Chiam Heng Hsien (on his own behalf and as partner of Mitre Hotel Proprietors) v Chiam Heng Chow (executor of the estate of Chiam Toh Say, deceased) and others

CourtCourt of Appeal (Singapore)
JudgeSundaresh Menon CJ
Judgment Date22 May 2015
Neutral Citation[2015] SGCA 27
Citation[2015] SGCA 27
Defendant CounselPrem Kumar Gurbani (Gurbani & Co LLC),Wee Chow Sing Patrick (Patrick Wee & Partners),Moey Chin Woon Michael (Moey & Yuen)
Published date07 August 2015
Plaintiff CounselEdwin Lee Peng Khoon, Fu Xianglin Lesley and Jin Shan (Eldan Law LLP)
Hearing Date25 November 2014
Docket NumberCivil Appeal No 63 of 2014
Date22 May 2015
Subject MatterPartnership-Partners Inter Se-Admission of New Partner,Partnership-Partners Inter Se-Partnership Property and Property of Separate Partners
Sundaresh Menon CJ (delivering the judgment of the court):

This is an appeal against the decision of the High Court judge (“the Judge”) dismissing the Appellant’s claim in Suit No 1 of 2012 (“the Suit”). The Appellant had sought a declaration that the Respondents were not partners of Mitre Hotel Proprietors (“MHP”) and thus had no interest in or entitlement to any part of the one-tenth share of the proceeds from the sale of the Mitre Hotel at No 145 Killiney Road, Singapore (“the Property”). The share in question amounted to $11,500,000 (“the Sale Proceeds”). The Property had been sold on 1 March 2010 pursuant to an Order of Court made in Originating Summons No 830 of 2006 (“OS 830/2006”).

The Judge dismissed the Appellant’s claim and held that the Respondents were partners of MHP (see Chiam Heng Hsien (on his own behalf and as partner of Mitre Hotel Proprietors) v Chiam Heng Chow (executor of the estate of Chiam Toh Say, deceased) and others [2014] SGHC 119 (“the GD”)). The Appellant appealed against the Judge’s finding that the Respondents were partners of MHP.

The background facts The parties to the dispute

The Appellant was admitted as a partner of MHP on 19 November 1974 in respect of a 21/88 share of the partnership by those who at that time were the partners of MHP and who signed the relevant Form B as stipulated in the Business Registration Act 1973 (Act 36 of 1973).1

The Respondents defend the action in their capacity as the respective personal representatives of three of the original partners of MHP : the 1st and 2nd Respondents are the executors of the estate of Chiam Toh Say (“Toh Say”); the 3rd Respondent is the executrix of the estate of Chiam Toh Tong (“Toh Tong”); and the 4th Respondent is the executor of the estate of Chiam Toh Kai (“Toh Kai”).

Background to the dispute The formation of MHP

Prior to the formation of MHP, another partnership (comprising the five original partners of MHP and five others) had run a hotel business on the Property. On 28 November 1951, it was decided that the earlier partnership be dissolved and the hotel business be sold as a going concern to Toh Say for the sum of $260,000. This was subsequently documented in a deed of dissolution dated 26 February 1952, pursuant to which, among other things, the earlier partnership was deemed dissolved as from 30 November 1951 and the outgoing partners assigned to Toh Say absolutely their respective shares, title and interest in the hotel business which included a one-tenth undivided share in the Property.2

MHP was then constituted to take over the running of the hotel business. The original partners of MHP entered into a partnership deed on 28 February 1952 (“the Partnership Deed”) setting out their respective shares in MHP as follows:3

Name of Partner Share in MHP
Chiam Toh Moo (“Toh Moo”) 21/88
Toh Say 25/88
Toh Tong 21/88
Toh Kai 19/88
Chiam Toh Lew (“Toh Lew”) 2/88

The one-tenth undivided share in the Property was only conveyed to Toh Say on 29 September 1952. The parties do not dispute that this was partnership property of MHP. Subsequently, on 21 October 1952, Toh Say executed a declaration of trust (“the Trust Deed”) in these terms:4

… the said one undivided tenth part or share of and in the property now belongs in equity to the partnership business of Mitre Hotel Proprietors carried on at No. 145 Killiney Road, Singapore (hereinafter called “the firm”) as I hereby acknowledge… that I Chiam Toh Say … HEREBY DECLARE that I hold and stand possessed of the said one undivided tenth part or share of and in the property in trust for the Firm and the partners for the time being thereof…

Toh Moo’s death and the Appellant’s admission into the partnership

Toh Moo passed away in February 1961 and was survived by his widow and the Appellant, who was his only child. They were also the only beneficiaries of his estate. On 22 July 1968, Toh Moo’s widow executed a Deed of Gift and transferred the 21/88 share in MHP that she had inherited from the late Toh Moo to the Appellant. Subsequently, the Appellant was admitted into the partnership of MHP in respect of that 21/88 share (see [3] above).

Toh Tong’s death and the alleged Loan Agreement

Toh Tong passed away on 17 May 1969. As provided in his will, Toh Kai was appointed the executor of his estate.

The Appellant alleged that sometime in 1974, Toh Tong’s widow, purporting to act on behalf of all the beneficiaries of Toh Tong’s estate, requested that Toh Kai take over the estate’s share in MHP in Toh Kai’s personal capacity as the beneficiaries were not prepared to bear responsibility for the substantial accumulated losses of MHP. According to the Appellant, Toh Kai acceded to her request and this arrangement was reflected in the omission of Toh Tong’s estate from the list of partners of MHP that was submitted to the Registry of Companies and Businesses in 1974 and further in the minutes of a partners’ meeting dated 6 April 1975.

Subsequently in the mid-1980s, Chiam Heng Pout (“Heng Pout”), Toh Tong’s son and a beneficiary of his estate, encountered some financial difficulties and requested a loan of $50,000 from the Appellant. The Appellant claims that he agreed with Toh Kai (as the personal representative of Toh Tong’s estate (see above at [9])) to extend such a loan to Heng Pout on the basis that the entirety of Toh Tong’s original 21/88 share in MHP to the Appellant, save for a nominal interest (the amount of which would be determined by the Appellant) that Toh Kai would hold on trust for the estate of Toh Tong, would be transferred to the Appellant with effect from the date of the loan, if: Heng Pout failed to repay the $50,000 loan to the Appellant within six months of the date of the loan; or Heng Pout was declared a bankrupt. (“the alleged Loan Agreement”)

According to the Appellant, Heng Pout knew of this arrangement and had signed a note stating that he was fully aware of the terms of the alleged Loan Agreement (“the alleged Loan Agreement Note”). Heng Pout did not dispute that he had obtained a $50,000 loan from the Appellant but claimed that it was an unconditional loan and that there was no such thing as the alleged Loan Agreement. He also denied ever having signed the alleged Loan Agreement Note.

Heng Pout did not repay the $50,000 loan to the Appellant within six months and was later adjudged a bankrupt in 1988. The Appellant claimed that he became aware of Heng Pout’s bankruptcy in the early 1990s, and he then asked Toh Kai to transfer Toh Tong’s 21/88 share in MHP to him, save for a nominal share which Toh Kai would hold for Toh Tong’s estate. The Appellant alleged that a letter evidencing this transfer was prepared (“the alleged Transfer Letter”). However, the Appellant was unable to produce either the alleged Transfer Letter or the alleged Loan Agreement Note. According to him, Toh Kai’s daughter, Chiam Siew Juat, and a relative had broken into the Property sometime in September or October 2008 and stolen these documents.

By way of a deed of appointment dated 27 February 1986 (“the First Deed of Appointment”), Toh Kai relinquished his position as the sole trustee of Toh Tong’s estate and appointed the 3rd Respondent and Heng Pout in his place. Subsequently, by another deed of appointment dated 23 October 1996 (“the Second Deed of Appointment”), Heng Pout discharged himself as executor and appointed the 3rd Respondent the sole executrix of Toh Tong’s estate.

The consent judgment with Toh Lew’s estate

Toh Lew passed away in 1975. In District Court Summons No 6648 of 1984 (“DC 6648/1984”), a consent judgment was entered in which his estate agreed to withdraw his name as a partner of MHP and relinquish all claims that it had in respect of any share in MHP in consideration for Toh Kai, Toh Say and the Appellant paying the estate $7,000 and reimbursing the estate for “all payments made by [Toh Lew’s estate] to the Inland Revenue Department for the years 1983−1988”.

Toh Say’s death and the proceedings brought by his estate

Toh Say’s status as a partner was the subject of court proceedings that took place more than two decades ago and which culminated in Civil Appeal No 150 of 1991 (“CA 150/1991”). It began in 1968 when the Appellant, having received Toh Moo’s share of the partnership, began to take an interest in the running of the hotel business. Toh Say had been running the hotel business with Toh Moo, but had become the sole managing partner upon Toh Moo’s death. The Appellant questioned Toh Say over the accounts for 1973 and was alleged to have physically assaulted Toh Say. Their relationship soured. On 20 March 1975, Toh Say, through his solicitors, wrote to the Appellant, Toh Kai and Toh Lew proposing that MHP be dissolved on 31 March 1975 or that he retire from MHP on that date. The proposals were not accepted. A few days later, on 31 March 1975, Toh Say issued a notice of dissolution to the Appellant, Toh Kai and Toh Lew. Again, the notice of dissolution was not accepted.

In 1984, Toh Say commenced an action against the MHP among other things, for his share of the profits of the partnership from 1976 to 1983. Toh Say passed away on 16 February 1990 in the midst of those proceedings and the 1st and 2nd Respondents, being the executors of Toh Say’s estate, took over the conduct of the proceedings. The statement of claim was then amended to reflect the claim for Toh Say’s share of the profits of the partnership from 1976 to 1986 (instead of 1983). It appears that this amendment was triggered by the decision of the Income Tax Department (the predecessor of the Inland Revenue Authority of Singapore) in 1986 to adjust Toh Say’s previous tax liabilities upwards.

Lai Siu Chiu JC (as she then was) held that Toh Say ceased to be a partner of MHP as at 31 March 1975 and was therefore not entitled to any share of the profits...

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