 30 years commencing from 1 August 1998. There was also no discussion about the valuation of the Property.
[37] According to Cheng, Ng Sing later found Su to buy the Property. Sam Oh and Ng Sing then met Cheng on or around 25 March 2011. At that meeting, Cheng was asked to use the SGR-Option (without the word “nominees” added). The differences between the SGR-Option and the Cheng-Option were as follows:
(a) the SGR-Option was printed on SGR Property’s letterhead;
(b) Ng Sing was replaced by Su whom Cheng did not know as the interested purchaser;
(c) a clause for commission payment to SGR Property was included;
(d) the SGR-Option was backdated to 18 March 2011, but the last date to exercise the SGR-Option was extended to 7 April 2011;
(e) the original deposit of 10% was reduced to 5%; and
(f) clause 11 of the SGR-Option was added.
Regardless of the changes described and the fact that certain terms were not what Cheng had initially intended, Cheng agreed to use the SGR-Option for the sale and purchase of the Property and signed it.
[38] In contrast, Su, Ng Sing and Sam Oh gave completely different accounts of the events. Ng Sing’s and Sam Oh’s accounts of the chronology of events began only in February 2011, as opposed to December 2010. At that time, Ng Sing told Sam Oh that there was a prospective buyer of a HDB shophouse unit in the Kallang Bahru area. Sam Oh then placed an advertisement in a local Chinese newspaper seeking information about HDB shophouses that were available for sale in the Kallang Bahru area. This advertisement was not produced to the court in evidence. Ng Sing explained that he did not place an advertisement himself for two reasons. First, it was improper for him to represent any potential seller when he was already Su’s agent. Second, it was intended that Sam Oh would act as the seller’s agent and collect a seller’s commission from the sale, which could then be split between them. In that way, Ng Sing would be able to receive extra money from the sale and purchase of the Property. Sam Oh and Ng Sing thus agreed to act as co-brokers in the transaction.
[39] Sam Oh’s version is that Cheng called him about the advertisement he had placed. In that telephone call, Sam Oh agreed to be his agent. Cheng informed Sam Oh that there were 62 years remaining on the lease of the Property. Sam Oh conveyed that information to Ng Sing. After some negotiations, the price was lowered from $1.1m to $900,000. As the price was agreed upon, Su instructed Ng Sing to secure an option to purchase the Property.
[40] As for Cheng’s evidence that he had shown Sam Oh the HDB letter mentioned at [35] above when Sam Oh approached him about the sale of the Property, Sam Oh’s testimony was that he did not receive the document as alleged, and that he saw the document for the first time in his cross-examination. This testimony was not challenged by Cheng’s counsel, Mr Pillai, in his cross-examination of Sam Oh.
[41] During cross-examination, Cheng said that he could not read Chinese and the Chinese newspapers, and would not have seen Sam Oh’s advertisement. He explained that it was Sam Oh who had approached him and not the other way round. While this aspect of the evidence was plausible, the rest of Cheng’s story was not credible.
[42] As regards Cheng’s evidence that Sam Oh made a verbal offer to buy the Property, this evidence has little weight since the verbal offer was never reduced into writing. There was thus nothing to support Cheng’s assertion that Sam Oh was his first intended buyer.
[43] Ng Sing and Sam Oh also refuted Cheng’s chronology of events on the Cheng-Option and the SGR-Option. Ng Sing and Sam Oh stated in their respective affidavits that they met Cheng once at a coffee shop on 18 March 2011 in relation to the SGR-Option and the two Tenancy Agreements (see [31] above). At the coffee shop, Cheng repeated that there were 62 years remaining on the lease of the Property. This March date tallied with Su’s evidence that Ng Sing gave the SGR-Option with copies of the two Tenancy Agreements to him at his residence on or around the same day, whereas Cheng’s version was that they all agreed to use the SGR-Option only later on or around 25 March 2011. Besides, as regards the Cheng-Option, both Sam Oh and Ng Sing categorically denied seeing it before the commencement of the trial.
[44] There are a few other issues that stood out about the Cheng-Option that supported Sam Oh’s and Ng Sing’s evidence. Cheng admitted that he had not met Ng Sing before 18 March 2011, and yet inexplicably, Cheng was in possession of information that enabled him to type into the Cheng-Option Ng Sing’s personal particulars such as his name, his NRIC number and the number of the cheque used to pay for the 1% option fee. The Cheng-Option was allegedly witnessed by an individual known as “Winnie”, but this individual did not testify at the trial to corroborate Cheng’s evidence. By 18 March 2011, Cheng would also have known that Sam Oh and Ng Sing were agents given that the SGR-Option had been shown to him by then and that it was addressed to Su. Hence, there is no credence to the story that Ng Sing was the second interested buyer of the Property after Sam Oh.
[45] I therefore find that Cheng created the Cheng-Option and made up the story of meeting the agents so as to support his position that the agents knew from the outset that the Property’s leasehold tenure was a 30-year term of which only 17 years remained. I also find that Cheng made up the story that the head tenancy was attached to the Cheng-Option. The evidence showed that Fu received the head tenancy only on 15 June 2011 and E&T did not receive it much earlier than that (see above at [29]).This supported Su’s and Ng Sing’s version that the SGR-Option was received together with the two Tenancy Agreements.
[46] Given the overall evidence, Cheng’s version of events lacked credibility, whilst Ng Sing and Sam Oh’s versions were consistent with the objective evidence. I therefore find that: (a) Sam Oh acted as Cheng’s agent in the transaction; and (b) the information that the Property had 62 years remaining on its lease came from Cheng.
The bank loan
[47] Su wanted a 30-year term loan for the Property. It appears that on 22 March 2011, Su handed copies of the SGR-Option and the two Tenancy Agreements to Sim, a home loan officer with the lender-bank (see [12(c)] above). He told Sim that the leasehold tenure of the Property was for 99 years, of which 62 years remained, and that the monthly rental income was $3,800. I must highlight that it was never alleged nor suggested that Cheng had informed Sam Oh and Ng Sing that the duration of the leasehold was 99 years although he stated that 62 years remained. I understand from Exhibit D12 that the term of the lease for 8 other shophouses in Blk 63 Kallang Bahru was 78 years commencing 1 August 1995, and not 99 years. There was no explanation as to where and how Su derived his information as to the duration of the Property’s lease term in the absence of any suggestion that Cheng had represented the lease term to be 99 years. On 5 May 2011, the bank offered a 30-year term loan of $630,000.
[48] On 7 June 2011, the lender-bank appointed the defendants as solicitors in the mortgage transaction. The bank was notified via a report on title that the leasehold tenure of the Property was for “30 years commencing 1 August 1998”. On 13 June 2011, ALT lodged a caveat against the Property on behalf of the lender-bank. Thereafter, on 22 June 2011, the lender-bank disbursed the loan of $630,000 on behalf of the plaintiffs to complete the purchase.
[49] It is to be noted here that the lender-bank was notified that the Property had 17 years remaining on its 30-year lease, but still offered a 30-year loan to the plaintiffs.
The date of ALT’s appointment
[50] According to Su, he telephoned Fu on or about 23 March 2011 to inform her that he was purchasing the Property. An e-mail addressed to Fu was sent by Su on 24 March 2011, with a copy of the SGR-Option which named Su as the intended named purchaser (as opposed to his nominees). On that day or a day earlier, Su personally handed the SGR-Option to Fu at ALT’s office. He also gave Fu a cheque for $36,000 made payable to “Esapan & Tan Advocates & Solicitors” (“the Esapan cheque”). This cheque was post-dated to 6 April 2011. It was for the remaining 4% of the purchase price (after initial payment of 1% of the purchase price as option fee) that was to be paid upon the exercise of the SGR-Option. Su told Fu that the remaining duration of the lease of the Property was around 60 years, with a total monthly rental income of $3,800, and that the SGR-Option was to be exercised in the name of his nominees, Hong Quan and Lye.
[51] In contrast, the defendants’ version is that Fu only met Su on 28 March 2011. Fu said that she could not locate a copy of the e-mail that Su had sent on 24 March 2011 and that it was not in the file. Her evidence is that Su handed to her the SGR-Option (ie, the version without reference to “nominees”) and the Esapan cheque. Fu could not find the law firm’s name (Esapan & Tan Advocates & Solicitors) in the directory and informed Su that the name of the payee on the cheque was wrong. She also informed Su to get the SGR-Option changed so that his nominees could exercise the SGR-Option. She returned the SGR-Option to Su. Fu informed Lim about Su dropping by ALT’s office and she handed over to Lim a photocopy of the SGR-Option and the cheque which Su made out to Esapan. This cheque was returned to the plaintiffs on 5 April 2011.
[52] On 29 March 2011, Fu received an e-mail from Su stating the details of Cheng’s conveyancing lawyers ie, E&T. The e-mail of 29 March 2011 setting out E&T’s details supports Fu’s evidence that she had informed Su about the error in the Esapan cheque, and Su had subsequently provided her with the correct information.
[53] On 5 April 2011, Su handed Fu the SGR-Option (ie, the version at [24] above) and a fresh cheque with E&T’s name correctly spelt, post-dated to 6 April 2011. Su instructed the defendants to exercise the SGR-Option. ALT opened a file for the Property’s transaction on the same day.
[54] I prefer and accept Fu’s evidence that Su went to the office on 28 March 2011 and not earlier. The date 28 March 2011 ties in with Ng Sing’s evidence that he recommended other law firms to Su on 25 March 2011, which post-dated Su’s alleged first visit to ALT. The e-mail that Fu received on 29 March 2011 from Su with E&T’s details also supports Fu’s evidence.
[55] I interpret Su’s e-mail of 24 March 2011 to Fu as a step taken in contemplation of the defendants being instructed at a later date to act for the Plaintiffs, at which time, but not before, it would be necessary for the defendants to read and act on the documents relating to the sale and purchase of the Property.
[56] I am of the view that as at 28 March 2011, no retainer had arisen even though Fu had already communicated with Su. Until the SGR-Option and the Esapan cheque were amended, there was nothing for ALT to act on. It was only after Su had come back on 5 April 2011 with amendments to the SGR-Option and a cheque correctly addressed to E&T that ALT accepted the retainer to act for the plaintiffs in the conveyancing transaction. The file for the transaction was also opened that very day. Fu conducted a SLA title search on the Property on the same day and Lim reviewed the search results. Also on 5 April 2011, Lim reviewed the SGR-Option and e-mailed Su his comments on the terms of the option. I therefore find on the evidence that ALT accepted Su’s instructions to act for him and his nominees on 5 April 2011.
[57] As stated above at [28], I also find that Su e-mailed the two Tenancy Agreements to the defendants for the first time only on 25 April 2011 after the SGR-Option was exercised on 7 April 2011 and after further payment of $45,000 to Cheng was made on 14 April 2011. I should make clear that on 25 April 2011, Fu received only the two Tenancy Agreements. However, on 11 May 2011, Fu received from Su the Two Tenancy Agreements as well as a floor plan and Invoice Factoring’s offer to Lochen.
Information from Su to the defendants about the term of the lease on the Property
[58] According to Su, on the day when he went to ALT’s office for the first time, he informed Fu that there was 62 years left on the Property’s lease and that the rental income was $3,800 a month. Fu disagreed. She said that there was neither mention of the Property having 62 years of the lease remaining, nor of the tenancies; she would have passed such information on to Lim if she had been informed. Instead, Su had only told her to check if Cheng was the owner of the Property, which she did.
[59] I find that Su did not inform Fu about the lease on the Property being 62 years remaining and about the tenancies affecting the Property before ALT exercised the SGR-Option on 7 April 2011 or at anytime thereafter before completion. The overall evidence supports this finding.
[60] Fu carried out the first SLA title search on the Property on 5 April 2011. Fu did a second search on 22 June 2011, the scheduled completion date, just before actual completion of the transaction. The results of both searches were not forwarded to Su and no report on title was given either.
[61] Fu’s evidence accords with Lim’s testimony that his practice was to inform his clients about the tenure of the leasehold property if the clients asked about it. Lim stated that the defendants’ SLA title search carried out before the exercise of the option was to check on the ownership of the property and on encumbrances. This was Fu’s evidence as well in relation to the title search on the Property. An e-mail from Lim to Su only stated that the SGR-Option would be exercised “as instructed”. Notably, Su did not reply to the e-mail even though he did not receive any information relating to the lease on the Property being 62 years remaining.
[62] Lim knew that there was only 17 years left on the lease from the results of the first SLA title search done on 5 April 2011. According to Lim, nothing unusual was gleaned from the results of that search, so he did not forward them to Su. This explanation is plausible in the context of a property with a leasehold tenure of 30 years since 17 years represent more than half of the remaining duration of the lease in contrast to a balance of 17 years out of a lease of 99 or 78 years. The discrepancy between 62 years and 17 years as the remaining duration of the lease on the Property would have come to light as early as 5 April 2011 if the defendants had been aware of Su’s belief that the Property had 62 years left on its lease. That, however, is not the end of the matter as the crux of the issue is whether there is a duty on a solicitor’s part to inform his client of the property’s title search results. I will deal with this issue later in this Judgment.
Events after Su found out about the tenure & tenancy problems
[63] According to Su, he realised that the Property had a leasehold tenure of 30 years with effect from 1 August 1998 (ie, at the time the plaintiffs purchased the Property, there were only 17 years left on its lease) from the notice of transfer of the Property which Fu sent to him. According to Su, he contacted Fu on 8 July 2011 to enquire about the tenure problem and an apologetic Fu arranged for him to meet Lim on 12 July 2011.
[64] From the defendants’ perspective, this was the first time that ALT realised that Su had intended to buy a property with 60 plus years of its lease remaining, and not a property held on a 30-year lease. On Su’s complaint that he had overpaid for the Property, Fu told him that she thought he knew of the leasehold tenure of the Property as he had paid the option fee for the SGR-Option before approaching ALT, and that Ng Sing should have informed him of the Property’s leasehold tenure. Su called Fu again to inform her that Ng Sing was also under the impression that the lease over the Property had at least 60 years left on its lease.
[65] After the completion of the sale of the Property, Su received letters from Invoice Factoring on 5 and 7 July 2011 stating that Hong Quan and Lye were landlords to Invoice Factoring only and should not be approaching Lochen and Mdm Erniwati directly for rent collection. Su’s position on the tenancy problem was that he had received the SGR-Option from Ng Sing with only the two Tenancy Agreements. He did not know that the Property was actually sold subject to the Invoice Factoring Tenancy.
[66] At that meeting on 12 July 2011, Su asked Lim about the tenure problem. According to Su, Lim informed him that he would take full responsibility for the matter and suggested that Su auction the Property. Lim also informed Su that he would help to resolve the situation relating to the tenancy agreements. After the meeting, Su agreed to retain ALT’s services to auction the Property and resolve the tenancy issues arising from the discovery of Invoice Factoring Tenancy as the head tenancy.
[67] However, by 18 July 2011, Su had begun to instruct Mr Lei’s firm who sent a letter of demand to ALT on that day itself. On 22 September 2011, Su formally asked ALT and Lim to stop working on the tenancy disputes.
[68] As at the date of the trial, the Property was still retained by the plaintiffs and unsold.
Summary of important facts to note
[69] I find it necessary to highlight the foregoing findings and facts as they are important to the analysis of the defendants’ duties. To summarise, the important findings and facts to note are the following:
(a) It was Cheng who informed Sam Oh and Ng Sing that the Property had 62 years remaining on its lease. Sam Oh was Cheng’s agent in respect of the sale of the Property.
(b) Cheng gave copies of the two Tenancy Agreements (ie, Lochen Tenancy and Erniwati Tenancy), along with some other documents (that will be elaborated upon later), to Ng Sing on 18 March 2011 with the SGR-Option. All these documents were passed on to Su on the same day.
(c) On 5 April 2011, ALT accepted Su’s instructions to act for him and his nominees in the conveyancing transaction.
(d) Su did not tell Fu that he believed there were 62 years remaining on the Property’s lease until after completion. Su did not tell Fu about the two Tenancy Agreements before 7 April 2011.
(e) Before the exercise of the SGR-Option on 7 April 2011, the defendants did not receive any tenancy agreements. Su e-mailed the two Tenancy Agreements to the defendants on 25 April, 11 May and 15 June 2011, while E&T sent those two tenancy agreements as well as the Invoice Factoring Tenancy to ALT on 15 June 2011.
(f) There were two SLA searches done on the Property’s title. One was done on 5 April 2011 after the defendants were retained by Su to act for him and his nominees; the other was done on 22 June 2011, the actual day scheduled for completion.
(g) Completion of the sale and purchase of the Property took place on the footing that the Invoice Factoring Tenancy was the applicable tenancy.
The defendants’ duties in contract and in tort
[70] The scope of a solicitor’s duty in contract depends upon his particular retainer and the particular circumstances of the case (per Oliver J in Midland Bank v Hett, Stubbs & Kemp [1979] Ch 384 at 437 (“Midland Bank ”) and approved in Yeo Yoke Mui v Ng Liang Poh [1999] 2 SLR(R) 701 at [17] (“Yeo Yoke Mui”)). On the other hand, a solicitor’s duty of care in tort concerns the standard that a client can expect from a professional who has assumed the responsibility of representing the client in the discharge of the solicitor’s engagement. This assumption of responsibility by one party and reliance on that party by another has been accepted and explained in the framework set out in the Court of Appeal decision of Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] 4 SLR(R) 100 (“Spandeck”) which founded a single test for determining the imposition of a duty of care in all claims arising out of negligence (see Go Dante Yap v Bank Austria Creditanstalt AG [2011] 4 SLR 559 at [31]–[32], where the assumption of responsibility was considered and accepted under the limb of proximity). In the context of a solicitor’s relationship with a client, local case law has shown that the standard of care expected of a solicitor is that of a reasonably competent and diligent solicitor, and in cases on conveyancing, the standard would be that expected of a reasonably competent and diligent conveyancing lawyer (see Yeo Yoke Mui at [22]). This test is not controversial.
[71] It is common ground that the defendants were engaged to act for the plaintiffs in the purchase of the Property. Notably, Lim did not take direct instructions from Su. The instructions were given by Su to Fu, and his instructions were given orally. There were no attendance notes that recorded Su’s oral instructions. One aspect of the dispute was what was said by Su to Fu and what the exact terms of Su’s oral instructions were. The paucity of particulars in the pleadings is telling, in that the plaintiffs must have recognised the vagueness of Su’s oral instructions - the plaintiffs’ Statement of Claim (Amendment No.1) (“the Statement of Claim”) averred to the existence of a retainer without particularising the exact terms of the retainer. On the face of it, the averment in the Statement of Claim that Su had told the defendants that the “Property had a remaining 60 plus years’ leasehold” is ambiguous, and hence, problematic. Oral instructions have to be clear before one can consider the scope and width of the express instructions given. The problem in respect of the averment just mentioned seems to be whether that averment was a term of the retainer and if so, what the effect of that term was. This renders the determination of the extent of the contractual duty beyond the scope of the express instructions given difficult.
[72] Given the state of the pleadings on the retainer point, the relationship of solicitor and client at the very least gives rise to a concurrent duty in tort, and the scope of the duty in tort is the same as the scope of the duty in contract unless a particular aspect of the duty has been expressly excluded from or included in the contract. Thus, the bottom line is that the defendants’ retainer here could only be construed as providing for the defendants to do no more and no less than the exercise of reasonable skill and care expected of a reasonably competent and diligent conveyancing solicitor in the transaction they were engaged to do and for which the plaintiffs had agreed to pay them in respect of the sale and purchase of the Property since there was no evidence to support any other construction.
The alleged breaches of duty
[73] I now come to the plaintiffs’ complaints in relation to the defendants’ alleged breaches of duty, namely,
(a) failing to check and report on the Property’s title as well as failing to inform/advise the plaintiffs of the remaining duration of the lease on the Property;
(b) failing to ensure and advise the plaintiffs that the purchase of the Property was subject to the Invoice Factoring Tenancy instead of the two Tenancy Agreements, and would not have yielded a rental income of $3,800 per month; and
(c) confirming or advising the lender-bank to extend a 30-year loan to the plaintiffs for the purchase of a property which had only 17 years of its lease remaining.
[74] First, I note from the outset that item (c) was not pleaded, while items (a) and (b) were essentially a summary of the particulars found in the plaintiffs’ pleadings. In relation to the bank loan mentioned in item (c), there was no specific plea in the Statement of Claim that the defendants had been engaged to act for the plaintiffs in the mortgage of the Property to the lender-bank.
[75] However, the Statement of Claim stated that the defendants had failed to advise the plaintiffs on the fact that the Property had only 17 years left on its lease which resulted in the repayment period of the mortgage loan being set at 30 years. Contrary to the pleadings just mentioned, Mr Lei’s submissions advance an entirely different point: that Lim had made a mistake in advising the lender-bank to grant a 30-year loan on the security of a property which had only 17 years remaining on its lease. Notably, Mr Lei’s cross-examination had also proceeded on such a basis. Effectively, Mr Lei was not only advancing in his submissions an averment different from the one stated in the Statement of Claim, but also one which was premature as the complaint related to a loss suffered under the bank loan, which loss had not yet materialised and was also not pleaded.
[76] Separately, it must be remembered that the lender-bank was notified on 13 June 2011 via a specific report on the Property’s title that the Property had 17 years remaining on its lease (see above at [48]). Although this report came after the bank had made its offer to the plaintiffs on 5 May 2011, the bank would, as of 13 June 2011, have already been put on notice that the security of the loan was shorter than the duration of the loan. How the lender-bank came to proceed with the finance of the purchase of the Property is distinct and independent of the alleged negligence of the defendants in the main action. I thus say no more on item (c), and the discussion on the defendants’ alleged breaches of duty will be in respect of (a) and (b) only.
[77] Before going on to consider the tenure & tenancy problems, there are two preliminary considerations that should be addressed first. The first relates to the weight of expert evidence in relation to a solicitor’s duty of care, while the second relates to the experience of the solicitor’s client.
Preliminary considerations
Weight of the plaintiffs’ expert evidence on the defendants’ duties
[78] The plaintiffs invited this court to adopt the opinion expressed by Wong, their expert witness, on the practice adopted by the legal profession on the matter of a solicitor’s duty to his client on the title to a property which the client intends to buy and to advise his client on the tenancy agreements affecting that property. Wong has 24 years of experience as a conveyancing solicitor and was the chairperson for the Law Society’s Conveyancing Practice Committee from 1997 to 2001 and from 2008 to the present time. For the purposes of this case, Wong’s evidence is not helpful for several reasons.
[79] The first objection has to do with the nature of Wong’s testimony. To illustrate, it is apparent from the underlined portions of Wong’s testimony set out below that the salient points of his opinion referred to what ought to be the practice, and not what the actual practice was. This much was accepted by him as well. On the issue of a report on title, he stated:
[80] Wong later elaborated on the practice standard of conveyancing solicitors in the following manner:
[81] In relation to tenancy agreements which might affect the subject property, Wong stated:
[82] Wong also relied on academic materials as well as the Singapore Institute for Legal Education’s preparatory materials for Part B of the Singapore Bar Examinations to support his opinion of what the precise standard ought to be. These materials indicate a standard that solicitors are supposed to endeavour to meet, and are not reflective of the actual current standards of conveyancing practice. This substantially undermined the usefulness of Wong’s opinions as it was not for Wong to opine on what ought to have been the case or to lay down a standard that conveyancing solicitors should be held to; instead Wong’s role as an expert witness was to inform the court on whether there was a standard in the conveyancing practice, and if so what that standard was.
[83] The second objection to Wong’s evidence lies in the need for expert evidence in the particular circumstances of this case, seeing that the extent of the defendants’ legal duty in any given situation is a question of law for the courts to determine. As Oliver J put it in Midland Bank at 402 (approved by the English Court of Appeal in Bown v Gould & Swayne [1996] PNLR 130 at 135 B-D):
[84] Hence, I find that Wong’s evidence was of little or no assistance to the court in considering the defendants’ breaches of duty.
Su’s experience in the sale and purchase of shophouses
[85] Before considering the defendants’ duty to inform the plaintiffs about the tenure problem and to advise them on the tenancy problem, this is a convenient juncture to deal with the defendants’ argument that their legal duty is circumscribed by Su’s commercial experience in buying and selling HDB shophouses. It was argued that Su’s experience in this field meant that the defendants did not have to inform the plaintiffs about the tenure & tenancy problems as it was not for them to second-guess Su’s decision to purchase the Property.
[86] At around the time the Property was purchased, Su had bought six other HDB shophouses and there were on-going conveyancing transactions being handled by ALT. Lim regarded Su to be an experienced investor-buyer of leasehold HDB shophouses. In the period between January 2010 and June 2011, Su had bought and sold nine HDB shophouses. According to the defendants, Su would have known the exact leasehold tenure of the HDB shophouse he was buying and whether the sale was with vacant possession or subject to tenancy. To support his argument, Lim also relied on the fact that Su had bought the SGR-Option without prior legal assistance and advice.
[87] I make two broad comments. First, it is settled law that it is not necessary for a solicitor to explain to his client matters of a commercial or economic nature. Second, I accept that the experience of a client is a relevant factor to determine the extent of a solicitor’s duty to advise that client. Legal advice which would be required by a first-time buyer of a property with no legal experience whatsoever may differ from that required by an experienced businessman-client who is buying property for the second or third time (see William Flenley and Tom Leech, Solicitors’ Negligence and Liability(Haywards Heath, 2nd Ed, 2008) (“Flenley and Leech”) at para 9.51). Thus, the extent of the defendants’ basic duty to inform a client in the same position as Su about the tenure and the tenancy of the Property is a matter of degree as explained by Donaldson LJ in Carradine Properties Ltd v DJ Freeman Co [1999] Lloyd’s Rep PN 48 at 487:
[88] However, any consideration of the client’s degree of experience cannot be taken too far. As the authors of Flenley and Leech opine at para 9.52, which I accept, it is generally not palatable for a solicitor to argue that his client’s degree of experience means that it is outside the ambit of his duty to give advice to the client: that argument is capable of amounting to a submission by the solicitor that he or she was entitled to assume that the client knew what to do, and this was precisely the defendants’ stance in this case.
[89] The law is clear that even an experienced client would still require some information and advice. Returning to the point made in Midland Bank, in a solicitor-client relationship, the solicitor assumes a responsibility to his or her client by the nature of his or her professional expertise. It is not correct for the defendants to say that there was no breach of duty if they had assumed the responsibility of acting as Su’s (and the other plaintiffs’) conveyancing solicitors and in carrying out their duty of exercising the SGR-Option had failed to inform Su of something that was within their realm of skill and knowledge simply because Su was an experienced investor. In the final analysis, the proper approach is to ask whether the defendants owed the plaintiffs a duty to take reasonable care in and about the handling the conveyancing transaction, and, if so, whether the defendants had breached that duty by failing to inform and advice the plaintiffs about the tenure & tenancy problems which the plaintiffs should have been given in circumstances where any reasonable conveyancing solicitor in the defendants’ position would have given that information or advice.
[90] Bearing the above comments in mind, I will proceed to assess the defendants’ duties in relation to the tenure & tenancy problems.
The tenure problem
[91] The tenure is important to the nature of the Property. It cannot be gainsaid that in leasehold property the tenure of the property being purchased is a crucial aspect of that property. Unlike a freehold interest, a leasehold HDB shophouse has a fixed term lease, and when the property is being on-sold by another person (as opposed to HDB) as in this case, the remaining duration of the lease would be a material concern to the purchaser. The question for determination in the present case is whether it was implicit in the defendants’ engagement to handle the sale and purchase of the Property that the defendants had a duty to inform the plaintiffs of the tenure which included passing on to the plaintiffs information that had come into the defendants’ possession about the term of the lease on the Property and the number of years remaining on that lease.
[92] On 5 April 2011, Lim advised the plaintiffs on the terms of the SGR-Option in an e-mail. He noted, amongst other things, that the SGR-Option did not provide for the sale to be subject to HDB’s consent. He did not, however, inform Su about the term of the lease or the remaining duration of that lease. After reviewing the first SLA title search done on 5 April 2011, Lim would have been aware that there were only 17 years remaining on the Property’s lease but, unfortunately, he and Fu had mistakenly assumed that Su wanted to acquire the Property despite its having only 17 years left out of its 30-year lease. Lim therefore did not notify Su of the results of the SLA title search.
[93] In terms of timing, the information on the Property’s leasehold tenure came into the defendants’ possession as a result of their carrying out Su’s instructions to act for him and his nominees in the conveyancing transaction: the first SLA title search was done by Fu on 5 April 2011 when the file for the transaction was opened, and the second search was done on 22 June 2011, shortly before completion. It is common ground that the SLA title search results were not sent to Su.At all material times, Lim’s practice of carrying out a first title search was to ascertain the vendor’s title to sell the property, and to ensure that encumbrances against the property would not affect the purchase. The second title search conducted just before completion was to check if the purchasers’ caveat and the lender-bank’s caveat were registered, and to ensure that no other caveats had been filed. The issue in this case is not about the solicitors failing to ensure that the purchasers obtained good title to the Property being purchased and the plaintiffs are not disputing that. Instead, the concern here is that the plaintiffs did not get the legal particulars of the leasehold property from the defendants at all. In this regard, Lim stated that he would not inform a client of the tenure of the leasehold property which the client intended to purchase unless he was specifically asked to check, and that there was no express instruction from Su to do so in this case. In response to the court’s question, Lim said:
[94] In my question to Lim, I had in mind the many new condominium developments frequently advertised in the newspapers. At the bottom of the advertisements – in fine print – are the legal particulars of the development concerned such as the tenure of the land and date of legal completion. If a 99-year leasehold is involved, the description of the land tenure would typically be as follows: Leasehold of 99 years with effect from a specified date, month and year. Unlike a freehold interest in a property, a leasehold interest cannot be described simpliciter as there will be no context to the nature of that leasehold interest as regards the term of the lease and the remaining duration of the lease.
[95] I cannot agree with the defendants that the solicitor’s duty to protect his client from the possibility of a misdescription of the legal particulars of the leasehold property which the client intends to purchase only arises upon the client’s specific express instructions to the solicitor. One way of protecting the client’s interest would be for the solicitor to check what kind of leasehold interest the client thought he was buying and to verify this through the title searches.
[96] I also did not find it helpful for the defendants to rely on the decisions in Pickersgill v Riley [2004] UKPC 14 and Clark Boyce v Mouat [1994] 1 AC 428, which state that: (a) the scope of a solicitor’s duty is governed by the instructions he receives and the circumstances of the case, and (b) a solicitor is not obliged to investigate matters which his client had not asked him to investigate. These general propositions that a solicitor’s duty is strictly circumscribed by his instructions cannot be taken too far, and do not assist the defendants in this case. Although Su merely instructed the defendants to exercise the SGR-Option, implicit in that express instruction to exercise the option was the duty to inform the plaintiffs about the tenure of the Property, seeing that the Property was a leasehold commercial property. As Laddie LJ put it in Credit Lyonnais v Russell Jones & Walker [2002] PNLR 2 at [28]:
Any risk of misdescription of the legal particulars of the tenure of a leasehold property can easily be cured or avoided by the solicitor informing the client-purchaser about the nature of the leasehold interest in the property. More importantly, this is a task that is implicit in the solicitor’s duty to exercise an option to purchase a leasehold interest on a client’s behalf.
[97] Lim’s additional argument for not telling the plaintiffs about the tenure of the Property was that, in his mind, he saw the tenure of the property as a commercial matter, and it was not necessary for him as a conveyancing solicitor to explain to the plaintiffs essentially matters of a commercial or economic nature. Lim elaborated in his re-examination:
[98] As stated, it is not controversial that a solicitor has no general duty to advise a client on matters of business since it is for the client to make his own commercial decision (see Jackson & Powell on Professional Liability (Sweet & Maxwell, 7th Ed, 2012) (“Jackson & Powell”) at para 11-177). But, in my view, the tenure particulars of a leasehold property are an integral part of the title to that property and go beyond a commercial decision to purchase that property. The mere fact that the tenure of a leasehold property has a bearing on the value of the property does not detract from the fact that a leasehold property can only be said to be properly described if the legal particulars of its tenure in terms of the duration of the lease and the number of years remaining on the lease are included. Further reasons as to why the term of the lease is important information to a client purchasing a leasehold interest are stated by the authors Robert M Abbey and Mark B Richards in A Practical Approach to Conveyancing (Oxford University Press, 15 Ed, 2013) at para 10.83:
While this statement arguably has a geographical context, the observation is capable of general application.
[99] Thus, information on the duration of the term of the lease and the remaining number of years left on the lease cannot be categorised as being purely commercial or economic information simply because of its relationship to the value of the property. I am thus unable to agree with Lim that the tenure of the Property is only a commercial matter that falls beyond the purview of the defendants’ professional duty to the plaintiffs.
[100] For these reasons, I find that the defendants had a duty to inform the plaintiffs about the duration of the lease and the number of years remaining on the lease, but they omitted to do so before the exercise of the SGR-Option and at any time thereafter until completion.
The tenancy problem
[101] I now turn to the tenancy problem which is another instance of the defendants’ alleged breach of duty of care arising from the defendants’ failure to advise that the purchase of the Property was subject to the Invoice Factoring Tenancy instead of the two Tenancy Agreements, and that rental derived from the head tenancy was not $3,800 per month.
[102] Specifically, it is the plaintiffs’ case that the defendants did not alert or advise them on the effects and ramifications of the three tenancy agreements in toto because they had not addressed their minds to these agreements. Their main contention was that the Invoice Factoring Tenancy operated as a head tenancy to the two Tenancy Agreements. This meant that in the event of an assignment of the Invoice Factoring Tenancy to Lye and Hong Quan upon completion of the Property, they would be collecting a smaller amount of rent based on the terms of the head tenancy ($2,000 as opposed to $3,800). Furthermore, the Invoice Factoring Tenancy was for three years, which meant that even after the Tenancy Agreements expired, Invoice Factoring could continue as head tenant and keep out Lye and Hong Quan from any arrangements with new occupiers who could potentially pay more rent to Invoice Factoring.
[103] The defence raised by the defendants was that Su had notice of the three tenancy agreements, and that he should have reviewed them. However, he was so eager to complete the transaction that he did not pay attention to them. The defendants are thus not to be blamed for Su’s inaction especially when the purchase of the Property was subject to tenancy which meant that there was very little the plaintiffs could do to change the terms of the tenancies or their implications.
[104] As mentioned earlier (see [32] above), the defendants and, to some extent, the plaintiffs challenged the validity of the Invoice Factoring Tenancy. The defendants and the plaintiffs submitted that Cheng was guilty of self-dealing by contracting with Invoice Factoring in the head tenancy, and consequently this meant that it was invalid. Mr Daniel had traced the legal entities involved in the ownership of Invoice Factoring and other related business entities and argued that they were all beneficially owned by Cheng. Hence, Cheng was actually dealing with himself in the head tenancy. In order to advance the self-dealing argument, the parties have to overcome the separate legal entity rule and establish that piercing the corporate veil is on the facts of this case justified by reference to the general principle of law which enables a court, in limited circumstances, to pierce the corporate veil. Mr Daniel and Mr Lei have not stated whether they are relying on agency, trust or fraud as a ground to pierce the corporate veil (see Cape v Adamson [1990] Ch 433 & Thode Gerd Walter v Mintwell Industry Pte Ltd and Others [2009] SGHC 44), and their respective pleadings are devoid of material averments. Their submissions are equally without evidential basis. Accordingly, the self-dealing argument fails.
[105] It is must be remembered that the plaintiffs are not making a claim for additional losses on the ground that the head tenancy purported to give a lower rent as opposed to the two Tenancy Agreements, or that they had lost the opportunity to rent the Property out because of the head tenancy. In short, the validity of the head tenancy is really a peripheral point in the argument on the defendants’ alleged breach of duty to advise the plaintiffs on the terms of the tenancy agreements.
[106] Lim’s usual course of dealing with Su was for the latter to secure a copy of the tenancy agreement from the agent and to go through the document on his own first before turning to Lim if he had any queries regarding the tenancy (hereafter referred to as “the standing arrangement”).
[107] I accept Lim’s evidence that although Su had not provided the defendants with a copy of the two Tenancy Agreements before 7 April 2011, he was nonetheless aware that the purchase was not with vacant possession but was subject to tenancy. In light of the standing arrangement with Su, the defendants did not follow up on the two Tenancy Agreements that were said to be “attached” to the SGR-Option from the plaintiffs or from E&T. The defendants only had sight of the Erniwati Tenancy, Lochen Tenancy, the floor plan and Invoice Factoring’s offer to Lochen on 11 May 2011, and the Invoice Factoring Tenancy on 15 June 2011. Notably, the standing arrangement was not disputed. Whilst Lim’s practice of leaving Su to go through a tenancy agreement and leaving him to inform Lim only if Su has queries invites trouble for the defendants since Lim is relying on the purchaser-client to give to him what the purchaser-client thinks is necessary for an understanding of the legal implications of the conveyancing transaction. Nonetheless, the standing arrangement was certainly in place at the material time as evidenced by Su’s delayed transmission of the two Tenancy Agreements to Fu (they were sent well after the SGR-Option was exercised). Su’s delay is conduct that demonstrated the plaintiffs’ ambivalent attitude towards the two Tenancy Agreements and their perceived unimportance to the plaintiffs in the sale and purchase of the Property. In any case, despite the standing arrangement, a prudent purchaser-client in the position of Su would nonetheless notify his solicitor if, for instance, the number of tenancy agreements were at odds with his discussions with the vendor or estate agent.

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Su Ah Tee and others v Allister Lim and Thrumurgan (sued as a firm) and another (William Cheng and others, third parties)

Laws this judgment relies on

Grounds of decision

Introduction

The parties

The arguments in the main action

The tenure problem

The tenancy problem

The tenure problem

The tenancy problem

The arguments in the third party action

Preliminary points to note in relation to the evidence

The Property was purchased in the names of Su’s nominees

The SGR-Option stated that the Property was to be sold subject to tenancy

Cheng’s relationship with Sam Oh and Ng Sing

The bank loan

The date of ALT’s appointment

Information from Su to the defendants about the term of the lease on the Property

Events after Su found out about the tenure & tenancy problems

Summary of important facts to note

The defendants’ duties in contract and in tort

The alleged breaches of duty

Preliminary considerations

Weight of the plaintiffs’ expert evidence on the defendants’ duties

Su’s experience in the sale and purchase of shophouses

The tenure problem

The tenancy problem