Broadley Engineering Pte. Ltd. v Award Engineering Pte. Ltd. & Anor

Facts

Broadley Engineering Pte Ltd owned a multi-floor commercial unit at The Splendor and engaged a real estate salesperson, Ms Wo Sui Moy, to find a tenant. Her online advertisement described the premises as "20 Pax Worker Dormitory Approved", and she confirmed to Award Engineering Pte Ltd's director, Mr Ng, by WhatsApp and at a viewing in September 2022 that it had a dormitory licence. Award, a construction firm needing housing for its foreign workers, signed a letter of intent and then a two-year lease dated 11 October 2022 at $14,000 a month and paid a $28,000 deposit. On 7 November 2022 Mr Ng found he could not register the premises with the Ministry of Manpower as a dormitory; it was agreed the premises lacked the required approvals. Award vacated by 1 January 2023 and stopped paying rent.

In Magistrate Court Originating Claim No 8617 of 2023, Broadley sued Award for unpaid rent, contractual interest and damage to the premises, and Ms Wo for acting beyond her authority. Award counterclaimed against both for rescission, return of the deposit and damages for misrepresentation and conspiracy. District Judge Tay Jingxi heard the case.

Issues

1. Whether Ms Wo was Broadley's agent with authority to describe the premises to prospective tenants
2. Whether Ms Wo or Broadley was liable to Award for misrepresentation
3. Whether the lease should be rescinded and what each side must restore to the other
4. Whether Broadley and Ms Wo were liable for unlawful means conspiracy

Holding

The court allowed Award's counterclaim in part and rescinded the lease ab initio for Broadley's fraudulent misrepresentation. Broadley's claim was allowed in part: Award was to pay $14,980 in rent and $8,964 and $1,144.80 for repairs to the lift and water tank, while Broadley was to return the $28,000 deposit and pay Award $15,099. The claim for contractual interest was dismissed, as were both Broadley's claim and Award's counterclaim against Ms Wo.

Reasoning

The judge found an express agency, despite Broadley's label of "property broker". Broadley set the asking rent and agreed to pay commission for introducing a tenant. Ms Wo had implied actual authority to describe the premises, including their approval status.

Ms Wo's statements that the premises were an approved dormitory were false and induced Award to sign, as approval mattered to its business and justified the higher rent. But she was not liable. Claims under the Misrepresentation Act 1967 failed because she had no contract with Award, and deceit failed because she honestly believed Broadley's director, who had told her the premises were approved for 20 workers. Negligent misrepresentation failed because no duty or standard of care was pleaded or proved. Acting within her authority, she owed Broadley nothing.

Broadley, however, knew the premises lacked approval and fed the statement to Ms Wo to command a premium rent. Following S. Pearson & Son, Limited v Dublin Corporation [1907] 1 AC 351, a principal's guilty knowledge combined with an innocent agent's statement makes the principal liable in deceit. Award had limited its damages claim to the statute, so only rescission was available; this was granted in equity because use of the premises could not be literally returned. Award had to pay rent for the period it occupied the premises, recovered the deposit, stamp duty and most of its renovation costs, and paid for the lift and water tank it damaged. Loss of rental chance and unproven cleaning, dismantling and alternative accommodation costs were refused. The conspiracy claim failed for lack of any evidence of agreement.

From the judgment