Chng Weng Wah v Goh Bak Heng

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 16 February 2016
• Neutral Citation: [2016] SGCA 9
• Plaintiff Counsel: Harry Elias SC, Andy Lem Jit Min and Farrah Joelle Isaac (Harry Elias Partnership LLP)
• Docket Number: Civil Appeal No 6 of 2015
• Date: 16 February 2016
• Hearing Date: 10 July 2015
• Subject Matter: Defences,Account,Equity,Remedies,Laches
• Published date: 18 February 2016
• Citation: [2016] SGCA 9
• Defendant Counsel: David Chan Ming Onn, Noraisha De Silva and Tan Su Hui (Shook Lin & Bok LLP)
• Court: Court of Appeal (Singapore)
• Year: 2016

Chao Hick Tin JA (delivering the judgment of the court): Introduction

This is an appeal from the decision of the Judicial Commissioner (“the Judge”) in Suit No 387 of 2013 (“S 387/2013”), where the appellant-trustee, Chng Weng Wah (“Chng”), was ordered to, inter alia, give an account to the respondent-beneficiary, Goh Bak Heng (“Goh”) in respect of certain shares, or such money or funds representing the sale proceeds of those shares. Chng was also ordered to pay Goh all sums, if any, found to be due to Goh on the taking of the account.

In the present appeal, Chng does not seek to challenge the Judge’s finding that he held the shares on bare trust for Goh. Before us, Chng argued that the Judge had erred on two grounds. First, it was submitted that Chng had already provided a full account of the shares and the sale proceeds thereof to Goh. Secondly, Chng contended that Goh should be barred from making the present claim on the basis that the doctrine of laches applies.

In response, Goh submitted that the reconstructed accounts by Chng were relatively incomplete and that there remained a number of outstanding discrepancies. As regards the doctrine of laches, Goh argued that it was extremely rare for laches to defeat a claim by a beneficiary to recover trust property where the trust had arisen in a non-commercial relationship. Goh further submitted that Chng has failed to show a causal link between the effluxion of time and the alleged prejudice suffered in making out his defence.

Background facts The parties

Goh and Chng first got to know each other way back in 1980 when they were both serving in the Navy. Upon leaving the Navy, Goh set up a sole proprietorship referred to as Serial System Marketing, which was subsequently incorporated and listed on the Singapore Stock Exchange in 1997 as Serial System Ltd (“Serial System”). Goh was a founding director and shareholder of Serial System. He was also its first chief executive officer (“CEO”). Like Goh, Chng was also a founding director and shareholder of Serial System. Chng took over as CEO of Serial System from Goh sometime after its listing in 1997. It appears from the evidence that Chng left Serial System in 2001 after a highly publicised falling out with Goh over a tussle for control of Serial System. Goh took on the role as CEO of Serial System after Chng’s departure.

For the avoidance of doubt, we should state that the present dispute does not involve the affairs of Serial System. Nevertheless, the facts discussed in the preceding paragraph are relevant for the purpose of understanding the dynamics of the relationship between Chng and Goh.

The investment

The present dispute concerns a joint investment involving the purchase of shares in a Taiwanese company, MediaTek Inc (“MTK”). We note that the parties had entered into other joint investments previously and their arrangement was that the profits would be split proportionately. Therefore, the investment in the MTK shares was only one of many joint investments which the parties had entered into.

Sometime in July 1997, the parties incorporated an investment vehicle called C&G Investment Pte Ltd (“C&G”). The parties contributed equal amounts of money to C&G, which was then used to facilitate the joint investments they had undertaken with each other. It was also around this time when the founder and chairman of MTK, Tsai Ming Kai (“Tsai”), offered approximately 1.2m MTK shares to Chng. It turned out that 600,000 of these shares were purchased by Serial Semiconductor Co Limited, which was then a subsidiary of Serial System. Chng then suggested to Goh that they purchase the remaining 601,750 shares as a joint investment. Goh agreed to the proposal and both parties then injected equal sums of money into C&G. It is not in dispute that NT$8,556,875 was paid for the purchase of 601,750 MTK shares.

There were, at that point in time, legal restrictions on the foreign ownership of Taiwan-incorporated companies. As a result, the MTK shares which Chng and Goh bought as joint investment were registered in the name of Kerry Hsu Wen Hung (“Kerry”), the wife of a business associate of the parties, Eric Cheng (“Eric”). The arrangement was for Kerry to help facilitate any transactions involving the MTK shares. Approval for foreign ownership of the shares in question was eventually obtained from the relevant administration bureau sometime in 1998 and 1999. The MTK shares were thereafter transferred from Kerry to Chng. It appears from the evidence that the MTK shares remained with Chng throughout, up to the point in time when they were eventually disposed of.

The above background facts were not disputed by the parties. The main factual dispute in the present case concerns the transactions that took place between 1999 and 2000. For ease of reference, we will deal with the relevant facts in the course of analysing the legal issues arising out of the present appeal. In brief, Chng takes the position that half of the MTK shares, which belonged to Goh, were progressively sold over a few tranches and that Chng was no longer holding on to any MTK shares on behalf of Goh. Whatever MTK shares still held by Chng belong to himself. As regards Goh’s shares in MTK which had already been sold on Goh’s instructions, Chng’s position is that he had accounted for and paid the proceeds to Goh. On this basis, Chng submits that he no longer owes any duty to account to Goh.

On the other hand, while Goh does not dispute some of the sale transactions that were put forward by Chng, he takes the view that not all of his MTK shares have been accounted for. To that end, he appears to take the position that Chng is still holding on to some MTK shares on his behalf. As regards the sale proceeds, Goh contends that there exists some uncertainty as to whether he had been fully paid for the sale of his MTK shares.

The decision below

In the Judgment, the Judge framed the issues as follows (at [12]): Whether Chng held half of the MTK shares on trust for Goh? Whether Goh was entitled to an account from Chng of that half of the MTK shares allegedly held on trust for Goh by Chng and/or the sale proceeds of any alleged sale of such MTK shares? Whether Goh was barred from making his claim for an account of those shares, or the proceeds thereof, pursuant to the doctrine of laches?

In relation to the first issue, the Judge found (at [24]) that Chng did hold half of the MTK shares on trust for Goh. The Judge held that Chng, as trustee, owed Goh certain duties with regard to those MTK shares, although these duties were not extensive given that the trust was an oral trust with no express terms. Nevertheless, the Judge took the view that Chng would owe Goh, at minimum, a duty to account for the MTK shares, and for the sale proceeds of those MTK shares.

The Judge approached the second issue from two angles. He first addressed the question of whether all of Goh’s MTK shares had been sold and accounted for by Chng. In this respect, the Judge was of the view that there appeared to be some uncertainty as to whether Goh had sold all of his MTK shares in the manner as claimed by Chng. The Judge referred extensively to the documentary evidence adduced by the parties and highlighted a number of discrepancies in the calculations set out therein. We will further elaborate on the Judge’s findings on this issue in the course of the analysis below. In summary, the Judge found, on a balance of probabilities, that Goh still held some MTK shares on behalf of Goh, which Chng had to account for. The Judge further caveated that this finding was based on the evidence adduced by the parties, and that it would be an entirely separate matter altogether should Chng be able to produce further evidence to show otherwise when he gives an account to Goh.

After having dealt with the MTK shares, the Judge went on to consider the question of whether Goh had received all the sale proceeds from the sale of those MTK shares belonging to Goh. As with the MTK shares, the Judge held that Chng had failed to satisfy the court that Goh had received all the monies due to him. It was also highlighted that Chng had taken the position that he could not say for sure that Goh had received all the proceeds that were due to him from the sale of Goh’s MTK shares, although Chng said this was due to the lack of evidence brought about by the prolonged lapse of time. In this regard, the Judge took the view that Chng’s arguments on the non-availability of evidence was better dealt with under the issue of laches.

As regards the application of the doctrine of laches, the Judge began by dealing with the preliminary issue of whether there was a need to show a causal link between a plaintiff’s delay in the bringing of proceedings and any alleged prejudice suffered by the defendant in making out his defence. He referred to the English High Court decision of Nelson v Rye and another [1996] 2 All ER 186 for the proposition that causation was one of the factors to be considered in deciding whether the doctrine of laches should apply. It is, however, not an immutable requirement that has to be satisfied before the defendant can establish the applicability of the doctrine of laches. The Judge further observed that the concept of causation was related to detrimental reliance, which had been elaborated upon by Lord Neuberger in the House of Lords decision of Fisher v Brooker [2009] 1 WLR 1764 (at 1781):

… Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion. …

On the facts of the present case, the Judge was not persuaded that the doctrine of laches should apply. Although he found that Goh did not have a good reason for the delay in bringing proceedings against Chng, the delay did not amount to acquiescence; neither did it result in Chng suffering prejudice. The...