Ching Mun Fong (executrix of the estate of Tan Geok Tee, deceased) v Liu Cho Chit (No 2)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 09 May 2001
• Neutral Citation: [2001] SGCA 36
• Date: 09 May 2001
• Subject Matter: Whether remedial constructive trust can and should be imposed,Whether plaintiff has or can with reasonable diligence have discovered mistake before court's decision,No intention for money to be kept distinct as identifiable fund,Particular causes of action,Unjust enrichment,s 29(1)(c) Limitation Act (Cap 163, 1996 Ed),When limitation period begins to run,Payment pursuant to contract for purchase of alleged interest in property,Restitution,When time begins to run,Plaintiff contracting with defendant for purchase of defendant's wife's alleged interest in property,Whether true contracting parties plaintiff and defendant,Failure of consideration,Whether claim contractual,Total failure of consideration,Court deciding 17 years later no such interest exists,Court deciding no interest as alleged,Trusts,Whether plaintiff can properly sue even if plaintiff make payment as agent,Whether claim time-barred,Plaintiff and defendant making agreement for sale of property by plaintiff's company to defendant's wife and plaintiff's daughter,Constructive trusts,Relief from consequences of mistake,Contract,Remedial constructive trust,Claim to recover money paid under mistake,Mistake,Plaintiff paying defendant with funds from another company,Whether defendant can properly be sued even if defendant receives payment as agent,Claim for money had and received for total failure of consideration,Parties' relationship wholly commercial,s 6(1)(a)Limitation Act (Cap 163, 1996 Ed),Proper Parties,Court deciding no such interest exists,Limitation of Actions,Court deciding defendant's wife has no interest in property,Proper parties,Whether proper parties before court
• Docket Number: Civil Appeal No 129 of 2000
• Published date: 19 September 2003
• Defendant Counsel: CR Rajah SC (instructed) and Harpal Singh (Harpal Mahtani Partnership)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Michael Khoo SC and Josephine Low (Michael Khoo & Partners)

dismissed Fook Gees claim for the repayment of the alleged loan. However, the she gave judgment for Madam Lim against Lee Tat, for the balance of the purchase price.

The matter was taken to the Court of Appeal, which delivered its judgment on 6 February 1998. The Court of Appeal dismissed Fook Gees appeal. However, the appeal by Lee Tat was allowed, on the ground that Madam Lim never had any interest in the joint venture site, and consequently had no interest in the Property which she could sell.

On 4 June 1998, Madam Ching, as executrix of Mr Tans estate, commenced the present proceedings against Mr Liu seeking to recover the sum of $1,368,420.71 (being the equivalent of US$642,451.04 at the agreed rate of exchange at the time of payment to Mr Liu) as money had and received, on the ground that the US$642,451.04 was paid to Mr Liu under a mistaken assumption that Madam Lim had an interest in the Property. After further litigation, Madam Ching managed to amend her statement of claim to include a claim for a remedial constructive trust.

The trial judge dismissed Madam Chings claims on two grounds. Firstly, it was held that the true contracting parties in the sale of Madam Lims alleged interest to Lee Tat was Madam Lim (as the purported vendor) and Lee Tat (as the purported purchaser). As such, any action for money paid under a mistake ought to have been brought by Lee Tat against Madam Lim. Mr Tans estate was not the proper plaintiff, and Mr Liu was not the proper defendant. Secondly, the trial judge held that in any case, the claim was time barred, and no remedial constructive trust arose.

Madam Ching thus brought the present appeal. On the question of the proper parties to the action, Madam Ching argued that the true contracting party to the joint venture was Mr Liu, and that Madam Ching was purportedly conveyed the joint venture site as Mr Lius nominee. As such, any interest in the joint venture site (and consequently in the Property) was supposed to have been vested in Mr Liu. Conversely, when Lee Tat contracted to purchase the interest in the Property from Mr Liu, it did so as Mr Tans nominee. Madam Ching thus contended that the true contracting parties in the purported sale of Madam Lims interest in the Property to Lee Tat were actually Mr Liu and Mr Tan, so that the parties were properly constituted for the present action.

With regards to the issue of time bar, Madam Ching contended that the mistaken assumption that Madam Lim had an interest in the Property was discovered only on 6 February 1998, when the Court of Appeal pronounced its judgment. Madam Ching therefore claimed that the limitation period began to run only as of that date, so her claim was not time-barred. Alternatively, Madam Ching argued that when the Court of Appeal pronounced its judgment on 6 February 1998, Mr Liu could no longer retain the monies without his conscience being affected. She thus contended that the monies became impressed with a remedial constructive trust as of 6 February 1998.

Held

, dismissing the appeal

(1) The true contracting parties were Mr Tan and Mr Liu and nobody else. ( 22-25). Madam Ching as the executrix of the estate of Mr Tan, was thus entitled to bring this action against Mr Liu for the recovery of the sum paid to him. The proper parties were before the court ( 26).

(2) The trial judge was correct in holding that the six year limitation period found in s 6(1)(a) of the Limitation Act applied to Madam Chings claim ( 27). However, if the monies sought to be recovered were paid under a mistake, then by virtue of s 29(1)(c) of the Limitation Act, the limitation period would begin to run only as of the time when the mistake could have been discovered ( 28).

(3) The contention that the mistake underlying the payment could not have been discovered until the Court of Appeal delivered its decision on 6 February 1998 was rejected ( 29). In the 1984 action brought by Madam Lim, Mr Tan asserted in his affidavit, filed on 1 February 1989, that Madam Lim had no interest in the Property. Thus, as of 1 February 1989, if not earlier, he had already discovered the mistake. Even if the limitation period was postponed by virtue of s 29(1)(c) of the Limitation Act, the time bar would have set in by 1 February 1995, at the latest ( 30). Section 29(1)(c) of the Limitation Act states quite clearly that time begins to run once the plaintiff could with reasonable diligence have discovered the mistake. As far as s 29(1)(c) is concerned, it is the plaintiffs means of ascertaining the mistake, and not what the court eventually decides, that is relevant in determining when the limitation period begins to run ( 32).

(4) A remedial constructive trust arises where the court imposes a constructive trust de novo on assets which are not subject to any pre-existing trust as a means of granting equitable relief in a case where it considers just that restitution should be made ( 34). In order for a remedial constructive trust to arise, the payees conscience must have been affected, while the monies in question still remain with him. If the payee learns of the mistake only after the monies have got mixed with other funds or dissipated, no constructive trust in respect of these monies can arise. This is because there would no longer be an identifiable fund for the trust to bite ( 36).

(5) On the facts of this case, there was no ground for imposing a remedial constructive trust on Mr Liu in respect of the US$642,451.04 paid to him. The relationship between Mr Liu and Mr Tan was only that of a vendor and purchaser and was wholly commercial. There was no dishonest conduct on the part of Mr Liu. The sum was paid to Mr Liu in April 1981 with the intent that he was free to deal with it as his money. It was never intended by either Mr Tan or Mr Liu that it should be kept, and it had never been kept, distinct as an identifiable fund. On the basis of Mr Khoos contention that Mr Liu discovered the mistake only in February 1998 or thereabouts, there was a span of some 17 years and the sum paid to Mr Liu must have, in the meanwhile, been spent or mixed with other funds of Mr Liu. There was no sum or fund on which a remedy of constructive trust could be imposed by the court. The sum paid to Mr Liu was certainly not trust property. There was, of course, an obligation on the part of Mr Liu to return the monies to Mr Tan, but that was only a personal obligation ( 37).

Case(s) referred to

Kleinwort, Sons & Co v Dunlop Rubber Co

(1907) 97 LT 263 (refd)

Metal Und Rohstoff A G v Donaldson Lufkin & Jenerette Inc and Anor

[1990] 1 QB 391 (refd)

Westdeutsche Landesbank Gironzentrale v Islington London Borough County Council

[1996] AC 669 (refd)

Legislation referred to

Limitation Act (Cap 163, 1996 Rev Ed), ss 6(1)(a), 22(1), 29(1)(c)

JUDGMENT:

Grounds of Judgment

1. This was an appeal against the decision of Woo Bih Li JC, in which he dismissed the claim of the appellant, Madam Ching Mun Fong (Madam Ching) suing as the executrix of the estate of Tan Geok Tee deceased (Mr Tan), against the respondent, Mr Liu Cho Chit (Mr Liu) for the sum of $1,386,420.71 (being the equivalent of US$642,451.01 at the rate of exchange of S$2.13 to US$1) as money had and received. We dismissed the appeal and now give our reasons.

Background facts

2. The material facts that led to this appeal stretch back to some 27 years. The convenient starting point was 18 July 1972, when a company called Peng Ann Realty Pte Ltd (Peng Ann) purchased a large parcel of land situate at Kampong Chai Chee, comprising lots 21-26, 4-4, 4-7, 112, 122, 123 and 221 of Mukim 28 having an area of 186.7 acres. At that time, there were three shareholders of the company, and Mr Liu was one of them. He was also the managing director of the company. Two days after the sale and purchase agreement was made, there appeared in the government gazette a notification of compulsory acquisition by the government of two of the lots, namely, Lots 4-4 and 221. Being apprehensive of further compulsory acquisitions by the government, Mr Liu and his co-directors decided to sell the remaining lots of land. In December 1972, Mr Liu was introduced to Mr Tan, who was interested in purchasing the remaining lots. Negotiations took place between the two of them and eventually they reached an agreement. The agreement was signed on 23 January 1973, and it was made between Peng Ann and one of Mr Tans family companies, Lee Kai Investments Pte Ltd (Lee Kai) (then known as Collin Investment Pte Ltd). Under the agreement, Peng Ann agreed to sell to Lee Kai three of the lots, namely, lots 21-26, 4-7 and 123, having a total area of 178 acres, at the price of $2,050,000.

3. In the meanwhile, Mr Tan and Mr Liu had orally agreed to enter into a joint venture to develop a small parcel of land containing an area of 5 acres, which was within lot 21-26 and zoned residential (the joint venture site). The terms of this joint venture were subsequently reduced into four written agreements (collectively called the joint venture agreements). The agreement most material to the present appeal was the sub-sale agreement of the joint venture site expressed to be made between on the one hand Lee Kai, and on the other Mr Lius wife, Madam Lim Siam Soi (Madam Lim), and Mr Tans daughter, Collin Tan (Collin). Under this sub-sale agreement, Lee Kai agreed to sell the joint venture site to Madam Lim and Collin at the price of $50,000. The agreement was signed by Mr Tan on behalf of Lee Kai and Collin respectively and by Mr Liu on behalf of Madam Lim. The other material joint venture agreements were (i) a pre-incorporation agreement, whereby Collin and Madam Lim agreed to incorporate a joint venture company, and (ii) a further sub-sale agreement, whereby Collin and Madam Lim agreed to transfer to the joint venture company the joint venture site in exchange for shares to be issued by that company to them respectively. These other...