Lou Kan v Li Hua: Fraudulent Misrepresentation & Damages in Investment Loss

In Lou Kan v Li Hua, the General Division of the High Court of Singapore heard a case regarding fraudulent misrepresentation. Lou Kan, the plaintiff, sued Li Hua, the defendant, for misrepresenting that an investment fund was principal-guaranteed, which induced Lou Kan to invest $1.5 million. The court allowed Lou Kan’s claim, finding Li Hua liable for fraudulent misrepresentation and awarding damages of S$1,275,490.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Lou Kan sued Li Hua for fraudulent misrepresentation regarding an investment. The court allowed Lou Kan’s claim, finding Li Hua liable.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Li HuaDefendantIndividualClaim AllowedLost
Lou KanPlaintiffIndividualJudgment for PlaintiffWon

3. Judges

Judge NameTitleDelivered Judgment
Pang Khang ChauJudgeYes

4. Counsels

Counsel NameOrganization
Koong Len ShengDavid Lim & Partners LLP
Richard Yeoh Kar HoeDavid Lim & Partners LLP
Eileen Tok See TengDavid Lim & Partners LLP
Chia Foon YeowLoo & Partners LLP

4. Facts

  1. Lou Kan invested $1.5m in Sunmax Global Capital Fund 1 Pte Ltd.
  2. Li Hua, a director of the Fund, represented it was principal-guaranteed.
  3. Subscription forms stated the Fund was principal-guaranteed.
  4. The Fund was not structured as principal-guaranteed.
  5. Lou Kan relied on Li Hua's representation to invest.
  6. Lou Kan redeemed his shares and received a cash distribution of $224,510.
  7. Lou Kan did not receive shares in the Liquidating Special Purpose Vehicle.

5. Formal Citations

  1. Lou Kan v Li Hua, Suit No 876 of 2018, [2021] SGHC 235

6. Timeline

DateEvent
Sunmax Global Capital Fund 1 Pte Ltd incorporated
Fund accepted Contact Singapore’s offer to participate as a GIP-approved Fund
Lou Kan received in-principle approval for PR application
Meeting between Lou Kan and Li Hua in Beijing
Redemption Offer Letter issued by the Fund
Li Hua ceased to be a director of the Fund
Lou Kan demanded return of investment principal
Fund replied that it was not principal-guaranteed
Lou Kan's lawyers issued a letter of demand to Mr Li seeking damages for misrepresentation
Lou Kan redeemed his preference shares
Lou Kan commenced suit against Li Hua
Trial began
Judgment issued

7. Legal Issues

  1. Fraudulent Misrepresentation
    • Outcome: The court found that Li Hua had made a fraudulent misrepresentation to Lou Kan.
    • Category: Substantive
    • Sub-Issues:
      • False representation of fact
      • Intention to induce reliance
      • Actual reliance
      • Resulting damage
      • Knowledge of falsity
    • Related Cases:
      • [2001] 2 SLR(R) 435
  2. Measure of Damages for Deceit
    • Outcome: The court determined the appropriate measure of damages to be the investment amount less any benefits derived from redemption.
    • Category: Substantive
    • Sub-Issues:
      • Recovery of full price paid
      • Credit for benefits received
      • Comparison of positions before and after misrepresentation
    • Related Cases:
      • [2008] 2 SLR(R) 909
      • [1997] AC 254
  3. Adverse Inference
    • Outcome: The court declined to draw an adverse inference against either party for not calling Mr. Xing as a witness.
    • Category: Procedural
    • Related Cases:
      • [2017] 1 SLR 141
      • [1993] 1 SLR(R) 642

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Fraudulent Misrepresentation
  • Deceit

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Panatron Pte Ltd and another v Lee Cheow Lee and anotherCourt of AppealYes[2001] 2 SLR(R) 435SingaporeCited for the elements required to establish a claim in fraudulent misrepresentation.
Tang Yoke Kheng (trading as Niklex Supply Co) v Lek Benedict and othersCourt of AppealYes[2005] 3 SLR(R) 263SingaporeCited for the standard of proof in civil cases, even where fraud is alleged.
Min Hong Auto Supply Pte Ltd v Loh Chun Seng and anotherHigh CourtYes[1993] 1 SLR(R) 642SingaporeCited regarding adverse inference can be drawn only if there is withholding of the evidence but not merely on account of the failure to obtain evidence
Sudha Natrajan v The Bank of East Asia LtdCourt of AppealYes[2017] 1 SLR 141SingaporeCited regarding the drawing of an adverse inference must depend on the circumstances of each case
Cheong Ghim Fah and another v Murugian s/o RangasamyUnknownYes[2004] 1 SLR(R) 628SingaporeCited regarding an adverse inference was drawn against the defence because the witness who failed to turn up was the defendant himself
Teng Ah Kow and another v Ho Sek Chiu and othersCourt of AppealYes[1993] 3 SLR(R) 43SingaporeCited regarding the trial judge erred in drawing an adverse inference against the plaintiff for not calling a material witness who was an employee of the defendants
Wishing Star Ltd v Jurong Town CorpCourt of AppealYes[2008] 2 SLR(R) 909SingaporeCited for the principles of awarding damages for deceit.
Smith New Court Securities Ltd v Citibank NAHouse of LordsYes[1997] AC 254EnglandCited for the measure of damages in a fraudulently induced transaction involving the purchase of shares.
Zuraimi bin Mohamed Dahlan and another v Zularnine B Hafiz and anotherHigh CourtYes[2020] SGHC 219SingaporeCited for the principle that a representation of future intention is not actionable.
Parallel Imports (Europe) Ltd v Radivan and anotherEnglish Court of AppealYes[2007] EWCA Civ 1373EnglandCited regarding the burden of proof to show that the claimant had in reality suffered no loss by making the payment
Yam Seng Pte Ltd v International Trade Corporation LtdUnknownYes[2013] 1 Lloyd’s Rep 526EnglandCited regarding whether a court assessing damages for deceit should take into account losses from hypothetical transactions which the plaintiff would have entered into in place of the fraudulently induced transaction.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Evidence Act (Cap 97, 1997 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Principal-guaranteed fund
  • Global Investment Programme
  • Private Placement Memorandum
  • Subscription Forms
  • Redemption
  • Misrepresentation
  • Investment
  • Damages
  • GIP-approved Funds
  • Currency Exchange Agreement

15.2 Keywords

  • Fraudulent Misrepresentation
  • Investment Loss
  • Principal-Guaranteed Fund
  • Singapore High Court
  • Civil Litigation

17. Areas of Law

Area NameRelevance Score
Misrepresentation95
Fraud and Deceit95
Measure of Damages80
Contract Law30

16. Subjects

  • Investment
  • Fraud
  • Misrepresentation
  • Damages