Stansfield Group v Consumers’ Association: Tort, Contract & Suspension of CaseTrust Membership

The Stansfield Group Pte Ltd and SIC College of Business and Technology Pte Ltd sued the Consumers’ Association of Singapore (CASE) and NTUC Income Insurance Co-operative Limited in the High Court of Singapore on 18 May 2011, claiming breach of contract and tort. The plaintiffs alleged that CASE unlawfully suspended their CaseTrust membership and that Income breached their insurance agreement. The court dismissed the claims against CASE and awarded nominal damages of $100 to the first plaintiff against Income, finding that while Income breached the contract by suspending insurance facilities without notice, the breach did not cause the losses claimed by the plaintiffs.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiffs' claim against Consumers’ Association of Singapore dismissed with costs; judgment to the first plaintiff against NTUC Income Insurance Co-operative Limited for damages of $100.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Stansfield Group's claim against CASE for unlawful suspension of CaseTrust membership and against Income for breach of contract dismissed.

1.7 Decision Date

17 May 2011

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
The Stansfield Group Pte Ltd (trading as Stansfield College	Plaintiff	Corporation	Claim Dismissed	Lost	Gregory Vijayendran, Prakash Pillai, Sheik Umar, Sheela Kumari Devi, Charmaine Neo
SIC College of Business and Technology Pte Ltd	Plaintiff	Corporation	Claim Dismissed	Lost	Gregory Vijayendran, Prakash Pillai, Sheik Umar, Sheela Kumari Devi, Charmaine Neo
Consumers’ Association of Singapore	Defendant	Association	Judgment for Defendant	Won	Cavinder Bull, Woo Shu Yan
NTUC Income Insurance Co-operative Limited	Defendant	Corporation	Judgment for Plaintiff	Partial	Lok Vi Ming, Koh Kia Jeng

3. Judges

Judge Name	Title	Delivered Judgment
Judith Prakash	Judge	Yes

4. Counsels

Counsel Name	Organization
Gregory Vijayendran	Rajah & Tann LLP
Prakash Pillai	Rajah & Tann LLP
Sheik Umar	Rajah & Tann LLP
Sheela Kumari Devi	Rajah & Tann LLP
Charmaine Neo	Rajah & Tann LLP
Cavinder Bull	Drew & Napier LLC
Woo Shu Yan	Drew & Napier LLC
Lok Vi Ming	Rodyk & Davidson LLP
Koh Kia Jeng	Rodyk & Davidson LLP

4. Facts

The Stansfield Group owned Stansfield College and Singapore Institute of Commerce (SIC).
CASE is a consumer protection society administering accreditation schemes, including CaseTrust for Education.
CaseTrust for Education requires PEOs to have a Student Protection Scheme (SPS) to protect foreign students' tuition fees.
The SPS can be satisfied through an escrow arrangement or an insurance policy.
Income provided insurance cover under the SPS insurance option.
Stansfield and SIC became accredited members of CaseTrust for Education in August 2005.
In October 2006, CASE investigated Stansfield and SIC due to concerns about their compliance with the SPS.
Income suspended the insurance facilities for Stansfield and SIC due to concerns about their financial status and discrepancies in insurance applications.
CASE suspended Stansfield and SIC's CaseTrust membership due to the suspension of insurance facilities and discrepancies in student insurance coverage.
The suspensions were published on CASE's website, leading to adverse consequences for the plaintiffs.

5. Formal Citations

The Stansfield Group Pte Ltd (trading as Stansfield College and another v Consumers’ Association of Singapore and another, Suit No 743 of 2007, [2011] SGHC 122

6. Timeline

Date	Event
2004-09-01	Economic Development Board launched the Education Excellence Framework.
2004-12-01	Income issued two separate master insurance policies to the first plaintiff.
2005-08-25	Stansfield became an accredited member of CaseTrust for Education.
2005-08-26	SIC acquired accredited membership status of CaseTrust for Education.
2006-09-30	Plaintiffs identified 23 international students with valid student passes but no insurance.
2006-10-06	Mr. Yeo instructed staff to apply for insurance cover for 23 students.
2006-10-14	First plaintiff sent Income 23 insurance applications with payment.
2006-10-16	Singapore Tourism Board informed CASE of market talk regarding Stansfield's and SIC's financial status.
2006-10-19	Ms. Lee informed Income that CASE was investigating SIC and Stansfield.
2006-10-20	Mr. Teo informed CASE that Income would suspend its bond facility to SIC and affiliated schools.
2006-10-23	Income reset the plaintiffs’ login password to Income’s online insurance application system.
2006-10-26	ICA provided CASE with stock figures for the schools.
2006-11-03	ICA provided CASE with flow figures for the schools.
2006-11-09	Plaintiffs attempted to access Income’s online insurance application system.
2006-11-10	Aegis returned the cheques to the first plaintiff.
2006-11-14	CASE wrote to Stansfield and SIC informing them of the discrepancies.
2006-11-17	CASE sent Income copies of the 14 November letters; Mr. Teo instructed Aegis to notify the plaintiffs of the freezing of the insurance facilities.
2006-11-20	Aegis sent an e-mail to Mr. Chettiar and Ms. Majella notifying them of the suspension of the SPS facility; CASE suspended the schools’ membership in CaseTrust for Education.
2006-11-23	Suspension of the schools from CaseTrust for Education was published on CASE’s website.
2006-11-24	Plaintiffs identified the students who had valid student passes but lacked the necessary insurance coverage.
2006-11-28	Stansfield and SIC formally responded to CASE’s Notices of Suspension.
2006-12-01	Plaintiffs submitted a list of students to Ms. Lee.
2006-12-04	CASE specified this date as the deadline for the schools to make good their default.
2006-12-05	Plaintiffs’ audited accounts were submitted to Income.
2006-12-06	Mr. Teo informed Mr. Chettiar that Income had to be satisfied that the schools continued to satisfy its underwriting criteria.
2006-12-07	News of the suspensions was reported on the front page of The Straits Times.
2006-12-10	Mr. Seah of CASE telephoned Dr. Pious and Mr. Teo and proposed a meeting at CASE’s office.
2006-12-12	Meeting held at CASE’s office to resolve the outstanding issues between the parties.
2006-12-13	Income lifted the suspension of the Scheme insurance facilities granted to the plaintiffs; insurance cover for the uninsured students was issued with retrospective effect; CASE lifted its suspension of the schools’ membership in CaseTrust for Education.
2007-01-03	First plaintiff transferred SIC to the second plaintiff.
2008-04-05	First plaintiff transferred Stansfield to one of its subsidiary companies, Stansfield College Group Pte Ltd.
2011-05-18	Judgment delivered.

7. Legal Issues

Breach of Contract
- Outcome: The court found that Income breached the contract by suspending insurance facilities without notice but that the breach did not cause the losses claimed by the plaintiffs.
- Category: Substantive
- Sub-Issues:
  - Failure to provide notice of suspension
  - Wrongful suspension of insurance facilities
Tortious Interference with Contract
- Outcome: The court found that CASE did not wrongfully and recklessly induce and procure the breach by Income of its contractual obligations to the plaintiffs.
- Category: Substantive
- Sub-Issues:
  - Inducement of breach of contract
  - Negligence
  - Duty of care
Breach of Duty of Care
- Outcome: The court found that CASE did not breach any duty of care to the plaintiffs.
- Category: Substantive
- Sub-Issues:
  - Negligence in administering CaseTrust membership
  - Failure to act reasonably
Suspension of CaseTrust Membership
- Outcome: The court found that CASE's suspension of the plaintiffs' CaseTrust membership was not unlawful.
- Category: Substantive
- Sub-Issues:
  - Unlawful suspension
  - Breach of Code of Practice
  - Breach of CASE-PEO agreement
  - Failure to provide opportunity to be heard
  - Failure to conduct independent investigation

8. Remedies Sought

Declaration that Notices of Suspension were unlawful and void
Special Damages of $107,523.84
Damages to be assessed

9. Cause of Actions

Breach of Contract
Negligence
Tortious Interference with Contract

10. Practice Areas

Commercial Litigation
Insurance Litigation

11. Industries

Education
Insurance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Zim Integrated Shipping Services Ltd v Dafni Igal	High Court	Yes	[2010] 2 SLR 426	Singapore	Cited for the elements required to establish a claim for wrongfully and recklessly inducing a breach of contract.
John v Rees	High Court of England	No	[1970] 1 Ch 345	England	Cited to support the proposition that a suspension is equivalent to an expulsion.
Burn v National Amalgamated Labourers’ Union	High Court	Yes	[1920] 2 Ch 364	England	Cited regarding the quasi-judicial nature of the power to suspend or expel a member for acting contrary to the rules.
Paul Wallis Furnell v Whangarei High Schools Board	Privy Council	No	[1973] 1 AC 660	New Zealand	Cited to support the proposition that whether the act of suspending a person from a position or a membership is penal or not depends on the circumstances of the case.
Haron bin Mundir v Singapore Amateur Athletic Association	High Court	Yes	[1991] 2 SLR(R) 494	Singapore	Cited for the proposition that the rules of natural justice are implied into every contract which contemplates a hearing affecting the rights and livelihood of persons.
R v Life Assurance Unit Trust Regulatory Organisation Ltd, Ex p. Ross	English Court of Appeal	Yes	[1993] QB 17	England	Cited for the proposition that the dispensation or exclusion of a right to be heard is permissible where such procedures would hinder prompt action or where there is an urgent need to protect the interests of third parties.
Suisse Security Bank & Trust Ltd v Governor of the Central Bank of The Bahamas	Privy Council	Yes	[2006] 1 WLR 1660	Bahamas	Cited for the proposition that where the authority acted urgently to protect investors, it was not required to consider whether there was sufficient time to receive representations.
Sunny Metal & Engineering Pte Ltd v Ng Kim Eric	High Court	Yes	[2007] 1 SLR(R) 853	Singapore	Cited as authority for the proposition that a defendant can owe concurrent duties to a plaintiff in contract and in tort.
Sunny Metal & Engineering Pte Ltd v Ng Kim Eric	Court of Appeal	No	[2007] 3 SLR(R) 782	Singapore	Cited regarding whether a contract between parties can create the proximity required for an action in negligence.
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency	Court of Appeal	Yes	[2007] 4 SLR(R) 100	Singapore	Cited for the test to determine the existence of a duty of care.
Pacific Associates v Baxter	Court of Appeal	Yes	[1990] 1 QB 993	England	Cited regarding the law being cautious before grafting on to the contractual relationships what might be termed a parasitic duty.
Yamashita Tetsuo v See Hup Seng Ltd	High Court	Yes	[2009] 2 SLR(R) 265	Singapore	Cited for the contextual approach to statutory interpretation.
Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd; The Star Sea	House of Lords	Yes	[2003] 1 AC 469	England	Cited for the principle that utmost good faith is a principle of fair dealing which does not come to an end when the contract has been made.
Banque Keyser Ullmann S.A. v Skandia (U.K.) Insurance Co. Ltd. And Others	Court of Appeal	Yes	[1989] 3 WLR 25	England	Cited for the proposition that when one party to an insurance contract breaches the duty of good faith, the remedy available to the innocent party is to rescind or avoid the contract.
Aldrich and Ors v Norwich Union	Court of Appeal	Yes	[2000] Lloyd’s Rep I.R. 1	England	Cited for the proposition that when one party to an insurance contract breaches the duty of good faith, the remedy available to the innocent party is to rescind or avoid the contract.
Banque Financiere de la Cite S.A. v Westgate Insurance Co Ltd	House of Lords	Yes	[1991] 2 AC 249	England	Cited for the proposition that when one party to an insurance contract breaches the duty of good faith, the remedy available to the innocent party is to rescind or avoid the contract.
Ng Giap Hon v Westcomb Securities Pte Ltd	Court of Appeal	Yes	[2009] 3 SLR(R) 518	Singapore	Cited for the holding that the court would not endorse an implied duty of faith in the Singapore context.
Chua Choon Cheng v Allgreen Properties Ltd	Court of Appeal	Yes	[2009] 3 SLR(R) 724	Singapore	Cited for the observation that the common law does not recognise a principle of good faith, in the sense of fair dealing, to be of general application.
Spindle v Travelers Ins Co	California Court of Appeal	No	136 Cal Rptr 404	United States	Cited for the holding that the right of the insurer to terminate the insurance in accordance with its terms is not absolute and may be limited by the doctrine of good faith.
KS Merc-Scandia XXXXII v Lloyd’s Underwriters	English Court of Appeal	Yes	[2001] 2 Lloyd’s Rep 563	England	Cited for the holding that the assured’s post-contractual duties were governed primarily by the policy.
C T Bowring Reinsurance Ltd v M.R. Baxter (The “M. Vatan” and “M. Ceyhan”)	Queen's Bench Division	Yes	[1987] 2 Lloyd’s Rep 416	England	Cited for construing a clause in a reinsurance policy which gave the reinsurer the right to cancel the cover.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Marine Insurance Act (Cap 387, 1994 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

CaseTrust for Education
Student Protection Scheme
SPS policy
Maximum Insurable Limit
Suspension of membership
Insurance facilities
Accreditation
Escrow arrangement
Good faith
Duty of care

15.2 Keywords

CaseTrust
Student Protection Scheme
Insurance
Suspension
Breach of Contract
Negligence
Duty of Care
Singapore
Education
Consumer Protection

16. Subjects

Contract Law
Tort Law
Insurance Law
Consumer Protection
Education Law

17. Areas of Law

Contract Law
Tort Law
Insurance Law
Administrative Law