ASTRAWATI ALUWI v LO YEW SENG & Anor

Facts

Madam Astrawati Aluwi, an Indonesian property investor, agreed in May 2019 to buy a freehold apartment in Tellus Hirafu, a development in Niseko, Japan, for US$1.88 million, and paid six instalments totalling US$1.786 million to LC Capital Ltd, part of the Infinity Group. She learned of the project through her property agent, Ms Wan, who dealt with the first defendant, Mr Lo Yew Seng. Between January and April 2019 he sent Ms Wan two investment brochures describing the developer's freehold land and a 2021 completion date, answered her questions, negotiated the price and later said the ground-breaking contract had been signed. Only once the price was agreed did he introduce the second defendant, Mr Chen Yicheng, to complete the paperwork.

In 2022 a Japanese lawyer found that the Infinity Group never owned the land, no building permit had been sought and nothing had been built. Documents produced at trial showed that the group's purchase of the land had fallen through by October 2018 for non-payment and was formally settled in January 2020. Madam Aluwi sued both men in Originating Claim No 437 of 2023 for fraudulent misrepresentation, negligent misstatement and unlawful means conspiracy. Mr Chen did not appear and default judgment was entered against him. Mr Lo said he was a mere intermediary and himself a victim, having lent money to the group and bought its bonds.

Issues

1. Whether Mr Lo made fraudulent misrepresentations about the developer's ownership of the land and the start of construction.
2. Whether Mr Lo owed and breached a duty of care in making the statements, and whether Madam Aluwi was contributorily negligent.
3. Whether Mr Lo was party to a conspiracy by unlawful means.

Holding

Tan Siong Thye SJ found Mr Lo liable for fraudulent misrepresentation, negligent misstatement and conspiracy by unlawful means, and allowed the claim. He was ordered to pay damages of US$1,786,000 with interest at 5.33% per annum from the start of the suit, and costs.

Reasoning

By forwarding the brochures, Mr Lo did not merely pass on another's material as in Lam Wing Yee Jane; he adopted and endorsed it, presenting himself as involved at company level, correcting a brochure error, negotiating the price and saying the project was on schedule. The ownership statement, though about a future position, implied a present basis that did not exist once the land purchase had failed, and he never corrected it after the settlement deed. Both representations were false and material, so inducement was presumed. He promoted the project's perks, discouraged the use of a Japanese lawyer and claimed other buyers wanted the unit, and Madam Aluwi relied on him even though friends had warned her about Niseko. He also stood to gain as a shareholder and creditor.

On knowledge, the court found that Mr Lo was in the group's key management team: websites listed him as a non-executive director, and he admitted advising on and raising capital for its projects, including bonds secured on the land. His shifting account of how he obtained the land documents, and a call to the group's chief shortly before those documents were sent, showed that he knew of them. Defaults on his own loan and bond coupons should in any event have prompted checks. The court drew an adverse inference from his incomplete disclosure of chats with his associates, and noted his calm reaction when confronted and his message warning the group's chief. It found the statements were made knowingly or without belief in their truth.

The negligence claim was not properly pleaded but caused no prejudice. Mr Lo assumed responsibility and expected reliance, satisfying the Spandeck test, and breached his duty by verifying nothing despite clear warning signs. Madam Aluwi was not contributorily negligent because he had steered her away from due diligence. A combination with Mr Chen and the group's chief to defraud her was inferred from their coordinated conduct. Mr Lo's evidence was found inconsistent and was treated with great caution.

From the judgment