Professional negligence cases in Singapore and abroad show a consistent pattern: one missed warning sign, one configuration change or one unchecked figure can expose a firm to a claim worth many times its fee, and even a firm that wins may spend years and large sums defending itself. Auditors have been ordered to pay damages for missing a cash fraud, an IT consultant was ordered to pay about US$6.5 million after a single misconfiguration, and a global audit firm settled a £1.3 billion claim. This article looks at what happened in each case, what it teaches about exposure, and how professional indemnity (PI) cover typically responds.
Why look at real cases?
Most owners of consulting, accounting, IT and design firms accept in principle that they could be sued. Real judgments show how claims actually unfold: how the loss is measured, which defences work, how long proceedings last and why settlement decisions matter. If you want the basics of how PI cover works first, read our guide to professional indemnity insurance in Singapore. If your company is the one that suffered the loss, our guide to suing an adviser for professional negligence is written from the claimant’s side.
The cases below are summarised from published judgments and mainstream news reports. None of the sources states whether, or how far, insurers paid, and we do not suggest otherwise.
Case 1: what happened when auditors missed a cash fraud at a pub group?
PlanAssure PAC v Gaelic Inns Pte Ltd [2007] SGCA 41. Gaelic Inns operated pubs in Singapore. Its group finance manager ran a “teeming and lading” scheme for about three years, delaying the banking of cash takings and using later deposits to hide the gap. In total about S$1.006 million was misappropriated. The statutory auditor, a public accounting corporation, did not detect the fraud.
The key warning sign was the December 2003 bank reconciliation, which showed about S$672,000 of “uncredited lodgments”, several times the level of previous year ends. The audit staff asked only for the dates those amounts later cleared and did not investigate further. The Court of Appeal held that the auditor was negligent and that a disclaimer in the engagement letter could not exclude its duty. It fixed the date of breach in March 2004 and assessed the loss from that date at S$634,216.05. It then halved the award to S$317,108.03 because it found the company’s own conduct had contributed to the loss.
Lessons:
- A red flag in the working papers that is noted but not pursued is the classic negligence finding.
- Engagement letter disclaimers do not reliably protect a professional from the core duty it was hired to perform; see our article on whether exclusion clauses survive the Unfair Contract Terms Act.
- Contributory negligence by the client can reduce damages substantially, so the client’s own controls matter to the outcome.
Case 2: how far can an auditor’s liability stretch?
Deloitte & Touche LLP v Hin Leong Trading (Pte) Ltd (in compulsory liquidation) [2026] SGCA 33. The liquidators of oil trader Hin Leong Trading sued its former auditor in 2021, alleging negligent audits for the financial years 2014 to 2019 and a failure to report fraud or irregularities. The heads of loss included about US$2.6 billion of trading losses, about US$90 million of dividends said to have been wrongly declared, and about S$612,000 of audit fees.
On an application decided before trial, the Court of Appeal held, even assuming negligence, that the trading losses were too remote to be recovered from the auditor, because the audit engagement had nothing to do with the company’s trading decisions. It ordered that the pleadings relating to the trading losses be struck out and awarded costs to Deloitte. The rest of the negligence claim, including the alleged failure to report, was not struck out, and the court made no finding that Deloitte had been negligent.
Lessons:
- The scope of the engagement defines the scope of the loss you can be made to pay. Clear engagement letters that say what you are and are not doing are a real defence.
- Even a strong legal argument takes years to establish. The suit was filed in 2021 and the trading-loss point reached the Court of Appeal in 2026, with the remaining claim still to be resolved.
- Large insolvencies often lead liquidators to look for solvent defendants, and professional advisers with insurance are obvious targets.
Case 3: what did one server change cost an IT consultant?
Razer (Asia-Pacific) Pte Ltd v Capgemini Singapore Pte Ltd [2022] SGHC 310 and [2023] SGHC 195. Capgemini provided IT consulting services to Razer and recommended a log analysis platform. In June 2020 a Capgemini engineer worked on a login problem on that platform and, in doing so, disabled a security setting in a configuration file. That allowed unauthenticated access, and in August 2020 a security researcher reported that a database containing customer order details was publicly accessible. Security was restored in September 2020.
The engineer initially denied making the change but, on the sixth day of trial, accepted that he was responsible for the relevant log entries. The High Court found Capgemini in breach of its consulting agreement and data processing addendum, and alternatively negligent. It rejected arguments that Razer had contributed to the loss or failed to mitigate it. Razer was awarded about US$6.5 million: around US$6.1 million in lost profits on its online store, plus investigation and forensic costs. Claims for a lost digital bank licence opportunity and management time failed for lack of evidence.
In a separate costs decision, the court noted that Razer had offered in June 2022 to settle for US$3 million plus costs. Because the judgment was more favourable to Razer than that offer, and because the data processing addendum contained an indemnity clause, Razer was awarded costs on the higher indemnity basis.
Lessons:
- Lost profits, not the project fee, drove the award. A small technical task can carry a large liability.
- Accurate change logs and honest early accounts of what happened matter; credibility issues at trial are costly.
- Rejecting a reasonable settlement offer can increase the costs bill. With PI cover, settlement decisions are usually made with the insurer, which is one reason to notify early.
- Indemnity clauses in data processing terms can widen exposure beyond ordinary damages; see our explainer on how indemnity clauses work.
Case 4: can a third party with no contract sue a consultant?
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] SGCA 37. DSTA acted as superintending officer on a government construction contract worth about S$31.78 million. The main contractor, Spandeck, had no contract with DSTA but sued it in negligence for about S$3.8 million, alleging under-certification of its progress payments. The trial judge and then the Court of Appeal dismissed the claim, and the Court of Appeal used the case to set out the test Singapore courts now apply to decide whether a duty of care exists: factual foreseeability, then proximity, then policy considerations.
Lessons:
- Claims can come from parties you never contracted with, such as contractors, investors, lenders or later owners.
- The contract structure matters. The trial judge relied in part on the contractor’s right to seek payment from the employer under the building contract.
- Winning still means paying for a trial and an appeal unless costs are fully recovered. PI defence costs cover exists for exactly this.
Case 5: what can a regulator add on top of a civil claim?
KPMG and the Carillion audits (United Kingdom). After the construction group Carillion collapsed, the UK Official Receiver sued its auditor KPMG for about £1.3 billion, alleging negligent audits. As reported by Reuters in February 2023, KPMG reached a confidential settlement. Separately, as reported by Accountancy Age in October 2023, the UK Financial Reporting Council fined KPMG £21 million over its audits of Carillion’s 2014 to 2016 accounts, reduced from £30 million for cooperation, and fined the former audit partner £350,000.
Lessons:
- Civil claims and regulatory sanctions are separate exposures. A PI policy is aimed at the civil claim; fines and penalties are usually excluded or uninsurable.
- Individual professionals can face personal regulatory sanctions as well as the firm.
How would PI cover typically respond in cases like these?
| Case | Exposure that arose | How a PI policy typically responds | Where cover may stop |
|---|---|---|---|
| Gaelic Inns (auditor) | Damages for missed fraud, reduced for contributory negligence | Pays defence costs and the damages award above the deductible | Limit of indemnity; any fraud by the firm’s own principals |
| Hin Leong (auditor) | Multi-billion dollar claim by liquidators | Funds the defence, including strike-out applications | Damages above the limit remain with the firm |
| Razer v Capgemini (IT consultant) | Lost profits, forensic costs, indemnity costs | Defence costs and damages for negligent service | Contractual indemnities wider than legal liability; refusing a settlement the insurer supported |
| Spandeck v DSTA (superintending officer) | Negligence claim by a non-client | Defence costs through trial and appeal | Deductible and any unrecovered costs |
| KPMG Carillion (auditor) | Civil claim and regulatory fines | Civil claim and settlement within limits | Regulatory fines and penalties |
Policy wordings differ. Most are claims-made, require prompt notification and prohibit admissions or settlements without insurer consent. Always check your own wording.
Example: a small accounting practice and a missed warning sign
Example: A five-person Singapore accounting practice prepares a client’s annual accounts and notices that a director loan balance has grown sharply without supporting documents. The engagement partner notes it but does not raise it. Two years later the client discovers the director was diverting funds and claims against the practice for losses incurred after the year end. As in Gaelic Inns, the claim will turn on whether a competent practitioner would have followed up and what loss flowed from the failure to do so. The practice should immediately notify its PI insurer, preserve its working papers, and avoid discussing fault with the client until it has legal advice. Our guide to what to do when a client says your work caused its loss sets out those first steps.
Checklist: lessons for your firm
- Write engagement letters that define scope clearly, including what you are not doing.
- Follow up and document every red flag you notice; a note without action can be worse than no note.
- Keep change logs and file notes that would stand up at trial.
- Escalate complaints to a director and notify your insurer before replying.
- Review contractual indemnities and costs clauses against your PI wording.
- Treat settlement offers seriously and decide on them with your insurer and lawyers.
- Set your limit of indemnity by the largest realistic loss a client could suffer, not by your fee.
Frequently asked questions
Can a professional be liable for more than the fee earned?
Yes. Damages are measured by the client’s loss caused by the breach, within the limits of remoteness and any valid contractual cap. In Razer v Capgemini the award ran to millions of US dollars.
Does a client’s own carelessness reduce what we pay?
It can. In Gaelic Inns the Court of Appeal halved the damages because of the company’s contributory negligence, though in Razer v Capgemini a similar argument failed. It depends on the facts.
If we win, do we get all our legal costs back?
Usually not. A successful party normally recovers only part of its costs unless a contract or the court orders costs on an indemnity basis. The shortfall and the management time are real costs of a claim.
Can someone who is not our client sue us?
Yes, if the court finds a duty of care under the Spandeck test. Lenders, investors and contractors have all tried. Our article on vicarious liability also explains when a firm answers for its employees’ mistakes.
Will PI insurance pay a regulator’s fine?
Generally not. Fines and penalties are commonly excluded and may not be insurable at all. PI is designed for civil claims for compensation.
Insurance cover itself should be arranged through a licensed insurer or an insurance broker regulated by MAS.
Official sources: PlanAssure PAC v Gaelic Inns Pte Ltd [2007] SGCA 41; Deloitte & Touche LLP v Hin Leong Trading [2026] SGCA 33; Razer v Capgemini [2022] SGHC 310; Razer v Capgemini [2023] SGHC 195; Spandeck Engineering v DSTA [2007] SGCA 37.
Need help with a professional negligence claim?
If your company, or you as a director or shareholder, is dealing with a client’s claim that your professional work caused loss, or is considering a claim against an adviser, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, for example if a claim is made against your company or you are sued, we will refer you to a firm on our panel of Singapore law firms that regularly handles professional negligence disputes. Raffles Corporate Services is a corporate services provider, not a law firm or insurer, and this article is general information, not legal or insurance advice.
The Raffles Corporate Services Editorial Team, Raffles Corporate Services