GC LEASE SINGAPORE PTE. LTD. v FONBELL SOLUTION PTE. LTD. & 7 Ors

Facts

GC Lease Singapore Pte Ltd, a lessor of equipment and software, bought 102 licences for an enterprise resource planning software from four companies, each controlled by an individual defendant, and leased them to customers those companies referred to it. The software was developed by the fifth defendant and supplied through Ofywork Pte Ltd; three of the companies acted as resellers. For each deal the reseller handed GC Lease the lease, a customer-signed confirmation of delivery, a delivery order and a guarantee, and GC Lease paid the purchase price. Only five customers paid in full. In January 2019 GC Lease stopped working with the defendants. During its enforcement efforts, some customer representatives claimed to have received cash rather than software, and one, Mr Chandrahason, alleged an illegal moneylending arrangement with the sixth defendant.

In Suit No 288 of 2022 GC Lease sued all eight defendants for fraudulent misrepresentation, unlawful means conspiracy and breach of implied conditions under the Sale of Goods Act 1979. It alleged representations that each reseller ran a genuine business, that customers were genuine, that the software was delivered, and that it was functional and of satisfactory quality. Default judgments had been entered against the first, second, fourth and fifth defendants, so the trial concerned the third, sixth, seventh and eighth defendants.

Issues

1. Whether the resellers made the alleged representations, and whether these were actionable statements of fact that were false and induced the purchases.
2. Whether any reseller made the genuine reseller representation fraudulently.
3. Whether an unlawful means conspiracy was proved.
4. Whether the third defendant breached the implied conditions in ss 13(1) and 14(2) of the Sale of Goods Act, and whether unpleaded illegality barred the claims.

Holding

Wong Li Kok, Alex J allowed the claim in part. He held the sixth defendant personally liable for $90,000, less any amount recovered from third parties for the same loss, for directing his company's fraudulent misrepresentation in the transaction with Fong Sheng Long (Recycling) Pte Ltd. The claims against the third, seventh and eighth defendants were dismissed entirely. Interest and costs were reserved, and GC Lease's solicitors' undertaking to disclose other recoveries was accepted to prevent double recovery.

Reasoning

The confirmation of delivery recorded the customer's representations, with the reseller only witnessing the signature. The resellers did not adopt the software representations, and those were not false: GC Lease's evidence did not prove the software was non-functional, and an adverse inference was drawn from its failure to call its founder, who had attended a demonstration and continued the business. The genuine customer representation was only a statement of belief, as the resellers relied on introducers and knew no more about customers than GC Lease.

The genuine reseller representation did induce each purchase. Whether it was false turned on the resellers' honesty, and fraud must be proved to a high standard. WhatsApp messages showed the sixth defendant understood the Fong Sheng Long deal to be a loan disguised as a software lease, but no inference could be drawn about his other customers. The seventh and eighth defendants were not shown to know of suspicious company filings, and their correspondence showed earnest efforts as resellers. No adverse inference arose from the missing WhatsApp messages, as lost access was unchallenged or plausible.

The director-immunity principle in Said v Butt does not extend to deceit. No combination between the fifth and sixth defendants was shown. The implied conditions were not breached because the software matched its description and quality. The court declined to make an unpleaded illegality finding, and in any event a rogue employee's knowledge would not be attributed to GC Lease.

From the judgment