Pilgrim v Asian Appraisal: Negligence in Asset Valuation and Loan Security

Pilgrim Private Debt Fund sued Asian Appraisal Company Private Limited in the General Division of the High Court of Singapore, alleging professional negligence in the valuation of NK Ingredients Pte Ltd's plant and machinery. Pilgrim claimed reliance on Asian Appraisal's reports led to a loan to NKI and subsequent losses. The court, presided over by Justice Tan Siong Thye, dismissed Pilgrim's claims, finding no breach of duty of care or causation. The judgment was reserved on 17 January 2022 after a trial between 20-24 September, 5-8, 11 October, 23 November 2021.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Plaintiff's claims dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Pilgrim sued Asian Appraisal for negligent asset valuation. Court dismissed the claim, finding no breach of duty or causation.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Pilgrim Private Debt FundPlaintiffCorporationClaim DismissedLost
Asian Appraisal Company Private LimitedDefendantCorporationJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Tan Siong ThyeJudgeYes

4. Counsels

Counsel NameOrganization
Lim Shu YiParwani Law LLC
Vijai Dharamdas ParwaniParwani Law LLC
Huang Po HanParwani Law LLC
Anparasan s/o KamachiWhiteFern LLC
Wong Jing Ying AudreyWhiteFern LLC

4. Facts

  1. Pilgrim Private Debt Fund claimed Asian Appraisal Company Private Limited was negligent in valuing NK Ingredients Pte Ltd's assets.
  2. Asian Appraisal prepared two valuation reports of NK Ingredients' assets, one in September 2017 and another in May 2019.
  3. Pilgrim relied on the first report to grant a S$1.6m loan to NK Ingredients, secured against the assets.
  4. NK Ingredients faced financial difficulties and was placed under judicial management in 2019.
  5. A subsequent valuation report valued the assets significantly lower than Asian Appraisal's reports.
  6. Pilgrim claimed Asian Appraisal negligently overstated the value of the assets, causing Pilgrim's loss.

5. Formal Citations

  1. Pilgrim Private Debt Fund v Asian Appraisal Company Pte Ltd, Suit No 378 of 2020, [2022] SGHC 10

6. Timeline

DateEvent
Assets valued as of this date in the 1st Report.
Defendant’s appraisers visited NKI’s premises.
Defendant’s appraisers visited NKI’s premises.
NKI requested for the “residual value” of its Assets.
Defendant stated that the Assets had a scrap value of US$4,882,000 as of 31 December 2016.
Date of the 1st Valuation Report.
NKI received the 1st Report dated 29 September 2017.
Soilbuild commenced Suit No 1045 of 2017 against NKI for possession of the Property.
NKI filed an application for a moratorium under the repealed s 211B of the Companies Act in Originating Summons No 1384 of 2017.
Court granted moratorium to end on 26 March 2018.
Qi Capital provided the plaintiff with a copy of the 1st Report via e-mail.
Site visit of NKI’s premises for the plaintiff to view NKI’s Assets.
Mr. Tan provided a summary of NKI’s loan request to the plaintiff’s credit committee.
NKI and the plaintiff signed a facility agreement for the Loan.
First tranche of the Loan disbursed.
Deed of debenture executed.
Second tranche of the Loan disbursed.
LLS Capital applied to place NKI under judicial management in Originating Summons No 72 of 2019. Mr Metzger left NKI’s employ on the same date.
NKI made an application for a moratorium in Originating Summons No 222 of 2019.
NKI was granted the moratorium.
Assets valued as of this date in the 2nd Report.
Date of the 2nd Valuation Report.
Moratorium lapsed.
NKI was placed under judicial management.
FTI Consulting commissioned another valuation report of the Assets.
Date of the RK Report.
FTI Consulting requested the plaintiff to remove NKI’s Assets from NKI’s premises.
NKI was ordered to be wound up.
The plaintiff applied for the trial to be bifurcated on liability and damages.
Application allowed for trial to be bifurcated.
Trial began.
Trial concluded.
Judgment reserved.

7. Legal Issues

  1. Duty of Care
    • Outcome: The court found that the defendant owed a duty of care to the plaintiff in preparing the valuation reports.
    • Category: Substantive
    • Related Cases:
      • [2007] 4 SLR(R) 100
  2. Breach of Duty
    • Outcome: The court found that the defendant did not breach its duty of care in preparing the 1st Report, but did breach its duty of care in preparing the 2nd report by failing to account for decommissioning costs.
    • Category: Substantive
  3. Causation
    • Outcome: The court found that the plaintiff failed to prove that the defendant's breach of duty caused the plaintiff's loss.
    • Category: Substantive
  4. Unfair Contract Terms Act
    • Outcome: The court held that the defendant could not rely on the Limiting Conditions to exclude or limit its liability from negligence.
    • Category: Substantive
  5. Contributory Negligence
    • Outcome: The court observed that the plaintiff was contributorily negligent by failing to conduct its own independent due diligence.
    • Category: Substantive

8. Remedies Sought

  1. Outstanding Loan amount of S$1,650,310
  2. Sum of S$1,561,240 due from NKI to the plaintiff as at the date of the winding up order
  3. Damages to be assessed by the court

9. Cause of Actions

  • Negligence

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Finance
  • Manufacturing

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology AgencyCourt of AppealYes[2007] 4 SLR(R) 100SingaporeEstablished the applicable framework for determining if a duty of care in the tort of negligence arises.
Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte LtdHigh CourtYes[2015] 4 SLR 1SingaporeSummarized the Spandeck test for duty of care, emphasizing proximity and policy considerations.
Ngiam Kong Seng v Lim Chiew HockCourt of AppealYes[2008] 3 SLR(R) 674SingaporeApplied the Spandeck test.
Animal Concerns Research & Education Society v Tan Boon KweeHigh CourtYes[2011] 2 SLR 146SingaporeApplied the Spandeck test.
AEL v Cheo Yeoh & Associates LLCHigh CourtYes[2014] 3 SLR 1231SingaporeApplied the Spandeck test.
Man Mohan Singh s/o Jothirambal Singh v Zurich Insurance (Singapore) Pte LtdHigh CourtYes[2008] 3 SLR(R) 735SingaporeExample where the Plaintiff failed to meet the threshold test of factual foreseeability.
Cooper v HobartSupreme CourtYes(2001) 206 DLR (4th) 193CanadaAnalogous precedent for applying the Spandeck test.
Rolls-Royce New Zealand Ltd v Carter Holt Harvey LtdCourt of AppealYes[2005] 1 NZLR 324New ZealandAnalogous precedent for applying the Spandeck test.
Go Dante Yap v Bank Austria Creditanstalt AGCourt of AppealYes[2011] 4 SLR 559SingaporeRejected the English approach of a general exclusionary rule against recovery of pure economic loss and explained the relationship between the concept of “assumption of responsibility” under legal proximity and the UCTA.
Straits Advisors Pte Ltd v Michael Deeb (alias Magdi Salah El-Deeb) and othersHigh CourtYes[2014] SGHC 94SingaporeDiscussed the application of indicia for establishing proximity, particularly voluntary assumption of responsibility and reliance in pure economic loss cases.
Resource Piling Pte Ltd v Geospecs Pte LtdHigh CourtYes[2014] 1 SLR 485SingaporeEmphasized the traditional test of assumption of responsibility and reliance in the context of economic loss.
Hedley Byrne & Co Ltd v Heller & Partners LtdHouse of LordsYes[1964] AC 465England and WalesEmphasized the traditional test of assumption of responsibility and reliance in the context of economic loss.
Smith v Eric S BushHouse of LordsYes[1990] 1 AC 831England and WalesAn express disclaimer of responsibility could prevent a tortious duty of care from arising, by negating the proximity sought to be established by the concept of an “assumption of responsibility”.
Sunny Metal & Engineering Pte Ltd v Ng Khim Meng Eric (practising under the name and style of W P Architects)High CourtYes[2007] 1 SLR(R) 853SingaporeDescribed the threshold inquiry of factual foreseeability.
Blyth v The Company of Proprietors of the Birmingham WaterworksCourt of ExchequerYes(1856) 11 Exch 781England and WalesThe standard of care expected to discharge a duty of care is usually the general objective standard of a reasonable person using ordinary care and skill.
Jurong Primewide Pte Ltd v Moh Seng Cranes Pte Ltd and othersCourt of AppealYes[2014] 2 SLR 360SingaporeThe standard of care expected to discharge a duty of care is usually the general objective standard of a reasonable person using ordinary care and skill.
Kuah Kok Kim and others v Ernst & YoungHigh CourtYes[1996] 3 SLR(R) 485SingaporeA valuer has to “attain the requisite standard of care of an ordinary competent valuer”.
Kua Kok Kim and others v Ernst & YoungHigh CourtYes[1999] 3 SLR(R) 1184SingaporeA valuer has to “attain the requisite standard of care of an ordinary competent valuer”.
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming EricCourt of AppealYes[2007] 3 SLR(R) 782SingaporeExplained causation in the tort of negligence, including causation in fact and causation in law.
Cook v LewisSupreme CourtYes[1951] SCR 830CanadaShifted the burden of disproving cause in fact to the defendant.
Wilsher v Essex Area Health AuthorityHouse of LordsYes[1988] AC 1074England and WalesThe ‘but for’ test should be applied flexibly and with common sense.
March v E & M H Stramare Pty LimitedHigh CourtYes(1991) 171 CLR 506AustraliaThe ‘but for’ test should be applied flexibly and with common sense.
United Project Consultants Pte Ltd v Leong Kwok OnnCourt of AppealYes[2005] 4 SLR(R) 214SingaporeAppeared to apply a commonsensical approach to causation in place of the ‘but for’ test.
Tan Woo Thian v PricewaterhouseCoopers Advisory Services Pte LtdCourt of AppealYes[2021] 1 SLR 1116SingaporeIn a bifurcated trial, the plaintiff nevertheless has to prove the element of causation for his claim in negligence although it does not have to ascertain the extent of the losses.
Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and othersCourt of AppealYes[2016] 1 SLR 21SingaporeThe private appointment of a receiver and manager, as opposed to the court’s appointment of one, “flows from the exercise of a creditor’s contractual powers (usually under the terms of a debenture) granted by a company.
JSI Shipping (S) Pte Ltd v Teofoongwonglcloong (a firm)Court of AppealYes[2007] 4 SLR(R) 460SingaporeOutlined the requirements for proving causation in cases involving the loss of a chance.
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd and anotherCourt of AppealYes[2005] 1 SLR(R) 661SingaporeOutlined the requirements for proving causation in cases involving the loss of a chance.
Cristian Priwisata Yacob and another v Wibowo Boediono and another and another suitHigh CourtYes[2017] SGHC 8SingaporeExplained the duty to mitigate in respect of a claim in tort.
Asnah bte Ab Rahman v Li JianlinCourt of AppealYes[2016] 2 SLR 944SingaporeSet out the law on contributory negligence.
Jones v Livox Quarries LdCourt of AppealYes[1952] 2 QB 608England and WalesContributory negligence requires the foreseeability of harm to oneself.
Cheong Ghim Fah v Murugian s/o RangasamyHigh CourtYes[2004] 1 SLR(R) 628SingaporeA person is guilty of contributory negligence if he ought to have objectively foreseen that his failure to act prudently could result in hurting himself and failed to take reasonable measures to guard against that foreseeable harm.
Nance v British Columbia Electric Railway Co LtdPrivy CouncilYes[1951] AC 601United KingdomWhen contributory negligence is set up as a defence, its existence does not depend on any duty owed by the injured party to the party sued.
Sungravure Pty Ltd v MeaniHigh CourtYes(1964) 110 CLR 24AustraliaThe standard of care expected of the claimant is measured against a person of ordinary prudence, corresponding in most cases to the standard of care in negligence.
A C Billings & Sons Ltd v RidenHouse of LordsYes[1958] AC 240England and WalesThe standard of care expected of the claimant is measured against a person of ordinary prudence, corresponding in most cases to the standard of care in negligence.
Butterfield v ForresterCourt of King's BenchYes(1809) 11 East 60England and WalesRepresented the common law rule that where a claimant’s injury was caused in part by his own fault, he was wholly disentitled from claiming damages from the negligent defendant.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Unfair Contract Terms Act (Cap 396, 1994 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed) s 211BSingapore
Insolvency, Restructuring and Dissolution Act (Act 40 of 2018) s 64Singapore
Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 33 r 2Singapore
Companies Act ss 211ESingapore
Companies Act ss 221(1)Singapore
Companies Act ss 222(1)Singapore
Insolvency, Restructuring and Dissolution Act ss 81(1)Singapore
Insolvency, Restructuring and Dissolution Act ss 82(1)Singapore
Contributory Negligence and Personal Injuries Act (Cap 54, 2002 Rev Ed) s 3(1)Singapore
English Law Reform (Contributory Negligence) Act 1945 s 1(1)England and Wales

15. Key Terms and Keywords

15.1 Key Terms

  • Valuation
  • Negligence
  • Duty of Care
  • Forced Sale Value
  • Fair Market Value
  • Loan
  • Judicial Management
  • Moratorium
  • Limiting Conditions
  • Unfair Contract Terms Act
  • Mitigation of Loss
  • Contributory Negligence

15.2 Keywords

  • Negligence
  • Valuation
  • Duty of Care
  • Loan
  • Singapore
  • Commercial
  • Financial
  • Asset

17. Areas of Law

Area NameRelevance Score
Negligence95
Contract Law40
Breach of Contract40
Damages Assessment20
Contracts20
Estoppel10
Prescription Regulations5
Psychiatry5
Medical Negligence5
Hotel Management Agreements5
Mistake5
Rescission5
Presumption of Advancement5
Joint Tenancy5
Defamation5
Enforcement of Arbitral Awards5
Time-Fixing Order5
Joinder of similar offences5
Offer to Settle5
Evidence5
Children's Welfare5
Falsification of Documents5
Proper Notice5
Shareholders Agreement5
Duty to Account5
Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act5
Provisional Award5
Submission to Jurisdiction5
Bills of Lading Act5
Switch Bills of Lading5
Bailment5
Wrongful arrest5
Oral contract5
Acknowledgment5
Total failure of consideration5
House-trespass5
Personating a public servant5
Preventive detention5
Guarantee5
Summary Judgement5
Company Law5
Crossclaims5
Disclosure of documents5
Peremptory orders5
Ship Mortgage5
Transnational issue estoppel5
Show cause action5
Codicils5
Will Interpretation5
Affidavits5
Disciplinary Proceedings5
Touting5
Moratorium5
Business Trust Law5
International Commercial Arbitration5
Holding out5
Construction5
Contractual terms5
Causation5
Contributory negligence5
Vicarious liability5
Assignment Law5
Statutory offences5
Sentencing5
Recourse against award5
Lack of proper notice5
Infra petita5
Natural justice5
Misuse of Drugs Act5
Admissibility of evidence5
Similar fact evidence5
Adverse inferences5
Sham Agreements5
Anti-suit injunction5
Natural forum5
Restraint of foreign proceedings5
Comity5
Vexatious and oppressive conduct5
Illegality and public policy5
Contractual discretions5
Mental Capacity Law5
Deputyship5
Knowing Receipt5
Director's Liability5
Separability5
Waiver of objections5
Misappropriation5
Unjust Enrichment5
Revision of Proceedings5
Consent Orders5
Mortgage5
Criminal Procedure5
Complicity5
Insolvency Law5
Testamentary Trust5
Trustee Liability5
Trustee Powers5
Malicious Falsehood5
Service out of jurisdiction5
Amendment of Pleadings5
Statutory Demand5
Succession Law5
Bankruptcy5
Grievous Hurt5
Garnishee Proceedings5
Duty of Candour5
Legal Profession Act5
Accounting Irregularities5
Lifting corporate veil5

16. Subjects

  • Tort Law
  • Contract Law
  • Valuation
  • Negligence
  • Financial Law