SINGAPORE - A real estate agency was partly to blame for the acts of a rogue agent who embezzled more than $830,000 from a client after she handed him four signed blank cheques, the country's highest court has ruled.
In a judgment released on Friday (July 6), it overturned an earlier High Court decision which said that the agency cannot be held liable for the loss.
The Court of Appeal found that property agent Kelvin Yeow Khim Whye - who was bankrupt at the time - had "full rein" to do as he pleased and was even given the designation of "group director".
It said that HSR International Realtors had no internal systems in place to track the bankruptcy status of its agents or to supervise agents who were undischarged bankrupts.
The court ruled that Yeow's ability to gain and abuse the trust of former teacher Rohini Balasubramaniam was a direct result of the agency's lack of proper checks and monitoring.
Under the Estate Agents Act, an undischarged bankrupt is considered not "fit and proper" to be registered as a real estate agent unless the Council of Estate Agencies determines otherwise. However, the events of Yeow's case took place before the law was enacted in 2010.
Judge of Appeal Andrew Phang, who wrote the judgment, said that although the regulatory regime was enacted after Yeow's fraudulent acts, it indicated that real estate agencies who hired bankrupts as agents, prior to 2010, owed a high standard of care to their clients.
However, the court recognised that the client, Ms Rohini, was primarily at fault.
The court said Ms Rohini was "extremely careless" in giving blank cheques to Yeow.
Thus, the court held that Ms Rohini was entitled to recover only 30 per cent of the amount she claimed from the agency, which works out to about $249,000.
The court heard that Ms Rohini trusted Yeow as he had acted for her parents in previous property transactions.
In 2009, she sold her Bayshore Park property and bought a Bedok Court unit. Yeow persuaded her to take up a bank loan for the purchase, saying that the sales proceeds may not arrive in time.
The sales proceeds were later deposited into her bank account.
In December 2009, Yeow told her to give him four blank cheques so that he could help her pay the first bank loan instalment and other fees.
After she gave him the cheques, Yeow filled in the details in her presence but she did not check what he wrote because she trusted him.
Yeow pocketed the money and has since absconded.
She discovered the fraud only in mid-2010, when she wanted to sell the property and found that the proceeds from the sale of the Bayshore flat had been withdrawn shortly after they were deposited.
She then sued Yeow and HSR to recover the money. She obtained judgment against Yeow but failed to recover any money from him. She lost her case against HSR last year but filed an appeal. Yeow is believed to be in China.