Chew Tong Seng and Another v Chew Cheng Quee and Another Matter

• Jurisdiction: Singapore
• Judge: Tan Lee Meng J
• Judgment Date: 23 August 2006
• Neutral Citation: [2006] SGHC 149
• Court: High Court (Singapore)
• Year: 2006
• Published date: 25 August 2006
• Plaintiff Counsel: Michael Low Wan Kwong and Gulab Sobhraj (Sobhraj Tay Low Subra & Teo)
• Defendant Counsel: Goh Peck San (P S Goh & Co)
• Subject Matter: Trusts,Purchase money resulting trust,Shares and property registered in name of child,Whether sufficient evidence of intention to create resulting trust,Family Law,Advancement,Presumption,Whether presumption displaces resulting trust,Whether presumption rebuttable,Equity,Estoppel,Estoppel by convention,Principles,Companies,Relief from oppression by minority shareholder,Whether minority can compel majority to buy shares and wind up the company
• Citation: [2006] SGHC 149

23 August 2006 Judgment reserved.

Tan Lee Meng J:

1 The two consolidated actions, Suit No 333 of 2005 (“Suit 333/2005”) and Originating Summons No 1591 of 2004 (“OS 151/2004”), involve yet another sad and bitter fight between family members over the ownership of shares and real property.

2 In Suit 333/2005, which concerns issues relating to a “purchase money resulting trust” (see Halsbury’s Laws of Singapore vol 9(2) (LexisNexis, 2003) at para 110.556), the presumption of advancement and estoppel by convention, the plaintiffs, Mr Chew Tong Seng (“Chew”) and his wife, Mdm Ng Mui Yan (“Mdm Ng”), sued their eldest son, Mr Chew Cheng Quee (“Quee”). In this action, Chew and Mdm Ng sought the following:

(a) a declaration that Quee held shares registered in his name in two family companies, Seng Huat Coffee Ltd (“SHC Ltd”) and Seng Huat Investment Holdings Pte Ltd (“SH Holdings”) on trust for them;

(b) an order that Quee account for the sale proceeds of a shophouse at 8 Cactus Road (“the Cactus Road property”), which was sold by him for $890,000 in March 2004 and for the rental of this property before it was sold;

(c) the recovery of loans advanced to Quee for his divorce proceedings against his former wife, Mdm Liau Gek Liang (“Mdm Liau”), in 1999;

(d) the recovery of a loan advanced to Quee for the purchase of an apartment in Hong San Walk; and

(e) possession of a Mercedes Benz vehicle, bearing registration number SDV 9657A, that was being used by Quee (“the Mercedes Benz”).

3 Quee, who asserted that his parents’ claims against him lacked substance, filed a counterclaim against his father for loans allegedly extended to him over the years. The total sum allegedly loaned to his father amounted to $397,527.81.

4 In OS 1591/2004, Quee, a director of SHC Ltd, in whose name 126,000 shares in the company were registered, sought relief under the Companies Act (Cap 50, 1994 Rev Ed) for oppression of the minority. The relief sought included having his fellow directors, namely his father and his brother, Mr Chew Koon Kwang (“Kwang”), buy his shares in the company as well as the winding up of the company. His fellow directors contended that there was no oppression of the minority and that the 126,000 shares in SHC Ltd that were registered in Quee’s name were, in any case, held on trust by him for his father.

Background

5 Chew, aged 72, and Mdm Ng, aged 68, have seven children. They are as follows:

(a) Chew Poh Suan, aged 45;

(b) Chew Cheng Quee, aged 44;

(c) Chew Koon Lye (“Lye”), aged 43;

(d) Chew Poh Bee, aged 42;

(e) Chew Koon Keong (“Keong”), who died in 1998;

(f) Chew Koon Kwang (“Kwang”), aged 38; and

(g) Chew Koon Hock (“Hock”), aged 37.

6 From the early 1960s, Chew and his family operated a poultry farm and a coconut and fruit plantation at 82A Jalan Ara, Singapore. The family was also involved in the egg distribution business. On 24 April 1978, the family business was registered as Sim Seah Poultry Farm, a sole proprietorship in Chew’s name.

7 In October 1983, Quee, who was then 21 years old, and his younger brother, Keong, who was then 18 years old, got their father interested in setting up another business to distribute eggs. This business, which was set up with their father’s money, was registered as Chin Leong Eggs Supplier (“Chin Leong”), with Quee as the sole proprietor. Five years later, in December 1988, Keong, then aged 23, was made a partner of Chin Leong. According to Chew, Chin Leong belonged to him and his wife and was not intended as a gift to Quee and Keong because this would be unfair to their other children. He added that the money in Chin Leong’s account was, on his directions, moved to other parts of the family business as and when needed.

8 In 1991, the Housing and Development Board acquired the family farm at Jalan Ara. Chew received $534,634.58 as compensation for the loss of his farm. In July 1993, he utilised the said compensation money to acquire a coffee powder business known as Seng Huat Coffee Powder Company (“SH Co”) for $500,000. Quee and his brother, Kwang, were registered as partners in this company. According to Chew, although SH Co was registered in his sons’ names, all the firm’s income was channelled to his family business and the two partners held the firm on trust for him and his wife.

9 In July 1991, Chew purchased 190 and 190B Choa Chu Kang Road in the names of Kwang and Keong. In August 1992, he purchased the Cactus Road property, which was registered in the names of Quee and Keong. Chew also purchased several other properties in the names of his other children.

10 In August 1995, SH Co was converted to a limited company and became SHC Ltd. Chew was allotted 10,000 shares in SHC Ltd. Quee, Keong, Kwang and Hock were allotted 26,000, 25,000, 25,000 and 14,000 shares respectively. Chew said that all his sons had been allotted shares on the understanding that they were to hold the same on trust for their parents. No cash was paid for the takeover by SHC Ltd of the assets of SH Co. Instead, a sum of $1,961,919 was reflected in its accounts as directors’ loans to the company. The directors of SHC Ltd were Chew, Quee and Kwang. Subsequently, with the issue of additional shares, Quee held 126,000 shares while Keong and Kwang held 125,000 shares each. Chew himself held 124,000 shares and Hock gave up his 14,000 shares in SHC Ltd.

11 In December 1998, Keong passed away. He left a will, giving half his estate to Quee and the other half to another brother, Kwang. It will be recalled that 125,000 shares in SHC Ltd were registered in Keong’s name. Furthermore, 190 and 190B Choa Chu Kang Road were purchased in the names of Keong and Kwang while the Cactus Road property was registered in the names of Keong and Quee. To make matters clear as to where the beneficial interest in these properties lay, lawyers for Chew, Quee and Kwang prepared documents for Quee and Kwang to sign, acknowledging that 190 and 190B Choa Chu Kang Road and the Cactus Road property belonged to their parents. On 3 March 2001, Quee, now the sole legal owner of the Cactus Road property following the death of the joint tenant, Keong, executed a deed (“the deed”), in which he made it clear that he held this property on trust for his parents and that as and when directed by them in writing, he would transfer the property to them or to any party nominated by them. By the same deed, Kwang acknowledged that he held 190 and 190B Choa Chu Kang Road on trust for his parents.

12 The lawyers for Chew, Kwang and Quee next arranged for the latter two to formally renounce their interests under Keong’s will. In the renunciation deed, which was signed by Quee on 7 August 2001, it was stated as follows:

Now we, CHEW KOON KWANG … and CHEW CHENG QUEE … do hereby GIVE UP AND RENOUNCE ABSOLUTELY all our rights, titles, benefits and interests in the estate of CHEW KOON KEONG … deceased.

13 The next problem faced by the Chew family concerns the setting up of their holding company, SH Holdings. According to Chew, Quee represented to him in 2001 that it was in their interest to form a company to hold some of their assets. After receiving his father’s green light, Quee set up SH Holdings. The initial paid-up capital of the holding company was paid for by his father, who agreed that two properties, namely 190 and 190B Choa Chu Kang Road, be transferred to the holding company. Subsequently, another property at Block 221, Boon Lay Place, #01-204 was purchased and transferred to SH Holdings.

14 Chew claimed that he had been informed by Quee that he would have a majority of the shares in the holding company. However, he subsequently discovered that 52% of the shares in SH Holdings had been surreptitiously registered in Quee’s name. He alleged that Quee had given him and Kwang documents relating to the holding company to sign without giving them the complete set of documents. Even more painful for Chew was the fact that Quee claimed to be the beneficial owner of all the shares in SH Holdings that were registered in his (Quee’s) name. Chew said that he never intended to give to Quee 52% of the value of the real properties that had been transferred to SH Holdings and that he retained the beneficial interest in all these properties.

15 Quee’s version of events was that the setting up of SH Holdings and the registration of 52% of the shares in this company in his name were part of a restructuring agreement that he had entered into with his father in February 2001 in exchange for giving up his rights under Keong’s will (“the alleged February 2001 restructuring agreement”). The details of this alleged restructuring agreement, the existence of which was vehemently denied by Chew, will be considered later on. All that needs to be noted at this juncture is that with the passage of time, Quee’s relationship with his parents steadily deteriorated.

16 In March 2004, Quee sold the Cactus Road property for $890,000. Although he had signed the deed acknowledging that he held this property on trust for his parents, Quee refused to acknowledge that his parents had a right either to the sale proceeds or to an account of the rental for the said property before it was sold.

17 On 10 November 2004, a meeting of SHC Ltd was called to, inter alia, provide for the transfer of Keong’s 125,000 shares in the company to his parents and to appoint his mother, Mdm Ng, as a director. Despite having renounced his share of Keong’s estate, Quee objected to this meeting on the ground that Keong’s wishes, as indicated in his will, which gave him half of the 125,000 shares in question, should be respected.

18 Quee alleged that from 1 December 2004, the employees of SHC Ltd were informed that he was no longer a director of the company. He also alleged that his family changed the lock of the doors of the company office and that he was shut out when he went to the office on 6 December 2004.

19 On 8 December 2004, he commenced OS 1591/2004, seeking relief for...