Chip Hup Hup Kee Construction Pte Ltd v Yeow Chern Lean

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 17 March 2010
• Neutral Citation: [2010] SGHC 83
• Date: 17 March 2010
• Docket Number: Originating Summons No 804 of 2009 (Registrar’s Appeal No 378 of 2009)
• Published date: 19 March 2010
• Plaintiff Counsel: Ling Daw Hoong Philip (Wong Tan & Molly Lim LLC)for the plaintiff
• Hearing Date: 26 October 2009,17 November 2009
• Defendant Counsel: Kronenburg Edmund Jerome and Lye Huixian(Braddell Brothers LLP)
• Court: High Court (Singapore)
• Subject Matter: Civil Procedure,Limitation

Andrew Ang J: Introduction

This was an appeal by the plaintiff (“CHHK”) against the decision of the assistant registrar (“the AR”) on 1 October 2009 in Summons No 4717 of 2009 (“Sum 4717”) in which she ordered that part of CHHK’s claim against Yeow Chern Lean (“Yeow”) be struck out. The AR also ordered the conversion of the originating summons into a writ action, but no appeal was made against this order.

Essentially, this case concerned a question of law, viz, the applicability of the Limitation Act (Cap 163, 1996 Rev Ed) (“the Act”) to a claim for moneys had and received in respect of two United Overseas Bank cheques, No 378730 for $80,000 (“the First Cheque”) and No 634684 for $100,000 (“the Second Cheque”) (collectively “the Two Cheques”), issued by Neo Kok Eng (“Neo”), the majority shareholder and managing director of CHHK. I dismissed the appeal on 17 November 2009 and now give my reasons for so doing.

Background

Neo had originally issued three cheques, the Two Cheques as well as another cheque for $260,000, to one Lim Leong Huat (“Lim”), the general manager of CHHK at the material time. Lim handed those cheques to Yeow, who in turn encashed the First Cheque on 22 November 2000 and the Second Cheque on 4 April 2002. He applied the proceeds from the Two Cheques towards, respectively, the purchase and construction of a house at No 189 Eng Kong Garden, Singapore 599287 (“the Property”). In a previous action, Suit No 136 of 2007 (“Suit 136”), Neo sued Yeow for damages from conversion, moneys had and received and a declaration that the Property was held by Yeow on trust for Neo. Yeow pleaded that there was a private arrangement between Neo and Lim which allowed Yeow the use of the proceeds from the three cheques, and further that Neo’s claim was in any case time barred. However, Yeow admitted that as he had no personal knowledge of such an arrangement he had accepted that the arrangement existed on the basis of whatever Lim had told him.

Suit 136 was heard by Lai Siu Chiu J (“Lai J”) together with a related action, Suit No 137 of 2007, in which CHHK sued Yeow for the breach of his fiduciary duties. Lai J found, in her judgment issued on 15 September 2008 in Neo Kok Eng v Yeow Chern Lean [2008] SGHC 151 (unreported) (“Neo Kok Eng (HC)”), that Yeow was liable to Neo for $440,000, or the sum of the three cheques, and ordered an inquiry into the percentage contribution of the $440,000 towards the profits and rental income of the Property. Significantly, Lai J, citing the decision of Judith Prakash J in MCST No 473 v De Beers Jewellery Pte Ltd [2001] 2 SLR(R) 669 (“De Beers”), held that Neo’s alternative claim for money had and received was not a claim in tort or contract, and that therefore s 6(1)(a) of the Act had no application (at [130] of Neo Kok Eng (HC)).

Yeow appealed successfully against Lai J’s decision. The Court of Appeal held, in Yeow Chern Lean v Neo Kok Eng [2009] 3 SLR(R) 1131 (“Neo Kok Eng (CA)”), that Neo had no locus standi to bring the claim in Suit 136 because he had already relinquished title to the three cheques in favour of CHHK; it was thus for CHHK and not Neo to bring a claim against Yeow (at [39] of Neo Kok Eng (CA)). Pertinently, the Court of Appeal observed at [52], ibid, that: 52 Neo’s alternative claim for moneys had and received is contingent on him proving his claim in conversion. It fails along with his inability to prove the existence of the tort. This is so because Neo’s alternative claim in restitution is premised on a ‘waiver of the tort.’ The House of Lords has made it clear in United Australia v Barclays Bank Ltd [1941] 1 AC 1 that the ‘waiver’ was really an election to take a gain-based rather than loss-based award for the tort. In the absence of the tort, this claim in restitution fails. As Viscount Simon LC explained (ibid at 18):

When the claimant ‘waived the tort’ and brought assumpsit, he did not thereby elect to be treated from that time forward on the basis that no tort had been committed; indeed, if it were to be understood that no tort had been committed, how could an action in assumpsit lie? It lies only because the acquisition of the defendant is wrongful and there is thus an obligation to make restitution. [emphasis added]

Since Neo’s claim for conversion is unsustainable, it follows that his claim for restitution of the tort also fails. Simply put, he cannot ‘waive the tort’ when there is no tort to waive in the first place. In any event, as the cheques were issued as loans to the Company, if any loss was suffered, it was on the part of the Company.

Following this decision, CHHK, in its own name, brought the current action against Yeow for moneys had and received under the three cheques as well as for a declaration that the Property was held by Yeow on trust for CHHK in the proportion that CHHK had contributed towards the purchase and construction of the Property. The AR held that, since an action for conversion of the Two Cheques was time-barred under s 6(1)(a) of the Act, CHHK’s claim for moneys had and received in respect of the Two Cheques was doomed to fail and should therefore be struck out.

The parties’ arguments

According to CHHK, the Act did not apply to its claim at all because it was neither founded in tort nor in contract. CHHK argued that its claim was not in conversion and therefore should not be subject to the time bar of six years applicable to torts, relying on the case of Chesworth v Farrar [1967] 1 QB 407 (“Chesworth”). It also pointed out that Lai J had considered and dismissed Yeow’s arguments on time bar in Suit 136 (at [129]–[133] of Neo Kok Eng (HC)), and that this point had not been overturned by the Court of Appeal on appeal. Further, CHHK argued that because there was no contract between the parties, the contractual time limit could not apply, as was the case in De Beers.

Conversely, Yeow argued that CHHK’s claim was doomed to fail because its alleged title to the Two Cheques was extinguished upon the expiry of six years from the date of the first alleged conversion pursuant to 7(2) of the Act. Moreover, Yeow argued that CHHK’s claim was time barred under s 6(1)(a) of the Act because the source or nature of the claim arose out of the tort of conversion despite the characterisation of the claim as restitutionary. I should add that no argument on laches was raised.

The law

This case requires an examination of the nature of a claim for money had and received based on a conversion of cheques and how it fits into the statutory limitation scheme. For that reason a brief summary of the legal history is necessary before looking at the Act itself. Broadly speaking, there are commonly understood to be two types of restitutionary claims: restitution for autonomous unjust enrichment and restitution for wrongs (see generally Andrew Burrows, The Law of Restitution (Butterworths, 2nd Ed, 2002) (“Burrows”) at p 25; Goff and Jones, The Law of Restitution (Sweet & Maxwell, 7th Ed, 2007) (“Goff and Jones”) at paras 1–092 to 1–095). The former, autonomous unjust enrichment, occurs when the defendant has gained at the expense of, or “in subtraction” from, the claimant. This category of restitution is commonly concerned with payments made under a mistake or an ineffective transaction. On the other hand, what the present case is concerned with is the latter category, which is to provide the claimant restitution of the benefits received by a wrongdoer from his wrongful acts, in this case Yeow’s conversion of the Two Cheques. As Burrows puts it (at p 26):

… the divide is between, on the one hand, where unjust enrichment is the cause of action or event to which restitution responds and, on the other hand, where a wrong is the cause of action or event to which restitution responds.

According to this definition, the claimant brings an action based on the tort, but chooses a restitutionary remedy instead of the usual compensatory remedy. The authors of Goff and Jones, however, note that judges often say that “restitution for wrongs is concerned with reversing the defendant’s unjust enrichment” (at para 1–011), suggesting that the cause of action lies in the unjust enrichment of the wrongdoer and not in the wrong suffered.

Historically, in lieu of suing on a tort, a claimant could “waive the tort” and choose instead bring a claim for money had and received (see generally United Australia, Limited v Barclays Bank, Limited [1941] AC 1 (“United Australia”) for a comprehensive history). The doctrine arose from necessity. In England, there was a time when an aggrieved person had to fit his claim within a specific form of action, either in indebitatus assumpsit (the precursor to a claim for money had and received) or an action for damages in tort. A claim in assumpsit had to be premised on a contract or debt between the parties. Therefore, to allow the aggrieved person whose goods had been converted to sue in assumpsit, the courts created the legal fiction that a defendant who improperly sold converted goods promised to repay the claimant the proceeds of such a sale, thereby allowing the claimant to claim against the defendant in assumpsit. (In form, this claim of assumpsit, and later the claim for money had and received, became recognised as “quasi-contract”.) However, the same claimant could not be allowed to go on to recover compensation for the tort on top of the profits disgorged, and so it was said that a claimant who sued in assumpsit had chosen to “waive the tort” because under those circumstances the claimant could no longer bring an action for damages for tort.

In United Australia, a company converted a cheque payable to the plaintiff by encashing it with a bank. The plaintiff originally claimed against the company for money had and received but discontinued the action without obtaining final judgment. The issue before...