Tuesday 21 December 2021

Singapore: Court of Appeal considers reflective loss principle

In one of the most important company law decisions of the year - Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd [2021] SGCA 116 (pdf) - the Court of Appeal has considered the reflective loss principle, exploring the significance of the majority (and minority) positions in the UK Supreme Court decision Sevilleja v Marex Financial Ltd (Rev 1) [2020] UKSC 31. Andrew Phang Boon Leong JCA delivered the decision of the court and stated, by way of a summary near the start of his written judgment, the following (para. [6], emphasis in the original):

...we are of the view that the reflective loss principle is one that relates to the specific sphere of company law and we therefore endorse the majority decision in Marex. To the extent that it is undergirded by principle, inasmuch as it has a specific purpose and rationale, the reflective loss principle is one that ought to be retained and we therefore do not agree with the minority decision in Marex. It follows that the approach in Townsing [[2007] 2 SLR(R) 597 (pdf)] (which was, in fact, rendered by way of obiter dicta) is no longer the law in Singapore. In our respectful view, the court in Townsing, inadvertently perhaps, conflated a specific principle of company law with the general principle proscribing double recovery – resulting in the dilution or undermining of what was an otherwise clear and specific rule that had a clear and coherent rationale in the context of company law".

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