KPMG Services Pte Ltd v Pawley, Mark Edward: Guarantee, Contractual Terms & Admissibility of Evidence

In KPMG Services Pte Ltd v Mark Edward Pawley, the High Court of Singapore ruled in favor of KPMG, finding Mr. Pawley personally liable for Bluestone's unpaid advisory fees. KPMG sued Mr. Pawley based on a clause in the engagement letter (LOE) he signed as a director of Bluestone, making him responsible if Bluestone failed to pay. The court found that Mr. Pawley's signature signified his agreement to be personally responsible, despite signing on behalf of Bluestone. The court granted KPMG judgment for US$944,050.70, interest, and costs.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

KPMG sues Pawley for unpaid fees. Court finds Pawley personally liable under a contract clause, despite signing as Bluestone's director.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
KPMG Services Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Pawley, Mark EdwardDefendantIndividualJudgment against DefendantLost

3. Judges

Judge NameTitleDelivered Judgment
Andre ManiamJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Daryl FongShook Lin & Bok LLP
Abhinav R MohanShook Lin & Bok LLP
Annette TanShook Lin & Bok LLP
Suang WijayaEugene Thuraisingam LLP
Genghis KohEugene Thuraisingam LLP

4. Facts

  1. Mr. Pawley, as director of Bluestone, signed a letter of engagement (LOE) with KPMG Services Pte Ltd.
  2. Clause 5.1 of the LOE stated that Mr. Pawley would be responsible for KPMG's fees if Bluestone failed to pay.
  3. Mr. Pawley's in-house counsel proposed striking out the clause making him personally liable, but KPMG did not agree.
  4. Bluestone was unsuccessful in its investment bid and did not pay KPMG's fees.
  5. KPMG invoiced Bluestone US$954,000, of which only US$9,949.30 was paid by TMF Trust.
  6. KPMG sued Mr. Pawley for the outstanding balance of US$944,050.70 based on clause 5.1 of the LOE.
  7. Mr. Pawley argued he signed the LOE only on behalf of Bluestone and did not agree to be personally responsible.

5. Formal Citations

  1. KPMG Services Pte Ltd v Pawley, Mark Edward, Suit No 264 of 2019, [2021] SGHC 54

6. Timeline

DateEvent
KPMG Services Pte Ltd circulated the first draft of the letter of engagement.
KPMG Services Pte Ltd sent the draft letter of engagement to Cate Friedlander.
Letter of engagement dated.
Cate Friedlander sent a revised draft of the letter of engagement back to KPMG Services Pte Ltd.
KPMG Services Pte Ltd replied to Cate Friedlander regarding the proposed changes.
Cate Friedlander responded that she was seeking further instructions from Mr. Pawley.
KPMG Services Pte Ltd replied to Cate Friedlander that certain amendments were accepted.
Cate Friedlander emailed KPMG Services Pte Ltd to review the latest iteration of the letter of engagement.
Mr. Pawley emailed KPMG Services Pte Ltd to say that the letter of engagement had been signed.
KPMG Services Pte Ltd issued its first invoice.
KPMG Services Pte Ltd emailed Mr. Pawley setting out the deliverables provided and a breakdown of fees.
KPMG Services Pte Ltd informed Mr. Pawley of the total amount to be invoiced.
KPMG Services Pte Ltd issued the second invoice.
Partial payment of US$9,949.30 from TMF Trust Labuan Ltd.
Date of writ.
Hearing date.
Hearing date.
Judgment reserved.

7. Legal Issues

  1. Personal Liability for Corporate Debt
    • Outcome: The court held that Mr. Pawley was personally liable for the debt, as he signed the LOE in a dual capacity, agreeing to be responsible for payment if Bluestone failed to pay.
    • Category: Substantive
    • Sub-Issues:
      • Dual capacity signing
      • Interpretation of contract clauses
      • Enforceability of guarantee
  2. Admissibility of Evidence
    • Outcome: The court found the timesheets admissible as evidence under s 32(1) of the Evidence Act.
    • Category: Procedural
    • Sub-Issues:
      • Hearsay
      • Business records
      • Evidence of deceased witness

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract
  • Guarantee

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Financial Services
  • Consulting

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Homburg Houtimport BV and others v Agrosin Pte Ltd and anotherHouse of LordsYes[2004] 1 AC 715England and WalesCited to determine the identity of the parties and the capacity in which they entered into the contract based on the signatures and accompanying statements.
Todd Trading Pte Ltd v Aglow Far East Trading Pte LtdHigh Court of SingaporeYes[1997] 1 SLR(R) 494SingaporeCited for the proposition that the use of words like 'director', 'manager' or 'agent' alone may not be sufficient to indicate that a corporate representative is signing a contract in a representative capacity and will therefore incur no personal liability under the contract.
Press Automation Technology Pte Ltd v Trans-Link Exhibition Forwarding Pte LtdHigh Court of SingaporeYes[2003] 1 SLR(R) 712SingaporeCited for the principle that a party who has signed a contract after being given notice of what would be included among the contractual terms cannot later assert that it is not bound by some of the terms on the ground that the same are onerous and unusual and had not been drawn specifically to its attention.
BOM v BOK and another appealCourt of Appeal of SingaporeYes[2019] 1 SLR 349SingaporeCited for the principle that the lack of independent legal advice is a non-mandatory factor to be considered in the context of unconscionability.
Young v SchulerQueen's Bench DivisionYes(1883) 11 QBD 651England and WalesCited for the conclusion that an agent had signed in a dual capacity (on his own behalf as well as on behalf of his principal).
Elpis Maritime Co Ltd v Marti Chartering Co IncHouse of LordsYes[1992] 1 AC 21England and WalesCited for the conclusion that an agent had signed in a dual capacity (on his own behalf as well as on behalf of his principal) and that even if a memorandum or note of the promise is signed by the guarantor solely as agent, that is sufficient for enforceability.
Doughty-Pratt Group Ltd v Perry CastleNew Zealand Court of AppealYes[1995] 2 NZLR 398New ZealandCited for the conclusion that an agent had signed in a dual capacity (on his own behalf as well as on behalf of his principal).
Chan Siew Lee Jannie v Australia and New Zealand Banking Group LtdHigh Court of SingaporeYes[2016] 3 SLR 239SingaporeCited for the principle that a surety has no right to require the creditor to proceed against the principal before proceeding against himself.
Barclays Bank plc v Price and othersHigh Court of JusticeYes[2018] EWHC 2727 (Comm)England and WalesCited as authority for the proposition that principal debtor clauses have the effect of creating a primary liability and such liability is not contingent on demand even where the words repayable on demand have been used in the instrument in the context of the surety’s liability as surety.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed)Singapore
Evidence Act (Cap 97, 1997 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Letter of Engagement
  • Personal Guarantee
  • Time Costs
  • Dual Capacity
  • Disbursements
  • Fees
  • Principal Debtor

15.2 Keywords

  • guarantee
  • contract
  • personal liability
  • corporate debt
  • letter of engagement
  • KPMG
  • Pawley
  • Bluestone

17. Areas of Law

Area NameRelevance Score
Contract Law90
Guarantee85
Guarantees and indemnities75
Guarantor70
Banking and Finance30
Evidence Law20
Admissibility of evidence15
Hearsay10

16. Subjects

  • Contract Law
  • Agency Law
  • Guarantees
  • Indemnities
  • Civil Procedure