Potential litigants often pay little attention to the rules on limitation. This is ill-advised, given how they can operate as an absolute bar to recovery. A paradigm example is provided by the case of IPP Financial Advisers Pte Ltd v Saimee bin Jumaat  SGCA 47 (IPP) where a claim for negligent misrepresentations was rejected for being time-barred, as discussed below.
In IPP, an investor (Investor) was advised by his financial advisers (FAs) to invest in the foreign exchange market (SMLG Investment) through a service operated by a third party company (SMLG). Relying on the representations made by the FAs regarding (amongst other things) the risks of the SMLG Investment and repayment of the principal amount plus profits within a year from the date of the investment, the Investor opened a trading account and invested an aggregate sum of US$620,900 in three tranches: (a) US$80,300 on 27 April 2011; (b) US$240,300 on 17 June 2011; and (c) US$300,300 on 3 February 2012.
As it turned out, SMLG did not repay the Investor when the first tranche of his investments became due on 27 April 2012. Instead, on 17 September 2012, SMLG entered into three separate agreements (Settlement Agreements) with the Investor whereby SMLG agreed to pay the Investor a total of US$711,000 (the Settlement Sum) by 21 September 2012. As the Settlement Sum was never repaid, the Investor commenced a claim (Claim) against his FAs and their corporate employer (Company) on 21 July 2018.
The High Court found the FAs liable in negligent misrepresentation and the Company vicariously liable for the FAs’ negligent acts.
Notably, the High Court found that the Claim was not time-barred. In that regard, the High Court had to decide the date on which the Investor suffered an actual loss, since a claim for negligent misrepresentation would accrue only upon proof of damage in reliance on the misrepresentation, and the limitation period of six years would only run from that accrual date.
The High Court held that 21 September 2012 (i.e. the default of the Settlement Agreements) was when the Claim accrued, because this was when it could be said with certainty that the Investor had suffered actual loss as a result of the FAs’ negligent misrepresentations. On that basis, the latest date for the Investor to pursue his Claim was 21 September 2018 (i.e. six years from the date of 21 September 2012), and the Claim was not time-barred given its commencement date of 21 July 2018. Dissatisfied, the Company and FAs appealed against the High Court’s decision.
The Court of Appeal’s decision
The Court of Appeal allowed the appeals by the Company and the FAs on the basis that the Claim was time-barred.
As a preliminary matter, the Court of Appeal held that, once the defence of limitation is raised, the burden of proof falls on the plaintiff to prove that his claim fell within the limitation period. This is because the burden is always on the plaintiff to prove his claim (notwithstanding that it is the defendant who raises the limitation issue as a defence). Accordingly, the burden was on the Investor to prove that he had commenced his Claim within the limitation period.
The Court of Appeal then turned to the heart of the inquiry, being the determination of when the Investor suffered an actual loss. After examining a series of Commonwealth decisions, the Court of Appeal found it unhelpful to follow the categorisation approach adopted in those decisions to decide the date on which the plaintiff suffers an actual loss. Instead, the Court of Appeal endorsed the test set out in the High Court decision of Wiltopps (Asia) Ltd v Emmanuel & Barker  2 SLR(R) 778 (Wiltopps) – that is, the test to determine whether a cause of action in tort has accrued is to ask whether a plaintiff would have succeeded if he had sued at any time after the occurrence of the negligent act complained of.
Applying the test in Wiltopps, the Court of Appeal held that the Claim did not accrue at the time of investing, since the Investor had not suffered any actual loss. The Court premised its holding on the caveat that there was nothing to suggest that the SMLG Investment was worthless from the start and that there was no prospect of return at the time of investing – if that had been the case, it could well be argued that the Investor had suffered actual loss at the time of investing, and the limitation period would therefore run from that date.
In addition, the Court of Appeal gave three reasons why it disagreed with the High Court’s holding that the Claim accrued on 21 September 2012, i.e. upon default of the Settlement Agreements. First, the Court of Appeal stated that the question of when the loss is caused must necessarily be decided with reference to the cause of action; here, the pleaded loss would be that caused by the FAs’ negligent misrepresentations regarding the SMLG Investment and not under the Settlement Agreements. Second, the Court of Appeal, unlike the High Court, found it irrelevant whether or not the FAs owed a continuing duty to the Investor, since the relevant breach of duty already occurred at the time of making the negligent misrepresentations. Third, in response to the High Court’s point that it could not be said with certainty that the Investor had suffered actual loss until 21 September 2012, the Court of Appeal considered the point to be a conflation between the recovery of any loss and the existence of the loss.
Instead, the Court of Appeal held that the Claim accrued on 27 April 2012 – actual loss was suffered when SMLG failed, as promised, to repay the Investor one year after the first principal was invested on 27 April 2011. In holding so, the Court rejected the argument that the Investor’s actual loss accrued on three separate occasions (i.e. on 27 April 2012, 17 June 2012 and 3 February 2013) because the investment was made in three tranches (on 27 April 2011, 17 June 2011 and 3 February 2012). This follows from the principle that, as long as some damage is caused as a result of the negligence in question, the cause of action in relation to that negligence accrues at that point; any loss occurring after that, which is attributable to the same negligence in question, does not postpone the accrual date of the cause of action. Hence, even though the SMLG Investment was disbursed over three tranches, it did not change the fact that the SMLG Investment arose from a single act of negligent misrepresentation by the FAs and there was only one actionable breach. This means that the Investor could claim damages in respect of his full claim of US$620,900 so long as he commenced the Claim against the FAs and the Company by 27 April 2018. However, the Investor commenced his Claim too late on 21 July 2018 and, accordingly, the Claim was time-barred.
The case of IPP underlines the importance of knowing your limitation period and of commencing your claim in a timely fashion. Failing that, you may be barred from recovery, even if you have a viable and meritorious claim.
Accordingly, we recommend you to seek legal advice on your potential claim as soon as possible.