Ang Tin Gee v Pang Teck Guan

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 02 December 2011
• Neutral Citation: [2011] SGHC 259
• Court: High Court (Singapore)
• Docket Number: Suit No 697 of 2010
• Year: 2011
• Published date: 12 January 2012
• Hearing Date: 17 March 2011,14 March 2011,21 March 2011,16 March 2011,08 March 2011,07 March 2011,09 March 2011,03 May 2011,22 March 2011,15 March 2011
• Plaintiff Counsel: Lai Kwok Seng (Lai Mun Onn & Co)
• Defendant Counsel: Leslie Yeo Choon Hsien (Sterling Law Corporation)
• Subject Matter: Partnership
• Citation: [2011] SGHC 259

Belinda Ang Saw Ean J: INTRODUCTION

This is a partnership action brought by the plaintiff in respect of alleged breaches by the defendant in discharging his duties as a business partner from 1996 to 2006. The plaintiff is Ang Tin Gee (also known as Julie Ang). The defendant is Pang Teck Guan (also known as Andy Pang).

The plaintiff’s various complaints were primarily about: (a) the conduct of the defendant as the working partner who controlled and managed the day-to-day affairs of the business carried on in the registered name and style of Japco TC International Enterprise (“Japco”), and (b) the office consumables business carried on through the entity known as Office Consumables Supplies (“OCS”), a sole proprietorship registered in the defendant’s name. By seeking to determine the true scope of the partnership businesses in this action, the plaintiff is in effect asserting that the full scope of the businesses as controlled and managed by the defendant as her partner had been concealed from her. In other words, a breach of fiduciary duty by the defendant had occurred. As such, the defendant is liable to, inter alia, account for actual profits derived from the businesses undertaken respectively by Japco and OCS. This relief will entail, inter alia, an account of the benefits and/or gains which the defendant derived from the use of Japco’s resources, funds and bank facilities to finance the business operations of OCS, including payment of OCS’s operating expenses.

The defendant disputes the plaintiff’s claims. The defences raised and relied upon by the defendant were primarily (a) to deny the partnership inter se, or (b) to maintain that OCS was his separate business and was never part of Japco’s business.

The question that lies at the heart of the present case is the defendant’s duty to account for, inter alia, Japco’s moneys and OCS’s sales receipts and his obligation to give a proper, complete and accurate account of all his dealings and acts in respect of Japco’s moneys and OCS’s sales receipts. The burden is on the defendant to show that at the relevant times, (a) there was no loss to Japco arising from the use of Japco’s moneys for OCS’s operating expenses, and (b) the profits of OCS had been earned wholly or partly by means other than the use of Japco’s resources, moneys and banking facilities.

BACKGROUND OF THE DISPUTE The parties

The plaintiff and her husband, Tan Chor Koon (“Chor Koon”), were introduced to the defendant by his then fiancée (now wife), Dorothy Lee Soon Min (“Dorothy”). At the material time, the plaintiff was working in Siemens and Dorothy was with a travel agency. The plaintiff came to know Dorothy through the business dealings of their respective employers, and they soon became friends. At some point in the relationship, Dorothy introduced the defendant to the plaintiff and Chor Koon. She and Dorothy had in fact discussed the possibility of setting up a travel business together with the plaintiff investing the funds and Dorothy running the business, but this did not materialise, and Dorothy therefore introduced the plaintiff to the defendant instead to further explore the plaintiff’s interest in going into business.

According to the plaintiff, the defendant and Dorothy represented to her that the defendant had considerable experience in the import and export trading business of consumer electrical appliances. Indeed, the defendant gave evidence that he had worked for United Overseas Bank (“UOB”) for about four to five years as a front desk clerk and had picked up some knowledge and know-how of trade operations and international trade finance. He also gave evidence that he had worked for about two years as a junior executive in a trading company which traded in electrical goods.¹ On the defendant’s part, he saw the plaintiff as having funds to invest in a business. He himself had only been working for six to seven years then and did not have any funds to start a business.²

The parties’ business relationship

Pursuant to their discussions, the defendant prepared and handed to the plaintiff a three-page business proposal about going into a partnership business trading in consumer electrical appliances overseas. Later, the defendant submitted an amended three-page business proposal and a further three pages, making it a six-page document. There was some dispute over the sequence of the documentation provided to the plaintiff. Nothing turns of this. Eventually, the parties signed a six-page document on 3 August 1996 (the “Partnership Agreement”).³

The parties strenuously dispute the terms of the partnership. The plaintiff takes the position that the partnership was entered into on the basis that they would be equal partners. As such, the parties were to contribute equally to the capital and on an equal basis share the profits and bear all losses sustained by the partnership. To the plaintiff, the parties entered into an oral partnership agreement on or about 20 July 1996 (ie, before the parties signed the Partnership Agreement) on the basis that they would be equal partners. The date 20 July 1996 is significant in that it was the same day the parties applied to register the partnership business. The partnership was registered on 25 July 1996 under the trade name and style of Japco TG International Enterprise. The name “Japco” is a combination and play on the parties’ names. The letter “J” is for “Julie”. The second letter “a” is for “Andy”. The first two letters “Ja” are the initials of “Julia Ang”. The second and third letters “ap” are the initials of “Andy Pang”. Finally, the letters “TG” are the initials of the parties’ Chinese names, “Tin Gee” and “Teck Guan”. According to the plaintiff, there were several discussions after the Partnership Agreement was signed on 3 August 1996, and the discussions culminated in the plaintiff accepting the defendant’s proposal that his salary be revised to $3,362 with the defendant taking a profit share of 50%.

In contrast, the defendant challenges the existence of a partnership inter se. The defendant denies the oral agreement on or about 20 July 1996⁴ and maintains that the Partnership Agreement constitutes the entire agreement between the parties.⁵ He also denies any supervening oral agreement as described. As I will explain below at [49−66], I find these factual disputes immaterial in any case since they do not affect the construction of the Partnership Agreement and the real issues to be resolved.

Japco’s bank facilities

About a week after the signing the Partnership Agreement, the parties received a letter of offer dated 10 August 1996 from UOB for the sum of $950,000 for Japco.

The parties signed in acceptance of UOB’s offer on 13 August 1996. The banking facilities were and are secured by (1) an open mortgage over the plaintiff’s property at 44 Sunrise Terrace Sunrise Villa, Singapore and (2) fresh joint and several guarantees by the plaintiff and defendant in favour of UOB for $950,000 (“the Guarantee”).

Under this Letter of Offer, UOB granted not only trade facilities but also two overdraft facilities: (a) Account No 101-365-513-3 with an overdraft facility of $100,000 (“UOB Account No 1”); and (b) Account No 101-365-514-1 with an overdraft facility of $200,000 (“UOB Account No 2”). These two accounts will be collectively referred to as “the UOB accounts”). In May 1998, the limit of the banking facilities was revised by UOB. For present purpose, I need only mention UOB Account No 2 where the available overdraft facility was increased from $200,000 to $250,000.

Japco’s business in consumer electrical goods and the Seychelles Debt

From both parties’ versions of the story, the plaintiff had a full time job and that her role in the partnership was to fund the business whereas the defendant would run it. To the plaintiff, the defendant had something to bring to the partnership: he would contribute his “expertise” and “experience” to the partnership. From his business proposal, the plaintiff was given the impression that he had the necessary customer base and supplier base and was thus confident to put down on paper his estimate of a sales turnover of $250,000 for September to December 1996, and of $1 million for 1997. During cross-examination of the defendant, it transpired that the defendant’s experience and knowledge was limited. He had no supplier base and no customer base for consumer electrical appliances. His estimates of the sales turnover were completely without bases and hence the figures were misleading in a grossly exaggerated way. It was not surprising that Japco’s business in consumer electrical appliances was not successful at the best of times.

Japco carried on its business in consumer electrical appliances from about September 1996 to about September 2000 when OCS started operations.

Sometime in September 1997, Japco’s business faced a major setback in the form of a customer, YL Electrics/Home Electronics from the Seychelles (“YL Electronics”), defaulting in payment in the sum of $146,462.95 (the “Seychelles Debt”). According to the defendant, Stephen Pillay (“Stephen”) from YL Electronics was an existing customer at the time and there had been previous successful transactions with him. However, in this particular transaction, Stephen wanted to order more goods but on credit. As the value of the goods was high, the defendant sought the plaintiff’s consent and she then sent Chor Koon to have a meeting with the defendant and Stephen in Singapore. In addition to the meeting, the defendant also travelled to Seychelles with Chor Koon to inspect Stephen’s assembly plant and wholesale centre. Unfortunately, YL Electronics eventually defaulted in payment of one of the two shipments made, and the total sum defaulted on was $146,462.95.

According to the plaintiff, she only found out when the defendant informed her about the default sometime in late 1997. The plaintiff...