Ang Tin Yong v Ang Boon Chye and another

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 04 November 2011
• Neutral Citation: [2011] SGCA 60
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 209 of 2010
• Year: 2011
• Published date: 14 November 2011
• Hearing Date: 06 September 2011
• Plaintiff Counsel: Mr Andrew Tan Tiong Gee and Ms Anna Png (Andrew Tan Tiong Gee & Co.)
• Defendant Counsel: Mr Mak Kok Weng (Mak & Partners)
• Subject Matter: Contract,Interpretation,Partnership Law
• Citation: [2011] SGCA 60

Chao Hick Tin JA (delivering the grounds of decision of the court): Introduction

This appeal arose out of an application by Ang Boon Chye and Wong Kee Yock (“the Respondents”) for leave to apply for an order of committal against Ang Tin Yong (“the Appellant”) under O 52 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules of Court”). The trial judge (“the Judge”) granted leave to the Respondents to apply for a committal order against the Appellant. After hearing the parties, we allowed the appeal and set aside the leave granted to the Respondents to apply for a committal order. We now give our reasons.

The background

The Appellant and the Respondents were in a partnership operating a food centre business known as the “All Family Food Court”. The partnership comprised five partners. It made profits during the years 1999 to 2004 and the profits were distributed amongst the partners yearly. However, to evade tax, the partners falsified their partnership accounts to declare a loss or under-declare the partnership’s income. The Inland Revenue Authority of Singapore (“IRAS”) eventually found out about this, and it served all the partners with Notices of Additional Assessment and taxed the Respondents on the additional income received.

The Respondents then brought a suit in the High Court against the Appellant to seek, amongst other reliefs, an account and inquiry of all partnership transactions during the years 1999 to 2004 and a payment of their rightful share of the partnership profits and interest on the tax they had paid. In Ang Boon Chye & another v Ang Tin Yong [2008] SGHC 177, a judgment dated 21 October 2008, the High Court, having ruled that the Respondents were not unaware of the improper practice of under-reporting to IRAS adopted by the Appellant, ordered at [35]: [T]hat an account be taken of all transactions of the partnership for the period 1999 – 2004. If it is found that some partners have not been paid their full share of the profits, then subject to stale claims for specific sums being barred by the Limitation Act, they should be paid their proper share.

Thereafter the Respondents applied for an order requiring the Appellant to lodge an account by 2 April 2009 in respect of all partnership transactions effected for the period 1999 to 2004 and to give the Respondents access to all books, vouchers, bank statements and other documents in his possession which related to the accounts. On 1 December 2008, the Assistant Registrar granted the order (“the AR’s Order”). An appeal by the Appellant against the AR’s Order was dismissed by the High Court on 5 January 2009.

On 23 September 2010, the Respondents filed a summons for leave to apply for committal against the Appellant (“the Leave Application”) and a Statement pursuant to O 52 r 2(2) of the Rules of Court (“the Statement”) stating the grounds in support of their application. In the Statement, the Respondents averred that the Appellant had failed to comply with the AR’s Order, and in the affidavit filed, the Respondents affirmed that they had still not been paid their proper share of the partnership profits. In response, the Appellant filed an affidavit opposing the Respondents’ application stating, amongst others, that the Statement was defective for lack of particulars, and that in any case the Respondents had since retired from the partnership and had in a retirement deed assigned away all their “share and interest” in the partnership.

At this juncture, we ought to highlight the very material development in the relationship between the parties which was alluded to by the Appellant in his affidavit (see [5] above) to resist the Leave Application. This was that before the Respondents made the Leave Application, they had already decided to retire from the partnership and in pursuance thereof had reached a settlement with the Appellant and the other two partners. Consequently, on 8 August 2009, one year before the Leave Application was made, the Respondents executed a deed with the other partners (“the Deed”) under which the Respondents would be deemed to have retired from the partnership on 31 July 2009 and it was also provided that the Respondents would, for a specified consideration, assign all their shares and interest in the partnership to the continuing partners, amongst whom was the Appellant.

Decision of the Judge below

On 8 November 2010, the Judge who heard the Leave Application, granted leave to the Respondents to commence contempt proceedings against the Appellant for his failure to comply with the AR’s Order. In his grounds of decision, the Judge held that the Appellant had simply failed to explain his failure to comply with the AR’s Order and that although, pursuant to the settlement as evidenced by the Deed, the Respondents had no more interest in the partnership accounts, the fact remained that the Appellant had not complied with the AR’s Order. The Judge also held that the Respondents’ retirement from the partnership did not release the Appellant from his obligation to provide accounts as ordered and did not extinguish the Respondents’ right to take action on the Appellant’s failure to comply with the AR’s Order.

Issues

The Appellant appealed against the Judge’s decision to grant leave. He argued in this appeal that the Respondents no longer had any locus standi to obtain leave to enforce the judgment they had previously obtained because they had reached an overall settlement with the Appellant and the other partners on their dispute relating to the partnership. Pursuant thereto, the Respondents had retired from the partnership and had transferred all their shares and interest in the partnership to the other continuing partners for consideration. The alternative argument made by the Appellant to resist the Leave Application was that the Statement was defective as it lacked particulars, having failed to specifically state the exact nature of the breaches and the nature and format of the accounts required to be produced under the AR’s Order.

Whether the Respondents had locus standi to seek leave to commence committal proceedings

We will first deal with the main issue of whether the Respondents lacked locus standi to apply for leave to enforce the AR’s Order. To determine this issue, a prior question to be addressed is whether the Respondents had, under the Deed, assigned away all their rights and interest in the partnership. If the Respondents had indeed so assigned away their rights and interest in the partnership, the next question would be whether it necessarily followed that they no longer had the locus standi to seek leave to commence committal proceedings against the Appellant. At this juncture, it would be appropriate to set out the pertinent clauses of the Deed:

2. A balance sheet as at the Succession Date [ie, 31 July 2009] and a profit and loss account from the date when the last partnership account was taken to the Succession Date shall be prepared by the partnership as soon as reasonably possible after the Succession Date.

3. Any undrawn balance of the Outgoing Partners’ share of the net profits of the partnership for the period since the date when the last partnership account was taken to the Succession Date ... be paid to the Outgoing Partners in accordance with their share in the Partnership within seven {7} days ...

4. In consideration of the...