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The Singapore Law Gazette

Vicarious Liability and Agency: Ong Han Ling v AIA and Beyond

In the evolution of the law on vicarious liability, major developments have taken place in the past two decades. More notably, the apex courts of the UK have extended the application of vicarious liability to quasi-employees and beyond. In Singapore, in the recent decision of Ong Han Ling v AIA,1(2018) 5 SLR 549. the High Court applied the doctrine to hold an insurance company liable for the tort of an agent. The decision raises interesting and difficult questions on the exact nature and ambit of the concepts of vicarious liability and agency respectively as well as their inter-relationship. In this article, the writer explores these and other related intrigues.

Introduction

The concept of vicarious liability has undergone significant change over the past two decades. Originally, vicarious liability was about the liability of an employer for the tort committed by its employee in the course of employment. The two key elements then were employee and course of employment.

As regards the first, over time, the courts evolved multi-factorial tests of control, business integration and economic reality to determine if the tortfeasor was an employee or an independent contractor. Vicarious liability was not applicable as regards an independent contractor.

As for the second, the concept of authorisation initially played an important role. In Armagas Ltd v Mundogas SA,2(1986) AC 717. the House of Lords held that there was no vicarious liability where the employee was not authorised. (In Singapore, however, the Armagas approach was rejected by the SGCA in Skandinaviska v Asia Pacific Breweries.3Skandinaviska Enskilda Banken B (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another (2011) 3 SLR 540.) Similarly, the Salmond test drew a distinction between an unauthorised act and an unauthorised mode of an authorised act; there was vicarious liability for the latter but not the former.

The Salmond test operated fairly well for some time but proved quite inappropriate for dealing with situations of intentional wrongdoing, such as fraud or sexual misconduct. Consequently, in Lister v Hesley Hall,4(2001) UKHL 22. the House of Lords adopted a close connection test – was there a sufficiently close connection between the tort and the employee’s scope of work? If there was such a close connection, it mattered not that the act or conduct was not authorised or could not be said to have been authorised.

The past decade saw another significant development – the extension of vicarious liability to cover tortfeasors who, by conventional definition, were not employees. In a succession of cases, the UKSC applied vicarious liability in the Christian Brothers case,5Various Claimants v Catholic Child Welfare Society and others (2013) 3 WLR 1319. Cox v Ministry of Justice6(2016) 3 WLR 1319. and Armes v Nottinghamshire County Council7(2017) UKSC 60. to followers of a religious order, prisoner-workers and participants in a foster-parenting scheme respectively, labelling the tortfeasors in the first two cases “quasi-employees”. In so extending the application of vicarious liability, the courts shifted their focus to the closeness of the connection between the defendant-tortfeasor relationship and the tort committed. Christian Brothers and Cox were cited with approval by the SGCA in Ng Huat Seng v Munib Mohammad Madni.8(2017) SGCA 58.

Against this backdrop of the doctrinal evolution, the SGHC decision of Ong Han Ling v AIA is important for several reasons. First and foremost, the decision has direct bearing on whether vicarious liability can be applied to situations where the tortfeasor is an agent and not an employee. Secondly, it throws light on the separate existence of the doctrine of vicarious liability and the doctrine of agency, and the independent availability of the alternative doctrines. Thirdly, it re-surfaces the puzzling question of the relevance of authority when considering vicarious liability and the converse question of whether close connection, a critical aspect of vicarious liability, may have relevance when one uses the agency approach. And there are ancillary issues as well.

Facts, Issues, Decision

The case involves a fraud committed by Sally, an agent of American International Assurance Company Ltd (AIA)9There were actually two AIA defendants in the action – Asia International Assurance Company Ltd, an entity incorporated in Hong Kong (AIA HK), and AIA Singapore Private Limited (AIA Singapore). AIA Singapore took over AIA HK’s Singapore business in 2012. Hence, AIA Singapore was a nominal plaintiff. against a couple, Ong Han Ling (OHL) and his wife Enny (together the Ongs). Essentially, Sally promoted to the Ongs a fictitious policy called “Thank You Policy” and used moneys remitted for this supposed purpose to purchase AIA policies in the name of the Ongs and their daughter.

When the Ongs subsequently stumbled on these policies, Sally lied that these were erroneously listed as a result of computer crashes. She then induced them to surrender these policies and to return the proceeds (less an amount of S$888,000, purportedly to compensate the Ongs for the mistake) to AIA through her personally, so that she could purchase for them the appropriate policies. Instead, she misappropriated the money to purchase stocks and properties in her own name.

Sally was subsequently convicted and imprisoned, and much of the money was recovered by the authorities. An action was brought for the balance of S$1.5m outstanding. Claims were made against AIA and against Motion Insurance Agency Pte Ltd (Motion), the agency which managed Sally.

These claims were brought on several grounds, including negligence, vicarious liability and agency. AIA made a counterclaim against the Ongs on the ground of unlawful means conspiracy.

The plaintiffs’ claim in negligence failed as, even though the High Court found that AIA owed the plaintiffs a duty of care in respect of the moneys remitted to AIA and had breached that duty, there was no causation. The reason was that the plaintiffs had not shown that if AIA had acted with care and contacted the plaintiffs directly to confirm the purchases, this would have led to the plaintiff discovering the fraud and recovering their moneys. After all, on the facts of the case, even after the plaintiffs learnt of the policies they had not applied for, they continued to trust and rely on Sally.

The plaintiffs’ claim succeeded on vicarious liability and, it would appear,10See, in particular, (219) of the judgment cp Supreme Court Case Summary of 29 December 2017 which said in paragraph 5 that the court found for the plaintiffs “on the sole issue of vicarious liability”. on the ground of agency but failed on the other grounds. AIA’s counterclaim in conspiracy failed as the High Court did not find evidence that AIA had conspired with Sally to defraud AIA.

This article focuses on the vicarious liability and agency aspects of the decision.

The Law on Vicarious Liability

Justice Belinda Ang began this part of her judgment by setting out the current, and rather complicated, law on vicarious liability.

Her Honour began by citing the two policy considerations identified by the SGCA in Skandinaviska – namely, effective victim compensation and deterrence of future harm. Regarding victim innocence, Chan CJ had said that vicarious liability would be imposed only if the victim was innocent or, at least, more innocent than the defendant.

She then emphasised the importance of enterprise risk in the concept of vicarious liability, citing in particular11Her Honour also cited Lister v Hesley Hall (2002) 1 AC 215 at (80) and Skandinaviska at (76) – (80). Lord Nicholls’ following remarks in Dubai Aluminium & Co Ltd v Salaam:

The underlying legal policy is based on the recognition that carrying on a business enterprise necessarily involves risks to others. It involves the risk that others will be harmed by the wrongful acts committed by the agents through whom the business is carried on. When those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged.

Justice Ang proceeded to the two-stage test of special relationship and sufficient connection as endorsed by the SGCA in Ng Huat Seng. In the first stage, the question is whether there was a special relationship between the tortfeasor and the defendant such that it was fair, just and reasonable to impose liability on the defendant. Following Christian Brothers and Cox, this relationship is not restricted to the employer-employee relationship but instead can apply to relationships which have the same features or factors as employer-employee relationships; and these, according to Lord Phillips JSC in Christian Brothers,12(2012) 3 WLR 1319 at (47). are:

  1. the defendant’s better ability to compensate,
  2. the activity was conducted on the defendant’s behalf,
  3. the activity was part of the defendant’s business activity,
  4. the defendant created the risk, and
  5. the tortfeasor was more or less under the control of the defendant.

The above five factors (the Phillips factors), she observed,13At (156). blended the traditional test of employment (control and integration) with the justifications for imposing vicarious liability on employers.

Ang J then mentioned that, in contrast, vicarious liability would not apply to torts committed by independent contractors, who operate their own enterprises and should take ownership of their own risks.14At (157), citing Ng Huat Seng (at (64)).

At the second stage, the question is whether there is a close (or sufficient) connection between the tortfeasor’s conduct and the defendant-tortfeasor relationship. According to Skandinaviska, in deciding if this connection existed, the five Bazley15The Christian Foundation v Patrick Allan Bazley (1999) 2 SCR 534. factors should be considered, namely,

  1. the opportunity afforded by the enterprise to the tortfeasor,
  2. furtherance of the defendant’s aims,
  3. the presence of inherent friction, confrontation or intimacy in the defendant’s enterprise,
  4. the extent of power conferred on the tortfeasor, and
  5. the vulnerability of the potential victims.

There will be a sufficient connection particularly where the defendant-tortfeasor relationship materially increased the risk of the tort being committed.16At (158), citing Ng Huat Seng (at (68)).

Her Honour emphasised:17At (160).

Ultimately, vicarious liability should be imposed only when it is fair, just and reasonable to do so, having regard to the aims of effective victim compensation, deterrence of future harm and in the light of the concept of enterprise risk.

In a nutshell, in deciding whether a defendant is vicariously liable for a tort committed by a non-employee, a court first has to find a special relationship between the defendant and the tortfeasor, using the Phillips factors. Next, it has to ascertain if there is a close connection between the aforesaid special relationship and the tort committed, using the Bazley factors. Overall, vicarious liability should be imposed only if it is fair, just and reasonable to do so and if the aims of effective victim compensation and deterrence are achieved.

Vicarious Liability for Agent’s Tort

Moving to the issue of applying vicarious liability to torts committed by agents, Ang J explained that the principal-agency relationship did not automatically satisfy the special relationship required at the first stage. So to hold “would not pursue the public policy aims of vicarious liability and conflate the two separate bodies of law.18At (164).

In this regard, after observing that agency relationships arise in a wide array of situations, Ang J made several important remarks:19Ibid.

  1. The authority test hence ensures that the principal’s liability is confined to acts that have been authorised by him as opposed to the close connection test, which encompasses a larger range of acts”;
  2. [C]oncepts in vicarious liability are not easily transposed into the agency context”; “[t]he legal positions of an agent and an independent contractor are not mutually exclusive, yet vicarious liability does not generally attach to the acts of an independent contractor”; and
  3. [P]ublic policy justifications for vicarious liability are not as applicable to agency relationships. The principal’s varying level of control over the agent and the independent environment the agent operates in may not permit the principal to adequately manage the risks of an agent’s torts.

Hence, having a principal-agent relationship would not of itself satisfy the special relationship required for the first stage.

Applying the Law to the Facts

Dealing with the preliminary point of lesser fault, Ang J clarified that while Chan CJ did say in Skandinaviska that where the victim is more at fault, the policy of victim compensation “loses much of its moral force”,20At (166). the learned judge went on to acknowledge that that did not mean vicarious liability cannot apply. The absence of lesser fault is not an absolute pre-condition to imposing vicarious liability.21Compare with Rohini d/o Balasubramaniam v Yeow Khim Whye Kelvin (2017) SGHC 149 where Chua J, at (30) interpreted this lesser fault principle as “a precondition”. In any case, Ang J did not think that the Ongs were more at fault than AIA.

As regards the categorisation of the tortfeasor, Justice Ang was of the view that even though Sally was not an employee,22There were two reasons for this: her agency contract expressly stated that the relationship was not one of employment, and she received commission-based remuneration: see (170). she was not an independent contractor. The explicit explanation for this conclusion was:23At (174).

She was not allowed to represent any other financial adviser or provide financial advisory services on her own account, and thus could not have been an independent contractor.

It should be noted that this conclusion – that Sally was not an independent contractor – was critical as the established position is that vicarious liability does not apply to torts committed by independent contractors.

Ang J then considered if there was a special relationship between AIA and Sally such that it was fair, just and reasonable to impose vicarious liability on AIA. The following factors inclined her Honour to conclude that there was this special relationship:

  1. the agents were an “integral part of AIA’s business”; AIA relied on them to promote the products;24Ang J remarked at (175) that insurance agents such as Sally are the “lifeblood of the insurance company”.
  2. AIA had the power to select the agents and to exercise a measure of control over them”;25At (173). and
  3. the life insurance business was regulated in a way that emphasised the closeness of relationship between the insurer and its agent, and the regulator expects the insurer to take responsibility for the management of the agent.26At (174).

Essentially, most of the Phillips factors were present and, in the circumstances, it was fair, just and reasonable to impose vicarious liability on AIA.

Ang J then moved on to the second stage of close connection, paying particular regard to whether AIA created or significantly enhanced the risk of Sally’s fraud. She observed AIA’s practice of accepting without independent verification the agent’s word as instruction and authorisation from policyholders and also the agent’s ability to retain refund cheques without difficulty. Applying the Bazley factors, the learned Judge found that there was a sufficient connection between the agent’s fraud and the defendant-tortfeasor relationship on account of, inter alia:

  1. the fact that “AIA’s business model afforded Sally the opportunity to abuse her functions”;27At (178).
  2. Sally’s selling of a non-existent product “fell squarely within AIA’s aims of selling insurance policies”;28At (181). and
  3. AIA agents were expected to develop “strong personal relationships with policyholders”.29At (182).

In the circumstances, Justice Ang was of the view that imposing vicarious liability is consistent with the aims of victim compensation and deterrence as well as with the notion of enterprise risk.30At (184). In her view, AIA’s practice in relation to its agents significantly enhanced the risk of fraud by the agents.

Further, Sally’s fraud was of a type which was within AIA’s contemplation31After Skandinaviska, it appears that the defendant’s contemplation of the tort is a requirement for imposing vicarious liability: see (2011) 3 SLR 540 at (91). as AIA was clearly aware of the risks arising from allowing their agents to act as intermediaries.32At (186). Sally’s fraudulent acts, including her false representations about the Thank You Policy, forgery of promotional material and signatures on various documents, were within AIA’s contemplation and were explicitly prohibited in AIA’s Rule Book.

Hence, AIA was vicariously liable for Sally’s fraud and should compensate the Ongs, with a view to putting them in a position they would have been in had the tort not been committed. Importantly, Justice Ang added tersely:33At (188).

Contributory negligence is also not a defence to the tort of deceit.

In addition, she found that the Ongs’ act of paying the surrender proceeds out to Sally did not break the chain of causation as their acts were “not wholly unreasonable” given that they were still under the effects of fraud.34At (192).

The Court found Motion not liable under vicarious liability as it did not find the requisite special relationship between Motion and Sally.35At (196) et seq.

Reasoning on Agency

Justice Ang began with the trite legal proposition that a principal is liable for its agent’s acts when such acts are within the agent’s actual or apparent authority; this extends even where the agent’s act are for the agent’s own benefit.36At (208). She then took pains to explain the differences between agency analysis and vicarious liability analysis.

First, a principal’s liability for an agent’s tort is primary whereas an employer’s liability for an employee’s tort is secondary. As her honour explained:37At (210).

Any act of the agent which is authorised by the principal is treated as the principal’s own act … An employer’s liability for his employee’s act, on the other hand, is secondary and indirect, in the sense that the tortious act is the employee’s alone, but the employer is vicariously liable for the tort.

She then noted that, in the past, this distinction had been blurred. In particular, in the UK, the House of Lords in Armagas decided that an employer’s liability for an employee’s fraud was determined using agency principles. Citing from Lord Keith’s judgment, she noted:38At (212).

Lord Keith found that “the question of ostensible authority in the contractual field is closely intertwined with that of vicarious liability for the fraud of a servant”, and “the attempted distinction” between acting within one’s scope of authority and one’s course of employment “has no validity in this category of case”.

Justice Ang then noted that the SGCA in Skandinaviska had chosen not to follow Armagas thus allowing Singapore courts to “cleanly separate a principal’s primary liability on agency principles and an employer’s secondary liability on the close connection test”.39At (213). Hence, “a principal’s liability on agency principles should not be seen as another way by which vicarious liability can be imposed on a principal”.40Ibid. She further explained that “principles of agency were not developed for tort law.”41At (214).

She further pointed out42At (215). that in agency analysis, the inquiry as to authority tended to end up in apparent authority, where the key question is what exactly the principal had represented or held out as to the agent’s scope of authority such that it encompasses the tortious act.

Turning to the facts, Justice Ang held43At (217). that Sally’s false representations as to the existence of the fictitious policy were not made within her actual authority but nevertheless were made within her apparent authority. However, the representations as to AIA’s approval of the policy, in contrast, were not made within her apparent authority.44At (217). However, she held that the false representation as to the fictitious policy still operated in the minds of the Ongs and hence AIA should be liable (at (219)).

The Court also found that Motion was not liable to the Ongs under agency principles as Sally had no actual authority in relation to Motion; neither did she have apparent authority, especially since on the evidence the Ongs had consistently treated Sally as AIA’s agent and not Motion’s.45At (222).

Comments and Thoughts

The Ong Han Ling decision is important for several reasons.

First, it provides a good excursus on the modern law of vicarious liability as it applies in Singapore. Second, it applies vicarious liability to a situation where the tortfeasor is an agent. Third, it explains and vigorously defends the distinction between agency and vicarious liability in general, and between apparent authority and close connection in particular.

A host of principles or propositions may be gleaned from the judgment:

  1. for employer-employee situations, the test is still whether there is a close connection between the tort and the employee’s scope of employment;
  2. where the tortfeasor is not technically an employee, a two-stage enquiry is undertaken:
    1. ascertaining, using the Bazley factors (and also the factor of contemplation), if there was a special relationship between the tortfeasor and the defendant such that it was fair, just and reasonable to impose liability; and
    2. ascertaining, using the Phillips factors, if there was a sufficient connection between the tortfeasor’s conduct and the aforesaid special relationship and, in particular, whether the relationship materially increased the risk;
  3. vicarious liability may be imposed only if doing so is consistent with the aims of effective victim compensation and deterrence as well as the notion of enterprise risk;
  4. vicarious liability may apply to an agency relationship if the two-stage test is satisfied;
  5. vicarious liability cannot apply if the agent is an independent contractor;
  6. an exclusive agent, that is – one who is permitted to represent only one principal – is not an independent contract and hence vicarious liability may apply;
  7. vicarious liability and agency are separate and distinct concepts, and may alternatively be applied to agency situations;
  8. agency liability is primary and the principal is liable for what is considered his own act; vicarious liability is secondary and the employer is liable for another’s act;
  9. the close connection test (in vicarious liability) is wider than the authority test (in agency) as it encompasses a larger range of acts; and
  10. contributory negligence is not a defence in the tort of deceit.

Propositions (1) to (3) collectively reflect the modern approach of vicarious liability under Singapore law. The framework is a complex one. It now emphasises and relies more on higher level considerations in three respects – the aims of tort law (compensation and deterrence), the general notions of justice (just, fair and reasonable) and the justifications for imposing vicarious liability (integration, benefit and risk creation46Here, the writer is adopting Lord Reed’s modifications of the Phillips factors: see Cox at (24).). It is observed that, in this process, the law has become more fluid and, consequently, more uncertain. One is reminded of the words of Lord Dyson in Mohamud v WM Morrison Supermarkets PLC47(2016) AC 677 at (54). that imprecision is inevitable and “to search for certainty and precision in vicarious liability is to undertake a quest for a chimera”. The extension of vicarious liability outside of conventional employee situations illustrate and test the elasticity of the doctrine. Certainly, the application of the doctrine to the participants of a foster-parenting scheme in Armes is rather controversial. The potential ambit of the modern doctrine is indeed wide.

Propositions (4) to (6) relate to the application of vicarious liability to agents. One wonders about proposition (6) and whether the exclusivity of dealing is itself sufficient to take the agent out of the category of independent contractor. One should note that from the point of economic reality (an important factor in testing if the tortfeasor is an employee), the agent is remunerated on a commission basis. Also, one wonders if the converse proposition is true – if the agent represents more than one principal, he is an independent contractor.

As for proposition (5), (7) and (8), it is observed that most judges tend to robustly defend the distinctions between vicarious liability and agency. Yet, when one looks at the bigger picture, as has been done in modernising vicarious liability, it would appear that the distinction is more semantic than substantive.

Proposition (9) directly challenges the Armagas position. In deciding if a defendant should be made liable for the conduct of a tortfeasor, are vicarious liability and agency simply alternative approaches and modes of analysis? Put in a diagrammatic way – are they an identical circle or are they different circles? If the latter, are they concentric circles or overlapping circles? And, if overlapping, where do they overlap and where do they not overlap? These are tough questions to answer.

Armagas suggests they are the same circle. This position is possible when we juxtapose and compare the two concepts. So far as prohibited acts, such as fraudulent ones, are concerned, the wrongdoing may have a close connection with the scope of work of the tortfeasor and may likewise be within the apparent authority of the agent, on account of the representation (by word or conduct) of the principal. It should be noted that Justice Ang found AIA liable on vicarious liability as well as on agency.

In this comparison, it is observed that the constraints on vicarious liability (victim compensation and deterrence, and the notion of fair, just and reasonable) are not unlike the limitations of the ambit of apparent authority, namely that the plaintiff was aware of, suspected or ought to have known of the lack of authority. Ong Han Ling may be construed as implying either that they are concentric circles (with agency being the inner circle) or as overlapping circles. If it is the latter, the question is – in what circumstances do they not overlap?

Even if one accepts that vicarious liability and agency are separate concepts, there is no escaping the reality that they are similar. Clearly, whether the tortfeasor has authority is relevant in considering close connection for the purposes of vicarious liability. In the recent decision of Bellman v Northampton Recruitment,48(2018) EWCA Civ 2214. the English Court of Appeal discussed the issue of actual authority and apparent authority even as it considered whether there was a company was vicariously liable for the conduct of an employee and the judgment is peppered with references to the tortfeasor’s “authority”.49The case is complicated by the fact that the employee was a high-level employee; in fact he was the managing director of the company. In such a scenario, questions of corporate agency – alter ego and the notion of directing mind and will – also surface.

More directly in point is the recent UK Court of Appeal decision in James Scott Winter v Hockley Mint Ltd,50(2018) EWCA Civ 2480. which involved the liability of a principal for the fraudulent misrepresentation of an agent. The trial Judge had applied vicarious liability and the close connection test to decide that the principal was liable. On appeal, the Court of Appeal granted the appeal and remitted the case for re-hearing on the issue of whether the principal was vicariously liable on the basis of the agent’s ostensible authority. The Court stated explicitly:51At (48).

“Armagas is binding authority of the House of Lords that, where a claimant has suffered loss in reliance of the deceit of an agent, the principal is vicariously liable if, but only if, the deceitful conduct of the agent was within his or her actual or ostensible authority.

The SGHC approach in Ong Han Ling is diametrically opposed to that taken by the UK courts.

The Rohini Decisions

As regards the fairness of the outcome in Ong Han Ling, and in relation to proposition (10), it is appropriate to consider the SGHC decision in Rohini d/o Balasubramaniam v Yeow Khim Whye Kelvin52(2017) SGHC 149. and the subsequent appellate decision in Rohini d/o Balasubramaniam v HSR International Realtors Pte Ltd.53(2018) 2 SLR 463. The case, like Ong Han Ling, involved liability for the fraudulent conduct of an agent. In that case, a real estate agent, Yeow, defrauded his client, Rohini, by persuading her to give him four blank cheques signed in blank on the pretext that he would use them to make payments in relation to a property transaction. In the High Court, an action was brought against Yeow as well as HSR. In respect of HSR, Rohini sued on the basis of negligence, vicarious liability and agency. Chua Lee Meng J dismissed the action against HSR and gave his reasons in a somewhat abbreviated judgment.

As regards HSR’s liability in negligence, Rohini had alleged that HSR was in breach of its duty by:

  1. appointing an undischarged bankrupt as an agent,
  2. failing to disclose to the client the agent’s bankrupt status,
  3. failing to supervise the agent, and
  4. misleading the client and/or misrepresenting the agent as a “Group Director”.

On the first point, Chua J noted54At (44). that in the closing submissions the plaintiff had accepted that there was no breach. On the second, the learned Judge was of the view55At (45). that there was no duty to inform of the agent’s bankrupt status. As regards the third, the Judge remarked56At (46). that the plaintiff had not shown what HSR failed to do in supervising the agent. On the final point, he took the view57At (50). that even if there had been a breach as regards the agent’s title of Group Director, it was not causative as the plaintiff would still have trusted him anyway.

On vicarious liability, Justice Chua thought the claim failed as the Skandinaviska precondition of the victim being either without fault or less at fault was not satisfied. The victim, he found, was grossly negligent and her loss was “directly attributable to her own moral culpability”;58At (34). the opportunity for the agent to commit the fraud “arose from the plaintiff’s own conduct”.59At (36). On agency, Chua J found60At (39). that the agent had no authority, “express, implied or apparent” to receive cheques signed in blank.

The client appealed on all the three grounds of negligence, vicarious liability and agency. The Court of Appeal allowed the appeal on the ground of negligence. Andrew Phang JA, delivering the judgment of the Court, noted61At (37). that HSR had admitted that it owed Rohini a duty of care; the issue then was the content of that duty. The learned Judge remarked that in view of the fact that real estate agents deal with large sums of money, the standard of care ought to be a high one.62At (41). The learned judge thought that the subsequent passing of the Estate Agents Act, Cap 95A, 2011 Rev Ed, corroborated the expectation of such a high standard.

Moving to the content of that duty, Phang JA found63At (42). that HSR was negligent in not having in place a system that would let it know that Yeow was a bankrupt. Further, HSR was negligent in not having in a place a system to monitor and supervise its agents, particularly those who were bankrupt; however, this duty would not extend to informing clients of the bankrupt status of its agent as this would be impracticable.64At (43). It is also implicit from the judgment that HSR was negligent in designating Yeow “Group Director”.65See (43).

HSR had argued that they had exercised due diligence through wording in “transaction advice” with clients that payments should be made to HSR and that agents were not allowed to receive payment in cash or cheques in the agents’ name as well as internal newsletters to agents warning them against illegal or unethical conduct and to inform the agency of transactions within a certain timeframe. Justice Phang thought these measures were insufficient66At (48). As the learned Judge explained, to begin with the transaction advice would have been received only after the blank cheques had already been given. and that if HSR had taken reasonable steps, such as close monitoring, Yeow would not have had the opportunity to commit the fraud.67See (52). His Honour also remarked that there was nothing in the evidence to suggest that even if a proper system of checks and measures were in place, Yeow would still have been able to defraud Rohini. In other words, HSR’s negligence was causative of the loss.

Hence, a case of negligence was made out against HSR. However, Justice Phang held that in view of the client’s “extremely careless68At (54). conduct of giving blank cheques she was clearly contributorily negligent.69It would appear from the judgment that the issue of contributory negligence was raised in relation to vicarious liability ground but not the negligence ground. He remarked that the client’s misguided decision to trust the agent was the more potent cause of the loss and hence she was entitled to only 30 per cent of the amount claimed.

After concluding that AIA was liable in negligence, the SGCA decided70At (55). that it was unnecessary to consider the claims in vicarious liability and in agency.

As one ponders over the fairness of the outcome in Ong Han Ling, it is inevitable that comparisons will be made with the Rohini case. There the principal was held liable for the fraud of an estate agent through misappropriate blank cheques handed to him by the purchaser. It may be felt that the giving of blank cheques to an agent is not so far away from giving a cheque in the name of the agent; both actions appear to have a high and arguably similar degree of culpability or carelessness. Of course, in Ong Han Ling the wrongdoing takes place within the context of an elaborate and protracted scheme and, hence, is more reprehensible.

More importantly, in Rohini, the claimant was awarded, following the application of the principle of contributory negligence, a reduced amount while in Ong Han Ling, the claim was allowed in full. It is unfortunate that as a result of the SGCA not considering the vicarious liability and agency grounds, one is uncertain about the status of proposition (10) above under Singapore law. Had the court deliberated upon and concluded that the Ongs succeeded on vicarious liability or agency as well, would the claim also have been reduced on account of contributory negligence?

In English law, the proposition that contributory negligence is not available as a defence in an action based on deceit is well-established by authority, in particular Alliance & Leicester Building Society v Edgestop71(1993) 1 WLR 1462. and the House of Lords decision in Standard Chartered Bank v Pakistan National Shipping Corporation.72(2003) 1 All ER 328. See also Nationwide Building Society v Dunlop Haywards (DHL) Ltd (2009) EWHC 254 Comm. As the maxim goes, “fraud unravels all”.

Whether the policy of not allowing a fraudulent wrongdoer to plead the neglect of the victim applies with equal force in a three-party situation is more doubtful. Perhaps subsequent courts may wish to revisit this issue. The writer suggests that the notion of proportionality is of important application in ascertaining what is the appropriate compensation.

Concluding Remarks

The Ong Han Ling decision is important for a variety of reasons. First, the doctrine of vicarious liability has evolved into a complex framework that is not easily recognisable let alone understood. Justice Belinda Ang’s judgment provides a commendably comprehensive and accurate excursus of the Singapore law on the subject.

Second, the decision enters unfamiliar territory in extending vicarious liability to exclusive agents while fervently maintaining that the doctrine cannot apply to independent contractors.

Third, it affirms the Singapore position that vicarious liability and agency are distinct concepts even though the two may provide alternative claims in a given case.

Fourth, it adheres to the established English position that contributory negligence is not a defence in an action based on deceit. The correctness of such a position, in relation to a three-party scenario, remains open, since the SGCA in Rohini left the issue for another day.

Fifth, a doubt is raised in the reader’s mind as to whether this was not a case of non-delegable duty, since the judge noted73At (174). the legislative policy to make financial advisers accountable for the acts of its representatives.

Indeed, the law on vicarious liability, as with that of agency liability as well as non-delegable duty, is “on the move”.74Lord Phillips in Christian Brothers at (19). At this juncture, it is difficult to predict the final resting place of each of the three alternative doctrines. Comparisons of the three and their interaction leave the reader perplexed. The writer humbly suggests that,75As the writer had done earlier: see KY Low and J Fun, “Non-delegable duty, vicarious liability and agency: moving towards convergence?”, Singapore Law Gazette, July 2018 and the arguments there canvassed. in the interests of clarity, uniformity and fairness, the three supposedly distinct strands of analysis can and should coalesce into a unitary principle that, in general, when the law imposes a duty of care on a person, while the task may be delegated, the duty and responsibility, vis-à-vis an innocent victim, remain with him.

* In writing this article, the writer benefitted from discussions with Leong Kwong Sin and Nicholas Liu respectively.

Endnotes   [ + ]

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1.(2018) 5 SLR 549.
2.(1986) AC 717.
3.Skandinaviska Enskilda Banken B (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and another (2011) 3 SLR 540.
4.(2001) UKHL 22.
5.Various Claimants v Catholic Child Welfare Society and others (2013) 3 WLR 1319.
6.(2016) 3 WLR 1319.
7.(2017) UKSC 60.
8.(2017) SGCA 58.
9.There were actually two AIA defendants in the action – Asia International Assurance Company Ltd, an entity incorporated in Hong Kong (AIA HK), and AIA Singapore Private Limited (AIA Singapore). AIA Singapore took over AIA HK’s Singapore business in 2012. Hence, AIA Singapore was a nominal plaintiff.
10.See, in particular, (219) of the judgment cp Supreme Court Case Summary of 29 December 2017 which said in paragraph 5 that the court found for the plaintiffs “on the sole issue of vicarious liability”.
11.Her Honour also cited Lister v Hesley Hall (2002) 1 AC 215 at (80) and Skandinaviska at (76) – (80).
12.(2012) 3 WLR 1319 at (47).
13.At (156).
14.At (157), citing Ng Huat Seng (at (64)).
15.The Christian Foundation v Patrick Allan Bazley (1999) 2 SCR 534.
16.At (158), citing Ng Huat Seng (at (68)).
17.At (160).
18.At (164).
19.Ibid.
20.At (166).
21.Compare with Rohini d/o Balasubramaniam v Yeow Khim Whye Kelvin (2017) SGHC 149 where Chua J, at (30) interpreted this lesser fault principle as “a precondition”.
22.There were two reasons for this: her agency contract expressly stated that the relationship was not one of employment, and she received commission-based remuneration: see (170).
23.At (174).
24.Ang J remarked at (175) that insurance agents such as Sally are the “lifeblood of the insurance company”.
25.At (173).
26.At (174).
27.At (178).
28.At (181).
29.At (182).
30.At (184).
31.After Skandinaviska, it appears that the defendant’s contemplation of the tort is a requirement for imposing vicarious liability: see (2011) 3 SLR 540 at (91).
32.At (186). Sally’s fraudulent acts, including her false representations about the Thank You Policy, forgery of promotional material and signatures on various documents, were within AIA’s contemplation and were explicitly prohibited in AIA’s Rule Book.
33.At (188).
34.At (192).
35.At (196) et seq.
36.At (208).
37.At (210).
38.At (212).
39.At (213).
40.Ibid.
41.At (214).
42.At (215).
43.At (217).
44.At (217). However, she held that the false representation as to the fictitious policy still operated in the minds of the Ongs and hence AIA should be liable (at (219)).
45.At (222).
46.Here, the writer is adopting Lord Reed’s modifications of the Phillips factors: see Cox at (24).
47.(2016) AC 677 at (54).
48.(2018) EWCA Civ 2214.
49.The case is complicated by the fact that the employee was a high-level employee; in fact he was the managing director of the company. In such a scenario, questions of corporate agency – alter ego and the notion of directing mind and will – also surface.
50.(2018) EWCA Civ 2480.
51.At (48).
52.(2017) SGHC 149.
53.(2018) 2 SLR 463.
54.At (44).
55.At (45).
56.At (46).
57.At (50).
58.At (34).
59.At (36).
60.At (39).