8 November, 2017
If a prospective employer in a certain industry decides not to employ a person following a negligent reference prepared by his ex-employer, how does a court assess his lost remuneration if he subsequently left the industry and sought employment elsewhere?
This was the central question which the High Court in Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2017] SGHC 197 (“Ramesh”) had to decide.
Ramesh illustrates the difficult balance between certainty and flexibility that the court has to strike in assessing the claimant’s loss of earnings.
BRIEF FACTS
The plaintiff had been an extremely successful adviser and financial services associate manager with the defendant insurance company for six years until he resigned in mid-2011, due to a deteriorating relationship with the defendant. He had received a conditional employment offer from another insurance company, Prudential Assurance Company Singapore Private Limited (“Prudential”) which included an Establishment Package that subjected his remuneration and rank to several conditions.
However, the employment reference provided by the defendant to Prudential essentially alleged that the plaintiff had potentially committed ethical violations, and gave a poor assessment as to his abilities as a financial adviser. The defendant took a long time to respond to requests for clarifications by Prudential, and only reiterated the same issues.
Upon Prudential’s application to the Monetary Authority of Singapore (“MAS”) for a license on behalf of the plaintiff, the defendant conveyed the same issues to the MAS. This led to the MAS imposing conditions on Prudential for the issuance of the license. Prudential eventually decided not to employ the plaintiff.
A similar process occurred in 2012 when the plaintiff applied to another insurance company for a less senior position, which also resulted in the plaintiff being unable to secure a position. The plaintiff made several other enquiries to other insurance companies to no avail.
After resigning from the defendant, the plaintiff worked as a “kitchen-hand” in a vegetarian restaurant that he and his wife operated. In November 2012, he commenced litigation against the defendant for defamation, malicious falsehood and negligence. Although the High Court dismissed his claims in 2015, he succeeded on appeal to the Court of Appeal for the negligence claim.
The Court of Appeal found that the defendant had breached its duty of care to the plaintiff in preparing the references and communications which it had sent to Prudential and to the MAS. The case was remitted to the High Court to assess the damages payable by the defendant to the plaintiff.
DECISION
The High Court assessed that the plaintiff was entitled to S$4.026 million representing his loss of earnings. In arriving at its decision, the High Court observed that the assessment was not a straightforward exercise. The key question was whether the plaintiff had adduced sufficient evidence to provide an adequate basis for estimating his loss. The plaintiff was required to do his “level best”1 to prove the amount of remuneration which he would have enjoyed if he had been hired by Prudential, had it not been for the defendant’s negligence.2
However, the plaintiff did not need to prove “with complete certainty the exact amount of damage he has suffered”, and the court could adopt a flexible approach where appropriate.3
The balance between the two competing principles of certainty and flexibility was reflected in the following judicial guidance: “where precise evidence is obtainable, the court expects to have it; where it is not obtainable, the court must do the best it can.”4
Hence, the court would take a “pragmatic approach” in assessing damages based on the facts of each case.5
On the facts, the High Court found that the plaintiff’s method of quantifying his loss was unsatisfactory. The plaintiff’s quantification was based on two key assumptions: (a) what he would have earned with Prudential would be comparable to what he had earned with the defendant; and (b) he would have grown his team to about 100 advisers within one year of joining Prudential.
However, the High Court found that there was insufficient evidence to support both assumptions and specifically rejected the plaintiff’s assertions that:
- there was no evidence that he would have been remunerated less with Prudential;
- the remuneration structures of Prudential and the defendant would be similar;
- he would have received $6m in remuneration annually from 2012 to 2016;
- he would have doubled the number of advisers on his team based on his past track record and negotiations with Prudential; and
- his performance with the defendant had been highly rated and valued.
The High Court also observed that it must exercise more care where the projection contained “more assumptions and contingencies”.6
Instead, the High Court preferred to use, as the basis for quantification, the terms of the Establishment Package that had been offered conditionally to the plaintiff. It acknowledged that this method was not free from difficulties, given that the Establishment Package was a conditional offer that had yet to be finalised, and was subject to several conditions that the High Court was either unsure as to their certainty, or how to estimate the plaintiff’s prospects of meeting the conditions.7
Nevertheless, in view of the need to adopt a “flexible approach”, the Establishment Package would constitute an adequate, albeit conservative, basis for assessing what the plaintiff would likely have earned if he had been hired by Prudential.8
It is worth noting that the High Court considered that the Establishment Package offered a “good approximation”, “conservative estimate” and “some basis” of what the plaintiff would have received with Prudential.9
The High Court then proceeded to find that the period of time that the plaintiff should be compensated for loss of earnings would be for August 2011 to July 2016, which was when the Court of Appeal released its judgment on the merits. The court further awarded damages for loss of future earnings for the period between August 2016 and July 2018, based on its estimate of how long the plaintiff would take to grow his team to the same size it was before the breach occurred.
The plaintiff was thus awarded $3,562,500 for his loss of earnings from August 2011 to July 2016, and $525,000 of loss of future earnings from August 2016 to July 2018. After subtracting $61,500 that he had earned from working at the restaurant, this left an amount of $4,026,000 for award.
The High Court, however, declined to award aggravated damages. Even though the Court of Appeal held that the defendant had wanted to paint the plaintiff in a bad light and did not act objectively, the High Court found that the defendant’s conduct did not involve “exceptional or contumelious conduct or motive”.10
CONCLUSION
The High Court in Ramesh was restricted greatly by the limited information that it had as well as the limited figures it could then derive from that information to achieve a just outcome.
Although the courts are entitled to adopt a flexible approach to assessing damages, claimants are required to do their “level best” in proving their loss. While a perfect quantification of the claimant’s loss is not required, Ramesh demonstrates that the court will not readily accept quantifications of loss which are based on unsubstantiated assumptions on the claimant’s future earnings.
In this regard, the High Court’s award of $4.026 million, which is in stark contrast to the diametrically opposed positions of the plaintiff ($63 million) and the defendant (nominal damages of $1), indicates that parties in future cases need to make more “realistic and reasoned assessments” in submitting their respective quantifications.
1 Ramesh at [65].
2 Ramesh at [93].
3 Ramesh at [64]-[65].
4 Robertson Quay Investment Pte Ltd v Steen Consultants [2008] 2 SLR(R) 623 at [30], citing the remarks of Devlin J in Biggin & Co Ltd v Permalite Ltd [1951] 1 KB 422 at 438.
5 Ramesh at [86]-[87].
6 Ramesh at [98].
7 Ramesh at [104]
8 Ramesh at [106]
9 Ramesh at [108]-[111]
10 Ramesh at [133]-[134].
11 Ramesh at [35].
12 Ramesh at [99]
For more information, please contact:
Roderick Edward Martin, Senior Partner, RHT Taylor Wessing
roderick.martin@rhtlawtaylorwessing.com
