Asidokona Mining Resources Pte Ltd v Alternative Advisors Investments Pte Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD,Kannan Ramesh JAD,Quentin Loh SJ
• Judgment Date: 03 February 2023
• Docket Number: Civil Appeal No 28 of 2022
• Court: High Court Appellate Division (Singapore)

Asidokona Mining Resources Pte Ltd and another

and

Alternative Advisors Investments Pte Ltd

[2023] SGHC(A) 6

Woo Bih Li JAD, Kannan Ramesh JAD and Quentin Loh SJ

Civil Appeal No 28 of 2022

Appellate Division of the High Court

Agency — Ratification — Acts — Action based on contracts entered into by unauthorised agent — Contracts ratified after commencement of action — Whether ratification could retrospectively furnish legal basis for action

Agency — Ratification — Acts — Alleged agent not shown to have purported to act on principal's behalf — Whether principal could ratify acts of alleged agent

Agency — Ratification — Acts — Contract not shown to have been performed by principal — Whether principal could ratify contract

Choses in Action — Assignment — Equitable assignor not joined as co-plaintiff — Whether requirement for equitable assignor to be joined as co-plaintiff should be waived

Contract — Illegality and public policy — Maintenance and champerty — Property rights assigned in connection with cause of action — Whether assignment savoured of maintenance or champerty

Held, allowing the appeal:

(1) A principal ratified the conduct of another who had purported to act on its behalf, albeit without authority. SSI could not have ratified the Loan because it was not shown that Mr Wong had acted or purported to act on SSI's behalf in relation to the Loan: at [51] and [69].

(2) When a principal ratified a contract with a third party purportedly made on its behalf, the principal was obliged to perform the contract as against the third party. Here, prior to the Ratification, performance of the Loan had already taken place and it had not been shown that the performance was by SSI. If it were recognised that SSI could ratify the Loan in such circumstances, SSI could adopt as its own the Loan and the funds disbursed thereunder when the funds could very well belong to another: at [70].

(3) It was a fundamental rule of civil procedure that a plaintiff had to have a valid cause of action at the time of commencement of the action. Here, there was no valid cause of action at the time of commencement because the Loan had not yet been ratified. Thus, there was no enforceable contract or deed of assignment when the action was commenced, and the action was void ab initio: at [78] and [79].

(4) The retrospective effect of ratification could not validate a cause of action that was not in place when action was commenced. If the action was void ab initio, an act undertaken post-commencement could not restore validity to it. Thus, even if valid, the Ratification could not retrospectively validate the action: at [80].

(5) There was no need for SSI, as equitable assignor, to remain as co-plaintiff. The risk of double recovery was overstated by the appellants. This was because any future action pursued by SSI might be considered an abuse of process: at [96] and [97].

(6) An assignment of property rights did not savour of maintenance and champerty simply because it was made for the sole purpose of allowing an action to be brought: at [104].

[Observation: There was a troubling paucity of evidence on the threshold question of whether SSI was even aware of and agreed to the Loan. The fact that on 19 February 2019, SSI purported to ratify, inter alia, the Loan Documents by the Ratification was consistent with SSI not being aware of and agreeing to the Loan: at [26] to [28].]

Case(s) referred to

Bolton Partners v Lambert (1889) 41 Ch D 295 (refd)

BXH v BXI [2020] 1 SLR 1043 (refd)

Danish Mercantile Co Ltd v Beaumont [1951] Ch 680 (distd)

Ellis v Torrington [1920] 1 KB 399 (refd)

Jarguh Sawit, The [1997] 3 SLR(R) 829; [1998] 1 SLR 648 (distd)

JWR Pte Ltd v Edmond Pereira Law Corp [2020] 4 SLR 832 (refd)

Lim Lie Hoa v Ong Jane Rebecca [1997] 1 SLR(R) 775; [1997] 2 SLR 320 (refd)

Multistar Holdings Ltd v Geocon Piling & Engineering Pte Ltd [2016] 2 SLR 1 (refd)

POA Recovery Pte Ltd v Yau Kwok Seng [2022] 1 SLR 1165 (refd)

Presentaciones Musicales SA v Secunda [1994] Ch 271 (distd)

Saga Foodstuffs Manufacturing (Pte) Ltd v Best Food Pte Ltd [1994] 1 SLR(R) 505; [1994] 2 SLR 802 (refd)

Smith v Henniker-Major & Co [2003] Ch 182 (distd)

Trendtex Trading Corp v Crédit Suisse [1982] AC 679 (refd)

Wittenbrock v Bellmer (1880) 57 Cal 12 (folld)

Facts

Asidokona Mining Resources Pte Ltd (“Asidokona”) was a company incorporated in Singapore. Mr Soh Sai Kiang (“Mr Soh”) was its sole shareholder and director. In June 2016, Mr Soh sought the assistance of Mr Wong Joo Wan (“Mr Wong”) to arrange a loan of $2m to Asidokona (the “Loan”). Mr Wong was the principal director and shareholder of Alternative Advisors Investments Pte Ltd (“AAI”).

To arrange the Loan, Mr Wong contacted Mr Ong Su Aun Jeffrey (“Mr Ong”), an advocate and solicitor who was then the managing partner of a Singapore law practice, JLC Advisors LLP (“JLC Advisors”). Mr Ong told Mr Wong that he had a client who was willing to contribute $1m towards the Loan. Mr Wong decided to raise the remaining $1m himself.

On 22 July 2016, Mr Soh signed a loan agreement, a deed of charge and a personal guarantee (the “Loan Documents”). The Loan Documents stated that the sole lender of the full $2m to Asidokona and sole chargee was one Supreme Star Investments (“SSI”), a company registered in the British Virgin Islands. Mr Soh was a guarantor of the Loan. Mr Wong was not also stated or identified as a lender or chargee in the Loan Documents despite having contributed $1m towards the Loan. At this time, the Loan Documents were not signed by SSI or Mr Wong. On the same day, $1.69m ($2m less certain deductions for interest and transaction expenses) was disbursed from JLC Advisors' client account to Asidokona.

By May 2017, Asidokona had defaulted on the Loan. In 2018, two deeds of assignment purporting to assign SSI's rights under the Loan Documents to AAI (the “Deeds of Assignment”) were executed, with one executed on 30 March 2018 and the other on 15 November 2018. Mr Wong signed the Deeds of Assignment purportedly on behalf of SSI.

On 20 July 2018, AAI commenced an action against Asidokona and Mr Soh for recovery of the Loan, amongst other things. The action was based on the Deeds of Assignment. SSI was added as co-plaintiff in February 2019, but its claim was struck out in April 2020 following its failure to comply with a court order.

On 26 July 2021, Ms Lou Swee Lan (“Ms Lou”), the sole shareholder and director of SSI, procured SSI to pass a director's resolution to ratify Mr Wong's execution of the Loan Documents and Deeds of Assignment, AAI's commencement of the action and the joinder of SSI to the action in February 2019 (the “Ratification”). Ms Lou asserted that she only became aware of the Loan Documents, the Deeds of Assignment and the action in around March 2020.

The judge (“Judge”) found that the Ratification was valid. She rejected the suggestion that AAI could not sue without SSI joined as co-plaintiff to the action. She also found that the action did not savour of maintenance and champerty simply because the action was incidental to the assignment of property rights under the Deeds of Assignment. As such, she found in favour of AAI and ordered Asidokona and Mr Soh to pay AAI the principal sum of $2m plus interest, less sums that had been previously paid towards interest.

Asidokona and Mr Soh appealed against the Judge's decision. They argued that the Ratification was invalid, that the Judge was wrong to waive the requirement that SSI remain joined as party, and that AAI's claim engaged concerns of maintenance and champerty.

Legislation referred to

Moneylenders Act 2008 (2020 Rev Ed) s 5(1)

Rules of Court (2014 Rev Ed) O 20 r 5, O 56A r 9(6)

Gregory Vijayendran Ganesamoorthy SC, Chua Kee Tian Lester (Cai Qizhan Lester), Tomoyuki Lewis BanandKevin Wong Jin Wei (Rajah & Tann Singapore LLP) (instructed), Mulani Prakash P and Safiuddin bin Mohamed Naseem (M & A Law Corporation) for the first appellant;

Mulani Prakash P and Safiuddin bin Mohamed Naseem (M & A Law Corporation) for the second appellant;

Narayanan Sreenivasan SC, Rajaram Muralli RajaandChloe Wang Wenyi (K&L Gates Straits Law LLC) for the respondent.

3 February 2023

Judgment reserved.

Kannan Ramesh JAD (delivering the judgment of the court):

Introduction

1 Several difficult questions arise in this appeal. First, can a principal ratify a contract (in this case, a loan agreement) when the alleged agent did not even purport to act on behalf of the principal? Second, can the principal ratify when it cannot show that it has performed the contract (in this case, the disbursement of a loan)? Third, where legal action is commenced on a contract that has not been ratified, can ratification thereafter retrospectively remedy the cause of action and so provide legal basis for the action?

2 In our view, these questions ought to be answered in the negative. Consequently, the respondent's successful action below cannot stand, and the appeal is therefore allowed.

Background

3 The factual background to the appeal has been covered in detail in the judgment below, Alternative Advisors Investments Pte Ltd and another v Asidokona Mining Resources Pte Ltd and another[2022] SGHC 41 (the “Judgment”). We summarise the pertinent aspects.

4 In June 2016, the second appellant, Mr Soh Sai Kiang (“Mr Soh”), sought the assistance of Mr Wong Joo Wan (“Mr Wong”) to arrange a loan of $2m (the “Loan”) to the first appellant, Asidokona Mining Resources Pte Ltd (“Asidokona”). Asidokona was incorporated in Singapore and Mr Soh was its sole shareholder and director. To raise the Loan, Mr Wong contacted Mr Ong Su Aun Jeffrey (“Mr Ong”), an advocate and solicitor and then-managing partner of JLC Advisors LLP (“JLC Advisors”), a Singapore law practice. Mr Wong approached Mr Ong as he was...