Caltong (Australia) Pty Ltd (fka Tong Tien See Holding (Australia) Pty Ltd) and Another v Tong Tien See Construction Pte Ltd (in liquidation) and another appeal

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeChao Hick Tin JA
Judgment Date29 May 2002
Neutral Citation[2002] SGCA 28
Citation[2002] SGCA 28
Plaintiff CounselN Sreenivasan and Sharon Chia ( Straits Law Practice LLC )
Published date19 September 2003
Docket NumberCivil Appeals Nos 600124 and
Defendant CounselFoo Maw Shien and Deborah Koh ( Ang & Partners )
Date29 May 2002
Subject MatterWhether to grant tracing order,Criteria for liability,Civil Procedure,Whether necessary to identify traceable proceeds in order to obtain tracing order,Parties only partially succeeding,Liability of third party dishonestly assisting fiduciary to breach fiduciary duties,Principles,Mixing of tainted moneys with others,Equity,Costs to award,Tracing,Breach,Nature of tracing exercise,Liability of third party knowingly receiving moneys obtained by breach of fiduciary duty,Costs,Fiduciary relationships,Legal effect of such mixing,Whether appellant guilty of knowing receipt or dishonest assistance,Common law

– Whether leave to appeal against judgment in favour of bankrupt is necessary when leave to commence proceedings already obtained

Equity

– Fiduciary duties – Breach – Accessory to breach – Liability of third party to account for dishonestly assisting fiduciary to breach fiduciary duties – Elements that have to be proved to establish liability – Whether appellant rendered any assistance in breach

Equity

– Fiduciary duties – Breach – Liability of third party who knowingly received sums traceable to breach of fiduciary duties - Elements that have to be proved to establish liability – Whether elements proved

Equity

– Tracing – Nature of tracing exercise – When a tracing order will be granted – Circumstances that a court will take into account when determining whether to grant a tracing order – Whether necessary to identify traceable proceeds in order to obtain a tracing order

Trust and Trustees

– Breach of trust – Identification of trust property – Effect of trustee mixing his/her personal funds with the trust funds

Facts

Tong Tien See Construction Pte Ltd (‘TTSC’) was a major player in the building construction industry. In 2000, TTSC was wound up on the ground of insolvency, it being unable to pay its debts of some $53.3 million. The liquidator, after examining the affairs of the company, came to the conclusion that the directors had breached their fiduciary duties to the company and commenced actions against the founder of the company, Tong Tien See (‘Tong’), some of his family members, as well as associated companies and parties who had wrongfully received assets from TTSC.

In the court below, the trial judge found that Tong, his wife (‘Koo’) and daughter (‘Angela’) had breached their fiduciary duties. Not only had they deceived TTSC’s creditors by manipulating the company’s accounts, the Tongs also siphoned large sums of money for their personal benefit. Furthermore, the evidence showed that they caused TTSC to transfer a total of $984,899.60 to Caltong (Australia) Pty Ltd (‘Caltong’). With these funds, Caltong purchased three properties in Australia, one of which was 70 Barker Road, Sydney. This property was sold in 1999 for A$800,000. Koo’s sister, Sally, was Caltong’s sole shareholder and director and despite her claim that one of her properties, No. 17 Woodward Avenue ( the ‘Woodward property’), had nothing to do with TTSC or its funds, the trial judge found that the property was bought using proceeds from the sale of 70 Barker Road.

At the end of the trial, the trial judge ordered Tong, Koo and Angela to pay TTSC $53.3 million in damages. He also held that they were constructive trustees in respect of this sum of money and the properties bought by them using the company’s funds. With regard to Caltong and Sally, the trial judge declared that they were constructive trustees of the $984,899.60 which Caltong received from TTSC as well as the Woodward property and the two Australian properties owned by Caltong. Dissatisfied with the ruling against them, Caltong and Sally appealed against the trial judge’s decision, arguing, inter alia, that Sally should not be personally liable to account for the $984,899.60 and that the trial judge erred in declaring that Sally held the Woodward property on trust for TTSC. TTSC also appealed, contending that the trial judge erred in refusing to grant it the tracing orders that it sought against the Tongs, Caltong and Sally.

Held

, allowing both appeals in part

(1) Sally was not guilty of dishonest assistance or of knowing receipt vis--vis the sum remitted from TTSC to Caltong. As such, she should not be held to be personally liable for this sum. To be liable for knowing receipt, three elements must be proved. First, the plaintiff must show a disposal of his assets in breach of fiduciary duty. Secondly, there must have been the beneficial receipt by the defendant of assets traceable to the assets of the plaintiff. Finally, it must be shown that the defendant had knowledge that the assets are traceable to a breach of fiduciary duty; El Ajou v Dollar Land Holdings [1994] BCLC 464 followed. In the present case, Sally did not receive the money and there was no evidence to indicate that she knew that the money received by Caltong from Tong was improperly siphoned off from TTSC (see 30 – 31).

(2) The elements which must be proved to establish dishonest assistance are (a) that there has been a disposal of assets in breach of trust or fiduciary duty; (b) in which the defendant has assisted or which she/he has procured; (c) the defendant acted dishonestly; and (d) resulting loss to the claimant; Royal Brunei Airlines v Tan [1995] 2 AC 378 followed. There was no evidence that Sally had dishonestly assisted Tong, Koo or Angela in siphoning off the funds of TTSC to Caltong. That she was a nominee director of Caltong did not per se mean that she would also know of the Tongs’ wrongdoings. (see 33 - 35).

(3) When a trustee mixes trust funds with his own funds, the whole is subject to the trust, except so far as he is able to distinguish what is his own; Firth v Cartland (1865) 71 ER 525 and Re Tilley’s Will Trust [1967] 1 Ch 1179 followed. In this case, Sally used proceeds from the Barker Road property to buy the Woodward property and knew that the proceeds were tainted. Having knowingly mixed trust monies with her own when purchasing the property, the burden was on her to show which portion of the purchase price came from her own resources. However, having regard to the nature of the pleadings, and the manner in which the trial had proceeded, it was fairer to afford Sally the opportunity of showing the extent to which she and/or her husband had contributed towards that portion of the purchase price of the Woodward property in excess of the amount obtained from the sale of the Barker Road property.

(4) Once leave is obtained to commence an action against a bankrupt under s 76(1)(c)(ii) of the Bankruptcy Act, that leave should hold good until the final determination of the proceeding, including any appeal. There is really no good reason why leave should be obtained at every stage; Overseas Union Bank v Lew Keh Lam [1999] 3 SLR 393 distinguished (see 51 – 52).

(5) Tracing is a process rather than a remedy. It enables a plaintiff to trace what has happened to his property, identify the persons who have handled or received it and justify his claim that the assets/property which they handled or received can properly be regarded as representing his property.; Foskett v Mckeown [2000] 3 All ER 97 followed (see 53). For a tracing order to operate, the assets from which a tracing exercise is to begin must be identified. However, it is not necessary to identify the traceable proceeds, as one of the objects of a tracing exercise is to establish this (see 57).

(6) The court is entitled to take all the circumstances of a case into account in determining whether a tracing order should be granted. While TTSC’s prayer for a tracing order was inadequately formulated, this did not preclude a court from granting an appropriate tracing order if the case warranted it (see 58).

(7) No tracing order based on the $53.3 million, which Tong, Koo and Angela were held to be accountable, would be granted. This was because there would be great difficulties in identifying the specific sums from which tracing was to be initiated, bearing in mind the numerous transactions which would have taken place (see 59).

(8) The same could not be said of the $984,899.60 received by Caltong from Tong/TTSC as this was a starting point from which tracing could begin. While proceedings would be extended by such a tracing exercise, this was inevitable. Furthermore, a tracing order was not redundant as it could compel third parties to assist in the exercise. This could be useful as Caltong was not very cooperative in disclosing its records (see 60 – 61).

Per Curiam

A party may be liable to another for damages on account of a tort the former had committed, but that does not render that party a constructive trustee of the same. It remains a personal debt (see 27).

Case(s) referred to

Browne v Dunn

[1893] 6 R 67 (distg)
El Ajou v Dollar Land Holdings [1994] BCLC 464 (folld)
Frith v Cartland (1865) 71 ER 525 (folld)
Foskett v McKeown [2000] 3 All ER 97 (folld)
HL Bolton (Engineering) Co Ltd v T.T Graham & Sons Ltd [1957] 1 QB 159 (folld)
Khan v Khan [1982] 2 All ER 60 (refd)
Overseas Union Bank v Lew Keh Lam [1999] 3 SLR 393 (distg)
Re Montagu’s Settlement Trusts [1987] Ch 264 (folld)
Re Tilley’s Will Trust [1967] Ch 1179 (folld)
Royal Brunei Airlines v Tan [1995] 2 AC 378 (folld)
Selangor United Rubber Estates Ltd v Craddock (No. 3) [1968] 2 All ER 1073 (distg)

Legislation referred to

Bankruptcy Act (Cap 20, 2000 Ed) s 76(1)(c)(ii)

Curia Advisari Vult

[Delivered by Chao Hick Tin JA]

Judgment

GROUNDS OF DECISION

1. These two related appeals arise from a decision of the High Court in an action instituted by the liquidator of a company, Tong Tien See Construction Pte Ltd ((TTSC), against primarily its former directors and shareholders for conspiracy fraud, and breach of fiduciary duties, and for the necessary reliefs. At the conclusion of the trial, judgment and various reliefs were granted in favour of TTSC. However, the High Court refused to grant a tracing order to TTSC and this formed the subject matter of the appeal by TTSC in CA 600130/2001.

2. Some of the orders made in favour of TTSC were against Caltong (Australia) Pty Ltd (Caltong) and Wei Fong Rasiah, Sally (Sally), the 8th and 12th defendants respectively in the action below. Both Caltong and Sally have appealed against the orders on the ground that their scope is too wide.


The facts

3. TTSC was in the building construction business. It was a major player in the industry, having attained the highest grade (G8) under the HDB ranking system for building contractors. It was a family owned company, started by the patriach Tong Tien See (Tong), the...

To continue reading

Request your trial
38 cases
  • Lee Hsien Loong v Singapore Democratic Party and Others and Another Suit
    • Singapore
    • Court of Three Judges (Singapore)
    • 6 November 2007
    ...... August 2006, Mr Ravi filed a notice of appeal in OS 1203/2006 against the Registrar’s ... at 217, [15]; Hau Khee Wee v Chua Kian Tong [1986] SLR 484 at 488, [14]; Stansfield ess International Pte Ltd v Vithya Sri Sumathis [1999] 3 SLR 239 at ..., that the Judge was entirely justified in holding that an adjournment could not be granted not only ......
  • George Raymond Zage III and Another v Rasif David and Others
    • Singapore
    • High Court (Singapore)
    • 30 December 2008
    ...and dishonest assistance were as set out by the Court of Appeal in Caltong (Australia) Pty Ltd v Tong Tien See Construction Pte Ltd [2002] 3 SLR 241 (“Caltong”). In that case, Chao Hick Tin JA said at [31] and 31 To be liable for knowing receipt which would render the recipient a constructi......
  • Go Go Delicacy Pte Ltd v Carona Holdings Pte Ltd and Others
    • Singapore
    • High Court (Singapore)
    • 28 September 2007
    ...... J Suit No 173 of 2007 (Registrar's Appeal No 162 of 2007) Go Go Delicacy Pte ... (refd) Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd [2003] 4 SLR (R) ...Another alternative was to apply to the duty registrar to ... order and allowed Samsung's appeal, holding that no O 14 application should be brought before ......
  • Pacific Integrated Logistics Pte Ltd v Gorman Vernel International Freight Ltd
    • Singapore
    • High Court (Singapore)
    • 3 January 2007
    ......1       This was an appeal" against the decision of the Assistant Registrar (\xE2"... Elegance (M) Sdn Bhd v Puay Kim Seng and another [1998] SGHC 171 at [3]; Aeronave & Another v ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT