Ching Mun Fong (representative of the estate of Tan Geok Tee, deceased) and Another v Peng Ann Realty Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 24 March 1995
• Neutral Citation: [1995] SGCA 33
• Date: 24 March 1995
• Subject Matter: Standard of proof,Whether requirements of s33 of Evidence Act satisfied,Whether there was sufficient evidence to draw an inference of a conspiracy to defraud respondent company,s 33 Evidence Act (Cap 97, 1990 Ed),Affidavits of deceased witness,Admissibility of evidence,s 10 Evidence Act (Cap 97, 1990 Ed),Whether affidavits written after alleged common intention was formed admissible to prove existence of conspiracy,Conspiracy,Evidence of things said or done by conspirator in reference to common intention,Tort,Evidence,Affidavits,Conspiracy to defraud,Admissibility
• Docket Number: Civil Appeals Nos 106 and
• Published date: 19 September 2003
• Defendant Counsel: HE Cashins and S Lalita (Donaldson & Burkinshaw)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Woo Tchi Chu and Michael Leow (Murphy & Dunbar),CS Wu and Jimmy Yap (Robert WH Wang & Woo)

Cur Adv Vult

The facts

Liu Cho Chit (Liu) was at the material time one of the contractors of the Housing and Development Board (HDB). He conducted his contracting business through his company, Hoe Huat Construction & Engineering Pte Ltd (Hoe Huat). One Lok Bok Sim (Lok) was at all material times the managing director of Singapore Finance Ltd. In or about 1970, Liu met Lok and thenceforth they became business associates. Together, they were involved in several transactions pertaining to land speculation as well as property development through various companies, namely, Hoe Huat Realty Pte Ltd, Taman Kolam Ayer Sdn Bhd and Perdana Properties Sdn Bhd. In particular, through his company Hoe Huat, Liu assisted Lok in the latter`s housing development at Mandalay Road during the period approximately between 1971 and 1973.

In 1972, through one Koh Chee Chong, Lok came to know that a large parcel of land situate at Kampong Chai Chee comprising lots 21-26, 4-4, 407, 120, 121, 122, 123 and 221 of mukim 28, having an area of 186.7 acres, was for sale. Negotiations were conducted and a price of $1.09m was agreed with the owners, who were the personal representatives of the estate of Tan Chwee Boon, deceased. A company, Peng Ann Realty Pte Ltd (Peng Ann), the respondents in these appeals, was thereupon incorporated to purchase the property. Liu was the managing director of the company and held that position until 3 March 1978; the other directors at the material time were Yip Ho Meng (Yip) and Koh Chee Cheong (Koh). All three of them were also the only shareholders, each holding one share with a par value of $1. Yip was in fact the nominee of Lok who was at all material times in effective control of Peng Ann.

The agreement for the purchase of the property was made on 18 July 1972 and under the agreement completion was to take place on 27 October 1972. The purchase was financed entirely by a loan of $1.5m from Singapore Finance Ltd, which was secured by a legal mortgage of the property and personal guarantees of the three directors. No doubt Lok was instrumental in approving the loan to Peng Ann. It was obvious that but for him such a loan could not have been granted to a company with only three dollars as its capital even with the securities that were provided. Little wonder there was that being only a one-third owner of the company Lok was in effective control of it.

Two days after the sale and purchase agreement was made, that is, on 20 July 1972, two of the lots, namely, lots 221 and 4-4 with a total area of about 5.8 acres, were gazetted by the Government for acquisition; some neighbouring lands and other lands were also included in the gazette notification. In due course, these two lots were compulsorily acquired and a compensation of $228,000 based on $0.89 psf was eventually paid to Peng Ann. Soon after the gazette notification, the directors of Peng Ann decided to sell the remaining six lots, and accordingly a directors` resolution was passed on 9 October 1972 whereby the directors unanimously authorized Liu to sell the entire six lots at a price of not less than $0.25 psf.

In December 1972, Liu was introduced to one Tan Geok Tee (Tan), and following the negotiations between the two of them, a sale and purchase agreement was made on 23 January 1973 between Peng Ann and Collin Investment Pte Ltd (CIP) (the main agreement), whereby Peng Ann agreed to sell to CIP three of the lots, namely, lots 21-26, 4-7 and 123 (the three lots), having a total area of about 178 acres at the price of $2.05m based on $0.263 psf. CIP is one of Tan`s family companies and is now known as Lee Kai Investment Pte Ltd. The three lots were within four zones under the master plan, that is, about 50.13% was zoned `water catchment`, 20.02% `rural`, 7.84% `permanent residential` and 22.01% `temporary residential`. The main agreement was signed by Liu on behalf of Peng Ann and by Tan on behalf of CIP.

During the negotiations leading to the main agreement, Liu and Tan orally agreed to develop jointly about five acres of lot 21-26. The proposed joint venture (the joint venture) was subsequently reduced into writing and was made in the names of Liu`s wife, Lim Siam Soi (Mdm Lim) and Tan`s daughter, Collin Tan, and the terms of the joint venture were embodied in four documents (collectively called `the side agreements`), all of which were backdated to 23 January 1973. Briefly these side agreements were as follows:

(i) First, there was the sub-sale agreement whereby a part of lot 21-26 zoned residential and described as an `approximate area of five acres` (joint venture site) was sold by CIP to Mdm Lim and Collin Tan at the price of $50,000 based on $0.25 psf. This agreement was signed by Tan on behalf of CIP and also on behalf of Collin Tan and by Liu on behalf of Mdm Lim. Special condition 1 of the sub-sale agreement provided that the purchasers would apply for subdivision of lot 21-26 on behalf of the vendor, and the costs and expenses in respect thereof would be borne by the purchasers. Further, by special condition 4, if the purchasers should fail to obtain approval for the subdivision, the joint venture site would be developed in the name of the vendor, and the purchasers would be entitled to the benefit of the development and would be responsible for all liabilities incurred thereby.

(ii) Next, there was an agreement expressed to be made between Madam Lim and Collin Tan on the one hand and a company, Collden Realty Pte Ltd (Collden), on the other (Collden agreement), under which Mdm Lim and Collin Tan were to convey the joint venture site to Collden in return for 50,000 shares of $1 each credited as fully paid to be issued and allotted to Madam Lim and Collin Tan in the following proportions: 22,500 shares (representing 45% thereof) to Mdm Lim and 27,500 shares (representing 55% thereof) to Collin Tan. Liu signed this agreement on behalf of Mdm Lim and Tan signed it on behalf of Collin Tan.

(iii) Thirdly, there was the pre-incorporation agreement signed by Liu and Tan on behalf of Mdm Lim and Collin Tan respectively, under which it was agreed that notwithstanding their respective proportions of shareholding in Collden, Collin Tan would bear 80% and Mdm Lim 20% of the development costs of the joint venture site. However, it was further provided that should Mdm Lim fail to contribute her share of the 20%, Collin Tan would advance the amount with interest at a rate of 10.8% pa, provided that she should not be required to contribute such development costs in excess of $1.5m.

(iv) Lastly, there was the fall-back agreement which provided that if CIP should fail under any circumstances to purchase the three lots under the main agreement from the respondents, the sub-sale agreement would become null and void, and the sum of $50,000 paid would be forfeited and each party would have no claim against the other.

The sale under the main agreement was completed on 14 March 1973, and all the three lots were conveyed on the direction of CIP to Collin Development Pte Ltd, another family company of Tan, which is now known as Lee Tat Development Pte Ltd (Lee Tat). At that time no application for subdivision approval had been made to excise the joint venture site from the lot 21-26.

Soon after the completion of the purchase, on 20 December 1973, Lee Tat through their architects, Lim Chew Kuan & Associates, applied to the competent authority for planning permission for a proposed condominium development and a golf course on `lots 21-26 pt and 123`. The application was refused and a notice of refusal of written permission dated 21 September 1974 was issued. Two reasons were given for the refusal, namely: (i) there was no proper access to the site, and (ii) the site would be affected by a `Public Scheme`. An appeal was immediately made to the Minister for National Development and was heard on 21 January 1975. The appeal was unsuccessful, and on 31 March 1975, Lee Tat were informed that the appeal had been disallowed.

About a year later, on 23 July 1976 the three lots, except a portion of about five acres, were acquired by the government, and compensation in the sum of $2.5m based on the rate of $0.33 psf was awarded. The unacquired land comprised 4.1 acres of the joint venture site and a portion, also part of lot 21-26, which was immediately outside and adjoining the contemplated boundary of the joint venture site. The unacquired land was subsequently resurveyed and the resurvey lot number is 1606. The Pan Island Expressway now runs along the northern boundary of lot 1606.

As it transpired, the joint venture did not materialize: neither Liu nor Tan (nor their respective nominees) took any step to implement the terms of the sub-sale agreement or any of the other joint venture agreements. It appears that there were subsequent negotiations between Liu and Tan for the latter to acquire Liu`s interest or share in the joint venture site. Arising from this, disputes arose between Liu and Tan. In June 1984, Mdm Lim commenced an action in the High Court in Suit No 4149 of 1984 (S 4149/84) against Lee Tat, Tan and CIP. In that suit, Madam Lim claimed specific performance of an agreement alleged to have been made whereby Lee Tat and/or Tan agreed to purchase her share in lot 1606 for $3.8m. The claim was resisted by the defendants and the suit is still pending. In 1987 or thereabout, as a result of the cause papers filed in that suit, Lok who was still in control of Peng Ann claimed that he then became aware of the sub-sale agreement. On 25 May 1987, Peng Ann commenced an action against Liu and Tan. Peng Ann averred, inter alia, that Liu as a director of Peng Ann conspired with Tan to sell to CIP the three lots at an inordinately low price of $2.05m in spite of the large area involved, and that at the time the sub-sale agreement was entered into, Liu and Tan knew or must have known that the joint venture site, which is now part of lot 1606,...