Blasco, Martinez Gemma v Ee Meng Yen Angela and another and another matter

• Jurisdiction: Singapore
• Judge: Kannan Ramesh J
• Judgment Date: 12 November 2020
• Neutral Citation: [2020] SGHC 247
• Published date: 07 January 2021
• Docket Number: Originating Summonses Nos 156 and 157 of 2020
• Year: 2020
• Hearing Date: 24 August 2020
• Plaintiff Counsel: Calvin Liang (Calvin Liang LLC) (instructed) and Eugene Jedidiah Low Yeow Chin (Ark Law Corporation)
• Defendant Counsel: Hing Shan Shan Blossom and Foo Guo Zheng Benjamin (Drew & Napier LLC)
• Court: High Court (Singapore)
• Citation: [2020] SGHC 247
• Subject Matter: Proof of evidence,Agency,Evidence of agency,Evidence

Kannan Ramesh J: Introduction

Ms Blasco Martinez Gemma (“Ms Gemma”) and Mr Javier Curtichs Moncusi are the Plaintiffs in Originating Summons No 156 of 2020 and Originating Summons No 157 of 2020 respectively. In their respective applications, the Plaintiffs sought to reverse the decision of the Defendants, the Judicial Managers of Epicentre Holdings Limited (“EHL”), rejecting their proofs of debt dated 27 September 2019 for the sums of S$610,012.81 and S$362,478.17 respectively (“the Proofs of Debt”). The Plaintiffs sought, instead, to have the claims admitted in full.

After hearing arguments, I dismissed both applications with brief grounds. The Plaintiffs have appealed, and I now give the full grounds for my decision.

Facts

EHL was a company listed on the Catalist Board of the Singapore Exchange Securities Trading Limited. Its business involved the retail of Apple brand products as well as complementary third-party and proprietary products through its stores in Singapore and Malaysia. Mr Kenneth Lim Tiong Hian (“Lim”) was appointed to EHL’s board on 24 June 2016. From 31 July 2016 to 30 July 2019, Lim was its Executive Chairman and Acting Chief Executive Officer (“Acting CEO”). At all material times, he was also the sole shareholder of Broadwell Limited (“Broadwell”), a company incorporated and having its registered address in the British Virgin Islands.

The Plaintiffs are citizens of Spain. They are husband and wife. Sometime in late 2014 or early 2015, they decided to invest in EHL on the recommendation of Mr Michael Lee (“Mr Lee”), their relationship manager in United Overseas Bank Limited. They each entered into agreements with Broadwell described as the “SGX Listed Company Financing Agreement” (collectively, “the Broadwell Agreements”). The Broadwell Agreements were signed by Lim on behalf of Broadwell. However, as I will elaborate below at [7], the Plaintiffs only met Lim on 6 November 2018.

Under the Broadwell Agreements, the Plaintiffs were to grant loans to Broadwell (“the Broadwell Loans”) and receive monthly interest at a prescribed rate until the loans matured, whereupon they would become payable. The Broadwell Loans matured in 2017. The Broadwell Agreements provided that the Broadwell Loans were to be used towards “the investment in the shares, and the funding of the projects” of EHL. The Plaintiffs duly disbursed the loans to Broadwell by telegraphic transfers and cheques on five separate occasions between 15 July 2016 and 15 February 2017. The Plaintiffs received monthly interest payments from Broadwell by cheques up to May 2019.

When the Broadwell Loans matured, they were offered to the Plaintiffs for renewal on substantially the same terms. The Plaintiffs agreed as the monthly interest payments had been prompt. Consequently, Broadwell issued letters confirming both the maturity and the renewal of the Broadwell Loans (“the Broadwell Confirmations”). The letters contained the corporate logos of both Broadwell and EHL, and were signed as “Kenneth Lim Tiong Hian, Broadwell Limited and Epicentre Holdings Limited”. The Plaintiffs then signed fresh “SGX Listed Company Financing Agreements” with Broadwell on substantially the same terms as the Broadwell Agreements. These agreements were again signed by Lim on behalf of Broadwell. The renewed Broadwell Loans matured in 2019.

On 6 November 2018, Mr Lee arranged a meeting between the Plaintiffs and Lim at the latter’s office. This was the first meeting between the Plaintiffs and Lim. Lim introduced himself as the CEO of EHL and its subsidiaries and discussed the Broadwell Loans with the Plaintiffs. According to the Plaintiffs, Lim explained that Broadwell was part of EHL’s “structure” as a vehicle to drive investments in EHL. He also shared information on new investment projects and invited Ms Gemma to invest in them.

When the renewed Broadwell Loans matured in 2019, they were once again renewed between 15 January 2019 and 15 March 2019. This time, however, there was a significant difference. The renewal confirmations (“the EHL Confirmations”) this time only bore EHL’s corporate logo. They were signed by Lim as a representative of EHL. By confirming the maturity and renewal of loans originally disbursed under the Broadwell Agreements, the EHL Confirmations purported to roll over and “renew” the Broadwell Loans as debts owed by EHL to the Plaintiffs. For ease of reference, I shall refer to the loans that were purportedly rolled over and renewed on this occasion as “the EHL Loans”.

New “SGX Listed Company Financing Agreements” were executed between the Plaintiffs and EHL (“the EHL Agreements”), not Broadwell, on substantially the same terms as the Broadwell Agreements. The EHL Agreements were signed by Lim “[f]or and on behalf” of EHL. Clause 3 of the EHL Agreements provided for fresh loans to be made by the Plaintiffs to EHL. In particular, it provided that “the proceeds of the [EHL Loans] shall be disbursed to [EHL] in one lump sum on the date of [the EHL Agreements] and made payable to [EHL] in the form of a cheque or cashier’s order” [emphasis added]. However, notwithstanding the terms of the EHL Agreements, it was common ground that no fresh loans were in fact made. As far as the Plaintiffs were concerned, by the EHL Agreements, the Broadwell Loans were being rolled over and renewed upon maturity in the same way they were in 2017, except that this time, they were rolled over and renewed as loans due from EHL (instead of Broadwell). In other words, EHL assumed Broadwell’s debts without receiving the proceeds of any fresh loans. Clause 8(iv) of the EHL Agreements made this plain by stating that the EHL Loans (previously the Broadwell Loans) were enforceable against EHL. The clause provided as follows: 8. WARRANTIES

[EHL] hereby represents and warrants to and for the benefit of the [Plaintiffs] that:- … (iv) all actions, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents from third parties) in order (a) to enable [EHL] lawfully to enter into, exercise its rights and perform and comply with its obligations under this Agreement and (b) to ensure that those obligations are valid, legally binding and enforceable have been taken, fulfilled and done; …

(emphasis added)

The Plaintiffs’ claims are therefore brought on the basis of the EHL Agreements for the purported debts owed thereunder.

As before, the Plaintiffs continued to receive monthly interest payments until payments completely ceased in June 2019. When that happened, Ms Gemma made inquiries with Mr Lee to understand the reasons for the cessation. The Plaintiffs discovered that: (a) Lim had gone missing and (b) in an announcement on 30 May 2019, EHL had disclosed based on a report by Deloitte & Touche LLP (“the D&T Report”) that EHL’s management had considered it prudent for certain funds to be received by Broadwell as a conduit, before onward transmission to EHL. Notably, the D&T report did not conclude that the EHL Loans were raised for EHL using this arrangement.

On 11 July 2019, the Plaintiffs issued statutory demands against EHL for repayment of the EHL Loans. EHL’s solicitors replied on 16 July 2019, disputing the Plaintiffs’ claims on the grounds that EHL and its Independent Directors had “no knowledge of [the EHL Loans] or their existence at all times” until the receipt of the Plaintiffs’ statutory demands, and stated that Lim had no authority to enter into the EHL Agreements on behalf of EHL at any material time.

The Defendants were appointed the Interim Judicial Managers and Judicial Managers of EHL on 2 August 2019 and 4 September 2019 respectively. On 27 September 2019, the Plaintiffs submitted the Proofs of Debt. The Proofs of Debt were for the loans which the Plaintiffs had disbursed to Broadwell (ie, the Broadwell Loans) under the Broadwell Agreements and interest thereon, which according to the Plaintiffs became liabilities owed by EHL upon the issuance of the EHL Confirmations and the execution of the EHL Agreements. The Proofs of Debt were met with a request for documents from the Defendants. The documents sought by the Defendants pertained to two things: first, whether the Plaintiffs had disbursed loans to EHL in accordance with and in performance of the terms of the EHL Agreements, and second, whether monthly interest payments had been made by EHL to the Plaintiffs pursuant to the EHL Agreements. On 24 December 2019, the Plaintiffs responded by furnishing proof of their transfers of funds to Broadwell under the Broadwell Agreements as well as proof that they had received interest payments in 2019 (which did not, however, show that the payments were from EHL).

On 13 January 2020, the Defendants issued Notices of Rejection of the Proofs of Debt. The grounds of rejection were as follows: First Ground of Rejection: The Judicial Managers did not have sight of any documents or records (including bank statements) showing any receipt of funds or payment of interest by EHL to either of the Plaintiffs in respect of the EHL Loans. Second Ground of Rejection: The Company Registration Number indicated in Part C of the Schedule to the EHL Agreements belonged to Epicentre Pte Ltd (“EPL”), not EHL. Third Ground of Rejection: The Judicial Managers did not have sight of any documents or records showing that the board of directors of EHL had approved the execution of the EHL Agreements.

The Plaintiffs were dissatisfied with the outcome and commenced the present proceedings against the Defendants.

The parties’ cases The Plaintiffs’ case

The Plaintiffs’ case essentially was that there was no basis to reject the Proofs of Debt as they were creditors of EHL for the EHL Loans. The claims were based entirely on the EHL Agreements. The Plaintiffs contended that with the issuance of the EHL Confirmations and the execution of the EHL Agreements, EHL...