1 The plaintiff, Fuji Xerox Singapore Pte Ltd (“Fuji Xerox”), commenced this Suit against the first defendant, Mazzy Creations Pte Ltd (“Mazzy Creations”) to claim arrears of rental and other charges which are due under three agreements it entered into with Mazzy Creations in 2015. Fuji Xerox also claims from the second defendant, Ms Alice Chua Tien Jin (“Ms Chua”), and the third defendant, Mr Chua Koon Kian (“Mr Chua”), as guarantors for Mazzy Creations. In addition, Fuji Xerox claims from Mazzy Creations for goods that it sold and delivered. I shall refer to Ms Chua, Mr Chua and Mazzy Creations by their names or collectively as “the defendants”.

2 On the other hand, the defendants plead that they were induced to enter into the relevant agreements as a result of Fuji Xerox’s misrepresentations. The defendants counterclaim for rescission of these agreements and for damages for misrepresentation. In addition, Mazzy Creations counterclaims for printing charges arising from several printing jobs it undertook for Fuji Xerox.

3 Fuji Xerox is a Singapore-incorporated company in the business of renting and servicing office machinery and equipment. ¹

4 Mazzy Creations is in the printing business. ² Ms Chua and Mr Chua are siblings ³ and they are partners in M/s Scanagraphic (“Scanagraphic”). ⁴ They are also the only shareholders and directors of Mazzy Creations ⁵ and Colourcube Pte Ltd (“Colourcube”). ⁶ Ms Chua is the managing director of Mazzy Creations. ⁷ At all material times, Ms Chua was running both Scanagraphic and Mazzy Creations on her own as Mr Chua has been retired for almost 15 years. ⁸

5 Over the years, Ms Chua and Mr Chua entered into various rental and service agreements with Fuji Xerox, first through Scanagraphic (in 2000, 2004, 2008, 2011 and 2014) ⁹ and later through Mazzy Creations (in 2012 and 2015). ¹⁰

6  From 2012 onwards, the defendants’ dealings with Fuji Xerox took place through direct conversations, discussions and negotiations between Ms Chua and Mr Andrew Lim Bee Cheng (“Mr Lim”). ¹¹ At the material time, Mr Lim was employed by Fuji Xerox as one of its customer account managers. ¹² He had dealings with Ms Chua since 2000 ¹³ and handled Mazzy Creations’ account from 2012 to 2015. ¹⁴

7 In July 2012, Fuji Xerox and Mazzy Creations entered into three agreements (collectively, the “2012 Agreements”): ¹⁵

(a) Rental Agreement L00023828, under which Mazzy Creations rented a “Color 1000 Press” photocopier with an attached “Fiery Ex Printer Server” and a “FX4127CP” black and white printer from Fuji Xerox for a minimum period of 60 months commencing on 1 July 2012 (the “2012 Rental Agreement”); ¹⁶

(b) Service Agreement F00060952, under which Fuji Xerox agreed to service the “FX4127CP” black and white printer for a period of 60 months; ¹⁷ and

(c) Service Agreement F00060953, under which Fuji Xerox agreed to service the “Color 1000 Press” photocopier with its attached “Fiery Ex Printer Server” for a period of 60 months. ¹⁸

8 Under the 2012 Rental Agreement, Mazzy Creations was required to make an initial payment of $80,000 and monthly period payments of $10,367 for each of the 60 months of the minimum period. The total amount payable by Mazzy Creations under the 2012 Rental Agreement was, therefore, $702,020. Clauses 5.1 and 7.3 of the 2012 Rental Agreement are of particular relevance in these proceedings: ¹⁹

9 Thus, pursuant to cl 5.1 of the 2012 Rental Agreement, Mazzy Creations was required to pay Fuji Xerox $10,367 each month for 60 months from July 2012 to July 2017. If the 2012 Rental Agreement was terminated before these 60 months had lapsed, Mazzy Creations would be liable to pay the period payments for all the remaining months.

10 As part of the value-added services which Fuji Xerox sought to provide to its customers, Fuji Xerox engaged Alliance Trust Pte Ltd (“Alliance Trust”) to provide complimentary consultancy services to Mazzy Creations in 2012. ²⁰ Alliance Trust was to assist Mazzy Creations to submit its claims for cash payouts under the Productivity and Innovation Credit Scheme (the “PIC Scheme”) administered by the Inland Revenue Authority of Singapore (“IRAS”) for one financial year, from the Year of Assessment 2012 to the Year of Assessment 2013. It is not disputed that Alliance Trust assisted Mazzy Creations in the submissions of its claims for cash payouts under the PIC Scheme (the “PIC Claims”) to IRAS in 2012. ²¹

11 Although the consultancy agreement dated 20 June 2012 (the “Consultancy Agreement”) was signed between Alliance Trust and Colourcube, ²² it is not disputed that Alliance Trust rendered these consultancy services to Mazzy Creations instead of Colourcube. ²³ The original parties to the 2012 Rental Agreement were Fuji Xerox and Colourcube. Later, the 2012 Rental Agreement was assigned from Colourcube to Mazzy Creations. ²⁴ Ms Chua clarified that Alliance Trust’s appointment vis-à-vis Mazzy Creations was, therefore, governed by the Consultancy Agreement. ²⁵

12 Sometime in early 2015, Mr Lim introduced Ms Chua to the latest model of Fuji Xerox’s printers, namely the “Color 1000i Press” photocopier. This was an upgrade of the “Color 1000 Press” photocopier that Mazzy Creations had previously rented under the 2012 Rental Agreement. ²⁶

13 Subsequently, on 10 March 2015, Fuji Xerox and Mazzy Creations entered into three agreements (collectively, the “2015 Agreements”):

(a) Rental Agreement L00030096, under which Mazzy Creations rented the “Color 1000i Press” photocopier and “Fiery Ex Print Server” from Fuji Xerox for a minimum period of 60 months commencing on 1 April 2015 (the “2015 Rental Agreement”); ²⁷

(b) Service Agreement F00086569, under which Mazzy Creations purchased materials and supplies from Fuji Xerox and Fuji Xerox agreed to provide maintenance for the “Color 1000i Press” photocopier and “Fiery Ex Print Server” (the “2015 Service Agreement”); ²⁸ and

(c) Rental and Service Agreement R00005227, under which Mazzy Creations rented the “FX4127CP” printer from Fuji Xerox for a period of 36 months commencing on 1 April 2015 (the “2015 Rental and Service Agreement”). ²⁹

The 2015 Rental Agreement, the 2015 Service Agreement and the 2015 Rental and Service Agreement are annexed to this judgment as Annex A, Annex B and Annex C respectively.

14 Under the 2015 Rental Agreement, Mazzy Creations was required to pay monthly period payments of $10,367 for each of the 60 months. However, Mazzy Creations was not required to make any initial payment. The total amount payable by Mazzy Creations under the 2015 Rental Agreement was $622,020. ³⁰ The 2015 Rental Agreement terminated and superseded the 2012 Rental Agreement before the 60-month minimum period under the 2012 Rental Agreement had expired. ³¹

15 On 10 March 2015, Ms Chua and Mr Chua also executed a guarantee and indemnity to guarantee the payment of all sums due from Mazzy Creations to Fuji Xerox under the 2015 Agreements (the “Guarantee”). ³²

16 At this point, it is necessary to briefly outline IRAS’s policy regarding claims under the PIC Scheme. Under the PIC Scheme, businesses are offered a cash payout of up to 60% of the cost of acquiring or leasing selected information technology and automation equipment, capped at a maximum of $100,000 per year. ³³ However, the amount claimed under the PIC Scheme must exclude any unpaid sums carried forward from a previous lease agreement (known as a “rollover”). ³⁴ Further, businesses which are found to have over-claimed for benefits under the PIC Scheme may face a penalty for the cash payouts that were overpaid or would have been overpaid. ³⁵

17 The types of colour photocopiers rented by Mazzy Creations from Fuji Xerox under the 2012 Agreements and 2015 Agreements qualify for cash payouts under the PIC Scheme. ³⁶ Following the execution of the 2015 Agreements, Mazzy Creations submitted periodic PIC Claims to IRAS in respect of the monthly period payments for the photocopier it had rented from Fuji Xerox. ³⁷ These PIC Claims were supported by the tax invoices issued by Fuji Xerox under the 2015 Agreements. ³⁸ At this point, it should be noted that Alliance Trust did not provide any consultancy services to Mazzy Creations in relation to the 2015 Agreements. ³⁹

18 However, sometime in mid-2016 when Ms Chua attended a Hewlett-Packard open house, she discovered that the amounts stated in Fuji Xerox’s tax invoices included rollovers. Ms Chua then sought an explanation from Mr Lim as well as from Fuji Xerox’s general manager and sales manager, but they neither denied nor confirmed the rollovers and offered no explanation. Thereafter, the defendants informed Fuji Xerox that unless it disclosed its recommended retail price or the reasonable retail price it offered to all its regular customers, the defendants would not continue to pay Fuji Xerox. ⁴⁰

19 In an e-mail dated 27 October 2017, Fuji Xerox’s chief financial officer offered to reduce Mazzy Creations’ outstanding payments by $36,202. According to Fuji Xerox, this offer of a reduction was made purely on a goodwill basis. ⁴¹ However, the defendants rejected this offer and maintained that they would not pay Fuji Xerox until it disclosed its recommended retail price or the reasonable price it offered to all its regular customers. ⁴²

20 Subsequently, Ms Chua wrote a letter to IRAS dated 16 January 2020 to report that Mazzy Creations had erroneously claimed cash payouts under the PIC Scheme in its submissions from 2012 to 2018, as these claims included rollovers. She indicated that she would only be able to submit the proper Disclosure of Error form when the exact amounts of rollovers were disclosed by Fuji Xerox. ⁴³ In its letter dated 21 August 2020, IRAS informed Mazzy Creations that it would have to claw back all the cash payouts that Mazzy Creations had previously received under the PIC Scheme relating to the machines rented from Fuji Xerox. These cash payouts amounted to $349,513.80. ⁴⁴

21 The defendants only found out the actual amount of the rollover in the course of this Suit, ⁴⁵ when Fuji Xerox disclosed a table which indicated that a rollover of $276,640 from the 2012 Rental Agreement had been included within the rental amount of $622,020 payable under the 2015 Rental Agreement. ⁴⁶ The amount of this rollover was not expressly disclosed in the 2015 Rental Agreement, which stated only that the total amount payable thereunder was $622,020. At the relevant time, Fuji Xerox did not have any policy of disclosing a detailed breakdown of the amounts payable under its rental agreements to its customers as this was regarded as the company’s confidential internal information. ⁴⁷ However, Ms Toh Sze Ben (“Ms Toh”), the senior manager of Fuji Xerox’s Finance Management and Operations team, ⁴⁸ explained that Fuji Xerox would have disclosed the amount of the rollover to Ms Chua if she had requested this information for the purpose of submitting Mazzy Creations’ PIC Claims. ⁴⁹ Indeed, it was possible for the defendants to calculate the amount of the rollover themselves by multiplying the number of remaining months of the minimum period under the 2012 Rental Agreement by the monthly period payment of $10,367. ⁵⁰ However, the defendants never asked Fuji Xerox for the amounts of any rollover contained in each invoice submitted by Mazzy Creations to IRAS in support of its PIC Claims. ⁵¹ Although Ms Chua asked for the rollover amounts in her e-mails to Fuji Xerox dated 16 May 2018 and 18 May 2018, she did not explain that this information was needed for the purposes of Mazzy Creations’ PIC Claims. Instead, in these e-mails, Ms Chua made allegations that she had been “cheated”; that Fuji Xerox’s staff had misled its customers; and that Fuji Xerox had unethically sought to “create unfair competition” among its customers, in respect of which the “relevant authorities should be alerted”. ⁵²

22 Since the 2015 Agreements were entered into, there have been two developments in Fuji Xerox’s internal policies relating to rollovers.

23 First, an internal investigation report dated 10 June 2017 was produced by an independent investigation committee established by Fujifilm Holdings Corporation in Japan (the “Fujifilm internal investigation report”). The investigation was conducted as Fuji Xerox New Zealand Limited and Fuji Xerox Australia had adopted certain “inappropriate accounting practices” regarding lease transactions. One concern was the practice of contract rollovers whereby “[l]ease contracts were renewed before expiration and then recorded as a new sale without reversing the past sale”. ⁵³ Fujifilm Holdings Corporation is a joint owner of Fuji Xerox Co Ltd, which owns Fuji Xerox Asia Pacific Pte Ltd, which in turn owns Fuji Xerox (see Wong Sung Boon v Fuji Xerox Singapore Pte Ltd and another [2021] SGHC 24 at [2]). The accounting practice adopted by Fuji Xerox (the plaintiff in the present Suit) was correct as the rollover was not recorded as a new rental price unlike the accounting practice of Fuji Xerox New Zealand Limited and Fuji Xerox Australia. ⁵⁴

24 The Fujifilm internal investigation was not initiated as a result of this case but because of the incorrect accounting practice in New Zealand and Australia.

25 Secondly, Fuji Xerox’s standard Rental Agreement form now specifies the “[a]mount outstanding from other agreements refinanced by [Fuji Xerox]” alongside information on the initial payment, the period payments and the total amount payable upon execution of the rental agreement. ⁵⁵ In other words, the amount of any rollover from previous rental agreements is now expressly stated in the Rental Agreement form. This new form has been used by Fuji Xerox since December 2018. ⁵⁶ Ms Toh explained that these changes to the Rental Agreement form were introduced as part of Fuji Xerox’s “internal process for improvement”, having regard to the practice in other countries. ⁵⁷ She said that these changes had “nothing to do” with the Fujifilm internal investigation report. ⁵⁸

26  From May 2015 to February 2019, Fuji Xerox issued invoices to Mazzy Creations for sums due under the 2015 Agreements and for supplies sold and delivered. ⁵⁹ Fuji Xerox claims payment of unpaid rental arrears of $465,892.98 under the 2015 Rental Agreement, ⁶⁰ maintenance charges of $20,784.07 under the 2015 Service Agreement ⁶¹ and charges of $1,424.64 under the 2015 Rental and Service Agreement. ⁶² Further, Fuji Xerox claims late payment interest of $64,493.50 (as at 2 January 2019) from Mazzy Creations under the 2015 Agreements. ⁶³ In the alternative, Fuji Xerox claims that Mazzy Creations’ breach of the 2015 Rental Agreement caused it to suffer loss and damage, in that it lost the benefit of the 2015 Rental Agreement and the rental revenue that it would otherwise have earned thereunder. ⁶⁴ Fuji Xerox also claims a sum of $909.50 for goods sold and delivered to Mazzy Creations, as reflected in Fuji Xerox’s invoice to Mazzy Creations dated 28 September 2017. ⁶⁵

27 Fuji Xerox’s claim against Ms Chua and Mr Chua is pursuant to the Guarantee. Under the Guarantee, Ms Chua and Mr Chua guaranteed the payment of all sums due from Mazzy Creations to Fuji Xerox under the 2015 Agreements. ⁶⁶

28 With regard to the misrepresentations alleged by the defendants, Fuji Xerox denies that it or Mr Lim ever made any such misrepresentations. ⁶⁷ According to Fuji Xerox, Mr Lim had merely informed Ms Chua (acting on behalf of Mazzy Creations) that the monthly rental payments under the 2015 Rental Agreement would remain the same as the monthly rental payments under the 2012 Rental Agreement. ⁶⁸ In particular, Fuji Xerox denies that it or Mr Lim had assured Mazzy Creations that part of the rental and service charges payable under the 2015 Agreements could be recovered under the PIC Scheme. At all material times, claims under the PIC Scheme were subject to IRAS’s approval based on Mazzy Creations’ eligibility. ⁶⁹ Fuji Xerox also submits that the defendants have failed to show that Mr Lim acted fraudulently. ⁷⁰

29 Further, Fuji Xerox denies that it was aware of or assisted Mazzy Creations in submitting its periodic PIC Claims supported by Fuji Xerox’s tax invoices. If these PIC Claims were in fact made by Mazzy Creations, they were made on Mazzy Creations’ own accord and at its own discretion. ⁷¹ In any event, since the defendants had appointed Alliance Trust to assist with Mazzy Creations’ PIC Claims in 2012, the defendants must have relied on the advice of Alliance Trust in their submission of Mazzy Creations’ PIC Claims to IRAS. ⁷²

30 In addition, Fuji Xerox contends that the defendants did not rely on any representations made by Mr Lim when Mazzy Creations entered into the 2015 Agreements. On the contrary, this was an arm’s length transaction entered into between two independent business entities. ⁷³

31 It is undisputed that, on various dates and in the course of the dealings between the parties, Mazzy Creations provided printing services to Fuji Xerox at the latter’s request. The charges for these printing services amounted to $93,109.26. ⁷⁴

32 Fuji Xerox argues that these charges have been validly set off, paid or settled in full, but otherwise does not dispute this counterclaim. ⁷⁵ In particular, Fuji Xerox avers that it issued credit notes to Mazzy Creations to set off these charges against the prior amounts owed to it by Mazzy Creations. The amounts claimed in its Statement of Claim are the balance amounts due and owing from Mazzy Creations after taking into account these credit notes. ⁷⁶

33 It is not disputed that Mazzy Creations defaulted in the payment of rental arrears of $465,892.98 under the 2015 Rental Agreement, ⁷⁷ maintenance charges of $20,784.07 under the 2015 Service Agreement ⁷⁸ and charges of $1,424.64 under the 2015 Rental and Service Agreement (as at 31 January 2019). ⁷⁹ It is also not disputed that Mazzy Creations owes Fuji Xerox a sum of $909.50 for goods that Fuji Xerox sold and delivered to Mazzy Creations at its request. ⁸⁰ However, the defendants contend that they were induced to enter into the 2015 Agreements by Fuji Xerox’s fraudulent misrepresentations.

34 Further, the defendants counterclaim against Fuji Xerox for: ⁸¹

(a) a declaration that the 2015 Agreements have been validly rescinded, or alternatively rescission of the 2015 Agreements;

(b) damages to be assessed based on the difference between (i) Fuji Xerox’s recommended retail prices or reasonable prices for all items of equipment rented to Mazzy Creations under the 2015 Agreements, without any rollovers from the 2012 Agreements, and (ii) the rental amounts stated in the 2015 Agreements;

(c) damages for misrepresentation pursuant to s 2 of the Misrepresentation Act (Cap 390);

(d) charges for the printing services provided by Mazzy Creations to Fuji Xerox (amounting to $93,109.26), which the defendants claim that Fuji Xerox has refused or neglected to settle despite repeated demands; ⁸² and

(e) any penalties that IRAS may impose in relation to Mazzy Creations’ erroneous claims under the PIC Scheme or Mazzy Creations’ false declaration that the tax invoices it had submitted to IRAS did not contain any rollovers from the 2012 Agreements.

35 In the event that Mazzy Creations is found to be liable to Fuji Xerox under all or any of the 2015 Agreements, the defendants argue that the amounts due to Fuji Xerox under the unpaid invoices should be set off against the counterclaims outlined at [34(d)]–[34(e)] above. ⁸³

36 The defendants argue that Fuji Xerox cannot rely on the 2015 Agreements to claim payment of the outstanding sums due thereunder because they were induced to enter into the 2015 Agreements by Fuji Xerox’s misrepresentations. ⁸⁴ In addition, the defendants counterclaim against Fuji Xerox for rescission of the 2015 Agreements and damages for misrepresentation. ⁸⁵

37 At para 7 of their Defence and Counterclaim, under the heading “The Representations”, the defendants pleaded that three representations were made to Ms Chua by Mr Lim in their discussions prior to the 2015 Agreements:

(a) First, that the total rental amount offered in the 2015 Agreements was Fuji Xerox’s recommended retail price or was a reasonable price offered by Fuji Xerox to all its customers (the “Rental Amount Representation”). ⁸⁶ According to the defendants, this representation was false because the total rental amount stated in the 2015 Rental Agreement included a rollover of Mazzy Creations’ liabilities under the 2012 Rental Agreement. ⁸⁷

(b) Second, that no deposit payment was required under the 2015 Agreements. ⁸⁸

(c) Third, that Fuji Xerox would cap the monthly payments due under the 2015 Agreements to the same amount as the monthly payments payable under the 2012 Agreements. ⁸⁹

38 The defendants accept that the second and third pleaded representations (at [37(b)] and [37(c)] above) were true. ⁹⁰ Indeed, both Ms Chua and the defendants’ counsel acknowledged that both of these representations were true ⁹¹ and that these were not misrepresentations by Mr Lim, albeit that Mr Lim told Ms Chua that there was no initial payment (and not “deposit payment”, which is refundable to the hiree, as pleaded). Therefore, I shall not consider these two representations in analysing the defendants’ case based on misrepresentation. However, the Rental Amount Representation (at [37(a)] above) is vigorously contested and it is one of the pivotal issues in this case.

39 At the trial, the defendants also relied on two further alleged representations made to them by Fuji Xerox and/or Mr Lim but these were not clearly pleaded in the Defence and Counterclaim. Instead, these alleged representations were mentioned under the headings “Past Dealings” and “The 2015 Representations were False”:

(a) First, the non-disclosure of the rollover from the 2012 Rental Agreement which was included in the total rental amount stated in the 2015 Rental Agreement. When Mazzy Creations signed the 2015 Agreements, Mr Lim did not mention that the total rental amount in the 2015 Rental Agreement included a rollover from the 2012 Rental Agreement. ⁹² The defendants submit that the non-disclosure of this rollover amounted to the “wilful suppression of material facts”. ⁹³ This allegation of misrepresentation by non-disclosure was the foundation of the defendants’ case at the trial and in their submissions.

(b) Second, that part of the costs of the rental and service charges payable under the 2015 Agreements could be recovered from IRAS under the PIC Scheme (the “PIC Representation”). ⁹⁴ According to the defendants, this representation was false because IRAS does not permit claims to be made under the PIC Scheme in respect of any invoice amount that includes rollovers. ⁹⁵

40 Acting on the faith of the representations, Mazzy Creations entered into the 2015 Agreements with Fuji Xerox. ⁹⁶ According to the defendants, Mazzy Creations would not have entered into the 2015 Agreements if Mr Lim had told them that the rental amount in the 2015 Rental Agreement included a rollover. This is because the defendants were pleased with the performance of the “Color 1000 Press” photocopier which they had rented under the 2012 Rental Agreement. ⁹⁷ Further or in the alternative, acting on the faith of these representations, Mazzy Creations submitted periodic PIC Claims to IRAS supported by Fuji Xerox’s tax invoices. ⁹⁸ These PIC Claims were false in that the invoice amounts for the 2015 Rental Agreement included undisclosed penalties for the early termination of the 2012 Rental Agreement. ⁹⁹

41 The defendants argue that Mr Lim was clearly motivated by the commission offered to him by Fuji Xerox in respect of the 2015 Agreements when he made these representations. They allege that Mr Lim made these representations knowing and intending that the defendants would rely upon them and thereby be induced to enter into the 2015 Agreements. The defendants further allege that Mr Lim made these representations fraudulently, knowing them to be false, or recklessly without caring whether they were true or false. In the alternative, even if Mr Lim did not make these representations fraudulently, the defendants argue that they are nevertheless entitled to damages under s 2 of the Misrepresentation Act. ¹⁰⁰

42 Further or in the alternative, the defendants argue that Fuji Xerox failed to take reasonable steps to mitigate its losses, such as by re-leasing the items rented to Mazzy Creations under the 2012 Agreements. When Mazzy Creations upgraded the “Color 1000 Press” photocopier (which it had rented under the 2012 Rental Agreement) to the “Color 1000i Press” photocopier (under the 2015 Rental Agreement), Fuji Xerox took possession of the “Color 1000 Press” photocopier from the defendants’ office. Sometime in October 2017, Ms Chua discovered that Fuji Xerox had re-leased this photocopier to M/s Unique Colour Separation Pte Ltd (“Unique Colour Separation”). ¹⁰¹ Notwithstanding this, Fuji Xerox did not offer any credit note to Mazzy Creations. On this basis, the defendants argue that Fuji Xerox failed in its duty to mitigate its losses. ¹⁰²

43 Initially, the defendants also asserted that the 2015 Agreements are unenforceable on the ground that undisclosed rollovers are illegal or against public policy. ¹⁰³ However, this argument was abandoned at the trial and in the defendants’ submissions. During her cross-examination, Ms Chua agreed that the IRAS rules did not state that a rental agreement containing rollovers was illegal per se. ¹⁰⁴ In my view, this concession was rightly made. It is, therefore, unnecessary for me to consider the defendants’ pleadings regarding illegality and the issue of whether the rental agreement is against public policy.

44 The defendants argue that Fuji Xerox has failed to sufficiently prove that the charges for the printing services provided by Mazzy Creations to Fuji Xerox were validly set off against the prior amounts owed by Mazzy Creations. The defendants contend that Fuji Xerox has not discharged its evidential burden of showing that this set-off was effected since it has merely made broad reference to some credit notes being issued to them, without providing proof or details of how this alleged credit note set-off was carried out. ¹⁰⁵

45 As I have noted at [33] above, there is no dispute regarding the quantum of the unpaid sums due from Mazzy Creations to Fuji Xerox under the 2015 Agreements. There is also no dispute regarding the quantum of charges for the printing services rendered by Mazzy Creations to Fuji Xerox (see [31] above). The main dispute in these proceedings arises in relation to the defendants’ defence and counterclaim based on misrepresentation.

46 There are three main issues for my determination:

47 I shall consider each of these issues in turn.

48 Before I address the parties’ pleadings and submissions on the issue of misrepresentation, I wish to reiterate several principles governing the law on misrepresentation which are relevant in these proceedings.

49 It is axiomatic that to establish an operative misrepresentation, there must be a false statement of existing or past fact made by one party (ie, the representor) before or at the time of making the contract, to the other party (ie, the representee), and the representee must have been induced to enter into the contract (see Lim Koon Park and another v Yap Jin Meng Bryan and another [2013] 4 SLR 150 at [38]). Where fraudulent misrepresentation is alleged, five elements must be proved (Panatron Pte Ltd and another v Lee Cheow Lee and another [2001] 2 SLR(R) 435 at [14], recently applied in Ma Hongjin v Sim Eng Tong [2021] SGHC 84 at [19]): ¹⁰⁶

50 It must be borne in mind that the defendants in this case bear the burden of establishing all five elements set out above (see Trans-World (Aluminium) Ltd v Cornelder China (Singapore) [2003] 3 SLR(R) 501 (“Trans-World”) at [29]). In particular, they must prove that the alleged representations consisted of something said or done by Fuji Xerox or Mr Lim and that this amounts in law to a misrepresentation. It should also be borne in mind that a relatively high standard of proof must be satisfied by the representee before a fraudulent misrepresentation can be established successfully against the representor. This is because the allegation of fraud is a grave one (see Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another [2013] 3 SLR 801 (“Wee Chiaw Sek Anna”) at [30]). ¹⁰⁷ Hence, cogent evidence is required before a court will be satisfied that fraud is established (see Alwie Handoyo v Tjong Very Sumito and another and another appeal [2013] 4 SLR 308 at [161]). ¹⁰⁸

51 In assessing whether an alleged representation was in fact made, the particular words used must be read in their context (Wee Chiaw Sek Anna at [36]). ¹⁰⁹

52 Silence is rarely considered sufficient to amount to a representation as it is a form of passive conduct “inherently lacking the definitive quality of an active statement” (see Broadley Construction Pte Ltd v Alacran Design Pte Ltd [2018] 2 SLR 110 at [28]). ¹¹⁰ However, it is possible for silence to amount to a representation in certain circumstances. This will generally require the alleged representor to have been under a positive duty to disclose the facts on which he remains silent. In those situations, the representor’s failure to disclose those relevant facts may render a statement previously made by the representor false or may itself constitute a false statement. Such a duty to disclose may arise out of the relationship of the parties and/or other circumstances in which the silence is maintained. As accepted in Hong Leong Singapore Finance Ltd v United Overseas Bank Ltd [2007] 1 SLR(R) 292 at [196], albeit in the context of estoppel rather than misrepresentation, the circumstances in which a duty to disclose may be found should not be confined within a closed class such as contracts uberrimae fidei (utmost good faith) or fiduciary relationships. The silence should be assessed by reference to how a reasonable person would view the silence in the circumstances (see Beyonics Asia Pacific Ltd and others v Goh Chan Peng and another [2020] 4 SLR 215 at [179]–[181] and the authorities cited therein). Silence cannot of itself constitute wilful conduct designed to deceive or mislead. However, silence can constitute a misrepresentation when there is a “wilful suppression of material and important facts” (Trans-World at [66]) ¹¹¹ or where there is “active concealment of a particular state of affairs” (Wee Chiaw Sek Anna at [65]). ¹¹²

53 Where the representation is ambiguous, the representee must show in which of the possible senses he understood the ambiguous representation at the time it was made, and that the representation was false in that sense (see Tradewaves Ltd and others v Standard Chartered Bank and another suit [2017] SGHC 93 at [69]–[71]). The specific sense in which the representee understood the ambiguous representation must be pleaded by him (see Goldrich Venture Pte Ltd and another v Halcyon Offshore Pte Ltd [2015] 3 SLR 990 at [119]). Further, when considering whether the representation was made fraudulently, the question is what the representor subjectively intended the ambiguous statement to mean (Wee Chiaw Sek Anna at [41]). ¹¹³

54 As a matter of procedure, O 18 r 12(1)(a) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) specifically enjoins the party alleging misrepresentation to include in his pleadings the particulars of any misrepresentation on which he relies. This is not a mere technicality. Pleadings serve the important function of giving the other party fair notice of the case which has to be met. Pleadings also define the issues which the court will have to decide on so as to resolve the matters in dispute between the parties (see Lee Chee Wei v Tan Hor Peow Victor and others and another appeal [2007] 3 SLR(R) 537 at [61]). In particular, the Court of Appeal emphasised in JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others [2020] 2 SLR 1256 (“JTrust Asia”) at [116] that allegations of fraud or misrepresentation must be pleaded with “utmost particularity”. Full particulars of the misrepresentation must be stated in the pleadings, including the nature and extent of the misrepresentation and whether the representation was made orally or in writing. Failure to adequately plead the particulars of an alleged misrepresentation may lead to an unsuccessful claim (JTrust Asia at [116]). The party alleging misrepresentation must plead a positive representation of fact. He cannot merely allege concealment and suppression of relevant information (see EA Apartments Pte Ltd v Tan Bek and others [2017] 3 SLR 559 (“EA Apartments”) at [29]). ¹¹⁴

55 This is illustrated by the facts of EA Apartments. In that case, the plaintiff had entered into a tenancy agreement with the defendants with respect to two properties. The defendants had not disclosed the fact that two notices of fire safety offences had been served in respect of those properties. The plaintiff commenced proceedings against the defendants based on, inter alia, misrepresentation. Hoo Sheau Peng JC (as she then was) found that the plaintiff’s statement of claim was defective as it had failed to plead any positive representation of fact made by the defendants. Furthermore, although the plaintiff had alleged in its further and better particulars that a positive statement had been made to the effect that everything was in order and proper, the plaintiff had not stated how this positive statement was rendered untrue by the alleged wilful suppression of the fire safety notices (EA Apartments at [29] and [32]–[33]). EA Apartments was applied and distinguished in JTrust Asia. In JTrust Asia, the Court of Appeal found that the alleged misrepresentations were sufficiently pleaded and particularised in the plaintiff’s statement of claim. For example, in JTrust Asia, the plaintiff pleaded that by providing certain financial and accounting information, the defendant had represented that this financial and accounting information represented a true, fair and/or accurate state of its financial position, or alternatively had impliedly represented that there was a reasonable basis for such an opinion (JTrust Asia at [121]–[122]).

56 With these principles in mind, I shall now consider each of the representations outlined at [37] above.

57 First, I wish to reiterate that there were three agreements comprising the 2015 Agreements. These were: the 2015 Rental Agreement for the “Color 1000i Press” photocopier; the 2015 Service Agreement for the sale of materials and supplies to Mazzy Creations as well as maintenance for the “Color 1000i Press photocopier and “Fiery Ex Print Server”; and the 2015 Rental and Service Agreement for the “FX4127CP” printer. The defendants in their Defence and Counterclaim pleaded that Fuji Xerox’s Mr Lim made misrepresentations that affected these three agreements. However, at the trial, the defendants’ case was focused solely on the effects of the misrepresentation on the 2015 Rental Agreement for the “Color 1000i Press” photocopier. In other words, the defendants do not challenge Fuji Xerox’s claims relating to the 2015 Service Agreement and the 2015 Rental and Service Agreement. Accordingly, I shall focus my findings on the 2015 Rental Agreement for the “Color 1000i Press” photocopier.

58 Further, out of the three representations expressly pleaded by the defendants, only the Rental Amount Representation is contested (see [38] above). Thus, my findings shall focus on the Rental Amount Representation allegedly made by Mr Lim of Fuji Xerox.

59 On the defendants’ pleaded case, the Rental Amount Representation is as follows:

60 It is undisputed that Mr Lim represented to Ms Chua that Mazzy Creations could lease a new and upgraded “Color 1000i Press” photocopier and “Fiery Ex Print Server”, without having to pay any initial payment, for the same monthly period payment of $10,367 and for the same minimum period of 60 months as the 2012 Rental Agreement which Mazzy Creations had leased the older “Color 1000 Press” photocopier (see [14] above). Under the 2012 Rental Agreement, Mazzy Creations had to pay a total rental amount of $702,020 (inclusive of an initial payment of $80,000), while Mazzy Creations only had to pay a total rental amount of $622,020 (without any initial payment) under the 2015 Rental Agreement. However, Fuji Xerox submits that the defendants have not proved on a balance of probabilities that Mr Lim made the Rental Amount Representation as pleaded by the defendants. ¹¹⁵

61 I shall first consider whether the Rental Amount Representation was made by Mr Lim to the defendants, and then consider whether the Rental Amount Representation (if made) was a false representation of fact.

62 To support its argument that the Rental Amount Representation was not made, Fuji Xerox relies on Mr Lim’s statement in his affidavit of evidence-in-chief that he did not mention anything about any recommended retail price or reasonable price to Ms Chua when they discussed the 2015 Agreements. ¹¹⁶ Mr Lim also testified in court that he did not discuss the total amount payable under the 2015 Rental Agreement with Ms Chua. ¹¹⁷ On the other hand, the defendants argue that Mr Lim’s oral testimony is equivocal. ¹¹⁸ They rely on Mr Lim’s admission during his cross-examination that he did not recall the discussion he had with Ms Chua prior to the 2015 Agreements. ¹¹⁹

63 The defendants, who allege the misrepresentation, bear the burden of proving that the Rental Amount Representation was in fact made by Mr Lim. From the evidence, I find that the defendants have not adduced sufficient evidence to prove on a balance of probabilities that Mr Lim made the Rental Amount Representation as pleaded by the defendants.

64 Nevertheless, even if the Rental Amount Representation was made, the defendants would also need to prove that it was a false representation of fact. It is to this issue that I now turn.

65 In order to prove that the Rental Amount Representation was false, the defendants must show that the total rental amount offered under the 2015 Rental Agreement was Fuji Xerox’s “recommended retail price” or a “reasonable price offered by [Fuji Xerox] to all their customers”.

66 However, the defendants’ own evidence indicates that the total rental amount in the 2015 Rental Agreement was very reasonable. During her cross-examination, Ms Chua candidly agreed that the total rental amount in the 2015 Rental Agreement was very reasonable, ¹²⁰ even if this amount was inclusive of the rollover from the 2012 Rental Agreement: ¹²¹

67 Indeed, the 2015 Agreement was without any doubt very reasonable. For the same monthly period payment and for the same minimum period of 60 months, Mazzy Creations got to use a new upgraded colour photocopier for a total rental amount of $622,020, which was much lower than the total rental amount under the 2012 Agreement. The total rental amount for the 2015 Rental Agreement shows a saving of $80,000 to Mazzy Creations. Hence, Fuji Xerox had offered the defendants a very reasonable rental price for the “Color 1000i Press” photocopier. Ms Toh informed the court that “a very so-called special pricing approval [had been] gotten by the sales to give a very good discount” to the defendants, ¹²² although she did not disclose the quantum of the discount. It appears that Fuji Xerox applied a significant discount under the 2015 Rental Agreement which effectively equalised the total rental amount that Mazzy Creations would have had to pay with or without the rollover. Given that the amount of the rollover was $276,640, and yet the monthly period payments payable under the 2015 Rental Agreement remained exactly the same as under the 2012 Rental Agreement (ie, $10,367), the quantum of the discount given to Mazzy Creations must have been enormous, perhaps close to the full amount of the rollover.

68 During his oral submissions, the defendants’ counsel explained that the “crux” of their case was that the amount of the rollover (ie, $276,640) should have been deducted from the total rental amount under the 2015 Rental Agreement (ie, $622,020), leaving a balance of $345,380. When this figure is divided by the 60-month minimum period under the 2015 Rental Agreement, this would have reduced the monthly period payment to only $5,756.33. ¹²³ This is just over half of the monthly period payment under the 2012 Rental Agreement, which was $10,367. The total rental amount under the 2012 Rental Agreement did not contain any rollover. I find it unbelievable and commercially not viable and profitable that Fuji Xerox would have agreed to Mazzy Creations paying only $5,756.33 per month for the new and upgraded photocopier that it leased under the 2015 Rental Agreement. In my view, the total rental amount and the monthly period payments under the 2015 Rental Agreement were plainly reasonable.

69 In the circumstances, the Rental Amount Representation as pleaded by the defendants (at [59] above) is factually accurate and not misleading in any way. Therefore, it is erroneous for the defendants to plead at para 8(iii) of their Defence and Counterclaim that Mr Lim made the Rental Amount Representation in the manner stated as follows:

70 There was no misrepresentation by Mr Lim in the first place. Thus, there could not have been a fraudulent misrepresentation.

71 For the foregoing reasons, the defendants’ pleaded misrepresentation defence against Fuji Xerox’s claim has not been established on a balance of probabilities. Hence, their defence can be dismissed on their pleaded case. However, during the trial, the defendants also raised other misrepresentations. For completeness, I shall deal with these other alleged misrepresentations below.

72 At the trial, Ms Chua alleged that Mr Lim failed to disclose to her that the total rental amount in the 2015 Rental Agreement included a rollover of $276,640 from the 2012 Rental Agreement. She also alleged that Mr Lim did not inform her that, as a result of the rollover in the monthly rental, Mazzy Creations could not claim subsidies under the PIC Scheme for the whole rental amount under the 2015 Agreement from IRAS. Further, she relied on Mr Lim’s representation that the 2015 Rental Agreement would “supersede” the 2012 Rental Agreement.

73 The defendants did not plead these allegations as active or positive representations made by Fuji Xerox in para 7 of their Defence and Counterclaim. However, the defendants pleaded at para 3 of their Defence and Counterclaim that Mazzy Creations was induced to enter into the 2015 Rental Agreement as Mr Lim assured Ms Chua that part of the costs of the rental could be recovered from Mazzy Creations’ PIC Claims. The issues about the non-disclosure of the rollover from the 2012 Rental Agreement and Ms Chua’s failure to disclose to IRAS the rollover in Fuji Xerox’s monthly invoices in her periodic PIC Claims were also pleaded in para 11 of the defendants’ Defence and Counterclaim as particulars of the falsehood of Mr Lim’s representations. These pleadings collapsed when the defendants failed to prove on a balance of probabilities that the three pleaded representations in para 7 of their Defence and Counterclaim were misleading or false (see [38] and [65]–[71] above). Nevertheless, I shall now consider each of these representations in turn.

74 In the Defence and Counterclaim, the defendants contended that Mr Lim’s non-disclosure of the rollover in the 2015 Rental Agreement made the Rental Amount Representation false. ¹²⁴ It was only apparent in the defendants’ opening statement and at the trial that the defendants’ case is based on misrepresentation by silence or non-disclosure of the rollover. The defendants confirmed that they were not alleging that Mr Lim had made any positive representation to them that Fuji Xerox’s invoices under the 2015 Rental Agreement would not contain any undisclosed fees. ¹²⁵ According to the defendants, it was Mr Lim’s failure to disclose or draw attention to the concealed rollover in the 2015 Rental Agreement which led to a “misleading impression” and constituted a misrepresentation because it was a “wilful suppression of important and material facts”. ¹²⁶

75 Fuji Xerox submits that the defendants have failed to prove on a balance of probabilities that Mr Lim had misrepresented the total rental amount in the 2015 Rental Agreement to the defendants. ¹²⁷ As I have mentioned at [62] above, Mr Lim stated that he did not mention anything about any recommended retail price or reasonable price to Ms Chua when they discussed the 2015 Agreements. ¹²⁸ According to Mr Lim, he told the defendants that Mazzy Creations would not be required to make any initial payment under the 2015 Agreements and that the monthly period payments under the 60-month 2015 Rental Agreement would be the same as those under the 2012 Rental Agreement. ¹²⁹ He did not discuss the total rental amount payable under the 2015 Rental Agreement with Ms Chua. ¹³⁰ He also did not discuss the outstanding liability under the 2012 Rental Agreement with Ms Chua. Mr Lim did not disclose the rollover to Ms Chua as he did not know the amount of any rollover in the total rental amount stated in the 2015 Rental Agreement. ¹³¹ The total rental amount stated in the 2015 Rental Agreement was worked out by the finance department and Mr Lim did not partake in this process. ¹³²

76 It seems that determining the total rental amount under a new rental agreement was a complex evaluation process. Ms Toh explained that the rental amount depended on many factors such as the value of the new upgraded machine; the customer’s track record; the customer’s creditworthiness; the goodwill between Fuji Xerox and the customer; the prevailing interest rates; other miscellaneous costs; and the balance amount owing under the existing rental agreement. ¹³³ The determination of the total rental amount for a new rental agreement was not within the purview of Mr Lim. Thus, he would not know the amount of any rollover and he did not know about the amount of the rollover in the 2015 Rental Agreement. ¹³⁴

77 In any case, at that time, Fuji Xerox would not have disclosed the rollover amount to the defendants as it was Fuji Xerox’s policy not to proactively disclose such information to customers. More so, Mr Lim would not have known about the rollover amount in the total rental amount under the 2015 Rental Agreement. Nor would he have had any reason to discuss the rollover with Ms Chua during their negotiations. ¹³⁵ However, if Mazzy Creations required the rollover sum for the purpose of its PIC Claims, Fuji Xerox would have disclosed it. ¹³⁶

78 Two issues arise in relation to the non-disclosure of the rollover. First, whether the non-disclosure of the rollover was adequately pleaded by the defendants. Second, whether the non-disclosure of the rollover could amount to an actionable misrepresentation in the circumstances of this case.

79 As in EA Apartments, the defendants’ case regarding misrepresentation is “obscured by extremely poor pleading” (EA Apartments at [1]). The only positive representation of fact pleaded by the defendants for the purpose of establishing an actionable misrepresentation is the Rental Amount Representation, ie, that the total rental amount in the 2015 Rental Agreement was Fuji Xerox’s recommended retail price or was a reasonable price offered by Fuji Xerox to all its customers (see [59] above). Nowhere in the defendants’ pleadings did they state that the non-disclosure itself constituted a false representation of fact, nor did the defendants explain how the non-disclosure rendered the Rental Amount Representation false. Therefore, the non-disclosure of the rollover was not adequately and correctly pleaded by the defendants.

80 During his oral submissions, the defendants’ counsel sought to argue that the non-disclosure of the rollover was adequately pleaded because paras 11(iii)–11(v) of the Defence and Counterclaim refer to Fuji Xerox’s “undisclosed unethical practice of [r]ollovers”. The defendants’ counsel submitted that when paras 11(iii)–11(v) are read together with para 7 of the Defence and Counterclaim, it is clear that the defendants were alleging misrepresentation by non-disclosure. ¹³⁷ However, I disagree. Based on the structure of the Defence and Counterclaim, the three representations which the defendants seek to rely on are set out in para 7. Paragraph 11, below the heading “The 2015 Representations were False”, addresses the falsity of the representations pleaded in para 7. ¹³⁸ Thus, in my view, the defendants have failed to properly plead that the non-disclosure of the rollover itself constituted a false representation of fact, and if so, what exactly that representation was. Further, for the reasons explained at [65]–[71] above, the non-disclosure did not render the pleaded Rental Amount Representation false.

81 On 5 July 2021, I granted the defendants leave to file further submissions on the sufficiency of their pleadings with regard to misrepresentation by non-disclosure after the parties had completed their oral submissions. In their further submissions, the defendants relied on the Court of Appeal’s decision in Liberty Sky Investments Ltd v Aesthetic Medical Partners Pte Ltd and other appeals and another matter [2020] 1 SLR 606 (“Liberty Sky Investments”). In Liberty Sky Investments at [16], the Court of Appeal observed that “[t]he entire spirit underlying the regime of pleadings is that each party is aware of the respective arguments against it and that neither is therefore taken by surprise”. As the defendant’s failure to plead the bars to rescission did not result in the plaintiff being taken by surprise, the Court of Appeal held that the defendant was not precluded from arguing that rescission should be refused because of the impossibility of restitutio in integrum (see Liberty Sky Investments at [14]–[16]). In the present case, the defendants contend that their failure to plead that the non-disclosure of the rollover was a false representation of fact did not take the plaintiff by surprise. The defendants argue that para 7(i) of their Defence and Counterclaim dealt specifically with the total rental amount stated in the 2015 Rental Agreement, while para 11 pleaded the concealment of the rollover within that total rental amount. ¹³⁹

82 As the Court of Appeal observed in Liberty Sky Investments at [14], “[a] balance has to be struck between, on the one hand, instilling procedural discipline in civil litigation and, on the other, permitting parties to present the substantive merits of their case notwithstanding a procedural irregularity”. Imperfections in a party’s pleadings should not, in and of themselves, preclude the court from giving due consideration to the merits of that party’s arguments. However, where a party’s failure to adequately plead the particulars of his claim or defence causes the other party to suffer prejudice, the court must take that prejudice into account as a matter of fairness. As I have explained at [54] above, pleadings are important in giving the other party fair notice of the case which has to be met. In cases where misrepresentation is alleged, the importance of proper pleadings is underscored by O 18 r 12(1)(a) of the Rules of Court. Given the seriousness of the allegation of fraudulent misrepresentation, it is especially important for a party making such an allegation to clearly particularise the misrepresentation(s) on which he seeks to rely, so that the other party is able to address these allegations head-on.

83 I am, therefore, unable to accept the defendants’ further submissions on the sufficiency of their pleadings. I am of the view that the defendants’ failure to plead the non-disclosure of the rollover as an actionable misrepresentation caused prejudice to the plaintiff as it was not adequately informed of the case it had to meet during the trial. In the plaintiff’s Reply and Defence to Counterclaim, its pleadings were directed at addressing the three representations pleaded by the defendants at para 7 of their Defence and Counterclaim, and did not deal with the non-disclosure of the rollover as a separate misrepresentation. ¹⁴⁰ Similarly, the plaintiff’s opening statement expressly focused on “the representations alleged in para 7” of the Defence and Counterclaim. ¹⁴¹ Paragraph 7 of the Defence and Counterclaim makes no mention of the non-disclosure of the rollover. It was only at the trial that it became apparent that the main thrust of the defendants’ case is misrepresentation by non-disclosure of the rollover. Therefore, during the trial, the plaintiff’s counsel had no choice but to deal with the defendants’ allegation of misrepresentation by non-disclosure as best as he could notwithstanding the significant shift in the emphasis of the defendants’ case. In these circumstances, the defendants’ failure to clearly particularise the alleged misrepresentation by non-disclosure, on which they now seek to rely, has prejudiced the plaintiff’s preparation of its case.

84 In any event, even if the non-disclosure of the rollover had been adequately pleaded by the defendants, I am of the view that the non-disclosure of the rollover could not have amounted to an actionable misrepresentation in the circumstances of this case. I shall now deal with this issue.

85 As I have explained at [52] above, silence will generally only amount to a representation where the representor was under a positive duty of disclosure arising from the parties’ relationship or from the circumstances.

86 The defendants assert that Fuji Xerox had a positive duty to “clearly” inform the defendants that the upgrading of their photocopier under the 2015 Rental Agreement would result in a premature termination under the 2012 Rental Agreement and that Fuji Xerox intended to impose penalties for premature termination (in the form of a rollover). According to the defendants, Fuji Xerox’s silence on the rollover amounted to a wilful suppression of material facts because Fuji Xerox and/or Mr Lim knew: (a) that IRAS required rollovers to be excluded from any claims under the PIC Scheme; ¹⁴² (b) that Mazzy Creations would be making claims under the PIC Scheme; ¹⁴³ and (c) that the total rental amount under the 2015 Rental Agreement contained a substantial rollover (amounting to one-third of the total rental amount), ¹⁴⁴ which was concealed on the face of the 2015 Rental Agreement. ¹⁴⁵ The defendants also rely on the fact that the upgrade was initiated by Fuji Xerox and on Mr Lim’s statement that the 2015 Rental Agreement would “supersede” the 2012 Rental Agreement (which I shall deal with at [110]–[113] below). ¹⁴⁶ On this basis, the defendants submit that the non-disclosure of the rollover in the 2015 Rental Agreement gave the false and misleading impression that Mazzy Creations was paying “reasonable rental charges”, ¹⁴⁷ or at least “open market value”, ¹⁴⁸ under the 2015 Rental Agreement.

87 I am unable to accept the defendants’ submissions. In my view, Fuji Xerox and Mr Lim were not under a positive duty to disclose the rollover to the defendants. I shall now explain my decision.

88 First, it is important to appreciate the differences between a rental agreement and a hire purchase agreement or sale agreement. In a rental agreement like in this case, is it important for the hiree, Mazzy Creations, to know the retail price of the “Color 1000i Press” photocopier and the amount of the rollover from the 2012 Rental Agreement? The defendants argue that this information had to be disclosed to Ms Chua.

89 This explains why the defendants’ counsel, in the course of the cross-examination of Mr Lim, asked Mr Lim whether he had told Ms Chua the retail price of the new “Color 1000i Press” photocopier leased to Mazzy Creations under the 2015 Rental Agreement. Mr Lim replied that he did not as the 2015 Rental Agreement was a leasing or rental agreement and he only informed Ms Chua of the monthly period payment and the minimum period of the lease. ¹⁴⁹ The defendants’ counsel also asked Ms Toh whether it was the policy of Fuji Xerox to disclose the price of the “Color 1000i Press” photocopier to Ms Chua and she answered in the negative. ¹⁵⁰

90 It is significant to know the differences and implications of a rental agreement and compare them to a hire purchase agreement or sale agreement. The 2015 Rental Agreement is a rental agreement and not a hire purchase agreement or sale agreement of the “Color 1000i Press” photocopier. In a rental agreement, Fuji Xerox owns the photocopier, while in a hire purchase or sale agreement, Mazzy Creations would be the owner when the photocopier was fully paid for. This is a significant and critical difference between the two types of agreements. In a rental agreement, what is of key importance is not the retail price of the photocopier, but the monthly period payments and the minimum period of the lease as this information matters the most to the hiree. Hence, it was not important for the defendants’ counsel to ask Mr Lim whether he had told Ms Chua the retail price of the “Color 1000i Press” photocopier leased to Mazzy Creations under the 2015 Rental Agreement. During the oral closing submissions, the defendants’ counsel eventually agreed with the court that the retail price of the “Color 1000i Press” photocopier would not be relevant to Ms Chua for the purpose of the 2015 Rental Agreement. ¹⁵¹ For similar reasons, the rollover from the 2012 Rental Agreement may not be important if the monthly period payment for the new photocopier remains the same or lower. If the monthly period payment was higher, Mazzy Creations might not want to upgrade the photocopier under the 2015 Rental Agreement. Therefore, in a rental agreement, the focus of a hiree, such as Mazzy Creations, is on the monthly period payments and the minimum period of the lease. Nothing else really matters.

91 In this case, Ms Chua acknowledged that the terms of the 2015 Rental Agreement were very reasonable as the monthly period payments were the same as the monthly period payments under the 2012 Rental Agreement; no initial payment was required; and Mazzy Creations would receive the benefit of an upgraded and new photocopier. Therefore, I cannot accept Ms Chua’s assertion that Mazzy Creations would not have entered into the 2015 Rental Agreement if Mr Lim had informed her of the rollover. Fuji Xerox would not have offered Ms Chua a better deal even if it had disclosed the rollover to her.

92 For the same reasons, I am unable to accept the defendants’ submission that it would have made “no commercial sense” for any customer to have agreed to prematurely “upgrade” the existing 2012 Rental Agreement to the 2015 Rental Agreement if he had known that he would have to return the older photocopier and still pay the period payments for the balance of the minimum period under the 2012 Rental Agreement, while also paying the period payments for a new photocopier under the 2015 Rental Agreement. ¹⁵² In my view, this is an inaccurate understanding of the 2015 Rental Agreement. As I have explained at [65]–[67] above, notwithstanding the rollover, the defendants effectively received the benefit of a new and upgraded model at no additional charge under the 2015 Rental Agreement (as the monthly period payments remained the same and no initial payment was required). Moreover, the total rental amount under the 2015 Rental Agreement was $80,000 lower than that under the 2012 Rental Agreement over the same 60-month minimum period of the lease. In fact, it made commercial sense to any reasonable hiree who was interested to upgrade his colour photocopier to take up the 2015 Rental Agreement. Ms Chua knew this as she acknowledged that the total rental amount in the 2015 Rental Agreement was very reasonable (see [66] above). Therefore, contrary to what the defendants suggest, this was not a situation where Fuji Xerox was earning “double-income” on a single machine while dealing the defendants a “double-blow” by making them continue to pay rental charges for a machine that they could no longer use. ¹⁵³

93 For the above reasons, the terms of the 2015 Rental Agreement were clearly and undisputedly advantageous to Mazzy Creations. In fact, Fuji Xerox did not earn “double income” on the old “Color 1000 Press” photocopier. After Fuji Xerox re-leased the old “Color 1000 Press” photocopier to Unique Colour Separation, it offered its net earnings of $36,202 to Mazzy Creations out of goodwill in October 2017, provided that the defendants settled their accounts with Fuji Xerox. ¹⁵⁴ I acknowledge, however, that this sum was only offered by Fuji Xerox after Ms Chua complained that the rollover was not disclosed to her when Mazzy Creations signed the 2015 Rental Agreement.

94 In my view, Fuji Xerox was not obliged to disclose the retail price of the new “Color 1000i Press” photocopier, the rollover from the 2012 Rental Agreement, the huge discount given to Mazzy Creations under the 2015 Rental Agreement, Fuji Xerox’s internal rental pricing practice or strategy, Fuji Xerox’s profit margins, the interest rate breakdown, et cetera. This information was part of a rental pricing strategy which was confidential to Fuji Xerox and the defendants’ counsel accepted during his oral submissions that Fuji Xerox’s pricing strategy did not have to be revealed to the defendants. ¹⁵⁵ As I have explained at [88]–[90] above, the 2015 Rental Agreement is a rental agreement and this information would not be relevant to the defendants. More importantly, Fuji Xerox did not have a duty nor an obligation to disclose this information to the defendants.

95 Having regard to how a reasonable hiree would view Mr Lim’s silence in the circumstances, I agree with Fuji Xerox’s argument that the 2015 Agreements were an arm’s length transaction entered into between two independent business entities. The law does not oblige parties dealing at arm’s length to disclose to each other everything including facts that are detrimental to their bargaining position (EA Apartments at [31]). Notwithstanding the arguments made by the defendants, I am of the view that neither Mr Lim nor Fuji Xerox was under a positive duty to disclose the rollover to the defendants. It must be underscored that fundamentally the 2015 Rental Agreement is a rental agreement. Further, using the examples cited in Loh Sze Ti Terence Peter v Gay Choon Ing [2008] SGHC 31 at [77], the relationship between the defendants and Fuji Xerox in the present case is far from analogous to contracts uberrimae fidei (utmost good faith), nor is there any existing fiduciary or similar relationship between Fuji Xerox and the defendants which might impose an obligation of disclosure.

96 When viewed in context, the non-disclosure of the rollover did not amount to a representation that the 2015 Rental Agreement did not contain any rollovers, nor did it render Mr Lim’s other statements regarding the initial payment and monthly period payments payable under the 2015 Rental Agreement false. Further, in my view, the non-disclosure of the rollover alone could not amount to wilful suppression or concealment of the rollover. Mr Lim had testified that he was unaware of the amount of the rollover in the 2015 Rental Agreement (see [76] above). ¹⁵⁶ Hence, he could not have actively or wilfully suppressed any information about the amount of the rollover from the defendants when he made his proposals to Ms Chua regarding the 2015 Rental Agreement. Therefore, in the circumstances, the non-disclosure of the rollover did not constitute a misrepresentation.

97 This finding is buttressed by the fact that Alliance Trust had assisted Mazzy Creations with the submission of its PIC Claims to IRAS in 2012 (see [10] above). It would, therefore, have been clear to the defendants that it was the role of the consultants like Alliance Trust, and not Fuji Xerox, to advise the defendants on possible issues relating to Mazzy Creations’ PIC Claims. Alliance Trust did not provide any consultancy services to Mazzy Creations in relation to its PIC Claims in respect of the 2015 Agreements (see [17] above). It was Ms Chua’s choice not to seek Alliance Trust’s advice in relation to the 2015 Agreements and this had nothing to do with Fuji Xerox. As Mr Lim explained, he informed the defendants in 2012 that they might wish to consult Alliance Trust in relation to Mazzy Creations’ PIC Claims, but he did not see a need to suggest this again in 2015 as a business relationship had already been established between the defendants and Alliance Trust by this time. ¹⁵⁷ Hence, the fact that Alliance Trust did not assist the defendants with Mazzy Creations’ PIC Claims in 2015 would not have imposed a positive duty on Fuji Xerox to disclose the rollover from the 2012 Rental Agreement.

98 The defendants place great emphasis on an internal e-mail dated 28 January 2015 which was sent by Ms Gladys Toh Joo Peng, Fuji Xerox’s general manager for finance management and operations, to its customer account managers (including Mr Lim). ¹⁵⁸ In this e-mail, Fuji Xerox’s sales representatives were instructed to go through IRAS’s guidelines on the PIC Scheme for vendors in detail. In particular, their attention was drawn to the penalties that would be imposed in respect of abusive PIC Scheme arrangements, such as those which resulted in the payment of an amount for goods or services that exceeded the open market value of those goods or services without a bona fide commercial reason. The customer account managers were urged to “exercise great care in [their] sales engagement with the customers” and were told that the preparation of any PIC Scheme submissions on behalf of customers was strictly disallowed. ¹⁵⁹ The defendants submit that this e-mail shows that Fuji Xerox and Mr Lim knew that rollovers were “prohibited” under IRAS’s PIC Scheme criteria. ¹⁶⁰ Further, the defendants submit that this e-mail shows that the Rental Amount Representation involved the wilful suppression or concealment of the rollover. ¹⁶¹

99 I cannot agree with the defendants’ submissions. On the contrary, the e-mail further supports my finding that it was not the role of Fuji Xerox or its customer account managers to advise the defendants on the submission of Mazzy Creations’ PIC Claims. The e-mail buttresses Mr Lim’s testimony that he did not advise Ms Chua on how to go about making Mazzy Creations’ PIC Claims as he was prohibited from doing so by Fuji Xerox’s internal policy.

100 Contrary to what the defendants’ submissions suggest, ¹⁶² the fact that the current version of Fuji Xerox’s Rental Agreement form specifically states the amount of any rollover does not show that Fuji Xerox was under a duty to disclose this information to its customers at the time the 2015 Rental Agreement was entered into. Fuji Xerox started using this new Rental Agreement form only in December 2018. The defendants also assert that the Fujifilm internal investigation report “noted [Fuji Xerox’s] unethical practi[c]e of rollover of liabilities”. ¹⁶³ However, as I have noted at [23] above, what this report highlighted was the inappropriateness of contract rollovers as an accounting practice. During the trial, Mr Lim explained that the changes in Fuji Xerox’s Rental Agreement form likely had nothing to do with the Fujifilm internal investigation report, which dealt with an “accounting irregularity”. ¹⁶⁴ Similarly, Ms Toh opined that the new Rental Agreement form was not introduced as a result of the Fujifilm internal investigation report, which instead highlighted an “accounting irregularity” in the practices adopted in New Zealand and Australia which arose from the fact that the same item of revenue was being recognised twice in two financial years as a result of the rollovers. ¹⁶⁵

101 Be that as it may, I am glad that Fuji Xerox’s new Rental Agreement form now discloses the rollover sum as this will avert similar misunderstandings with hirees in the future. It is true that, as the defendants’ counsel argued, this dispute between Fuji Xerox and the defendants regarding the rollover would have been avoided if the new Rental Agreement form had been used for the 2015 Rental Agreement. ¹⁶⁶ However, that is not sufficient to show that Fuji Xerox was under a positive duty to disclose the rollover to the defendants at the time the 2015 Rental Agreement was entered into.

102 I, therefore, find that the defendants have failed to plead or establish an actionable misrepresentation in respect of the non-disclosure of the rollover. In fact, there was no misrepresentation by Fuji Xerox or Mr Lim to Ms Chua when Mazzy Creations signed the 2015 Rental Agreement.

103 As I have noted at [39] above, the PIC Representation was not pleaded as one of the representations relied on by the defendants in para 7 of the Defence and Counterclaim. Instead, it was alluded to in the section of the Defence and Counterclaim on the “Past Dealings” between the defendants and Fuji Xerox ¹⁶⁷ and in the section explaining why Mr Lim’s representations to Ms Chua were false. ¹⁶⁸ The paragraphs alluding to the PIC Representation were introduced as part of an amendment to the Defence and Counterclaim.

104 The PIC Representation is deeply ambiguous and poorly pleaded. The clearest statement of the content of this alleged representation in the Defence and Counterclaim is as follows: ¹⁶⁹

105 Fuji Xerox denies that the PIC Representation was made to the defendants. ¹⁷⁰ According to Mr Lim, he merely mentioned briefly to Ms Chua the general information on IRAS’s criteria for claims under the PIC Scheme, which could be found on the IRAS website. ¹⁷¹ Mr Lim explained that it was not his job to go through specific criteria relating to rollovers and early termination penalties with customers. ¹⁷² Instead, it was the role of consultants like Alliance Trust to guide customers in making their claims under the PIC Scheme. ¹⁷³

106 The defendants’ case regarding the PIC Representation is a non-starter because the PIC Representation made by Mr Lim was not false. The defendants argue that the PIC Representation was false because IRAS does not permit claims to be made under the PIC Scheme in respect of any invoice amount that includes a rollover. ¹⁷⁴ However, as I have explained at [16] above, IRAS’s policy is simply that the amount claimed under the PIC Scheme must exclude any rollovers. IRAS’s guidelines state that, where the amount paid under a lease agreement includes rollover lease payments from a previous lease agreement: ¹⁷⁵

107 Thus, as Ms Chua acknowledged during her cross-examination, the inclusion of a rollover within the total rental amount stated in the 2015 Rental Agreement would not automatically preclude Mazzy Creations from claiming a cash payout under the PIC Scheme in respect of the entire rental amount. Mazzy Creations would still be able to make a claim in respect of the total rental amount less the amount of the rollover: ¹⁷⁶

108 The PIC Representation (as pleaded by the defendants) was that part of the costs of the rental and service charges under the 2015 Agreements could be claimed under the PIC Scheme. Thus, the PIC Representation was simply not false. In any event, I agree with Fuji Xerox’s submission that the success of Mazzy Creations’ PIC Claims would depend on Mazzy Creations’ own eligibility. Mr Lim was in no position to know whether Mazzy Creations would satisfy the qualifying criteria or whether it had exhausted its cash payouts under the PIC Scheme for the year, ¹⁷⁷ which were capped at a maximum of $100,000 (see [16] above). Indeed, Ms Chua agreed that the reasonable understanding of the alleged PIC Representation (if it was in fact made) was that Mazzy Creations’ ability to make a successful claim under the PIC Scheme was subject to it satisfying the qualifying criteria laid down by IRAS: ¹⁷⁸

109 In these circumstances, I find that the defendants have failed to prove that the PIC Representation, as pleaded by the defendants, was made by Mr Lim or that it was a false representation of fact.

110 For completeness, I shall also briefly address one further representation which Mr Lim admitted making to Ms Chua: namely, that the 2015 Rental Agreement would “supersede” the 2012 Rental Agreement. ¹⁷⁹ Ms Chua interpreted this statement to mean that the 2012 Rental Agreement was “null and void” ¹⁸⁰ and “cancelled”, and that Mazzy Creations no longer needed to pay Fuji Xerox the period payments for each remaining months of the 60-month minimum period under the 2012 Rental Agreement. ¹⁸¹ On this basis, the defendants submit that this statement gave Ms Chua “an impression that there would be no liability rollover from the 2012 [Rental] Agreement”. ¹⁸² However, Ms Chua admitted that Mr Lim did not explicitly tell her that Mazzy Creations was no longer required to pay Fuji Xerox the remaining period payments under the 2012 Rental Agreement. ¹⁸³ Instead, she assumed that no unpaid period payments from the 2012 Rental Agreement would be carried forward to the 2015 Rental Agreement. ¹⁸⁴ She did not seek clarification from Mr Lim on whether Mazzy Creations would still be required to pay Fuji Xerox these remaining period payments because she “trusted [Mr Lim] a lot”. ¹⁸⁵ Thereafter, she “never g[a]ve it a second thought” ¹⁸⁶ and “never thought to clarify with [Mr Lim]”. ¹⁸⁷

111 Mr Lim’s statement that the 2012 Rental Agreement was “superseded” by the 2015 Rental Agreement was also not pleaded by the defendants in the specific sense as understood by Ms Chua. ¹⁸⁸ Nor did the defendants show why the statement was false in that specific sense, as they were required to do. This statement was not pleaded at all by the defendants as one of the misrepresentations on which they seek to rely, let alone pleaded with “utmost particularity” (see [53]–[54] above).

112 Moreover, a statement of fact must be sufficiently unambiguous to constitute a potentially actionable misrepresentation (see Hai Jiao 1306 Ltd and others v Yaw Chee Siew [2020] 5 SLR 21 (“Hai Jiao”) at [443]). Like several of the representations at issue in Hai Jiao, Mr Lim’s statement was simply too vague to carry the meaning or significance that Ms Chua appears to have attached to it (see Hai Jiao at [443]).

113 In view of the above, Mr Lim’s representation that the 2015 Rental Agreement “superseded” the 2012 Rental Agreement is also not an actionable misrepresentation.

114 Therefore, I find that the defendants’ case on misrepresentation must fail. The three representations that were pleaded as representations by the defendants in their Defence and Counterclaim were factually correct and there were no misrepresentations. Consequently, the defendants’ allegation in their pleadings that Mr Lim made these misrepresentations fraudulently is also completely unmeritorious.

115 The defendants’ primary argument at the trial and in their submissions is that the non-disclosure of the rollover was a wilful suppression of important and material facts which amounted to an actionable misrepresentation. However, the defendants did not plead any positive representation of fact allegedly made by this non-disclosure. The defendants have also not shown that the non-disclosure of the rollover was an actionable misrepresentation. The PIC Representation was also not clearly pleaded, and in any event did not amount to a false representation of fact. As for Mr Lim’s statement that the 2015 Rental Agreement would “supersede” the 2012 Rental Agreement, this representation was not relied on by the defendants in their pleadings. In any event, the defendants failed to plead the specific sense in which they understood this statement and to show why the statement was false in that specific sense. Furthermore, this statement was too vague to constitute an actionable misrepresentation.

116 In view of these findings, it is not necessary for me to consider whether the representations made by Fuji Xerox and/or Mr Lim induced Mazzy Creations to enter into the 2015 Agreements or to submit its PIC Claims to IRAS. However, with regard to the defendants’ allegation of fraud, I wish to emphasise that cogent evidence is required before a court will be satisfied that fraud is established, in view of the serious implications of fraud (see [50] above). To establish fraud, the defendants must prove that false representations were made knowingly; without belief in their truth; or recklessly, with the representor being careless whether they were true or false (Wee Chiaw Sek Anna at [32], applying the UK House of Lords’ decision in Derry v Peek (1889) 14 App Cas 337). ¹⁸⁹ The defendants must also show that Mr Lim did not subjectively believe in the truth of his representations (Wee Chiaw Sek Anna at [37]). In the present case, as in Zuraimi bin Mohamed Dahlan and another v Zulkarnine B Hafiz and another [2020] SGHC 219 (“Zuraimi”), the defendants have simply asserted in their pleadings that Mr Lim made the representations fraudulently, without providing any particulars or facts to support or substantiate their assertion of dishonesty (see Zuraimi at [33]). Even in their submissions, the defendants merely made vague allusions to Fuji Xerox having an “obvious” motive for suppressing or concealing the rollover, namely, so that customers would agree to upgrade their machines before the expiry of their existing rental agreements. ¹⁹⁰

117 The evidence clearly shows that there was no misrepresentation or fraud on the part of Mr Lim and Fuji Xerox. Furthermore, there is no evidence that Mr Lim had wilfully or deliberately concealed the rollover from the defendants; that he had done so with the intention to mislead the defendants; or that he had acted dishonestly or fraudulently in not disclosing the rollover. ¹⁹¹ There is simply insufficient evidence to support the defendants’ serious allegation of fraud.

118 Given my findings above, the defendants’ alternative counterclaim for damages under s 2 of the Misrepresentation Act also fails. The Court of Appeal in Tan Chin Seng and others v Raffles Town Club Pte Ltd [2003] 3 SLR(R) 307 explained that s 2(1) of the Misrepresentation Act (which provides for damages for non-fraudulent misrepresentations) “only alters the law as to the reliefs to be granted for a non-fraudulent misrepresentation but not as to what constitutes an actionable misrepresentation” [emphasis added] (at [23]). ¹⁹² In my view, this applies equally to s 2(2) of the Misrepresentation Act, which provides for damages in lieu of rescission for non-fraudulent misrepresentations. Since the defendants have failed to establish any actionable misrepresentations on the part of Fuji Xerox, they are not entitled to relief under s 2 of the Misrepresentation Act.

119 Consequently, I find that the defendants are not entitled to rescission of the 2015 Agreements or damages for misrepresentation. Interestingly, the defendants also appeared to have affirmed the 2015 Rental Agreement after discovering that the total rental amount stated therein included a rollover from the 2012 Rental Agreement. ¹⁹³ During the trial, Ms Chua admitted that she did not attempt to return the “Color 1000i Press” photocopier rented by Mazzy Creations from Fuji Xerox after finding out about the rollover in late 2016. ¹⁹⁴ On the contrary, her intention at that time was to continue to use the photocopier. ¹⁹⁵ Indeed, the defendants continued to use the photocopier all the way until January 2019. ¹⁹⁶ The defendants’ conduct demonstrated a “clear and unequivocal election to affirm” the 2015 Rental Agreement which was binding upon them (see Strait Colonies Pte Ltd v SMRT Alpha Pte Ltd [2018] 2 SLR 441 at [42]).

120 The defendants’ failure to establish any actionable misrepresentations on the part of Fuji Xerox is also fatal to their counterclaim for any penalties that IRAS may impose on Mazzy Creations. In any event, the quantum of these penalties has yet to be determined. Although IRAS’s letter dated 21 August 2020 indicated IRAS’s intention to claw back all the cash payouts that Mazzy Creations previously received under the PIC Scheme relating to the machines it had rented from Fuji Xerox (amounting to $349,513.80) (see [20] above), this sum of $349,513.80 includes cash payouts that were not claimed based on any rollovers. ¹⁹⁷ In any event, any such penalties are a matter to be resolved between the defendants and IRAS. As I have found at [85]–[102] and [106]–[109] above, the non-disclosure of the rollover did not amount to an actionable misrepresentation by Mr Lim or Fuji Xerox, and the PIC Representation (even if made) was not false.

121 The second contention raised by the defendants is that Fuji Xerox failed to take reasonable steps to mitigate its losses. The defendants rely on the fact that after Mazzy Creations and Fuji Xerox had entered into the 2015 Agreements, Fuji Xerox re-leased the “Color 1000 Press” photocopier (which was previously rented to Mazzy Creations under the 2012 Rental Agreement) to Unique Colour Separation, yet did not offer any credit note to Mazzy Creations.

122 In my view, this argument is wholly misconceived. It is well established that a plaintiff must take all reasonable steps to mitigate the loss it suffered as a result of a defendant’s breach of contract, and cannot recover damages for any loss which it could have avoided but failed to avoid due to its own unreasonable action or inaction (see Alvin Nicholas Nathan v Raffles Assets (Singapore) Pte Ltd [2016] 2 SLR 1056 at [17]). However, I am unable to accept the defendants’ assertion that Fuji Xerox failed to take reasonable steps to mitigate its losses. Fuji Xerox’s claim against Mazzy Creations in the present Suit is for unpaid sums due under the 2015 Agreements. The fact that Fuji Xerox re-leased a photocopier previously rented to Mazzy Creations under the 2012 Rental Agreement is completely irrelevant to whether Fuji Xerox has mitigated the losses it has suffered as a result of Mazzy Creations’ breach of its payment obligations under the 2015 Agreements. Further, given that the “Color 1000 Press” photocopier was owned by Fuji Xerox and the 2012 Rental Agreement had been superseded, I agree with Fuji Xerox’s argument that it was fully entitled to re-lease this photocopier to Unique Colour Separation and did not need to account to Mazzy Creations in respect of any amounts earned from this re-leasing. ¹⁹⁸ This was a rental agreement and the ownership of the “Color 1000 Press” photocopier in the 2012 Rental Agreement rested with Fuji Xerox who was entitled to re-lease it to Unique Colour Separation.

123 It is undisputed that the charges payable to Mazzy Creations for the printing services it provided to Fuji Xerox amounted to $93,109.26. However, Fuji Xerox argues that it has already validly set off these charges against the prior amounts owed to it by Mazzy Creations under the 2015 Rental Agreement via the issuance of credit notes to Mazzy Creations. Fuji Xerox contends that it has exhibited detailed statements and the specific invoices from both Fuji Xerox and Mazzy Creations which had been set off against each other. ¹⁹⁹

124 On the other hand, the defendants contend that Fuji Xerox has failed to sufficiently prove that a valid set-off was effected. The defendants emphasise that Fuji Xerox pleaded in its Reply and Defence to Counterclaim that it had set off these printing charges through the issuance of credit notes. ²⁰⁰ However, Fuji Xerox has merely made broad reference to credit notes being issued to the defendants (see [31]–[32] and [44] above). The defendants put Fuji Xerox to strict proof that this set-off was effected. ²⁰¹ According to the defendants, the documentary evidence does not indicate that the alleged credit notes set-off was effected by Fuji Xerox. ²⁰² In particular, the defendants rely on an e-mail from Fuji Xerox to Ms Chua dated 27 October 2017 (the “October 2017 E-mail”), in which Fuji Xerox informed Ms Chua that the issuance of a credit note to set off the sum of $36,202 was “[c]ontingent on [Mazzy Creations] making expeditious payment” of the outstanding sums due to Fuji Xerox. ²⁰³ The defendants submit that this shows that no credit notes set-off had taken place as at 27 October 2017. ²⁰⁴ The defendants further submit that they asked Fuji Xerox’s counsel to produce copies of these credit notes after the trial, but Fuji Xerox refused to do so on the ground that the credit notes were an “internal credit memo”. ²⁰⁵

125 In my view, Fuji Xerox has adduced sufficient evidence to prove, on a balance of probabilities, that $83,950.06 of these charges have been validly set off against the prior amounts owed to it by Mazzy Creations. Fuji Xerox produced statements showing that it had set off Mazzy Creations’ invoices amounting to $83,950.06 against the $93,109.26 it owed to Mazzy Creations for printing services. ²⁰⁶ Even though Fuji Xerox did not produce physical credit notes, it admitted statements of account that show that its invoices were set off against Mazzy Creations’ invoices. ²⁰⁷ Further, these statements were supported by copies of Fuji Xerox’s specific invoices that had been set off against Mazzy Creations’ invoices, and which are not part of Fuji Xerox’s claim against the defendants in these proceedings. ²⁰⁸ It is important that when Ms Chua was questioned on these statements, she agreed that they showed that Fuji Xerox had in fact validly set off these invoices against the printing charges owed to Mazzy Creations: ²⁰⁹

126 The existence of this practice of setting off Fuji Xerox’s invoices against Mazzy Creations’ invoices is further corroborated by Ms Chua’s letter to IRAS in March 2018, which referred to “a contra arrangement with Fuji Xerox in settlement of [Mazzy Creations’] lease agreement”. ²¹⁰

127 The October 2017 E-mail does not support the defendants’ submission. The sum of $36,202 referred to in the October 2017 E-mail represented the “net gain” to Fuji Xerox arising from its re-leasing of the “Color 1000 Press” photocopier (which it had rented to Mazzy Creations under the 2012 Rental Agreement) to Unique Colour Separation. The return of this sum to Mazzy Creations was offered “in consideration of the long term acquaintance and goodwill” between the defendants and Fuji Xerox. ²¹¹ Fuji Xerox further stated in the same e-mail that the credit note for the $36,202 would be set off against the amount owing to Fuji Xerox contingent on Mazzy Creations and Scanagraphic “making expeditious payment” of outstanding amounts owing to Fuji Xerox. ²¹² Thus, this had nothing to do with the printing charges of $93,109.26 payable to Mazzy Creations. Therefore, the October 2017 E-mail does not show that the setting off of the printing charges was contingent on Mazzy Creations making payment of the outstanding sums due to Fuji Xerox as at 27 October 2017.

128 After setting off the sum of $83,950.06 against Mazzy Creations’ counterclaim for printing charges, the balance owed to Mazzy Creations by Fuji Xerox is $9,159.20. ²¹³

129 On the date that Mazzy Creations entered into the 2015 Agreements with Fuji Xerox, Ms Chua and Mr Chua also executed a Guarantee in favour of Fuji Xerox to guarantee the payment of all sums due from Mazzy Creations under the 2015 Agreements (see [15] above). Hence, Ms Chua and Mr Chua are jointly and severally liable to Fuji Xerox under the Guarantee as guarantors for the outstanding sums payable by Mazzy Creations. This was not disputed by the defendants.

130 I make the following findings:

(a) Of the three representations expressly pleaded by the defendants, none of them are false representations of fact. In particular, the Rental Amount Representation is factually accurate and not misleading in any way.

(b) The non-disclosure of the rollover was not adequately and unequivocally pleaded by the defendants as a misrepresentation. In any event, the non-disclosure of the rollover could not amount to an actionable misrepresentation in the circumstances of this case.

(c) Even if the PIC Representation, as alleged by the defendants, was made by Mr Lim to Ms Chua, it was not a false representation of fact.

(d) Mr Lim’s statement that the 2015 Rental Agreement would “supersede” the 2012 Rental Agreement was not adequately pleaded. In any event, this statement was too vague to constitute an actionable misrepresentation.

(e) Fuji Xerox had not failed to mitigate its losses arising from the defendants’ non-payment of the unpaid sums due under the 2015 Agreements.

131 Fuji Xerox had validly set off a sum of $83,950.06 against the charges amounting to $93,109.26 which it owed Mazzy Creations for printing services.

132 For the above reasons, I allow Fuji Xerox’s claim against the defendants for $544,345.49, as follows: ²¹⁴

(a) all the unpaid amounts under the 2015 Agreements, ie, $488,101.69 in total (comprising $465,892.98 due under the 2015 Rental Agreement, $20,784.07 due under the 2015 Service Agreement, and $1,424.64 due under the 2015 Rental and Service Agreement);

(b) the sum of $909.50 for goods sold and delivered to Mazzy Creations;

(c) late payment interest of $64,493.50 (as at 2 January 2019); and

(d) less the outstanding printing charges of $9,159.20 owed to Mazzy Creations, which should be set off against the sum due under the 2015 Rental Agreement.

133 I allow Mazzy Creations’ counterclaim for printing services rendered to Fuji Xerox amounting to $93,109.26. I accept that Fuji Xerox had set off a sum of $83,950.06 against the amount owed by Mazzy Creations. Thus, Mazzy Creations is entitled to the balance of $9,159.20. I dismiss Mazzy Creations’ defence of misrepresentation and its other counterclaims, ie, rescission of the 2015 Agreements, damages, and any penalties that IRAS may impose in relation to Mazzy Creations’ erroneous claims under the PIC Scheme.

134 The default interest rate prescribed by para 77 of the Supreme Court Practice Directions is 5.33% per annum. However, each of the 2015 Agreements stipulates a late payment interest rate:

(a) Under the 2015 Rental Agreement (cl 5.3) and the 2015 Service Agreement (cl 7), a late payment interest rate of 15% per annum is stipulated. This late payment interest rate is to be applied both before and after judgment until the date of full payment of the amount due. ²¹⁵

(b) Under the 2015 Rental and Service Agreement (cl D), the interest rate is 2% per month for invoices not paid within 30 days of the invoice date. ²¹⁶

135 The defendants have not offered any reason for not applying these contractually agreed interest rates in the present case. In these circumstances, I award Fuji Xerox interest at the following rates, from the date of the writ (ie, 7 June 2019) until the date of full payment: ²¹⁷

(a) 15% per annum on the unpaid sums due under the 2015 Rental Agreement (ie, $465,892.98 less Mazzy Creations’ counterclaim for the sum of $9,159.20) and under the 2015 Service Agreement (ie, $20,784.07); and

(b) 2% per month on the unpaid sum due under the 2015 Rental and Service Agreement (ie, $1,424.64).

136 With regard to Fuji Xerox’s claim for the unpaid sum of $909.50 for goods sold and delivered, I see no reason to depart from the default interest rate of 5.33% per annum. Accordingly, interest is to be awarded at the rate of 5.33% per annum on the sum of $909.50 from the date of the writ (ie, 7 June 2019) until the date of judgment. ²¹⁸

137 Fuji Xerox seeks costs against the defendants on an indemnity basis, ²¹⁹ based on cl 7.7 of the 2015 Rental Agreement and cl 10.4 of the 2015 Service Agreement. ²²⁰ These clauses provide that the customer (here, Mazzy Creations) shall be liable for all costs and expenses incurred by Fuji Xerox (including all legal fees on a full indemnity basis) flowing from the customer’s breach of these agreements. ²²¹ Accordingly, Fuji Xerox seeks costs of $20,000 for the general care and conduct of the matter since 7 June 2019, $60,000 for the three days of trial, $5,000 for the closing and reply submissions, and all reasonable disbursements. These costs claims are all on an indemnity basis. ²²²

138 During the parties’ oral submissions, the defendants’ counsel confirmed that the defendants did not dispute that Fuji Xerox had pleaded its claim for indemnity costs based on cl 7.7 of the 2015 Rental Agreement and cl 10.4 of the 2015 Service Agreement. They also did not dispute the quantum of indemnity costs sought by Fuji Xerox. ²²³

139 I, therefore, award costs to Fuji Xerox on an indemnity basis, to be agreed or taxed.