Capital Realty Pte Ltd v Chip Thye Enterprises (Pte) Ltd

CourtCourt of Three Judges (Singapore)
Judgment Date27 October 2000
Date27 October 2000
Docket NumberCivil Appeal No 50 of 2000

[2000] SGCA 58

Court of Appeal

Yong Pung How CJ


L P Thean JA


Chao Hick Tin JA

Civil Appeal No 50 of 2000

Capital Realty Pte Ltd
Chip Thye Enterprises (Pte) Ltd

Yang Ing Loong and Christopher Tan (Allen & Gledhill) for the appellant

Alfonso Ang and Nicholas Chan (A Ang Seah & Hoe) for the respondent.

Camillo Tank SS Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134 (folld)

Ice-Mack Pte Ltd, Re [1989] 2 SLR (R) 283; [1989] SLR 876 (distd)

Nissho Iwai International (Singapore) Pte Ltd v Kohinoor Impex Pte Ltd [1995] 2 SLR (R) 170; [1995] 3 SLR 268 (folld)

Contract–Privity of contract–Loan agreement–Housing developer disbursed loan to project manager for main contractor–Project manager also shareholder and director of subcontractor–Whether loan taken on behalf of main contractor or subcontractor–Whether person not being shareholder or director of main contractor authorised to raise loan on its behalf

The appellant Capital was the owner and developer of a housing project (“the project”). The respondent CTE was the main contractor for the project and it subcontracted the entire contract to Articon, a company in which it held a 35.33% share. Capital's project was managed by its director Ang while one Lee managed the project for CTE. Lee was a shareholder and director of Articon. Ang and Lee made an oral arrangement under which Capital would loan money to pay Articon; the loans to be made in four cash cheques drawn on Capital's bank account. Ang handed the cheques to Lee who then deposited them into Articon's bank account. Three repayments were then made in the form of cheques drawn on Articon's account. Capital sued for the outstanding balance of $500,000. Ang had passed away and Lee went missing and so the High Court was unable to hear evidence from them. The High Court held that the loans were not made to CTE but to Articon and Capital appealed. The only issue before the Court of Appeal was whether CTE or Articon was the borrower.

Held, allowing the appeal:

(1) Capital's payments were loans to CTE. Viewed in totality, the evidence convincingly supported Capital's claim. In light of the contemporaneous documents, namely the payment vouchers of the developer, the receipts issued by the main contractor on receipt of the cheques and the receipts issued by the developer in respect of the repayments, the inference was irresistible that the loans were made to CTE, which in turn, and pursuant to its understanding with Articon, deposited the money into the latter's account: at [13], [14], [15], [17] and [37].

(2) The trial judge erred in holding that the loan arrangement did not really benefit CTE because: (a) CTE was a substantial shareholder of Articon; (b) CTE allowed its name to be used by Articon to tender for the project; and (c) being the main contractor, CTE remained liable under the contract if Articon failed to carry out the works satisfactorily: at [18].

(3) An audit confirmation signed by CTE's managing director stating that CTE was indebted to Capital in a certain sum further attested Capital's claim that the loans were granted to CTE and not to Articon. CTE's execution of the audit confirmation constituted strong prima facie evidence of a debt which CTE's explanations failed to rebut: at [21] and [26].

(4) Even though Lee was neither a shareholder nor a director of CTE, and was instead a shareholder and director of Articon, the facts showed that he was authorised by CTE to deal on CTE's behalf. Lee had been designated the “Project Manager” by CTE when CTE confirmed to the quantity surveyors that Lee was authorised to act for CTE, he had signed various documents and most of the subcontracts relating to the project on CTE's behalf, and he had attended site meetings representing CTE and was involved actively in the project representing CTE from the first site meeting. CTE's assertion that Lee was not authorised to raise loans on behalf of CTE was therefore not supported by the objective facts: at [32], [33] and [35].

Chao Hick Tin JA

(delivering the grounds of judgment of the court):

1 This was an appeal against a decision of the High Court which dismissed the appellants' claim against the respondents for repayment of interest-free loans which they had allegedly made to the respondents. The court below held that the loans were not made to the respondents but to a third party. Having heard counsel for the parties, we allowed the appeal with costs. We now give our reasons.

The background

2 The appellants were the owners and developers of a condominium and bungalow housing project at Tanglin Hill/Ridley Park. It was also known as “the Tanglin Hill Project” (hereinafter referred to as “the project”). The respondents, a construction company, were the main contractors for the building of the project (under a contract dated 8 July 1994) and they subcontracted the entire building contract to a company called Articon Construction Pte Ltd (“Articon”), except in relation to the appointment of nominated subcontractors under the main contract. The person in the appellants who was primarily in charge of the project was their director, Mr Ang Poon Soon (“APS”), who had passed away on 14 June 1998.

3 One of the two persons managing Articon was Mr Lee Chin Kian (“Lee”), who was a shareholder (holding 26.67% of the shares) and director. Though Lee was neither a shareholder nor a director of the respondents, there was clear evidence that Lee also managed the project on behalf of the respondents. It was not in dispute that Lee had a close personal relationship with APS, as the former was, at some point in time earlier, the Chinese tutor of the latter. Furthermore, Lee was also during a period working for companies related to the appellants.

4 Sometime in 1996 an oral arrangement was made between APS and Lee whereby the appellant company would loan sums of money to be used to pay the subcontractors of the project (“the loan arrangement”). The loan given amounted in total to $1.4m. The loans were made in the form of four cash cheques drawn on the appellants' bank account. They were issued on four separate dates during the period November 1996 to May 1998. Each of the cheques was handed by APS to Lee, who then deposited it into Articon's bank account. During that period, three repayments were made from time to time in the form of cheques drawn on Articon's account. The outstanding balance, which was the subject of the present action, was $500,000.

5 For ease of reference, we set out below a table showing how chronologically the loans were taken and repayments made:


Amount Loaned by Appellants

Amount Repaid to Appellants

Amount Outstanding

20 Nov 1996




4Dec 1996




25 Jan 1997




12 Feb 1997




28 Apr 1997




16 Jun 1997




13 May 1998




6 The only issue before the court below, as it was also before us, was the identity of the borrower. Was it the respondents or Articon? It was unfortunate that at the time of the trial both the main persona dramatis were not before the court to testify as to the events that occurred, APS having passed away and Lee having gone missing.


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    ...Articon and another 16.6% were held by D4. D4 was a director of Articon from 1983 to 1999. 7 In Civil Appeal no. 50 of 2000 reported in [2000] 4 SLR 548, the Court of Appeal allowed Capital Realty’s appeal for the repayment of an outstanding loan in the sum of $500,000. The appellate court ......
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