Choo Michael v Loh Shak Mow

• Jurisdiction: Singapore
• Judgment Date: 28 December 1993
• Date: 28 December 1993
• Docket Number: Suit No 158 of 1989
• Court: High Court (Singapore)

Choo Michael

Plaintiff

and

Loh Shak Mow

Defendant

[1993] SGHC 302

Goh Joon Seng J

Suit No 158 of 1989

High Court

Evidence–Admissibility of evidence–Criminal conviction for cheating and criminal breach of trust–Whether conviction admissible in civil proceedings to prove allegation of fraud –Limitation of Actions–Particular causes of action–Tort–Deceit–When limitation period starts to run–Section 29 Limitation Act (Cap 163, 1985 Rev Ed)–Tort–Misrepresentation–Fraud and deceit–Deceit–Whether company director personally liable for company's torts committed on his direction

The plaintiff sued the defendant, a director of a company, BVC, for deceit in respect of his representations regarding BVC as a legitimate commodity trading house and thereby inducing him to contract with BVC to trade in gold futures. The plaintiff stopped trading in July 1983 when BVC came under investigation by the authorities. BVC was eventually wound up in October 1983 by the Minister of Law and the defendant was subsequently charged and convicted on several counts of abetment of cheating. One of the charges related to deals done by BVC on the plaintiff's behalf. In these proceedings, the defendant relied on the same defence he used in the criminal proceedings against him and objected to the court's reliance on the criminal court's findings of fact. The defendant further argued that the plaintiff's action was barred by limitation as more than six years had elapsed from the dates of the commission of the deals before proceedings were commenced.

Held, allowing the claim:

(1) A defendant's conviction was admissible evidence in civil proceedings of the fact of his guilt in respect of the offence with which he was charged: at [49].

(2) On the oral evidence of witnesses and the documents (excluding the records of the criminal proceedings), there were sufficient facts proved by the plaintiff in support of his allegations of deceit against the defendant: at [50].

(3) The plaintiff was induced by the defendant to trade through BVC, and on the defendant's direction as a director of BVC, the plaintiff's orders were bucketed by BVC, and no genuine trading was carried out by BVC on the plaintiff's behalf: at [51].

(4) Where a director procured or directed the commission of the tort by the company, he was personally liable for the tort and the damage flowing from it: at [52].

(5) In an action for deceit, which was based on fraud, by virtue of s 29 of the Limitation Act (Cap 163, 1985 Rev Ed), time did not begin to run until the fraud was discovered: at [53].

[Observation: To follow Hollington v F Hewthorn and Company, Limited [1943] 1 KB 587 and hold that a prior criminal conviction was not admissible evidence in civil proceedings would be tantamount to allowing a collateral attack by means of a civil action against a final decision of a court of competent criminal jurisdiction, thus permitting an abuse of the process of the court: at [49].]

Barclays Bank Ltd v Cole [1967] 2 QB 738; [1966] 3 All ER 948 (refd)

Demeter v British Pacific Life Insurance Co (1983) 150 DLR (3d) 249, HC (folld)

Demeter v British Pacific Life Insurance Co (1984) 13 DLR (4th) 318, CA (folld)

Goody v Odhams Press Ltd [1967] 1 QB 333; [1966] 3 All ER 369 (refd)

Hardjo Soekatmo (deceased), Re [1989] 3 MLJ lxxvii (refd)

Hollington v F Hewthorn and Company, Limited [1943] 1 KB 587 (not folld)

Hunter v Chief Constable of the West Midlands Police [1982] AC 529; [1981] 3 All ER 727 (refd)

Jennifer McAlpin Lynn v AK Ludin bin Pg Salimin (Suits Nos 143 of 1987 and 214 of 1988) (folld)

Jorgensen v News Media (Auckland) Limited [1969] NZLR 961 (folld)

Loh Shak Mow v PP [1985-1986] SLR (R) 875; [1986] SLR 358 (refd)

Raymond John Mickelberg and Peter Mickelberg v The Director of the Perth Mint [1986] WAR 365 (folld)

She Eng Gek v D A De Silva [1957] MLJ 55 (not folld)

Singh Kalpanath, Re [1992] 1 SLR (R) 595; [1992] 2 SLR 639 (refd)

Wah Tat Bank Ltd v Chan Cheng Kum [1974-1976] SLR (R) 284; [1975-1977] SLR 1 (folld)

Limitation Act (Cap 163, 1985 Rev Ed) s 29 (consd)

Penal Code (Cap 224, 1985 Rev Ed) ss 109, 304A, 409, 420

Civil Evidence Act 1968 (c 64) (UK)

Evidence Ordinance (Cap 8) (HK) s 62

Road Traffic Act 1930 (c 43) (UK)

Muthu Arusu and Phillip Tay (Drew & Napier) for the plaintiff

Ooi Oon Tat (Emmanuel & Barker) for the defendant.

Judgment reserved.

Goh Joon Seng J

1 The defendant was, at all material times, a director and shareholder of 50% of the issued shares of Broadview Commodities Pte Ltd (“BVC”). BVC was incorporated in Singapore and held itself out as brokers for the purchase and sale of commodities or future interest therein, including gold at various exchanges, including the New York Commodity Exchange (“Comex”). The other shareholder and director was one Lee Kwong Fai (“Lee”), a Hong Kong national, who was the managing director of a Hong Kong gold futures trading company called Broadview Finance Pte Ltd (“BVF”).

2 On 22 February 1982, the plaintiff, whilst dining at the German Chicken Restaurant at International Plaza with one Sim Teng Peng (“Sim”), was introduced to one Lee Tow Kiat (“Tow Kiat”) and June Chng (“June”). June was attached to BVC as a broker. No doubt it was her duty to solicit business for BVC. At her suggestion, they proceeded to the office of BVC at Hong Leong Building, Collyer Quay, Singapore.

3 On arrival, they were shown into the defendant's office where the defendant made a presentation on the activities and bona fides of BVC as a legitimate commodity trading house and (falsely) represented that BVC was financially sound having $1m on fixed deposit with the United Overseas Bank Ltd. Following this presentation, the plaintiff (and Sim), in the presence of the defendant, signed and entered into, with BVC, an agreement in accordance with BVC's standard form of contract called “general agreement for customer accounts” (“the agreement”). By cl 4 of the agreement, the plaintiff agreed with BVC as follows:

It is agreed between me … and you that each contract between us … contemplates actual delivery and receipt of the physical subject matter of the contract and payment therefor.

4 By cl 5 of the agreement, the plaintiff agreed with BVC as follows:

I … will, at all times, maintain with you, in such form as you may require, deposits and or margins in excess of my … indebtedness or obligations to you and the amount of which may be greater than that required by the rules of the appropriate exchange and/or relevant clearing house, if any, upon which the contract concerned was executed on my … behalf. Original deposits and margins or other payments called for are due on demand and in the currency of your choice, subject only to any restrictions which may be imposed by the appropriate exchange and/or relevant clearing house, if any, upon which the contract concerned was executed on my … behalf.

5 The agreement thus required actual execution of buying and selling orders through the relevant exchange. Bucketing by BVC would be a breach of the agreement. The relevant exchange was Comex in which the plaintiff purportedly traded. By cl 3 of the agreement, it was provided as follows:

Each contract between me … and you, and all orders and transactions hereunder will be executed in accordance with, and subject to, the constitution, bye-law, rules, regulations, statutes, customs, usages or conditions … necessarily applicable to … the appropriate exchange … and/or relevant clearing house.

6 It is not in dispute that bucketing is prohibited by the relevant law governing trading in Comex and the rules of Comex.

7 After the agreement was signed, the plaintiff proceeded to trade on the defendant's suggestion. For this first transaction, on 22 February 1982, the plaintiff had no margin with BVC. He only paid in $20,000 on 24 February 1982. On this, his first foray into gold futures trading, he bought and sold ten lots and was credited with a net profit of US$600. Thereafter, except for another transaction on 1 March 1982 in which he was credited with the net profit of US$100, his trading, through BVC, on 11 trading days, ending on 7 April 1982, purportedly resulted in a total loss of $369,390. The plaintiff, throughout, was not allowed to maintain overnight positions and he was told that all open positions had to be squared on the same trading day. He ceased all trading on 8 April 1982.

8 From time to time, from 24 February 1982 to 1 July 1983, the plaintiff paid various sums to BVC in settlement of his “losses” amounting to $272,300. He did so in the belief that they were genuine losses suffered by him as a result of his trading through BVC on Comex. He stopped further payment from July 1983 on the advice of Inspector Henry Soh of the Commercial Crimes Division of the Criminal Investigation Department. When he stopped further payment, the unpaid balance was $97,090.

9 Following investigations by the relevant authorities into the affairs of BVC, BVC was wound up on the petition of the Minister of Law on 21 October 1983 on the ground that BVC was indulging in “churning”, that is buying and selling on behalf of clients excessively to generate commission for itself.

10 Following further investigation, the defendant was charged with six counts of abetment of cheating (District Arrest Case No 3874 of 1984 to District Arrest Case No 3879 of 1984, both inclusive), under ss 420 and 109 of the Penal Code (Cap 224), by conspiring with Lee and others to cheat clients of BVC of various sums of money totalling $1,928,988.88 between December 1981 and August 1982, by deceiving them into believing that their gold trading orders would be placed with authorised international gold exchanges and, thereby, inducing them into paying moneys into BVC. Short particulars of the six charges were:

Name of client	Amount
(a) Madam Chew Swee Poh	$1,062,862.47 (DAC 3874/1984)...