Doctor sues property adviser who recommended UK hotel investment that flopped, gets S$85,000

SINGAPORE: A doctor who invested in a hotel in the United Kingdom after attending a seminar on property investment lost money after it was sold at a loss.

He sued the seminar's speaker - a woman who presented herself on the event brochure as a savvy property investor - and was awarded about S$85,000 (US$61,800) by a district court in Singapore.

In a judgment made available on Wednesday (Oct 4), District Judge Tan May Tee found that property adviser and investor Wendy Kwek had breached her duty of care to Dr Lim Chong Teck.

Dr Lim was one of 85 plaintiffs who bought units in the Tillington Hall Hotel in Stafford, UK, during a series of property exhibitions in Singapore in 2013 and suffered losses.

The project had been introduced to them by Ms Kwek, who told them that it would be profitable. 

All of the plaintiffs except Dr Lim eventually withdrew their claims in the High Court, and his claim was heard in a district court.

WHAT HAPPENED

According to Dr Lim, who is a ear, nose and throat specialist, he came across an advertisement in a local newspaper in January 2013, promoting a free two-hour "Property Riches Seminar", which Ms Kwek conducted.

She was identified as "Ms Wendy Kwek, Spirit of Enterprise Awardee 2004". 

Dr Lim regarded himself as someone with "zero knowledge when it comes to property investment".

Around Jan 20, 2013, he attended the free seminar, which was organised under WK Events and fronted by Ms Kwek.

Throughout the seminar, Ms Kwek portrayed herself as an astute business owner and property investor with significant experience and success in advising others on investment properties as well as in her personal investments.

During the two-hour seminar, she talked about how savvy investors have been accumulating millions in the property market, how average people can also become rich by taking the right action, and how to identify good investment opportunities locally and internationally.

Ms Kwek encouraged the attendees to sign up for another two-and-a-half day course called the "Property Riches Program" which cost S$2,995.

Dr Lim said that Ms Kwek told the attendees that if they signed up for this programme, they would become members of her investment network and be offered exclusive investment opportunities that she had personally sourced and assessed using tried and tested investment methods.

Dr Lim signed up for the programme and attended it in March 2013, becoming part of Ms Kwek's investment network.

In July 2013, Ms Kwek sent an email to the network introducing the Tillington Hotel investment opportunity. 

In her email, she called it "an undervalued, profitable and hassle-free investment deal" that she had personally traveled to the UK to view and assess.

Dr Lim attended subsequent briefings that Ms Kwek held on the project, which had large turnouts.

According to Dr Lim, Ms Kwek assured attendees that she had done all the relevant and necessary due diligence.

She said the project would yield returns of at least 7 per cent in the first year, with returns increasing progressively each year.

By about the sixth or seventh year, the project would yield returns of about 14 per cent, and she would lead them to exit from the project and sell their investments at two times of their invested sums.

She also invited the director of the hotel's developer on stage, who talked about the project and the projected yield.

Convinced that the project was sound and profitable based on what Ms Kwek said, Dr Lim placed a holding deposit of S$10,000 for a double room unit in July 2013 and completed the full payment of £52,000, worth about S$100,000 at the time, in August 2013.

However, the project was a failure. Dr Lim did not receive the promised returns as presented in the emails or exhibitions.

Over a five-year period, the investment did not even yield returns of 7 per cent annually, and did not reach 14 per cent by the sixth year in 2019.

Instead, Dr Lim received a sum of about S$18,400 as rental income from his investment in the hotel between 2013 and 2017.

HOTEL SOLD AT A LOSS

In June 2021, the Tillington Hotel was sold at a loss, and Dr Lim received a mere £3,949 as his share of the proceeds. 

This was nowhere near his original purchase price of the unit, and a far cry from double the invested sums which he claimed Ms Kwek had told investors they would receive.

Dr Lim worked out his losses from the investment project at S$84,989.55, including the purchase price of the unit, the legal costs and other charges and taxes.

He claimed that Ms Kwek was liable for his losses because of her failure to conduct proper due diligence and provide proper investment advice. He also claimed that she had made a fraudulent or negligent misrepresentation under the Misrepresentation Act.

His lawyers based the due diligence claim on a breach of the terms of contract between Dr Lim and Ms Kwek in Dr Lim's capacity as a member of the WK Investment Network, and a breach of duty of care under common law.

Dr Lim said Ms Kwek had failed to advise him on the fact that the 52.15 per cent occupancy rate stated in the hotel's budget for 2011 and 2012 showed that the hotel was not trading successfully, as almost half its rooms were empty all year round.

Ms Kwek denied Dr Lim's claim entirely, saying that the WK Investment Network was an informal grouping of people interested in investing in property and that its formation was not intended to create legal or contractual obligations.

While she did introduce the investment opportunity to Dr Lim, Ms Kwek denied telling attendees that she would follow through and exit the project with them at a profit after five to seven years.

She also denied giving any financial or investment advice to Dr Lim.

She argued that participants were shown a comprehensive disclaimer at the start of the programme, saying that they are to exercise due diligence in making any purchasing or investment decision.

The disclaimer also encouraged participants to seek out professionals like legal advisers, accountants and bankers before making any property investments or purchases.

The judge found that there was no contractual relationship between Dr Lim and Ms Kwek, and his claim on this basis failed.

However, she found that Ms Kwek did owe Dr Lim a duty of care in common law. Judge Tan noted that Ms Kwek did assume personal responsibility for her statements made during the programme.

She did not challenge Dr Lim's testimony that she had verbally assured attendees that she would look into and source for undervalued properties with considerable growth potential on their behalf and hold onto the investments with them, eventually leading them to sell the investments at a profit.

In cross-examination at trial, Ms Kwek confirmed that she had never informed the attendees at the exhibitions that she represented the developer, or told them to find their own property agent.

She also did not warn them that they ought to conduct their own due diligence checks on the project.

Additionally, all the commission received from the project was received by Ms Kwek, the judge noted.

A former colleague of hers had testified that Ms Kwek would have received no less than 10 per cent in commission.

Judge Tan found that Dr Lim was not able to prove fraud on Ms Kwek's part. She noted that Ms Kwek had also purchased a unit in the Tillington Hotel.

Since Dr Lim had proven his claim, and Ms Kwek did not challenge his losses at all, she awarded him damages of S$84,989.55.