Chiam Toh Say v Mitre Hotel (Proprietors) (sued as a firm) and Others

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu JC
• Judgment Date: 20 September 1991
• Neutral Citation: [1991] SGHC 132
• Court: High Court (Singapore)
• Published date: 22 March 2013
• Year: 1991
• Plaintiff Counsel: K S Chung (Harry Elias & Partners)
• Defendant Counsel: Patrick Nai Thiam Siew (Abraham Low & Partners)
• Citation: [1991] SGHC 132

JUDGMENT:

1. The facts

The Plaintiff Chiam Toh Say (the deceased) together with his 3 younger brothers Toh Kai (the 3rd Defendant), Toh Moo and Toh Lew and his cousin Chiam Toh Tong (Toh Tong) by a deed of partnership (the 1952 deed) dated 28th February 1982 (see Exhibit D-2/2AB 18-25) became partners carrying on the business of hotel proprietors at Mitre Hotel (the Hotel) at No.145, Killiney Road (the address). The salient terms of the partnership are as follows:-

(1) It was deemed to have commenced on 1st December 1951 and would continue for 3 years from that date.

(2) Any partner may at any time after the sixth month retire from the partnership on giving not less than 2 weeks' previous notice in writing to the other partners and at the expiration of such notice the partnership shall determine accordingly as to the partner giving or leaving such notice.

(3) The death or retirement of any partner shall not dissolve the partnership as to the other partners.

(4) (Clause 9): If any partners shall with the consent in writing of the other partners or partner advance any sum of money to the partnership firm over and above his due contribution to capital the same shall be a debt due from the firm to the partner advancing the same and shall carry interest at the rate of Dollars ten per centum (10%) per annum. No sum so lent shall be deemed an increase of the capital of the partner advancing the same or entitle him to any increased share in the profits of the partnership. Every or any such sum together with the interest for the time being due in respect thereof shall be repaid by the firm and received by the partner by whom the same shall have been advanced at the expiration of one month from the time when by notice in writing the firm shall have signified to such partner their intention of making or such partner shall have signified to the firm his intention of demanding such repayment.

(5) (Clause 15(e)): The two named partners who for the time being are managing the affairs of the partnership should devote their whole time and attention to the business of the partnership except during the annual holiday to which each of them may be entitled and diligently and faithfully employ themselves therein and use their best skill and endeavours to carry on the same for the utmost benefit of the partnership.

(6) (Clause 25): All disputes and questions whatsoever which shall either during the partnership or afterwards arise between the partners or their respective representatives or between any partners or partner and the representatives of any partner touching this deed or the construction or application thereof or any clause or thing herein contained or any account valuation or division of assets debts or liabilities to be made hereunder as to any act deed or omission of any partner or as to any other matter in any way relating to the partnership business or the affairs thereof or the rights duties or liabilities of any person under the deed shall be referred to a single arbitrator in case the parties agree upon one otherwise to two arbitrators one to be appointed by each party to the difference in accordance with and subject to the provisions of the Arbitration Ordinance or any statutory modification thereof for the time being in force (emphasis added).

Prior to the 1952 Deed, on the 24th March 1949 (the first partnership (see 2AB 1-7) the said 5 partners together with 5 others viz Chiam Wee Liang, Chiam Heng Luan (Heng Luan), Chiam Eng Aun (Eng Aun), John Dalton and R.A. Pranam were partners carrying on the business of public house, restaurant and hotel at the address with effect from 1st January 1949. The first Partnership was deemed to have been dissolved on the 30th November 1951 by a deed of dissolution (see 2AB 9-17) dated the 26th February 1952. According to the 3rd Defendant's evidence (DW1) the then 10 partners had differences and at a meeting held on the 28th November 1951 (the meeting) where 8 of the original 10 partners were present (the eleventh partner Chiam Toh Keow was admitted some time in July 1950 after the first partnership had commenced) it was agreed (see Minutes of the meeting at 2AB-8) that the business of the partnership would be sold to the highest bidding partner as a going concern. The deceased made an offer to purchase the business including its goodwill together with one tenth (1/10th) undivided share in the freehold land and building at the address for $260,000/-. As there were no other offers, the deceased's offer was accepted.

The terms of the deed of dissolution reflected the agreement reached at the meeting and for the total consideration of $210,000/- paid by the deceased to the 10 other partners (the shortfall of $50,000/- between his offer of $260,000/- and payment of $210,000/- was for his own then 50 shares) the latter and each of them assigned to the deceased (see clause 3 of the deed of dissolution at 2AB-13) all their respective shares title and interest in the said partnership business including the tenancy of the premises at the address and one-tenth undivided share in the freehold land and building at the address to hold the same unto the deceased absolutely (emphasis added).

The 3rd Defendant testified that only the outgoing partners were paid for their shares under the deed of dissolution and he together with his 2 brothers and cousin who entered into the new partnership with the deceased under the 1952 deed were not paid at all as their contribution towards the share capital of the new partnership was set-off against what was due and payable to them as outgoing partners. In any event as the document was executed under seal, even if the deceased had not paid any consideration to the 3rd Defendant and the other partners (save for the outgoing partners) for their shares as contended by the 3rd Defendant, I hold that the omission was not fatal to the validity of the 1952 deed.

Neither side touched upon the same in their evidence but by a declaration of trust dated the 21st October 1952 (see 2AB 27-28) the deceased acknowledged that the one undivided tenth share in the house situated on and the 2 pieces of land at the address conveyed and assigned to him by Eng Aun on the 29th September 1952 for the consideration of $9,000/- was held by him on trust for the partners and the partnership business of Mitre Hotel Proprietors (the 1st Defendants) carried on at the address. The deceased further declared that he would at the then partners' request and cost, convey and assign the said share to them or to such person or persons or otherwise deal with the same as they shall direct or appoint.

Toh Moo died on the 24th February 1961 leaving as his sole issue the 2nd Defendant. By a deed of gift dated the 22nd July 1968 (2AB-36) Toh Moo's widow Madam Chiang Boo Jee gave to the 2nd Defendant the share of the partnership which she had inherited from Toh Moo. The 2nd Defendant took over Toh Moo's share of the partnership and with effect from October 1974 he was recognised as a partner by the deceased (see 2AB-87). In so far as the Income Tax Department (the Department) was concerned, (see DB-17) the 2nd Defendant was recognised as a partner with effect from 23rd July 1968.

The 1st and 2nd Plaintiffs Chiam Heng Chow and his brother Chiam Heng Tin were added as Plaintiffs to the action by an Order of Court dated 16th August 1990 after the death of their father (the deceased) who passed away on the 16th February 1990. It would appear from the evidence of the 3rd Defendant that he is the sole surviving partner under the 1952 deed the others having passed away over the years either before or after this Suit was commenced. The only living survivor under the first partnership is Heng Luan who was not called by either party as a witness and who is not on speaking terms with the 2nd Defendant (DW2).

The 1st Plaintiff (PW1) had testified that under the 1952 Deed, it was Toh Moo who was the managing partner of the Hotel until 1st April 1956 when the deceased took over. The 3rd and 2nd Defendants contended that pursuant to clause 15(c) of the 1952 Deed, the deceased and Toh Moo were managing partner and assistant managing partner respectively and upon Toh Moo's death in 1961 the deceased carried on as the sole managing partner. The 3rd Defendant testified that the other partners never interfered with the deceased's running of the Hotel because each of them had his own business to manage. In the 3rd Defendant's case, he managed and part-owned the Pavilion Restaurant in which the deceased had a small share and in Toh Tong's case, he managed the Tangle Inn. Toh Lew who was illiterate worked as a general sweeper/cleaner at the Pavilion Restaurant. Heng Luan, a partner under the first partnership operated the Sloane Court Hotel at Balmoral Road. Trouble started when the 2nd Defendant inherited Toh Moo's share in the partnership after the latter's death in 1961 and in particular after the 2nd Defendant graduated from the local University in 1968. By his own evidence he started getting involved in the Hotel when his father passed away. Of the 5 partners, only Toh Moo and his family resided at the Hotel. The 2nd Defendant is still residing at the Hotel.

The 2nd Defendant upon obtaining a set of the Hotel's 1973 accounts (Exhibit D-1) questioned the deceased as to why the Hotel was losing money year after year notwithstanding that business was good. As at 31st December 1973 (see DB-23) the accumulated losses of the partnership totalled $103,804/- of which the deceased's share was $33,678/- and Toh Moo's share was $22,158/-. In response the deceased allegedly said that the business cannot and can never make money. The 2nd Defendant also questioned the deceased on an item headed 'loan account' in the 1973 accounts (DB-21) with the figure $15,000/- against the deceased's name and another figure $28,107/- shown as interest accrued on the principal sum of $15,000/-. A similar sum of $15,000/- was...