Alphire Group Pte Ltd v Law Chau Loon

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 16 November 2017
• Neutral Citation: [2017] SGHC 297
• Court: High Court (Singapore)
• Docket Number: Suit No 822 of 2015
• Published date: 14 November 2018
• Year: 2017
• Hearing Date: 29 November 2016,22 November 2016,19 April 2017,07 August 2017,18 April 2017,25 November 2016
• Plaintiff Counsel: Collin Seah, Reuben Tan, Jaime Lye and Timothy Ng (Quahe Woo & Palmer LLC)
• Defendant Counsel: Palaniappan Sundararaj (instructed) and Lim Min (Straits Law Practice LLC), Thangavelu and Syafiqah Binte Ahmad Fu'ad (Thangavelu LLC)
• Subject Matter: Trusts,Trustees,Duty to account,Evidence,Burden of proof,Confession and avoidance defence
• Citation: [2017] SGHC 297

Vinodh Coomaraswamy J (delivering the oral judgment of the court): Introduction

The plaintiff brings this action against the defendant to recover 68 sums of money.¹ The plaintiff claims that the defendant collected these 68 sums from the plaintiff’s clients on its behalf but has failed to account to the plaintiff for the sums.² In total, the plaintiff claims that the defendant owes it: (i) SGD 271,170, (ii) MYR 3,797,285, and (iii) HKD 18,742,810.³

After considering all the evidence and the parties’ submissions, I find that the plaintiff has made out its claim against the defendant for some of the 68 sums. Specifically, these are the sums that the parties have placed in Categories A and B as set out in the Scott schedule.⁴ As for the sums which the parties have placed in Categories D and E,⁵ I find that the plaintiff has not established that the defendant has either collected or failed to account for them.

I now set out the grounds for my decision.

Background facts

The plaintiff was incorporated in May 2012 by Ms Alicia Chua and the defendant. They were the plaintiff’s two initial shareholders and directors. The plaintiff ceased carrying on business in September 2014. The defendant ceased to be a director of the plaintiff in September 2015.

The plaintiff’s business was organising trips for its clients to foreign casinos. These trips are known as “junkets”.⁶ As a junket operator, the plaintiff essentially acted as a middleman between the casinos and its clients to facilitate its clients’ gambling. Thus, for example, it arranged for the casinos to extend credit to its clients and underwrote that credit.⁷ It also collected money from its clients and paid the casinos for its clients’ losses. The casinos looked to the plaintiff, as the junket operator, and not to the plaintiff’s client for payment. The plaintiff as the junket operator therefore took on its clients’ credit risk.⁸ For its services, the casinos paid the plaintiff a commission based on the amount that its clients gambled at the casino.⁹

The defendant’s primary role in the plaintiff’s business was to bring in new clients. But the defendant also collected money from the plaintiff’s clients.¹⁰ The 68 sums which the plaintiff claims from the defendant in this action are sums which the plaintiff says that the defendant collected from the plaintiff’s clients on the plaintiff’s behalf but failed to account to the plaintiff for.¹¹

The defendant concedes that he has collected some – but not all – of the 68 sums from the plaintiff’s clients. But he avers that he has paid all those sums either to the plaintiff or to six different casinos against the plaintiff’s debts to those casinos.¹²

The parties have tendered a Scott schedule which breaks down the 68 sums which the plaintiff claims into five categories which they have called Categories A, B, C, D, and E. Put simply, the defendant admits collecting the sums in Categories A and B but claims he has either handed the sums over to the plaintiff or applied the sums towards the plaintiff’s business. The defendant denies collecting the sums in Categories D and E. Category C of the Scott schedule comprises sums that the defendant claims to have paid to various casinos on behalf of the plaintiff using sums that he collected from the plaintiff’s clients.¹³ As seen below at [27]–[31], this category overlaps with Category B¹⁴ and the two categories will therefore be analysed together.

To be more specific, the four categories that the plaintiff now claims from the defendant break down as follows: Category A comprises sums amounting SGD 2,821,788.52¹⁵ which the defendant admits to having collected and which he alleges he has handed over to the plaintiff.¹⁶ Category B comprises sums totalling SGD 3,083,429.22¹⁷ which the defendant also admits to having collected and which he claims to have used for the purposes of the plaintiff’s business.¹⁸ Category D comprises sums which represent the difference between (i) sums which the defendant claims to have collected in part and (ii) sums being claimed by the plaintiff.¹⁹ These sums amount to SGD 202,708.56.²⁰ Category E comprises sums amounting SGD 1,095,770.21²¹ which the defendant denies collecting.²²

To summarise, Categories D and E are sums which the defendant denies collecting at all. And Categories A and B are sums which the defendant admits collecting but avers that he no longer has with him, either because he has handed the sums over to the plaintiff or because he has used them for the purposes of the plaintiff’s business.

Issues to be determined

The principal issue that I have to determine is whether the defendant has collected any of the 68 sums, and if so, whether he has paid them to the plaintiff or to the casinos or used them for the purposes of the plaintiff’s business. As will be seen, determining this issue requires determining a preliminary question: who has the burden of proving that the defendant has collected and discharged his obligations with respect to the 68 sums? This question arises because the plaintiff’s poor accounting practices have led to a paucity of objective evidence in relation to what happened to the money.²³

It is to the preliminary question that I now turn before addressing each of the four categories of the plaintiff’s claim.

Burden of proof

The defendant admits that he has a duty to account to the plaintiff for the sums that he has collected on its behalf.²⁴ He therefore bears the burden of proving that he has handed over to the plaintiff the Category A sums and that he has used the Category B sums for the purposes of the plaintiff’s business. As for Categories D and E, the plaintiff rightly accepts that it bears the burden of showing that the defendant has collected these sums. If it can do so, the burden will shift to the defendant to show that he has discharged his obligation to the plaintiff to account for those sums.

The starting point in analysing the incidence of the burden of proof is s 105 of the Evidence Act (Cap 97, 1997 Rev Ed). That provision states that the “burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence”. Accordingly, the burden of proof is to be determined by the parties’ pleadings and the facts which they each aver to be true in those pleadings. Where a defendant chooses to “confess and avoid” in his defence, the burden rests on him to prove the facts that underpin the avoidance. A defendant “confesses and avoids” where he accepts the allegation which the plaintiff makes against him, but nevertheless positively asserts further facts which he claims avoids his liability. The nature and effect of confessing and avoiding is explained by the Court of Appeal in SCT Technologies Pte Ltd v Western Copper Co Ltd [2016] 1 SLR 1471 at [23] as follows:

[A] “confession and avoidance” plea [is where] the defendant expressly or impliedly “confesses” the truth of what is alleged against him (ie, the existence of the debt in this case) but proceeds immediately to “avoid” the effect of such an allegation (such as by positively asserting that payment was made as is the case here). … [I]t will be for the defendant to prove the facts on which he relies to avoid liability…

[emphasis in original]

On the facts of the case before me, the defendant’s defence on Categories A and B is a confession and avoidance defence. He admits that he collected certain sums from the plaintiff’s clients but avers that he has handed the sums over to the plaintiff or paid the sums to certain casinos on the plaintiff’s behalf.²⁵ He has also identified with precision the sums he admits collecting, the sums he claims to have handed over to the plaintiff, and the sums which he claims to have paid to the casinos.²⁶ Moreover, the defendant admits that he has an obligation to deliver a true and full account to the plaintiff of the sums he has collected.²⁷ The burden is therefore on the defendant to prove that he has properly accounted for these sums.

The defendant relies on Yap Son On v Ding Pei Zhen [2017] 1 SLR 219 to argue that s 108 of the Evidence Act applies to reverse the burden of proof.²⁸ His reliance is misplaced. Yap Son On stands for the proposition that s 108 applies when one party pleads a “confession and avoidance” defence and when the other party is in the position of an accounting party. In those circumstances, s 108 operates to reverse the burden of proof by placing it on the accounting party. That is because it is especially within the accounting party’s own knowledge how he has dealt with the money he is obliged to account for (Yap Son On at [79] and [82]).

Here, the defendant is the one who has pleaded a “confession and avoidance” defence. He is also, by his own admission, the accounting party. In the light of this, the proposition set out in Yap Son On does not operate to relieve the defendant of the burden of proof which s 105 places upon him.

Lastly, the defendant submits that it is onerous for him to discharge this burden.²⁹ That submission does not take his case very far. This is so for three reasons: First, in SCT Technologies, the Court of Appeal noted at [32]–[33] that the burden of proof cannot be lifted merely because it would be “overly onerous” for a party to prove something. Second, as the party alleging that he collected certain sums from certain clients and paid those sums either to the plaintiff or to certain casinos on the plaintiff’s behalf, the defendant was best placed to keep records of how he paid out these sums. Certainly, as between the parties, only the defendant knows from whom he collected the sums that he claims to have paid to the plaintiff and the casinos. Third, the poor state of the plaintiff’s financial records is partly due to the defendant’s own practice of not keeping proper records.³⁰ It bears emphasising that the defendant was a director of the plaintiff at the...