Yes, a client can sometimes sue the individual consultant, engineer, accountant or director who did the work, not just the company that signed the contract. Most clients sue the company, because it made the contract, is usually responsible for its employees and holds the insurance. But Singapore courts will find that an individual personally owed a duty of care where he or she assumed responsibility to the client and the client relied on it. Being a director does not shield you from liability for your own wrongs. A well-drafted professional indemnity (PI) policy that covers individuals, and a lawful company indemnity, are the main protections.
Why do clients usually sue the company and not the individual?
Three reasons. First, the contract is normally with the company, so a claim for breach of contract lies against the company alone. Second, an employer is generally vicariously liable for negligence committed by employees in the course of their work, which we explain in our guide to vicarious liability in Singapore. Third, the company is the one with the PI policy and the assets.
So when are individuals named? Typically when the company is insolvent, struck off or uninsured; when the individual made personal promises; when the claimant wants extra pressure in negotiations; or when a statute places duties on the individual, such as a professional engineer or other registered professional who signs off work in a personal statutory capacity.
When does an individual owe a client a personal duty of care?
A claim against an individual is usually brought in the tort of negligence. Singapore courts apply the test in Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] 4 SLR(R) 100: after a threshold of factual foreseeability, the court asks whether there was sufficient legal proximity between the parties, and then whether any policy considerations negate a duty. For pure economic loss, which is the usual loss from bad advice, proximity often turns on whether the individual voluntarily assumed responsibility and whether the claimant relied on it.
Factors that tend to point towards, or away from, personal responsibility include:
| Points towards a personal duty | Points away from a personal duty |
|---|---|
| The individual signed advice, reports or certificates in his or her own name or professional capacity | Work was issued on the firm’s letterhead, reviewed and signed off by the firm |
| A statutory or regulatory role attaches to the individual (for example, a registered professional or appointed supervisor) | The individual was one of many staff with no special role |
| Personal assurances to the client (“I personally guarantee these figures”) | Clear terms that the client relies only on the firm |
| Direct dealing and reliance on the individual’s own expertise | Engagement letter excluding personal liability of staff |
| Conflicts of interest the client did not know about | Full disclosure and independent checks by others |
None of these is decisive. The courts look at the whole relationship, and the outcome is fact-specific.
Does being a director protect you?
No, not for your own wrongs. A company is a separate legal person, so a director is not liable for the company’s contracts or debts merely because he or she is a director. But a director who personally commits a tort, for example by negligently carrying out a professional role that he or she personally took on, can be sued personally. The Court of Appeal’s decision in the ACRES case, described below, is a clear Singapore example.
When a claim names both the company and a director, each needs its own defence and advice. Our article on claims naming both a company and its director explains why.
How does the firm’s PI policy protect individuals?
Many PI policies define “insured” to include the firm and its directors, partners and employees for work done on the firm’s behalf, and often former directors and employees for work done while they were with the firm. Wordings differ, so check these points:
- Who is an insured: are consultants, secondees, subcontractors and freelancers included, or only employees?
- Former staff: does cover continue after people leave, and after the firm closes? A firm that closes without run-off cover can leave former staff exposed. See our guide to run-off cover when closing a professional firm.
- Dishonesty: fraud by one individual is usually excluded for that person; many policies keep cover for innocent colleagues.
- Waiver of subrogation: some policies say the insurer will not pursue an employee after paying a claim, unless the employee acted dishonestly. Check whether yours does.
- Personal work outside the firm: side projects or advice given in a personal capacity are generally not covered by the firm’s policy.
Directors’ and officers’ (D&O) insurance is different. It covers directors for management decisions, and commonly excludes claims arising from the firm’s professional services, so it is not a substitute for PI. Our guide to D&O liability insurance explains what it does cover.
| Policy | Typically responds to | Typically does not respond to |
|---|---|---|
| Professional indemnity | Clients’ claims about negligent advice, design or services, for the firm and insured individuals | Fines, dishonesty, known prior circumstances, work outside the insured business |
| D&O liability | Claims about directors’ management decisions, regulatory investigations into directors | Claims arising from professional services to clients |
| Public liability | Bodily injury and property damage to third parties | Financial loss caused by advice |
Can the company indemnify an employee or director instead?
Partly, and the Companies Act 1967 sets limits for officers such as directors. Under section 172, a provision exempting or indemnifying an officer against liability to the company for negligence, default, breach of duty or breach of trust is generally void. Section 172B allows a company to indemnify an officer against liability to third parties, such as a client, but not against:
- a fine in criminal proceedings;
- a penalty payable to a regulatory authority for non-compliance;
- costs of defending criminal proceedings in which the officer is convicted;
- costs of defending civil proceedings brought by the company (or a related company) in which judgment is given against the officer;
- costs of certain court applications for relief that are refused.
Section 172A expressly allows the company to buy insurance for an officer against liabilities of the kind section 172 would otherwise prevent it from indemnifying. Our article on directors’ indemnity and section 172 sets out which clauses are void. For ordinary employees, any indemnity depends on the employment contract and company policy, so read yours.
What should you do if you are named personally?
- Tell the firm in writing at once, and ask it to notify its PI insurer. If you have left the firm, still notify it and ask for confirmation of cover.
- Ask whether you are an insured under the firm’s policy and whether the insurer will defend you as well as the firm.
- Get your own advice if your interests may differ from the firm’s, for example if the firm may blame you or the claim alleges dishonesty.
- Do not reply to the claimant yourself or admit fault. Keep your notes and copies of documents you are entitled to keep.
- Check the deadlines. If you are served with an originating claim, a notice of intention to contest or not contest is due within 14 days after the statement of claim is served in Singapore, under the Rules of Court 2021.
- Check any personal cover, such as professional body schemes or your own policy.
Example: a project manager and a failed fit-out
Example: a design consultancy appoints its senior project manager, who is also a director, to supervise a client’s office fit-out. He emails the client confirming that he has personally checked the fire-rated partitions. They were not to specification, and the client must rebuild. The consultancy has since stopped trading. The client sues both the consultancy and the project manager in negligence, relying on his personal confirmation and his supervisory role.
The firm’s PI policy names directors and employees as insureds and has run-off cover, so the insurer defends both, subject to the policy terms and deductible. Without that cover, the project manager would be funding his own defence, and the company could not lawfully indemnify him if he were later fined by a regulator.
What happened in real cases?
A contractor’s director held personally liable as clerk of works (ACRES, 2011)
In Animal Concerns Research & Education Society v Tan Boon Kwee [2011] SGCA 2, the charity ACRES engaged a contractor to build an animal shelter. The contractor’s main director was appointed as clerk of works, the person supervising the site. Unsuitable backfill containing wood chips was used, causing contamination, and the charity had to excavate and rebuild. The High Court had dismissed the negligence claim against him personally. On 20 January 2011 the Court of Appeal reversed that: applying the Spandeck test, it held that he had voluntarily assumed the responsibilities of the role, owed the charity a personal duty of care and breached it. His position as director did not shield him, because the liability was for his own acts as clerk of works.
The PIE viaduct collapse: an engineer jailed and his firm ordered to pay S$43.8 million (2017 to 2023)
Part of a viaduct under construction near Upper Changi Road East collapsed on 14 July 2017, killing one worker and injuring 10 others. As reported by The Straits Times in December 2019, the design engineer who led the design team at CPG Consultants, the design consultant, was sentenced to 86 weeks’ jail and a S$10,000 fine after pleading guilty to charges under the Building Control Act and the Workplace Safety and Health Act. Separately, as reported by The Straits Times in March 2023 based on an SGX filing by OKP Holdings, an arbitral tribunal ordered CPG Consultants to pay the main contractor, Or Kim Peow Contractors, about S$43.8 million plus interest. The civil bill fell on the firm, while the individual faced criminal penalties that no insurance or company indemnity could pay.
Frequently asked questions
Can a former employee be sued years after leaving?
Yes, within the limitation period, which is generally 6 years, and longer for latent damage under the Limitation Act 1959. Former staff should check that the firm’s policy covers former employees.
Can my employer make me pay if the firm is sued because of my mistake?
In principle an employer may have a claim against a negligent employee, but in practice this is uncommon and some PI policies waive the insurer’s right to pursue employees except for dishonesty. Check your contract and the policy.
Does a liability cap in the client contract protect me personally?
Not necessarily. A cap in the firm’s contract protects the firm; it may not bind a tort claim against you unless the contract expressly extends the protection to staff. Some engagement letters include such wording.
Will the firm’s insurer defend me if the firm blames me?
If you are an insured, the insurer will usually defend covered claims against you, but conflicts can arise. Take independent advice if your interests and the firm’s diverge.
Official sources: ACRES v Tan Boon Kwee [2011] SGCA 2; Companies Act 1967 (sections 172, 172A and 172B); Limitation Act 1959; Singapore Courts, how to respond to an originating claim; Ministry of Transport, reply on the viaduct collapse investigation.
Insurance for the firm and its people should be arranged through a licensed insurer or insurance broker.
Need help with a claim against you or your staff?
If your company, or you as a director, employee or shareholder, is dealing with a professional negligence claim that names you personally, 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 and directors’ liability. 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