Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

Judgment reserved.

Karthigesu JA (delivering the judgment of the court):

1       The second appellant (Soh) is a property developer with more than ten years’ experience. He is a director of several companies and the managing director of one, known as Land Resources Holding Pte Ltd (Land Resources). He has been involved in hundreds of sale and purchase transactions of landed property over the years. The first appellant (Fong) at the material time was a secretary working for Soh at Land Resources.

2       The respondent (Yoong) is an advocate and solicitor, admitted to practise in 1976 and has since practised as a sole proprietor under the name of Yoong & Co. Yoong’s main area of work is in conveyancing although he does engage in some litigation and corporate work.

3       The appellants’ claim for damages against Yoong revolves around the alleged negligence of Yoong as the solicitor acting for the appellants in the purported purchase by Fong as the nominee of Soh of 9 Ewart Park (the property) from its owners Fontana Pte Ltd (Fontana). The central figure through whose machinations Soh parted with $806,000, which sum the appellants claimed from Yoong as damages for Yoong’s alleged negligence, was one Foo Peng Boon (Foo).

4(i)     Foo was known both to Soh and to Yoong. Soh had known him for over ten years as a property agent and had done business with him on at least three previous occasions. Soh’s impression of Foo was that he was a person always in need of money; Foo had borrowed money from Soh on a few occasions totalling in all to about $20,000, which Foo had not repaid. In fact Soh testified that he never expected to be repaid whenever he had lent Foo money.

4(ii)   Yoong had known Foo for about 18 years. From time to time over the years he would meet Foo and some other friends for dinner and drinks. Yoong’s contact with Foo was purely social; he had not done any business with Foo and Foo had not introduced any work to him. In his evidence Yoong said that he found Foo to be a candid and honest person. He was unaware that Foo had any financial problems. Foo had never attempted to borrow money from him or from their mutual friends who met for dinner and drinks at periodic but irregular intervals.

5       In essence the appellants’ claim was that through Yoong’s negligence and lack of exercise of professional care, skill and diligence due to them as their solicitor in the purported property transaction, they had parted with $806,000 to Foo which they would not have otherwise. In the alternative they said that Yoong had negligently represented to them that Fontana wanted to sell the property and had appointed him as its solicitor. The appellants had relied on this representation and had parted with $806,000 to Foo which they would not have but for the representation. Yoong’s defence was that he did not owe any solicitor-client duties to either Soh or Fong. He also denied liability for any negligent misrepresentation and finally that Soh and Fong had been contributorily negligent and had, hence, wholly or partly caused their own loss. The learned judge dismissed the appellants’ claims against Yoong with costs. The appellants now appeal.

6       We should mention that at the commencement of the hearing of this appeal, appellants’ counsel applied for the further amendment of the statement of claim by adding a new cause of action, claiming a breach of warranty of authority, namely, that Yoong warranted to the appellants that he was authorised to represent Fontana in the purported sale of the property and in reliance of this warranty the appellants authorised Yoong to release the sum of $806,000 to Foo. We allowed the further amendment as it was available on the existing evidence and would cause no prejudice to Yoong.

7       The evidence given at trial did not raise any controversial issues of fact save in two aspects. One is on what was discussed between Soh and Yoong privately in Yoong’s office on 15 August 1994 before Fong, as Soh’s nominee, exercised the option to purchase the property and the second is the conflicting opinions expressed by the expert witnesses, namely Mr Lee Bon Leong called by the appellants, and Mr TPB Menon called by Yoong, on conveyancing practice and the standard of care expected of a conveyancing solicitor in Singapore. We will address these issues as they arise in our narration of the facts.

8       A few days before the end of July 1994, Soh received a telephone call from Foo who said that he could obtain a piece of land near Garlick Avenue for about $300 per sq ft and enquired whether Soh was interested. Soh thought that $300 per sq ft was a good price for land in that area and confirmed his interest. Then, on 1 August 1994, Soh received a facsimile message from Foo concerning their earlier telephone conversation which appeared to have been sent from Bangkok (the Bangkok fax). The relevant parts of the Bangkok fax are as follows:

(1)    Location: 9 Ewart Park — Lot 239–36 MK4

(2)    Tenure: Freehold

(3)    Development Potential: 3 bungalows

The above property is owned by HK public company who bought it many years, using a Singapore nominee company.

I am working closely with the HK director in charge (of) the property who has the power to instruct the nominee to sell the property and the Singapore lawyer acting for the HK company.

Please check the market price and confirm the best offer you are willing to pay, to the HK company, plus our profits. We will do our best on our part to try to get the option to purchase for as low price as possible, for our mutual benefits, and assign option to you.

As we are using our own money to take the option, please confirm the following:

(a)    at what price you wish us to take the option to purchase;

(b)     confirm price you agree to pay us on assignment of option to you;

(c)     confirm you agree to use same lawyer to complete the sale.

Please do not send any of your agents, staff or associate, to contact the Singapore nominee company, as they have no authority to sell or negotiate with any party. The decision to sell is controlled by the HK director and Singapore lawyer. Your cooperation to do this deal quietly with us is greatly appreciated. I will be in Singapore on Friday.

9       A one page, unsigned feasibility study of the property purportedly prepared by Architects Group Associates (as it was on their letterhead) and a location map were also enclosed. The principal architect in Architects Group Associates is one Ong Cher Keong (Ong). Although Soh knew Ong and had engaged his services before, Soh made no effort to contact Ong regarding the feasibility study.

10     On or about 5 August 1994, Foo called at Soh’s office in Penang Road. Soh asked about the property and Foo took him to Ewart Park for Soh to view the property. They did not enter into the property but only viewed it from outside. During the journey to Ewart Park and back there was no discussion on the price or the terms of the sale. The discussion centered on the layout of the land and the development potential, which was residential and comprised three bungalows.

11     Several days later but certainly before 15 August 1994 Foo called at Soh’s office. This time there was some discussion on the price, the upshot of which was that an agreement was reached that the purchase price would be $12.8m but Soh would in addition pay directly to Foo another $1.1m in consideration for Foo securing the option to purchase the property at $12.8m. Subsequently, but still before 15 August 1994, Foo went once again to Soh’s office taking with him an undated document addressed to Soh. The undated document set out the terms of an agreement under which Foo would secure the option to purchase the property for $12.8m and assign it to Soh for $1.1m. It read as follows:

To: Mr Stephen Soh Seng Ho (Soh)

Fm: Frank Foo (Foo)

Re: 9 Ewart Park Singapore

For your confirmation/approval

1          Frank Foo to secure ‘Option to Purchase’ by paying option fee to vendors, to buy the property at 
            S$12,800,000.

2          Option Terms:

3          Assignment of option for a fee of $1,100,000.

On assignment of option to you, you agree to pay Frank Foo:

(a)         50% of S$1,100,000 to be paid by cash or cashier’s order amounting to S$550,000;

(b)         50% by post-dated cash cheque amounting to S$550,000 to be released on completion date; and

(c)          2% option money to be refunded to option-holder, Frank Foo.

4          In the event you decide not to take over the ‘Option to Purchase’ after I secure the option, you agree to reimburse the option money paid by me to the vendors immediately.

5          You agree to use my lawyer to complete the sale and purchase of the property.

6            If you decide to use your own lawyer, you agree to pay an extra S$100,000.00 as our profits.

(a)          Option fee = 2% (S$256,000)

(b)          Period = 6 weeks

(c)          Completion = 16 weeks from date of option

Agreed and confirmed

Signed: STEPHEN SOH SENG HO

Note: My lawyer agrees to waive fee on mortgages.

12     During the period we have been discussing above, Foo was also busying himself laying the further ground work necessary for his deception. First, he contacted Yoong on the telephone on 13 August 1994 and said to him that he was in Singapore to attend to some business and that he wanted Yoong to act for him in that matter. It is in evidence that Yoong and Foo had not seen each other since late 1993. Yoong agreed to meet Foo at the Carlton Hotel. When Yoong arrived at the Carlton Hotel he found Foo with another gentleman whom Foo introduced to Yoong as his boss, ‘Mr Lim’. The three exchanged pleasantries. After a while ‘Mr Lim’ excused himself and left and as he was leaving, almost as an aside, said to Yoong that Foo would deal with ‘the property business’.

13     After ‘Mr Lim’ had left Foo explained to Yoong that he was working for a Hongkong company called Top Vanguard Ltd and handed to Yoong his business card. The Hongkong company, he said, controlled a Singapore company which owned the property which it wanted to dispose. Foo said that, in fact, he had already been granted an option to purchase the property for $12.8m and that he had found a buyer to whom he would, either assign or sell the option. Foo wanted Yoong to act as the solicitor in the sale and said that he would get the local company to appoint him as its solicitor. Yoong said in evidence that he had no reason to doubt Foo, whom he had known for several years and in fact ‘Mr Lim’s’ accent was distinctly non-Singaporean. He thought that ‘Mr Lim’ was connected with the Hongkong company.

14     Then on the morning of 15 August 1994 Foo arrived at Soh’s office and showed him the option he had purportedly obtained from Fontana for the purchase of the property. It was dated 11 August 1994 and the option was granted to Foo and, or his nominees. The purchase price stated in the option was $12.8m and the option fee paid was stated as $256,000. The option was to be exercised by 26 September 1994 with completion fixed for 12 December 1994. Clause 2 of the option read:

This option is to be exercised by the purchaser by signing the portion of this option marked ‘Acceptance Copy’ and delivering the same to the vendor’s solicitors, M/s Yoong & Co of 141 Middle Road #03-02A Singapore 0718 duly signed …

The option was purportedly signed by Fontana’s managing director, Lee Khim Chai and witnessed by one Tan Bee Lan whose identity card number was given as A 1739207. 

15     Foo also showed Soh a company resolution dated 10 August 1994 purportedly passed by the directors of Fontana. It was signed by Lee Khim Chai as managing director and two other directors, namely Pauline Lee Mui Gek and Richard Lee Wee Heng. The resolution authorised the property to be sold for not less than $12.8m and it also appointed M/s Yoong & Co to act for Fontana in the sale of the property. Foo also showed Soh a photocopy of a cheque dated 11 August 1994 for $256,000 which on its face was drawn on POSBank, Raffles City Branch and payable to Fontana on the reverse of which was a typewritten acknowledgment purportedly signed by Lee Khim Chai over a rubber-stamp, ‘Fontana Private Ltd, managing director, Lee Khim Chai’. As subsequent events later showed all the signatures on the option, company resolution and the reverse of the cheque were forgeries but this was not then known to either Soh or Yoong. There was no evidence of the authenticity of the cheque, its relevance being to satisfy Soh that the option fee of $256,000 had been paid to and received by Fontana.

16     Soh said in his evidence that he was apprehensive over the transaction; he had some doubts as to its genuineness. He wanted confirmation that Fontana really wanted to sell the property and that the option and the resolution were genuine. So he told Foo that he wanted to see Fontana’s solicitors. Foo reluctantly agreed to take Soh to see Yoong. Soh asked Fong to accompany them as he intended to exercise the option in Fong’s name as his nominee. Accordingly all three of them went to Yoong’s office in Middle Road.

17     The evidence on this is not very clear but it appears that before going to Soh’s office that morning, Foo had gone to Yoong’s office and shown him the documents we have referred to in paras 14 and 15, as well as a letter of nomination to exercise the option and a letter of authority for the purpose of directing Fontana to credit the option fee money already paid to the account of the nominee, but these two letters were not fully completed. Yoong in his evidence said that he did not draft any of these documents. He also said that he was prepared to act for Fontana in the sale but he wanted a letter from Fontana officially appointing him as its solicitor. Foo said he would get such a letter.

18     Anyhow when Soh, Fong and Foo arrived at Yoong’s office they had to wait before they could see Yoong. While waiting, Soh and Foo discussed cl 6 of the undated document and Foo agreed to waive it. Despite this waiver Soh decided that he would instruct Yoong to act for him also. He explained in his evidence that it would ‘help make the transaction smoother’. Nothing was said about Soh saving himself a further $100,000 by this gesture of Foo.

19     When Yoong was ready to see them, Soh asked to speak to Yoong privately. Not only does Soh’s version differ from Yoong’s version of this private conversation between them, but Soh himself gave contradicting versions.

20(i)    Soh’s pleaded case was that he asked Yoong whether it was true that Fontana wanted to sell the property. Yoong had answered by showing Soh Fontana’s resolution dated 10 August 1994 purportedly authorising the sale of the property and appointing Yoong’s firm as Fontana’s solicitors for the sale of the property. After Soh had perused the resolution he asked Yoong whether he acted for Fontana and Yoong had answered that he did. Soh further asked Yoong whether he knew the persons who had signed the resolution namely, Lee Khim Chai, Lee Wee Heng Richard and Lee Mui Gek Pauline. Yoong answered that he would carry out a search to ascertain whether these persons were directors of Fontana.

20(ii)   However, in his affidavit of evidence-in-chief at paras 13 and 14 he said:

13       When we were alone, I asked the defendant (Yoong) whether he has been instructed to act for Fontana in this sale. The defendant said that he had been so instructed..

14     I asked him whether it was true that Fontana wanted to sell the property. He told me that they did.. To confirm this, he also showed me a copy of the resolution. I asked the defendant whether the resolution was genuine. He replied without hesitation that it was. He added that he could do a search to confirm this. [Our emphasis.]

Clearly Soh’s evidence-in-chief is at variance with his pleaded case and makes the allegation of a positive misrepresentation that Fontana’s resolution dated 10 August 1994 was genuine, an allegation absent in the pleaded case. When this inconsistency was pointed out in cross-examination, Soh insisted that he did ask Yoong whether the resolution was genuine and added for good measure that Yoong told him that he knew the directors of Fontana.

20(iii) Yoong by his defence admitted Soh’s pleaded case save that he was asked whether he knew the persons who had signed the resolution. His evidence in court was consistent with his pleaded defence and his affidavit of evidence-in-chief. In summary it was that he had answered Soh’s question whether he was acting for Fontana in the affirmative; that he had shown Soh Fontana’s resolution to his query whether it was true that Fontana wanted to sell the property; that when asked whether he knew Fontana he had replied that he did not and that he had been appointed to act in the sale by that resolution; and finally when asked whether he knew that the persons who had signed the resolution and the option were indeed directors of Fontana, he had answered that he could not confirm that they were directors of Fontana, but would carry out a company search to ascertain whether they were. It is in evidence that Yoong did carry out a company search and he did confirm to Soh and Fong later that the persons who had signed the resolution and the option were at the material time directors of Fontana. Yoong rejected the suggestion that Soh had asked him whether Fontana’s resolution was genuine.

21     When Soh had finished conferring privately with Yoong, and Foo and Fong had joined them, Foo produced the uncompleted letter of nomination and letter of authority we have referred to in para 17 above. These were duly completed by typing in Fong’s name and the other details and duly signed by Foo and dated 15 August 1994. Foo’s signature was witnessed by Yoong. In substance, the letter of nomination stated that Foo had nominated Fong or her nominee to exercise the option to purchase the property from Fontana, in consideration of a payment of $1.1m plus the refund of the option fee of $256,000, paid by Foo to Fontana, with the condition that $550,000 out of the $1.1m, which was a non-refundable payment, was paid immediately. The letter of authority, not addressed to anyone but entitled ‘The property known as 9 Ewart Park, Singapore’, was an authority to credit the option fee of $256,000 to account of Foo’s nominee ‘exercising the option to purchase dated 15th day of August 1994 granted to me by you’. In fact the option was dated 11 August 1994.

22     Before Fong, Soh and Foo left Yoong’s office, Soh handed to Yoong three cheques made out to M/s Yoong & Co. One was for $256,000 and the other two for $550,000 each. Soh maintained in his evidence that the cheques were made payable to Yoong & Co because he wanted time to verify the genuineness of Fontana’s resolution, whilst Yoong said in his evidence that this was at Foo’s suggestion as he wanted to be sure that Soh’s cheques would be cleared. It is not material as to which version is correct but it does seem that Yoong’s version is more credible given that by the letter of nomination, Foo wanted cash or a cashier’s order and Soh could not have given the reason he gave in court without arousing Foo’s suspicions. Anyhow upon return to Soh’s office Fong sent a letter by fax to Yoong to obtain her letter of confirmation before releasing the money to Foo, ‘which is only subjected to satisfactory searches’.

23     On 15 August 1994 itself, Yoong carried out an instant search on Fontana at the Registry of Companies and faxed the search to Fong. It showed, inter alia, that Lee Khim Chai was the managing director and that Lee Wee Heng Richard and Lee Mui Gek Pauline were directors. They, together with Wee Seng Tiong who held the position of secretary, were the only officers of Fontana on record. Later that same day Soh spoke with Yoong on the telephone and asked ‘if there was a problem’. Yoong replied ‘everything was okay’ and asked whether he could release the money to Foo. Soh replied that he would give his confirmation the next day.

24     The next day, 16 August 1994, Yoong received a letter by fax from Fong authorising the release of the money to Foo ‘on the basis that all searches are in order’, whatever this meant. Soh’s concern was whether the transaction was genuine; whether the option and Fontana’s resolution were genuine. A company search could not have thrown any light on this. But as Soh said when crossexamined, he delayed the release of the money to Foo because he had some doubts about the transaction and he wanted more time to mull over the matter. Soh said he wanted to consider if he had missed out any ‘trick’ in the whole deal. As we have already noted Soh admitted that he did not voice any of his concerns and misgivings to any one, including Yoong, whether during the private conference he had with him on 15 August 1994 or at any time thereafter.

25     Yoong complied with Fong’s instructions. When Foo called for his monies on 16 August 1994 Yoong issued him two cheques drawn on Yoong & Co’s clients account for $550,000 and $256,000 respectively. Both cheques were not crossed and Foo cashed them straight-away at the United Overseas Bank, Middle Road Branch, on which bank the two cheques were drawn. Later that evening, Yoong met Foo for a drink and asked him for the letter of appointment from Fontana. In fact Yoong had already requested for the letter of appointment from Fontana, notwithstanding that Fontana’s resolution of 10 August 1994 had appointed Yoong to act for Fontana in the sale of the property. Yoong had the previous day recollected that Fontana’s resolution to sell the property and appointing him its solicitor had preceded Yoong’s first meeting on this occasion with Foo on 13 August 1994, when Foo had told him of the proposed transaction and that Foo would try and get Yoong appointed as Fontana’s solicitor for the sale. Foo had explained that the resolution was backdated to fit the option which was dated 11 August 1994 and in fact it was his idea to have Yoong appointed as solicitor for the sale to which the ‘Hongkong director’ had agreed, even before Foo had met Yoong on 13 August. The explanation appeared satisfactory and Yoong had accepted it. But he still wanted the letter of appointment and Foo had promised to get it for him when he returned from Kuala Lumpur, where he had to go on business for a few days. On this note they parted and Yoong was never to see or hear from Foo again.

26     On 19 August 1994 Yoong was approached by a property broker who wanted to know if the property was for sale. Yoong contacted Soh who indicated that he would sell if the price was right. He suggested that a price of between $17m and $18m would be favourably considered.

27     Not having heard from Foo, Yoong tried to contact Foo on 19 and 20 August. He was nowhere to be found. Yoong was still anxious to get the letter of appointment from Fontana. He felt he could not directly ask for the letter of appointment from Fontana. So on 23 August he addressed a letter to Fontana thanking its directors for appointing him its solicitor in the sale of the property and informing Fontana he would advise the directors once the option was exercised. He did not receive a response.

28     The next thing that happened was that Yoong was approached by Sgt Ismail from the Central Police Station. He wanted to know whether Yoong was involved in any transactions connected with the property and whether any moneys had been paid to Foo. Sgt Ismail disclosed that Foo was a fraudster who had cheated another purchaser in a bogus transaction of the property. Fearing that the option and the resolution might be forgeries, Yoong immediately contacted Soh and told him not to attempt to sub-sell the property.

29     A few days later, on 30 August, Yoong wrote to Fontana enclosing the option and the resolution. This time he got a reply saying that both documents had been forged. On 2 September Yoong wrote to Fong enclosing the letter he had received from Fontana and advising Fong to lodge a police report. Yoong himself lodged a police report on 13 September.

30     In para 7 above we said that two controversial issues of fact arose from the evidence at trial. The first related to the private discussion between Soh and Yoong in Yoong’s office on 15 August 1994. We discussed this in paras 19 to 20 above. The second controversial issue is the conflicting opinions expressed by Mr Lee Bon Leong for the appellants and Mr TPB Menon for Yoong. We will now deal with their respective opinions on conveyancing practice and the standard of care expected of a conveyancing solicitor in Singapore.

31(i)    Mr Lee Bon Leong is an advocate and solicitor with 25 years’ experience as a conveyancer. He was critical of Yoong’s conduct in only one respect. In Mr Lee’s opinion, given that Yoong had not acted for Fontana previously in any conveyancing or legal matter and given that he was meeting Foo after a lapse of several months whom he met intermittently, albeit over the past 18 years but only socially in the company of others for drinks and dinner, and given that Foo had never introduced any business to him, Yoong should not have held himself out to Soh as acting for Fontana in the sale of the property merely on the strength of Fontana’s resolution handed to him by Foo, notwithstanding Foo’s assurances that he could influence Fontana’s choice of solicitors. In doing so, Yoong put himself at risk of acting without proper authority. In Mr Lee’s view the only exception to this would be if the client was a regular client and the client, or someone whom he knew was connected with the client, gave oral instructions, say on the telephone, he would accept it but would require the client to confirm the instructions in writing straight-away. Mr Lee went on to say that this was his practice. Mr Lee conceded in cross-examination that the option, Fontana’s resolution and the receipt on the reverse side of the POSB cheque for $256,000 all looked genuine and did not give rise to a suspicion of forgery. Mr Lee was also questioned on the Bangkok fax. He agreed that Soh should have shown the Bangkok fax to Yoong; it was extremely important for a solicitor to be apprised of all the circumstances pertaining to a property transaction. Mr Lee was surprised when told that Foo had not shown and had not told Yoong anything about the Bangkok fax. So also if the client had any uneasy feelings about a particular transaction, not discernible on the face of the documents, he would expect the client to disclose it to him. However, Mr Lee was not able to agree with counsel that a solicitor was always entitled to assume that a document was genuine unless there was something on the face of the documents or the nature of the instructions which gave rise to suspicions. But he conceded that in the many thousands of conveyancing transactions he had handled, he had not come across a forged company resolution and only a couple of instances where forged documents were involved.

31(ii)    Mr TPB Menon is also an advocate and solicitor. His experience as a conveyancing solicitor extends to over 30 years; he has been the chairman of the Conveyancing Rulings Committee, formerly the Conveyancing and Non- Contentious Costs Committee of the Law Society of Singapore for many years. Mr Menon’s evidence is best summarised by this extract from his affidavit of evidence-in-chief:

2          … As far as I am aware it is not the practice of solicitors in Singapore to verify their instructions received (either by way of letter or by way of company resolution) every time they receive the same unless such letter of instructions or company resolution arouses suspicion. In this case it is unlikely that the option and company resolution would have aroused any suspicion as the search made of the company and the property showed that the property was in fact registered in the name of the company and the option was purportedly signed by the managing director of the company (with the ‘chop’ of the managing director affixed thereon). Likewise the resolution was purportedly signed by all the directors.

3          Trust is usually the cornerstone of a solicitor’s relationship with his client in conveyancing matters. A solicitor is also entitled to assume that a client would draw his attention to any unusual facts or circumstances or any reservations or suspicion that he may have in relation to the transaction.

4          In my experience the number of forgeries in conveyancing transactions are few and far between and a solicitor would normally be entitled to assume that documents produced to him are genuine unless there are compelling reasons which are apparent on the face of the documents or the circumstances under which they are produced create any aura of grave suspicion which the client cannot satisfactorily explain.

Mr Menon’s main thrust was that Yoong in the context of this appeal was entitled to act on the basis that Fontana’s resolution and the option were valid as there was nothing on the face of those two documents or in the circumstances in which they were handed to him by Foo to arouse any suspicion as to their authenticity or to the bona fides of the transaction itself, ie Fontana’s intent and desire to sell the property for $12.8m. A conveyancing solicitor was not an investigator or a handwriting expert, to use Mr Menon’s words. But Mr Menon agreed with Mr Lee that Soh should have disclosed the Bangkok fax to Yoong. If Soh had done this, as he ought, Yoong would have been put on his guard because of the involvement of the Hongkong public company with the property and the implication of the Residential Property Act (Cap 274) on the sale and would have wanted more detailed instructions.

32     The learned judge chose to adopt Mr Menon’s opinions. In her judgment she said:

As Menon rightly pointed out, a conveyancing lawyer deals with more than one option at a time especially since the rise in the property market in the early 1990s — a reasonably competent conveyancer (not a reasonably prudent lawyer) would not be expected to conduct the checks Lee stipulated in anticipation of something untoward happening when trust is the cornerstone of a lawyer’s relationship with his client; lawyers are not private investigators. (The learned judge’s underlining.)

33     In the main the learned judge accepted the evidence of Yoong and rejected that of Soh. She was particularly critical of Soh’s lack of candour towards Yoong and of his failure to disclose to Yoong relevant documents such as the Bangkok fax. She blamed Soh for not being suspicious of the unrealistically low price at which the property was being offered, which as an experienced property developer he ought to have realised, and felt that Soh should have treated Foo with suspicion particularly as Foo maintained that he had paid $256,000 to Fontana for the option when Soh knew that Foo was always short of money and had borrowed from him which Foo had not paid back. All this should have been disclosed to Yoong as Foo had decided to and did instruct Yoong to act for him as well. Had he done so the fraud would have been unravelled. On the other hand she was somewhat more prepared to accept Yoong’s explanation for not following up the one or two matters that had arrested his attention.

34     Accordingly she found that Yoong’s conduct as a solicitor had not fallen below the standard of a reasonably competent conveyancer for not verifying his instructions to act for Fontana. In fact she found that there was no necessity for Yoong to have done so. The learned judge also found that Yoong had not acted in breach of his duty to exercise professional care, skill and diligence as the solicitor acting for the appellants by acting on the basis that the documents presented to him by Foo were valid. Hence she held that the appellants’ loss must lie where it fell and dismissed the appellants’ suit for negligence.

35     The contentions raised by appellants’ counsel before us were (i) that Yoong was in breach of his duty of care as a solicitor by failing to verify his appointment to act for Fontana in the sale of the property; (ii) that Yoong was liable for making negligent misstatements as to his authority to act for Fontana upon which the appellants relied, and since we allowed the appellants’ motion to further amend the statement of claim warranted as well that he represented Fontana in the sale of the property on which the appellants relied also, in consequence of which they suffered loss; the learned judge erred in failing to find that Yoong had made these misstatements and that the appellants had relied on them to their detriment and likewise that Yoong had by pointing to Fontana’s resolution had impliedly, if not expressly, warranted that he acted for Fontana in the sale on which the appellants had also relied to their detriment; and (iii) that the sole cause of the appellants’ loss was Yoong’s negligence and warranty; the appellants’ damages should not be reduced because there was no contributory negligence on the part of Soh or Fong or them collectively.

36     It cannot be denied that, as a matter of law, Yoong owed a duty to the appellants to exercise care and skill as their solicitor. To determine whether Yoong had acted in breach of his duties of care and skill we have to consider whether Yoong’s conduct has fallen below the standard expected of a reasonably competent conveyancing solicitor. This question must be determined with reference to the evidence of conveyancing practice given by the two experts, Mr Lee and Mr Menon. This, in our view, is the crux of the entire appeal, no matter how one formulates the appellants’ claim.

37      Accordingly, the question which poses itself is, whether in the circumstances of this case, Yoong ought to have verified with Fontana his instructions to act for Fontana in the sale of the property before acknowledging to the appellants that he had been so instructed merely on the strength of Fontana’s resolution and the option. Mr Lee’s short answer to this question was, yes, whilst Mr Menon said, no. It seems to us that the learned judge was much influenced by Mr Menon’s evidence and accepted it in its entirety. This is evident from this passage from her judgment: The lawyer is not an insurer for his client’s own folly nor is he obliged to guarantee the validity of a transaction which documentation he did not prepare. To expect a lawyer to foresee the possibility of fraud when documents presented to him prima facie appear to be in order and when there are no circumstances to warrant any suspicions is to place an unreasonable and intolerable burden on any practitioner.

38     With respect to the learned judge and Mr Menon they were both off the mark. They failed to address the question which on the facts and circumstances of this case readily posed itself and which we have set out in the first sentence of para 37 above. With respect to Mr Menon again, the opinions he expressed in his evidence were a series of generalisations with which one could not quarrel but they had no relevance to the particular facts and circumstances of this case. In our view Mr Lee was much nearer the mark (see the digest of his evidence at para 31(i) above).

39     On the facts of this case which bear repeating, Yoong was approached by Foo, a property broker and a long time acquaintance with whom from time to time Yoong met in the company of others for drinks and dinner, but who had never introduced any work to him before to act for Fontana in the sale of the property. Foo ‘stage managed’ his meeting with Yoong to give Yoong the impression that he (Foo) had connections through whom he could influence Fontana’s decisions. Foo told Yoong that he would get Yoong appointed to act for Fontana. This was at the first meeting. At his next meeting with Yoong, Foo presented to Yoong Fontana’s resolution purportedly signed by all the directors of Fontana resolving to sell the property and appointing Yoong to act for Fontana in the sale. Foo also showed Yoong the option purportedly signed by the managing director. Yoong had never previously acted for Fontana in any matter whatsoever. On his own admission he did not know the existence of Fontana and who its directors were. He had never met them and would not be able to recognise their signatures. The signatures appeared authentic and either unsuspectingly or without caring to inquire further but trusting Foo he was prepared to act for Fontana and take the risk of acting without proper authority from Fontana. In the factual situation we have portrayed above we do not think that any solicitor in the position of Yoong could be said to be over-cautious if he insisted on getting the confirmation of Fontana before holding himself out as acting for Fontana in the sale of the property. Foo was not an officer or employee of Fontana but the person who held Fontana’s option and was seeking to benefit from it. At the very least when Soh inquired about the sale of the property and Yoong acting for Fontana in the sale, he should have told Soh that this is what the resolution says and not waved the resolution at Soh. In doing so Yoong impliedly represented that Fontana wanted to sell the property and that he had been appointed by Fontana to act in the sale. Our answer to the question we have posed in para 37 is in the affirmative.

40     Admittedly practice will vary from jurisdiction to jurisdiction. However, a common sense approach will easily sift good practice from doubtful or bad practice. The conveyancing practices in other jurisdictions can also serve as useful guidelines as to what should constitute good conveyancing practice in Singapore in the absence of any settled or well accepted practice. We were referred to the conveyancing practice in England as a useful guideline by appellants’ counsel. Silverman, The Law Society’s Conveyancing Handbook (1993) (England) states at para 1.3.1:

Wherever possible instructions should be obtained from the client in a personal interview. This will enable the solicitor to clarify areas of doubt concerning the transaction, enable the client to ask questions about matters which worry him, and establish a confident working relationship between the solicitor and his client. Where the solicitor is instructed by one person to act on behalf of that person and another, eg as co-vendors, the non-instructing client’s authority to act and consent to the transaction should be confirmed directly with the person concerned.

The United Kingdom Law Society’s Guide to the Professional Conduct of Solicitors states at para 9.05:

Where instructions are received not from a client but from a third party purporting to represent that client a solicitor should obtain written instructions from the client that he wishes him to act or in any case of doubt he should see the client or take other appropriate steps to confirm instructions.

41     The extracts we have quoted above, in our view, truly reflect good conveyancing practice. They are sensible and helpful guidelines to practitioners engaged in conveyancing practice in Singapore and ought to be adopted and where possible followed so as not to be exposed to the risk of acting without authority.

42     Mr Menon was prepared to go further than Mr Lee did. See para 31(i) and (ii) for a summary of their respective opinions. Mr Menon said that put in the position of Yoong in this case and provided that the Residential Property Act or the question of beneficial ownership by a Hongkong company did not arise, he would have acted for Fontana on the strength of the resolution and option without further verification as in his opinion ‘it is not the practice in Singapore to verify their instructions.’ The question is not really what the practice is or what a particular solicitor would have done in a particular situation but the extent of the legal duty in a given situation, which is a question of law.

43     In Midland Bank Trust Co Ltd & Anor v Hett, Stubbs & Kemp [1979] Ch 384 at 402, Oliver J said:

The extent of the legal duty in any given situation must, I think, be a question of law for the court. Clearly, if there is some practice in a particular profession, some accepted standard of conduct which is laid down by a professional institute or sanctioned by common usage, evidence of that can and ought to be received. But evidence which really amounts to no more than an expression of opinion by a particular practitioner of what he thinks that he would have done had he been placed, hypothetically and without the benefit of hindsight, in the position of the defendants, is of little assistance to the court; whilst evidence of the witnesses’ view of what, as a matter of law, the solicitor’s duty was in the particular circumstances of the case is, I should have thought, inadmissible, for that is the very question which it is the court’s function to decide.

44     This issue can be taken one step further by the tests enunciated by the Judicial Committee of the Privy Council in the appeal from Hongkong in Edward Wong Finance Co Ltd v Johnson Stokes & Master [1984] AC 1296 (not cited by either party). In this case Edward Wong Finance, the plaintiffs, a finance company, agreed to lend money to a company to purchase a piece of property free from encumbrances. The loan was to be secured by a mortgage on the property. Edward Wong Finance instructed Johnson Stokes & Master to act for them in the mortgage. Evidence led before the court was to the effect that in Hongkong, the customary conveyancing practice of solicitors in completing a contract for sale of land was for the purchaser’s solicitor to forward the purchase price to the vendor’s solicitor on an undertaking by the vendor’s solicitor to forward to the purchaser’s solicitor within a specified period the document of title duly executed. In accordance with this practice, the vendor’s solicitor gave Johnson Stokes & Master his undertaking to forward to them within ten days all the relevant documents of title duly executed and Johnson Stokes & Master sent to the vendor’s solicitor the cheques drawn by Edward Wong Finance in favour of the vendor’s solicitor. The vendor’s solicitor took the money and absconded from Hongkong. Edward Wong Finance sued Johnson Stokes & Master in negligence. The Board overturned the Hongkong Court of Appeal’s decision and found Johnson Stokes & Master liable in negligence even though they had acted in accordance with well established conveyancing practice in Hongkong. Their Lordships held that simply following the general style or method of completion as almost all the other conveyancing solicitors in Hongkong did not ipso facto mean that Johnson Stokes & Master’s actions had not fallen below the standard required of a reasonably competent firm of solicitors. Lord Brightman delivering the judgment of the Board said at p 306:

In assessing whether the respondents (Johnson Stokes & Masters) fell short of the standard of care which they owed towards the appellants, three questions must be considered: first, does the practice, as operated by the respondents in the instant case, involve a foreseeable risk? If so, could that risk have been avoided? If so, were the respondents negligent in failing to take avoiding action?

45     Applying this threefold test and addressing the questions raised by Lord Brightman to the facts of this case, we arrive at the conclusion that by failing to verify his instructions to act for Fontana, there was clearly a foreseeable risk that Yoong would be acting without authority. This risk could have been avoided by Yoong taking steps to confirm his authority to act for Fontana or, if he could not do so, to at least warn the appellants of the risk that he could be acting without proper authority, as he could not confirm his instructions with Fontana directly. Yoong took no such avoiding action before proceeding to act for Fontana in the sale, with the result that he acted without authority and the appellants suffered loss. Therefore, in our judgment, Yoong did not meet up to the standard required by him of a reasonably competent conveyancing solicitor in Singapore and he should be held to have been in breach of his duty of care and skill to the appellants.

46    The second contention raised by appellants’ counsel is the question of the negligent misstatement and breach of warranty as to Yoong’s authority to act for Fontana in the sale of the property. This is a pure question of fact and falls to be decided on what transpired during the private conversation Soh had with Yoong in Yoong’s office on 15 August 1994. We have discussed the evidence at paras 19 and 20 above. We agree with the learned judge’s finding that Yoong did not make the representations Soh alleged that Yoong had made, that is to say that the option and resolution were genuine, but that Yoong, on his own admission, responded to Soh’s questioning by showing Soh the resolution.

47     Even if Yoong had not uttered a single word during his private conversation with Soh but in response to Soh’s question whether Fontana really wanted to sell the property (for $12m) and whether Yoong was representing Fontana in the sale had simply pointed to the resolution (as the learned judge found and we agree) that act alone would in our judgment be a sufficient representation and a warranty that Fontana really wanted to sell the property and that Yoong represented Fontana in the sale. Yoong had no direct information on these two matters from Fontana; he believed what Foo told him and relied on the documents without verifying them with Fontana; and Foo in no sense represented Fontana as clearly on the evidence he was acting independently and in his own interest. It follows that there was a misstatement and a warranty.

48     The learned judge then went on to say in her judgment that even if there was a misstatement, Soh had not relied on it. This is what she said in her judgment:

Even if Yoong’s answer amounted to a representation, how can it be said Soh relied on it when, by his own testimony (after receipt of the ROC search on Fontana), Soh still wondered whether he had missed any trick, he considered the matter for 24 hours despite Yoong’s assurance there were no problems and, he knew it was an unusual transaction?

With respect to the learned judge, we cannot agree. Soh may still have harboured suspicion about the transaction with Foo even after Yoong had told him Fontana wanted to sell the property. Soh may still have thought that there was some ‘trick’ but the fact is that he was persuaded to go ahead with the transaction. In these circumstances it is a logical inference that at least one factor in Soh’s decision to go ahead must have been the fact that Yoong had given him the misleading impression that Fontana wanted to sell the property. After all, Soh’s whole purpose of going to see Yoong was to confirm that Fontana truly wanted to sell the property. The law does not require that the negligent misrepresentation must be the sole or decisive factor in inducing the representee to act; it is sufficient that it plays a real and substantial role in causing the representee to act to his detriment. See JEB Fasteners Ltd v Marks, Bloom & Co [1983] 1 All ER 583.

49     Turning now to the breach of warranty of authority, the facts as we have found them on the negligent misrepresentation cause of action equally applies to the cause of action founded on the breach of warranty although the former is an action in tort and the latter an action on an implied contract. The elements required to be proved in an action for breach of warranty as stated in Bowstead & Reynolds on Agency (16th Ed, 1996) at para 9-057 are as follows:

(1)          Where a person, by words or conduct, represents that he has authority to act on behalf of another, and a third party is induced by such representation to act in a manner in which he would not have acted if that representation had not been made, the first-mentioned person is deemed to warrant that the representation is true, and is liable for any loss caused to such third party by a breach of that implied warranty, even if he acted in good faith, under a mistaken belief that he had such authority.

(2)          Every person who purports to act as an agent is deemed by his conduct to represent that he is in fact duly authorised so to act, except where the nature and extent of his authority, or the material facts from which its nature and extent may be inferred, are fully known to the other contracting party, or the purported agent expressly disclaims any present authority.

The fact as we have found then fall squarely into the elements of the action in breach of warranty.

50     However, circumstances can arise where the warranty will not be implied or will be deemed to be rebutted. Bowstead & Reynolds at para 9-064 states:

The circumstances in which the warranty is implied create the possibility of considerable flexibility, and the strictness of the liability placed on the agent is in effect tempered by this technique. Thus where the agent disclaims authority, he avoids such liability, unless the case is one where he contracts to obtain authority. If the third party does not think that authority can be obtained, this may be a ground for negativing the implication of a warranty, though the fact that A does not think that B can perform his contract with A does not usually affect B’s liability. In some cases the third party may be taken to know of the limitation or lack of authority so that there are no grounds for implying a warranty by the agent. There will not, however, usually be any duty on a third party to inquire.

Unfortunately for Yoong none of these circumstances exist on the facts to dislodge the warranty of authority.

51     The last contention left for us to consider is whether the sole cause of the appellants’ loss is attributable to Yoong’s two acts of negligence, ie failure to verify his authority to act for Fontana and the negligent misrepresentation that he acted for Fontana, and that Fontana wanted to sell the property, and the breach of warranty of authority, or whether Soh himself contributed to his own loss. Clearly the defence of contributory negligence is available to Yoong on the two acts of negligence as they are actions in tort. Although there is no clear authority whether the defence of contributory negligence is available in an action founded on an implied contract, it has been held by the English Court of Appeal in Forsikringsaktieselskapet Vesta v Butcher [1988] 2 All ER 43 that where a defendant’s liability in contract is concurrent with an identical duty in tort, the defence of contributory negligence is available to the defendant. In our respectful opinion the English Court of Appeal’s decision makes much sense and we have no hesitation in adopting it and following it in this appeal. Hereafter when we speak of Yoong’s negligence we also include his breach of warranty of authority.

52     On the facts it is clear to us that if Yoong had contacted Fontana directly to confirm his instructions, he would have discovered that the signatures on the option and Fontana’s resolution were forgeries and that he had no authority to act for Fontana in the sale of the property. This is what happened in fact when eventually Yoong did write to Fontana enclosing a copy of the option and the resolution. It must follow that but for Yoong’s failure to confirm his instructions which would have unravelled Foo’s fraudulent scheme, Soh would not have ordered the release of the moneys to Foo. Similarly, but for Yoong’s negligent misrepresentation that he acted for Fontana and that Fontana wanted to sell the property, Soh would not have completed the assignment of the option to Fong, since it was his clear evidence that he had gone to see Yoong to obtain confirmation of Fontana’s intention to sell. So also with the breach of warranty of authority.

53     The factual connection is established but is the loss suffered by the appellants too remote a consequence of Yoong’s negligence. It is settled law that the general test for remoteness of damage is the foreseeability of the loss suffered by the plaintiff. In our judgment it is quite unarguable that the loss suffered by the appellants was not a foreseeable consequence of Yoong’s negligence. But the real question in this appeal is whether the learned judge was right in concluding that the effective cause of the appellants’ loss was Soh’s own failure to disclose relevant documents to Yoong to the extent that it negatived Yoong’s negligence completely. The learned judge may well have been right and probably was justified to draw the inference from the evidence that but for Soh’s lack of candour, Yoong would have been put on alert that something was amiss. But to hold that this was the effective cause of the appellants’ loss subsuming Yoong’s negligence, in our view, goes too far.

54     The defence of contributory negligence applies where the relevant evidence establishes that the cause of the damage suffered by the plaintiff is the combination of the fault on his part and the wrong doing of the defendant. See Clerk & Lindsell on Torts (17th Ed, 1995) para 3-11 where it is stated:

Causation is crucial in a plea of contributory negligence. Lord Atkin summed up the position as follows: ‘If the plaintiff were negligent but his negligence was not a cause operating to produce the damage there would be no defence. I find it impossible to divorce any theory of contributory negligence from the concept of causation.’ So if the plaintiff’s own carelessness is in effect either in no sense a cause of his injury or of trivial import, there is no contributory negligence. In the context of contributory negligence, the judges have made frequent pleas for a commonsense approach. Lord Birkenhead declared: ‘The question of contributory negligence must be dealt with somewhat broadly and on commonsense grounds as a jury would probably deal with it.’

55     On the principles applicable in proving causation in contributory negligence Clerk & Lindsell on Torts at para 3-13 states:

Authorities subsequent to the 1945 Act seek to establish the following principles. (1) The principles applicable to determine whether the plaintiff’s own fault contributed to his injury should be the same as those governing whether the defendant caused those injuries. The basic rules of factual causation should not differ. (2) It matters not whether the operative fault of the plaintiff is prior, or subsequent, to the wrongdoing of the defendant. (3) Broad common sense should be used to judge cause and effect on the facts of each particular case. (4) Foreseeability of the manner of injury is not relevant.

56     The question then is whether Soh by his own conduct contributed to his injury. It seems to us that the learned judge was much influenced by Mr Menon’s evidence that had he been shown the Bangkok fax, his suspicions would have been aroused straight-away by the reference in the fax that the property was owned by a Hongkong public company through a Singapore nominee. She reasoned that it would be reasonable to infer that Yoong, similarly, would have been alerted to inquire further into the matter instead of accepting everything Foo said to him. She also drew the inference that the reference in the Bangkok fax to ‘the Singapore lawyer’ controlling the sale of the property would have had a profound impact on Yoong as he knew nothing of the property and had no contact with any Hongkong or Singapore company regarding the property.

57     In our judgment the Bangkok fax had lost all relevance by the time Foo took Soh and Fong to see Yoong on 15 August 1994 as the Bangkok fax had been superceded by the option and the resolution which clearly showed that the property was owned by Fontana, a Singapore company, and that Fontana had given the option to Foo to sell the property for $12.8m and Foo had already paid the option fee to Fontana. Soh’s failure to disclose the Bangkok fax to Yoong could in no sense have contributed to his loss.

58     Soh, however, does not dispute that he had serious reservations about the sale of the property going through and that he was thinking all the time that he had missed ‘a trick’. What worried him was the cheap price at which Fontana was prepared to sell the property. This is what made him think there was some ‘trick’. It was to allay his fears that he wanted to see Yoong: he wanted to find out whether Fontana really wanted to sell the property at $12.8m. Now, this is something he ought to have disclosed to Yoong, his lawyer, and his failure to do so contributed to his loss as in that event Yoong would have been put on his guard against Foo and less likely to have acted in the way he did. In this sense Soh contributed to his own loss.

59     In apportioning liability the particular relationship between the plaintiff and the defendant must not be overlooked. Where the relationship is one of a client and a professional where the client relies on the professional care and skill in handling the affairs of the client, the courts take account of the primary responsibility of the professional. See Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1995] 2 All ER 769. Bearing this in mind and taking a broad overview of the conduct of both parties, we think that it would be just and equitable to apportion liability in the proportion of 25% to Soh and 75% to Yoong.

60        Accordingly, this appeal is allowed. There will be judgment for the appellants, the plaintiffs in the action, for $604,500, that being three-quarters of the sum of $806,000 paid to Foo, with interest at 6% pa from the date of the writ to the date of this judgment and with 75% of the taxed costs both here and below. The appeal deposit will be refunded to the appellants’ solicitors.

Appeal allowed

Reported by Ang Cheng Hock