Colombo Dockyard Limited v Athula Anthony Jayasinghe trading as Metro Maritime Services

• Judge: MPH Rubin J
• Judgment Date: 07 December 2002
• Neutral Citation: [2002] SGHC 289
• Citation: [2002] SGHC 289
• Defendant Counsel: G Raman (G Raman & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: Deborah Barker SC and Audrey Chiang (Khattar Wong & Partners)
• Date: 07 December 2002
• Docket Number: Suit No 2238 of 1998
• Court: High Court (Singapore)
• Subject Matter: Weight of evidence,Inferences drawn,Illegal purpose not carried out,Contract,Whether company infected by contrivances of officers,Whether plaintiffs entitled to recover moneys from defendant,Whether plaintiffs can recover moneys remitted to defendant by its officers,Delay in providing explanation,Illegality and public policy,Companies,Acts of officers,Evidence,Plaintiffs' officers remitting moneys to defendant for illegal purpose,Ploy by officers of company to siphon moneys from company

Judgment

GROUNDS OF DECISION

Background facts

1 The plaintiffs, Colombo Dockyard Limited, are a large public corporation in Sri Lanka. They are, as their name suggests, in dockyard, maritime and port-related activities. They are said to own 51% of a company incorporated in Singapore known as Ceylon Shipping Agency.

2 The defendant, Athula Anthony Jayasinghe, is a Sri Lankan national. He was at all material times the managing director of a Singapore company known as Oriental Pearl Trading Pte Ltd (‘Orient Pearl’). The defendant also carried on business in Singapore under the name of Metro Maritime Services.

3 On or about 1 January 1995, the plaintiffs appointed Orient Pearl to act as managing agents of Ceylon Shipping Agency and the defendant as the managing director of Orient Pearl, took over the management of Ceylon Shipping Agency.

4 On or about 9 July 1997, a sum of US$650,000 was remitted by the plaintiffs to an account held by Metro Maritime Services with the Overseas Union Bank of Singapore. The receipt of the payment of the said sum by the defendant was never in dispute. The purpose of the remittance as averred in para 4 of the plaintiffs’ statement of claim was that it was to be used to promote the plaintiffs’ business and apply the said sum in accordance with instructions that were to be given to him by the plaintiffs from time to time. The person who admittedly liaised with the defendant and made arrangements on behalf of the plaintiffs in this connection was one Sarath De Costa (‘De Costa’), a director of the plaintiffs.

5 What followed next was somewhat mystifying. In a nutshell, a tug-of-war developed between the plaintiffs and the defendant in relation to the disposition of the sum paid. Consequently, the plaintiffs brought this action for the recovery of a sum of US$649,187.50 (ie US$650,000 less bank charges of US$12.50) from the defendant. The defendant for his part denied that the plaintiffs were entitled to any repayment as he had disbursed the said sum according to instructions given to him by De Costa in relation to a confidential assignment beneficial to the plaintiffs.

Evidence

6 The plaintiffs’ principal witness in this action was De Costa. His evidence insofar as is material can be stated in the following terms.

7 He met the defendant through a mutual friend who helped the defendant set up Orient Pearl. Ceylon Shipping Agency, one of the plaintiffs’ subsidiaries, was a joint venture between the Ceylon Shipping Corporation (a government company) and the plaintiffs. On or about 1 January 1995, the plaintiffs appointed Orient Pearl to act as the managing agent of Ceylon Shipping Agency and the defendant as managing director of Orient Pearl took over the management of Ceylon Shipping Agency.

8 Sometime in the first half of 1997, the plaintiffs’ directors decided to remit a substantial sum of money to Singapore to be used over a period of time in connection with the promotion of the plaintiffs’ business. The plaintiffs’ directors took the view at that time that it would be useful to have some funds in Singapore for the purposes of their business.

9 By this time, the defendant as managing director of Orient Pearl had been managing Ceylon Shipping Agency for about two years and the plaintiffs’ directors had come to trust him. De Costa suggested to them that the defendant be asked to hold the monies on the plaintiffs’ behalf and apply the same in accordance with instructions. He was then given the green light by the plaintiffs’ directors to approach the defendant to act as custodian of the plaintiffs’ funds and to apply the same in accordance with instructions which would be relayed to him from time to time.

10 Subsequently, De Costa met the defendant in Sri Lanka and conveyed to him the plaintiffs’ wish. He asked the defendant whether he would be agreeable to hold the monies to be remitted to him, on the plaintiffs’ behalf and to apply the same in accordance with instructions to be given to him from time to time. The defendant agreed.

11 Consequently, on 9 July 1997, a sum of US$650,000 was remitted by the plaintiffs to an account operated by the defendant in the name of Metro Maritime Services with the Overseas Union Bank Ltd, Singapore.

12 De Costa expected the defendant to contact him after the defendant had received the remittance but this did not happen. Two or three days after the remittance, De Costa’s secretary informed him that the defendant was in Sri Lanka. De Costa then called the defendant in Sri Lanka but to his shock and surprise, the defendant not only pretended not to know him but also denied having received the said sum or having agreed to act on the plaintiffs’ behalf or having anything to do with the plaintiffs. Presently, De Costa enlisted the help of D.L.H. Ganlath (‘Ganlath’), an attorney-at-law, as well as a director of the plaintiffs, to speak to the defendant with a view to recovering the sum remitted.

13 He later learnt from Ganlath that the defendant had admitted receiving the said sum but was asserting a right to offset it against fees due to him for work he had done for De Costa. De Costa reported the developments to the other directors of the plaintiffs.

14 In or about October 1997, the directors of the plaintiffs decided that a further effort be made to resolve the matter amicably with the defendant. Subsequently, Sarath Obeysekera (‘Obeysekera’), the plaintiffs’ managing director, informed De Costa and his fellow directors that he had contacted the defendant and the latter had agreed to attend a meeting scheduled to take place in October 1997 at the Hyatt Hotel, Singapore.

15 Following the arrangement, the plaintiffs’ then chairman, Ide, Obeysekera, Ganlath and De Costa arrived in Singapore for the meeting. The defendant, however, failed to turn up for the meeting at the appointed time and date and the result was that the plaintiffs’ effort to achieve an amicable resolution of the matter failed.

16 In the event, by a letter dated 16 July 1998, the plaintiffs requested the defendant to repay the said sum to them. The defendant failed to comply with this request.

17 De Costa learnt subsequently from Koichi Yamanaka (Yamanaka) the new chairman of the plaintiffs, that the defendant had called him in Sri Lanka on 28 July 1998 and requested a meeting with him to discuss the remittance. Yamanaka’s reply to the defendant was that the plaintiffs’ board of directors had already made a decision to take legal action against the defendant and as such he should contact the plaintiffs’ legal officer to discuss the matter instead. Subsequently, six pages of photocopied documents were left at Yamanaka’s residence in Sri Lanka by the defendant. According to De Costa, the defendant had left the said documents in an endeavour to explain what he had done with the monies remitted to him. The documents however reflected some transactions in the year 1996, prior to the remittance of the sum of US$650,000.00 and were unrelated to the sum in issue.

18 Since the defendant had failed to return the monies remitted to him, the plaintiffs wrote to him on 19 August 1998, stating that the documents which had been forwarded by the defendant did not provide any explanation as to what he had done with the monies remitted to him. The plaintiffs demanded in that letter that the defendant provide documents to show how he had utilised the said sum. No reply was forthcoming. Through their solicitors’ letters dated 30 October and 7 November 1998, the plaintiffs again demanded the repayment by the defendant of the said sum. No payment was received from the defendant and hence the commencement of the proceedings herein on 8 December 1998.

19 De Costa also denied the allegations of the defendant, contained in the particulars of the defence filed on 25 May 1999, that De Costa had orally requested the defendant to render services to the plaintiffs and to carry out such services in strict confidence. De Costa said that the plaintiffs had no knowledge of any alleged concessions obtained, undertakings revalidated or environment created by the defendant for the plaintiffs through the officers of the Sri Lankan Government.

20 De Costa further averred that he had not participated in any fraudulent scam involving the siphoning out monies of the plaintiffs or any other wrongful acts. He asserted that the sum of US$650,000 was sent to the defendant for business promotion purposes; neither the said sum nor any part thereof comprised bribe money; and the plaintiffs had no knowledge of the making of any bribes by the defendant. He added that he did not receive any part of the said sum of US$650,000 and the allegation that he had received part of the sum of US$650,000 remitted to him were false, mischievous and malicious.

21 De Costa was cross-examined by counsel for the defendant in relation to his previous dealings with the defendant. It would appear from the answers given by De Costa in cross-examination that he had prior to 1997, an ongoing business relationship with the defendant to the extent that there were a number of payments made to him by the defendant – all of them pre-dating the remittance of the sum by the plaintiffs in July 1997 (pages 192 to 198 of the NE and AB-2 to AB-8). De Costa admitted receiving US$122,500, US$400,000 (AB-3/AB-4), US$30,000 (AB-6) and another sum of US$200,000 (AB-7) paid to his wife. He explained that the last payment of US$200,000 was chanelled through his wife to a person in Japan in connection with the plaintiffs’ business promotional efforts (pages 196 and 197 of the NE). There were two other payments of US$28,000 and US$45,000. De Costa denied receiving these two sums.

22 De Costa explained why the plaintiffs had set up a business promotion fund in Singapore. He said it was to pay ship’s crew such as superintendents, captains and the like to give them incentives to bring work to the plaintiffs’ yards (see pages 190 to 192 of the NE).

23 De Costa was...