HE & SF Properties LP v Rising Dragon Singapore Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Sir Henry Bernard Eder IJ
• Judgment Date: 03 May 2019
• Neutral Citation: [2019] SGHC(I) 5
• Court: International Commercial Court (Singapore)
• Hearing Date: 18 October 2018,17 October 2018,16 October 2018,19 October 2018,14 December 2018,09 July 2018
• Docket Number: Suit No 9 of 2017
• Plaintiff Counsel: Gan Kam Yuin and Timothy Quek (Bih Li & Lee LLP)
• Defendant Counsel: Kelvin Koh, Nanthini Vijayakumar and Nguyen Vu Lan (TSMP Law Corporation)
• Subject Matter: Trusts,Quistclose trusts,Restitution,Unjust enrichment,Failure of basis,Contract,Misrepresentation,Fraudulent,Tort,Conspiracy
• Published date: 09 May 2019

Sir Henry Bernard Eder IJ: Part 1: Introduction

The plaintiff, HE & SF Properties LP (“HE&SF”) is an investment holding company registered in the USA. It is owned and/or controlled by Mr Peter Andreas Eyckeler (“Mr Eyckeler”). He is a wealthy individual with a strong financial background in banking. He resides in Germany but appears to have wide business interests around the world including the USA. Mr Eyckeler also owns and/or controls a company known as US Global Finance Corporation (“Global Finance”) either on his own or together with his wife, Mrs Barbara Eyckeler (“Mrs Eyckeler”). Both Mr and Mrs Eyckeler gave oral evidence in the trial.

The first defendant, Rising Dragon Singapore Pte Ltd (“RDS”) is incorporated in Singapore as a private investment company to hold interests in investments in Asia which included investments in the technology, e-payments, real estate and mining sectors at various points in time. The second defendant, Mr Eric Alfred Schaer (“Mr Eric Schaer”), is a citizen of the Comoros Islands. He describes himself as being engaged in business consulting and other business interests including arranging financing and refinancing for various corporations and private companies. He is the chief executive officer (“CEO”) of RDS. He is also the CEO of the MySquar Group of companies, which includes a company, MySQUAR BVI, that is incorporated in the British Virgin Islands and has been listed on the Alternative Investment Market (AIM) of the London Stock Exchange since 1 July 2015. Mr David Glenn Schaer (“Mr David Schaer”) is Mr Eric Schaer’s brother. He is an American citizen employed in the telecommunications sector. He currently resides in Malaysia and works frequently in Myanmar and Vietnam for various telecommunications businesses. In passing, I should mention that although Mr David Schaer is not a party to these proceedings, various allegations are made against him, and he is a defendant in parallel proceedings brought by HE&SF in Florida, USA. Both Mr Eric Schaer and Mr David Schaer gave evidence at the trial.

The present proceedings concern three main claims brought by HE&SF against the first and second defendants (hereafter referred to collectively as “the Defendants”), viz, A claim to recover the sum of US$300,000 remitted by HE&SF on 2 December 2014 to RDS to purchase shares in the MySQUAR Group (the “MySQUAR moneys”). As appears further below, that claim is advanced (i) against RDS on the basis of breach of trust, Quistclose trust, unjust enrichment and conspiracy; and (ii) against Mr Eric Schaer personally on the basis of fraudulent misrepresentation, conspiracy and dishonest assistance. A claim to recover the sum of US$3,235,385 remitted by HE&SF on 20 July 2015 to RDS to purchase shares (whether directly or indirectly) in another start-up, Fastacash Pte Ltd (the “Fastacash moneys”). As appears below, that claim is advanced against both Defendants on similar grounds to the claim in respect of the MySQUAR moneys, viz, (i) against RDS on the basis of breach of trust, Quistclose trust, unjust enrichment and conspiracy; and (ii) against Mr Eric Schaer personally on the basis of fraudulent misrepresentation, conspiracy and dishonest assistance. A claim to recover the sum of US$1,500,000 remitted by HE&SF on 27 November 2015 to a subsidiary of RDS, Rising Dragon Pan-Asia Limited (“RDPA”). It is HE&SF’s case that this was a bridging loan for Mr Eric Schaer, Mr David Schaer and RDPA (the “Bridging Loan”). The claim is advanced against Mr Eric Schaer personally on two main grounds, viz, fraudulent misrepresentation and conspiracy.

In addition, HE&SF seeks various orders that RDS holds the MySQUAR moneys and the Fastacash moneys (and any profit) on trust for HE&SF as well as other ancillary orders including orders for an account, damages, interest and costs.

The Defendants deny all these claims on various grounds. In broad terms, the Defendants say that in truth the case tells a story of failed investment ventures and missed investment opportunities in start-up companies, and that the claims represent attempts by an investor to recoup its losses arising from bad investment decisions and to obtain the profits that it would otherwise have made from missed opportunities.

As a threshold point, the Defendants say that HE&SF has waived its right to make any claims against the Defendants, including the present claims in these proceedings, by virtue of the terms of Clause 3.3 of two Sale and Purchase Agreements (“SPAs”) dated 26 April 2016 which provided in material part as follows:

As of the date of this Agreement, each Party hereto shall be released from its obligations relating to the Company vis a vis any other Party to this Agreement. The Parties agree that this Agreement fully and finally settles all disputes and claims between themselves (including their respective affiliates, related parties and officers) and no party to this Agreement (including its affiliates, related parties and officers) shall make any further claims against any other Party or its affiliates, related parties and officers for anything occurring before the date of this Agreement, whether relating to the Company, Fastacash or otherwise... [emphasis added]

In summary, the Defendants say that the wording of Clause 3.3 in the two SPAs is of very wide ambit, ie, it expressly provides that (i) all disputes and claims between the contracting parties (including their affiliates, related parties and officers) are fully settled; and (ii) none of the contracting parties shall make any further claims against any other contracting party (or its affiliates, related parties and officers) for anything that occurred before the date of the Agreements (26 April 2016). Thus, it was submitted on behalf of the Defendants that Clause 3.3 was sufficiently wide to cover all disputes brought in the present suit and that, for this reason, the present claims are all doomed to fail in any event.

In addition, the Defendants advance a number of specific defences with regard to each of the various claims. In particular: With regard to the MySQUAR moneys, the Defendants say that, at the request of Mr Eyckeler, the sum claimed, viz, US$300,000 was returned to HE&SF sometime in July 2015. With regard to the Fastacash moneys, the Defendants say that the shares were, in effect, transferred pursuant to the SPAs. With regard to the Bridging Loan, Mr Eric Schaer denies that this was a bridging loan at all.

Further, it is RDS’s case that if (contrary to the Defendants’ primary case) Clause 3.3 of the SPAs does not operate as a bar to claims, it is entitled to counterclaim against HE&SF in respect of an alleged separate loan agreed orally on or about 15 July 2015 between Mr Eyckeler on behalf of HE&SF and Mr Eric Schaer on behalf of RDS in the sum of US$896,000. In addition, the Defendants say that the commencement and pursuit of these current proceedings in Singapore constitute a breach of Clause 3.3 of the SPAs for which they are entitled to damages.

Before turning to consider the facts and the various claims, it is convenient to mention a number of general points.

First, in the course of the trial and the parties’ submissions, various points – both of law and fact – have been explored at some length and in considerable detail. I confess that I have not dealt with all these points. Instead, I have limited myself to addressing the points advanced by both parties which I consider are necessary for determining the relevant issues.

Second, this case involves serious questions concerning the credibility of the three main witnesses, viz, Mr Eyckeler, Mr Eric Schaer and Mr David Schaer. On a number of potentially important points, there is a complete clash of the oral evidence. For the most part, this is not a case where it might be said that such clashes can be explained simply on the basis of confusion or failure of memory: one or more of these three witnesses is – to a greater or lesser extent – deliberately lying on at least some of the points in issue.

Third, in these circumstances, the task of the Court is particularly difficult in assessing the truth. One of the difficulties is that the fact that a witness may lie in respect of one or more points does not necessarily mean that the rest of that witness’s evidence is untrue or should be discounted or ignored. For example, a witness may lie to bolster or embellish what is otherwise true or to seek to increase the chances of success in the litigation. However, where a court concludes that a witness is lying on any particular point, great caution is required with the remainder of that witness’s evidence; and, in appropriate circumstances, it may be that the entirety of that witness’s evidence should be ignored unless substantiated by other evidence. In such circumstances, the question of burden of proof is – or at least may be – important. It is often said that the Court may be assisted by considering the “demeanour” of the witnesses. However, I recognise that reliance on demeanour also requires great caution because it is often misleading, for the reasons explained by Lord Bingham in his brilliant essay “The Judge as Juror: The Judicial Determination of Factual Issues” in T H Bingham, The Business of Judging: Selected Essays and Speeches (Oxford University Press, 2000).

Fourth, I have serious doubts as to the credibility and reliability of the evidence of all three main witnesses with regard to at least certain aspects of their evidence.

As for Mr Eyckeler, he obviously has considerable experience in business and financial matters. He is somewhat older than either Mr David Schaer or Mr Eric Schaer. Although he appeared to give careful evidence, it seems to me that he was at times somewhat confused with regard to some events – although, in fairness, it may be that this was due to his recent illness. Moreover, certain of his explanations...