Two property agents invested in rights to buy units in a New Zealand housing project marketed in Singapore. The developer had neither title to the land nor planning consent, and went into liquidation. The investors sued the Singapore agency, its key executive officer and the salesperson who presented the project. The appeal turned on when individuals, rather than their company, are personally liable for what they say.
The facts
At a marketing event in January 2012, the salesperson told the investors about the developer’s track record, the sales status of the project and the security of investors’ money. Two days later, when the investors signed, they asked the agency’s key executive officer whether these statements were true and whether due diligence had been done (at [7]–[8]). The investors paid S$15,000 and US$142,656.76.
At trial, the District Judge found the agency liable but dismissed the claims against both individuals (at [10]–[13]).
The key executive officer: liable
On appeal, the High Court found that he had made the assurances the investors described (at [58]). Following Williams v Natural Life Health Foods and the Court of Appeal in Animal Concerns, a director is liable for his own torts, but liability for a negligent statement requires a personal assumption of responsibility (at [68]–[77]). Here he spoke directly to the investors and nothing suggested he was speaking only for the company, so there was sufficient proximity (at [83]). The clauses of the purchase agreement dealt with representations by the developer and did not exclude his duty (at [84]–[97]). Policy did not point the other way: the duty is to take reasonable care, not strict liability (at [98]–[102]). Breach was not seriously disputed (at [103]).
The salesperson: duty, but no breach
Following Su Ah Tee, the salesperson did owe the investors a personal duty of care (at [107]). But she had not fallen below the standard expected of her. She was conveying statements she had been trained to make, much like a promoter at a fair working from a fact sheet, and was entitled to assume that the agency had verified them (at [114]–[117]). Requiring every salesperson at an event to carry out their own due diligence would be unduly onerous.
Outcome
The key executive officer was held jointly and severally liable with the agency for S$15,000 and US$142,656.76, with interest at 5.33% from the date of the writ (at [118]). The appeal against the salesperson was dismissed (at [117]).
Why it matters
Directors and senior managers who reassure customers personally can be sued personally. Those giving assurances should be sure the checks they describe were actually done. Investors, for their part, should keep a record of who said what, and in what capacity.
Common questions
Can a company director be personally liable for negligent misstatement?
Yes, where the director personally assumes responsibility for the statement, for example by giving direct assurances to the buyer. Speaking only on the company’s behalf, such as in a letter on company letterhead, normally points the other way.
Must a property salesperson verify everything a developer says?
Not always. In this case a salesperson repeating representations she had been trained to make was entitled to rely on her agency having done its due diligence. She would have breached her duty if, for example, she had misstated what she was told to say.
Akesh Abhilash is a Singapore disputes lawyer with eleven years in practice, acting in commercial, cross-border and criminal matters before the Court of Appeal, the High Court, the State Courts and international tribunals. Read his profile.