United Indo-Singapore Corporation Pte Ltd

- vs -

Foo

Judgment

CJ Wee CJ

1. The defendants are the partners of Messrs Foo & Quek, a firm of solicitors. The plaintiffs, on 5 March 1974 exercised an option to purchase, subject to contract, premises known as 37, Telok Ayer Street, Singapore (the property) from City Developments Ltd (the vendors) for whom the defendants were acting.

2. After the exercise of the option, the plaintiffs instructed the defendants’ firm to act for them also in their proposed purchase of the property. As the plaintiffs’ solicitors the defendants’ firm wrote to the Urban Renewal Department of the Housing and Development Board on 5 March 1974 to inquire whether the property was in an area earmarked for urban renewal. On 14 March 1974 that department replied stating the property was in an area ‘under study for comprehensive development’. The defendants did not inform the plaintiffs of the contents of the Urban Renewal Department’s letter of 14 March 1974 nor did they advise the plaintiffs as to the implications of that letter and the likelihood that all or part of the property would be compulsorily acquired in the near future. The plaintiffs allege that in failing to so advise them the defendants were in breach of duty and as a consequence the plaintiffs have suffered damage. The defendants’ firm asked for an interpretation of that term and in reply that department stated: ‘Based on our Department’s policy our reply of 14 March 1974 stands’. Although that reply was dated 29 March 1974 it was not received by the defendants’ firm until 3 April 1974. That reply was also not made known to the plaintiffs by the defendants.

3. Before that reply was received the defendants proceeded to arrange for the plaintiffs to exchange contracts with the vendors on or before 3 April 1974 for the purchase of the property. The terms, (so far as material) of the contract were:

4. Clause 2 which so far as material reads:

   The purchase price of $2,700,000 shall be paid by the Purchaser to the vendor in the following manner: (a) Immediately on signing of this Agreement a sum of $270,000. (b) On or before 30 June 1974 $270,000. (c) On or before 30 June 1975 $432,000. (d) On or before 30 June 1976 $432,000. (e) On or before 30 June 1977 $432,000. (f) On or before 30 June 1978 $432,000, (g) On or before 30 June 1979 $432,000. PROVIDED the Purchaser may pay any sum in excess of the yearly instalments referred to in (c) to (g) above and any such payments shall be adjusted accordingly from the last instalment. AND PROVIDED ALSO the payments stipulated above shall not prejudice any rights which the vendor may have under any subsequent clauses of this Agreement in case of non-payment of any of the instalments aforesaid.

   Clause 13 reads:

   Without limiting or restricting cl 11 herein it is hereby declared the property is sold subject to any Notices of intended acquisition or acquisition by the Government or other Competent Authority and in the event the Government or other Competent Authority acquiring the property or part thereof after the date of this Agreement but before the actual date of completion the Purchaser shall not be entitled to rescind this Agreement.

   Clause 14 reads:

   Notwithstanding cl 2 herein should the property be acquired by the Government or other Competent Authority the Purchaser shall forthwith complete the purchase.

5. The plaintiffs, pursuant to the contract, entered into possession and paid to the vendors the instalments due and also affected improvements and alterations to the property.

6. On 15 November 1975 the Government by a Gazette notification gave notice under s 5 of the Land Acquisition Act of the intended compulsory acquisition of the property. Subsequently the government acquired the property and the Collector made his award on 18 June 1977 of $1,261,000. On appeal, the award was increased by $620,610.96.

7. The facts outlined were pleaded in the amended statement of claim endorsed in the amended writ of summons taken out by the plaintiffs against the defendants on 19 June 1982. Their cause of action was in tort — the tort of negligence. The defendants now apply to strike out the amended statement of claim on the grounds that it discloses no reasonable cause of action against them, or alternatively, is frivolous or vexatious, or, alternatively is otherwise an abuse of the process of the court. For the purposes of this application the allegations made by the plaintiffs have to be assumed to be correct. The defendants’ contend that the claim is statute-barred, the writ having been issued more than six years after the cause of action arose. It is not in dispute that to establish a cause of action the plaintiffs must establish not only a breach of duty, but that that breach of duty occasioned them damage. It is common ground that in an action in tort, time will not begin to run until the damage occurs.

8. It is also common ground that the critical question I have to decide is, when did the damage occur. The defendants rely on Pirelli General Cable Works Ltd v Oscar Faber & Partners (1983) 1 All ER 65. In that case the defendants, a firm of consulting engineers in March 1969 advised the plaintiffs in the design and erection of a boiler chimney. They were found negligent in the design of the chimney. It was found that damage in the form of cracks at the top of the chimney could not have occurred later than April 1970. The writ was issued in October 1978. The House of Lords held that the plaintiff’s claim was time barred because the cause of action accrued in April 1970, when damage, in the form of cracks, must have come into existence. Lord Fraser who delivered the leading opinion said at p 72:

   Counsel for the defendants submitted fault of his clients in advising on the design of the chimney was analogous to that of a solicitor who gives negligent advice on law, which results in the client suffering damage and a right of action accruing when the client acts on the advice (see Howell v Young (1826) 5 B & C 259, [1824-34] All ER Rep 377 and Forster v Outred & Co [1982] 2 All ER 753, [1982] 1 WLR 86). It is not necessary for the present purpose to decide whether that submission is well founded, but as at present advised, I do not think it is. It seems to me that perhaps where the advice of an architect or consulting engineer leads to the erection of a building which is so defective as to be doomed from the start, the cause of action accrues only when physical damage occurs to the building.

9. The defendants also rely on Re Robinson’s; Robinson & Co Ltd v Collector of Land Revenue  [1980-1981] SLR 1, in particular, the following passage (at p 257) in the opinion of the Privy Council which reads:

   Once the machinery for acquisition has started to operate, which it has under s 5, then, subject to the power to withdraw, the owner of the land who, it is important to observe, has no right to object to the acquisition, has an interest only in compensation. To accept this earlier stage as that from which acquisition is to start, accords with the policy of s 33, and presents the lesser difficulties in practical operation. Their Lordships are, on this point, in favour of the respondent, being of opinion that the operation of s 5 is the critical date.

10. They argue that the plaintiffs effectively suffered damage when the s 5 notification was gazetted in November 1975. They say that from that date the process or machinery of acquisition of the property had started and from that date the plaintiffs could not deal with the property and thereby suffered damage. It was a loss which was a quantifiable loss.

11. The plaintiffs’ answer to that argument is that it was not self-evident that the plaintiffs suffered some damage when the s 5 notification was gazetted in November 1975. They had not alleged in their pleadings that the market value of the property at the date of the notification was less than the agreed purchase price. They submit that this must depend on the evidence that will be led at the trial. Their contention is that damage occurred when the Collector of Land Revenue made his award on 18 June 1977 and rely on UBAF Ltd v European American Banking Ltd [1984] QB 713. In that case Ackner LJ who delivered the judgment of the court said:

    The plaintiffs are suing in tort — the tort of negligence. To establish a cause of action they must establish not only a breach of duty, but that that the breach of duty occasioned them damage. This is axiomatic. It is possible, although it may be improbable, that, at the date when the plaintiffs advanced their money, the value of the chose in action which they then acquired was, in fact, not less than the sum which the plaintiffs lent, or indeed even exceeded it.

12. This must depend on the evidence. The mere fact that the innocent but negligent misrepresentations caused the plaintiffs to enter into a contract which they otherwise would not have entered into, does not inevitably mean that they had suffered damage by merely entering into the contract. To take and somewhat modify an example canvassed during the course of argument: A tells B that he wishes to sell his vintage Bentley which he innocently but negligently represents is a blue label long chassis. it is, in fact, a red label short chassis. If A had known, he would not have agreed to buy the Bentley, because he only collects blue label long chassis Bentleys. Assume, however, that the red label short chassis Bentleys were at all material times significantly the more valuable cars so that he was able to resell at a profit. He has then no cause of action.

13. In my opinion as soon as the s 5 notification was gazetted it was self-evident that the plaintiffs had suffered some damage, The value of the property to the plaintiffs was at that date reduced because it was property under compulsory acquisition.

14. If I am wrong, I have to consider another point raised by the plaintiffs in answer to the defendants’ plea under the Limitation Act (Cap 10). The plaintiffs rely on s 29 which so far as material, reads:

    Where in the case of any action for which a period of limitation is prescribed by this Act, either — (b) the right of action is concealed by the fraud of (the defendant); ... the period of limitation shall not run until the plaintiff has discovered the fraud ... or could by reasonable diligence have discovered it.

15. The plaintiffs’ allegation in para 5 of the statement of claim is that the Urban Renewal Department’s reply of 29 March 1974 was not disclosed to them by the defendants’ firm.

16. The argument is that this letter should have been passed on to the plaintiffs with, the advice that if the plaintiffs proceeded with their proposed purchase of the property there was a substantial risk that the property would be compulsorily acquired. They submit that this non-disclosure is significant enough to enable them to rely on s 29 and is an arguable point for the case to go to trial in an application to strike out the writ on the ground that the action is statute-barred. They submit that this is non-disclosure which amounts to ‘fraud’ within the meaning of s 29. They rely on a passage in the judgment of Lord Evershed MR in Kitchen v Royal Air Forces Association [1958] 2 All ER 563.

17. A necessary consequence of the concealment was, as they must, if they had given any thought to the matter at all, have realized, was a concealment also from the plaintiff of the real effect of their having thrown away — and I use that word deliberately — any case which she might have possessed under the Fatal Accidents Acts in the previous May. Does, however, that concealment amount to fraud? I repeat that there is no finding and no justification for any finding of dishonesty as that word is ordinarily understood. But it is now clear that the word ‘fraud’ in the section which I have read, is by no means limited to common law fraud or deceit. Equally, it is clear, having regard to the decision in Beaman v ARTS Ltd that no degree of moral attitude is necessary to establish fraud within the section. What is covered by equitable fraud is a matter which Lord Hardwicke did not attempt to define 200 years ago, and I certainly shall not attempt to do so now, but it is, I think, clear that the phrase covers conduct which, having regard to some special relationship between the two parties concerned, is an unconscionable thing for the one to do towards the other.

18. The defendants submit the non-disclosure relied on by the plaintiffs cannot amount to conduct which is unconscionable.

19. In my view, it is arguable that a necessary consequence of the defendants’ failure to disclose to the plaintiffs the contents of the reply by the Urban Renewal Department, which they received before the plaintiffs had contracted to purchase the property, was, as they must have realized if they had given the matter any thought at all, a concealment from the plaintiffs of the real likelihood that the property would be compulsorily acquired in the near future.

20. Accordingly, the application is dismissed with costs in any event.

Cases

Kitchen v Royal Air Forces Association [1958] 2 All ER 563; Pirelli General Cable Works v Oscar Faber & Partners (a firm) [1983] 1 All ER 65; Robinson’s Re; Robinson & Co v Collector of Land Revenue [1980–1981] SLR 1; UBAF Ltd v European American Banking [1984] QB 713

Legislations

Land Acquisition Act (Cap 272): s. 5

Limitation Act (Cap 10): s. 29

Representation

Samuel Julius Sher QC and Lim Chor Pee (Chor Pee & Co) for plaintiffs.

S Rajendran (Khattar Wong & Partners)for defendants/applicants.