Case Summaries

Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd


                                             SUPREME COURT OF SINGAPORE

27 July 2016

Media Summary

Civil Appeal No 112 of 2015

Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2016] SGCA 47




1     In Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2016] SGCA 47, the Court of Appeal partially allowed the appeal against the High Court judge’s decision to dismiss the appellant’s claim in negligence against its former principal. In the course of its judgment, the Court of Appeal laid down the standard of care that an employer (or principal) should meet when preparing a reference for its former employee (or agent). This is an issue that has not previously been dealt with by the Court.

2     The Court of Appeal prefaced its judgment with the recognition that employers often require potential hirees to provide references from their former employers. Such references may serve as a basis for the prospective employer to assess the applicant’s character and abilities, and will likely have at least some, if not significant, bearing on the applicant’s chances of obtaining employment. It is thus important that employers prepare such references, when called upon to do so, in a fair and accurate manner in order to avoid unjustifiably prejudicing the former employee’s prospects of obtaining fresh employment.

The facts

3     The appellant, Mr Ramesh s/o Krishnan ("the Appellant"), was a senior financial services director in the respondent, AXA Life Insurance Singapore Pte Ltd ("the Respondent"). While he was with the Respondent, he led a group of advisers under his own "agency organisation" known as "the Ramesh Organisation". On 29 April 2011, the Respondent initially decided to terminate the Appellant’s services, but then, at his request, allowed him to resign instead.

4     The Appellant thereafter applied to join Prudential Assurance Company Singapore Pte Ltd ("Prudential"). As required under the regulatory framework of the financial advisory and insurance industry, Prudential sent a reference check request to the Respondent. The Respondent responded about two weeks later with a completed reference check form. The information provided in the form indicated or suggested that the Ramesh Organisation had a low persistency ratio (which would indicate its sales were of a poor quality), that 14 of the advisers in the Ramesh Organisation including the Appellant had been investigated for compliance issues, and that disciplinary actions had been taken against five advisers while three cases had been referred to the police for further investigation.

5     The information provided by the Respondent prompted Prudential to seek further information from the Respondent, such as the details of the investigations and the method by which the Respondent had calculated the persistency ratios that were furnished. The Respondent did not provide most of the information, save for some brief details of only the internal investigation concerning the Appellant, but not that concerning the other advisers nor that concerning the Ramesh Organisation in general. A few months later, the Respondent sent a letter to Prudential, copied to the Monetary Authority of Singapore ("MAS"), highlighting that the Ramesh Organisation had a very poor persistency ratio of 9% and alluding to possible ethical violations by the advisers in the Ramesh Organisation. While seeking clarification from the Respondent, Prudential concurrently made a conditional job offer to the Appellant and applied for a licence for him from MAS. MAS took significantly longer than it usually would take to respond to such an application, and replied two to three months later indicating that it was prepared to issue only a conditional licence for the Appellant. MAS’s decision to impose conditions appeared to stem from the matters stated by the Respondent in its correspondence that had been sent or copied to MAS. Prudential eventually withdrew its application for a licence and decided not to hire the Appellant.

6     The Appellant applied to join Tokio Marine Life Insurance Singapore Limited ("Tokio Marine") after it became clear that his application to Prudential was unlikely  to succeed. His application to Tokio Marine was not material to the Court’s judgment and is not discussed further in this summary.

7     The Appellant commenced a suit against the Respondent founded on three causes of action: defamation, malicious falsehood and negligence. The High Court dismissed all three claims. In respect of the negligence claim, the High Court found that the Respondent had not breached the duty of care that it owed the Appellant in responding to or corresponding with Prudential, Tokio Marine and MAS, and that in any event, it was questionable whether the Respondent’s conduct had caused the Appellant not to be employed by either Prudential or Tokio Marine. The Appellant appealed only against the Judge’s decision in respect of the negligence claim.


8     The Court of Appeal allowed the appeal in part, and held that the Appellant succeeded in his claim in negligence against the Respondent in respect of his application to join Prudential (but not his application to join Tokio Marine).

Reasons for the judgment

9     In coming to its decision, the Court of Appeal endorsed the High Court’s finding that an employer who writes a reference for its employee (whether a former or present employee) owes a duty of care to the employee in preparing the reference.

10    The Court of Appeal set out the standard of care that is expected of such an employer:

(a) In preparing the reference, the employer must exercise reasonable care:

(i) to ensure that the facts stated in the reference are true and that any opinions expressed in the reference are based on, and supported by, facts which are true;

(ii) to ensure that the reference is not only true, but also accurate in that it does not give an unfair or misleading overall impression of the employee, even if the discrete pieces of information are true. The information that is provided may be considered misleading or unfair where the information provided has gone through an unfair process of selection, or where the manner in which the facts and opinions have been included gives rise to a false or mistaken impression in the mind of a reasonable recipient of the reference.

(iii) to disclose any information that relates to information which has already been provided, where the withholding of such information would render the information that has been disclosed incomplete, inaccurate or unfair. This obligation continues to exist when the recipient of the reference seeks further information or clarification pertaining to what has been disclosed.

(b) Subject to the foregoing qualifications, the employer is not required to give a full and comprehensive reference or to include all material facts about the employee in the reference.

(c) In general, the employer should not include in the reference, whether explicitly or implicitly, complaints or other allegations against the employee that the employee had no knowledge of and had not been given an opportunity to explain or defend himself against.

(d) In assessing what constitutes reasonable care, regard will be had to the gravity of any adverse suggestion or inference contained in the reference. The greater the gravity of any adverse suggestion or inference, the more closely will the employer’s conduct be scrutinised to ascertain whether it has taken reasonable care to ensure that the suggestion or inference in question: (i) is based on facts which are true and accurate; and (ii) is, in view of those facts, fair and reasonable.

(e) This does not, however, mean that an adverse reference will automatically be regarded as being unfair or misleading. Some references, such as the reference check form in the present case, are meant to elicit primarily adverse information, and thus, the employer cannot be faulted for not including positive attributes about the employee in such a reference.

11     The Court found that the Respondent breached its duty of care to the Appellant in preparing the information set out in the reference check form to Prudential and in its subsequent correspondence with Prudential and MAS for the following reasons:

(a) Although the information provided in the reference check form was factually true, a substantial part of the information provided was incomplete, misleading and unfair to the Appellant.

(b) The Respondent unfairly withheld, in its subsequent communications with Prudential, information which was relevant to clarify or qualify other information that it had earlier included in the reference check form despite Prudential’s requests for the further information.

(c) Several aspects of the information that the Respondent subsequently provided were also unfair and misleading.

(d) The Respondent did not provide the information concerned in an objective manner. This was particularly clear from the tone and contents of two letters that the Respondent sent to Prudential and MAS, which alluded to potential ethical violations by the Appellant and the advisers under him. The Court found that there did not appear to be any basis for, or any attempt to substantiate, the views expressed in the two letters.

12    On the issue of causation, the Court was satisfied that the Respondent’s breach of its duty of care to the Appellant in preparing the information set out in the reference check form and in its subsequent correspondence with Prudential and MAS caused Prudential not to hire the Appellant. Prudential’s evidence was that it eventually decided not to hire the Appellant because of the delay in processing his job application and getting him approved. The Court found that there had been two periods of delay: one in respect of the internal decision-making process within  Prudential where it took Prudential almost three months to decide whether to apply for a licence from MAS for the Appellant, and one in respect of the time it took for MAS to process Prudential’s application for a licence and to decide to issue only a conditional licence for the Appellant. The Court was satisfied that both periods of delay could be attributed to either the Respondent’s reference check response to Prudential or the further information that it provided in its subsequent correspondence with Prudential and MAS. The Court of Appeal therefore partially allowed the appeal.

13     The matter will now be remitted to the High Court for an assessment of the damages payable.

* This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court.