DBS Bank Ltd v Yamazaki Mazak Singapore Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 21 October 2008
• Neutral Citation: [2008] SGHC 181
• Court: High Court (Singapore)
• Published date: 24 October 2008
• Year: 2008
• Plaintiff Counsel: Terence Tan and Melissa Thng (Rodyk & Davidson LLP)
• Defendant Counsel: Chua Sui Tong and Aw Wen Ni (Wong Partnership LLP),Loo Dip Seng (Ang & Partners)
• Subject Matter: Civil Procedure,Evidence
• Citation: [2008] SGHC 181

21 October 2008

Tay Yong Kwang J:

Introduction

1 The three Registrar’s Appeals before me were against the decisions of the Assistant Registrar Teo Guan Siew (“AR Teo”) and Senior Assistant Registrar Kenneth Yap (“SAR Yap”) given on 18 March 2008 and 25 April 2008 respectively. Registrar’s Appeal No 105 of 2008 (“RA 105”) concerned Mr Hwa Lai Heng’s (“the 2nd defendant”) appeal against AR Teo’s decision granting summary judgment to DBS Pte Ltd (“the plaintiff”) for its claim against him, while Registrar’s Appeal No 110 of 2008 (“RA 110”) concerned, conversely, the plaintiff’s appeal against AR Teo’s decision granting Yamazaki Mazak Singapore Pte Ltd (“the 1st defendant”) unconditional leave to defend. The last Registrar’s Appeal No 170 (“RA 170”) concerned the 2nd defendant’s appeal against SAR Yap’s dismissal of his application to amend his Defence filed on 3 October 2007.

2 After hearing the parties, I dismissed all three appeals. However, for RA 105, I varied the judgment sum granted to the plaintiff to the extent and for the reasons stated at [33] below. The 2nd defendant has since appealed against my decision in both RA 105 and RA 170. I now set out the grounds for my decision.

Background

The facts

3 The 1st defendant was a company incorporated in Singapore and was in the business of, inter alia, the manufacture and repair of machinery and machine tools, while the 2nd defendant was an assistant sales manager of the 1st defendant. The dispute between the parties arose out of an agreement between the plaintiff and Sin Yuh Industries (Pte) Ltd (“Sin Yuh”) (“the agreement”) whereby the plaintiff granted Sin Yuh two Regionalisation Finance Scheme (“RFS”) loans (“RFS I” and “RFS II”) to partially finance the purchase of 31 units of Yamazaki Mazak machinery (“the machines”) from the 1st defendant. The loan amount under RFS I (“the loan agreement”) was $1.94m (“the loan”) and the loan amount under RFS II was $1.54m. There appears to be some dispute as to who the actual buyer of the machines was; the defendants alleged that the machines were sold not to Sin Yuh, but to a Malaysian company known as Zhang Hui Industries Sdn Bhd (“Zhang Hui”), in which Sin Yuh held 69% of the shareholding. However, nothing really turns on this in the present proceedings, given that it is undisputed that the loan agreement was between Sin Yuh and the plaintiff and it is this loan agreement that is relevant for the purposes of the present proceedings.

4 Under the loan agreement, the amount to be financed for the machines was 60% of the valuation/purchase price of the machines or $1.94m whichever was lower. The two pre-conditions for the disbursement of the loan were:

(a) Sin Yuh shall furnish evidence satisfactory to the plaintiff that the difference between the purchase price of the machines and the loan (i.e., 40% of the purchase price of the machines) has been paid by Sin Yuh to the 1st defendant; and

(b) the legal documentation as required by the plaintiff must be completed.

5 By way of an email from Joyce Tia Hui Yee (“Joyce”), the finance manager of Sin Yuh, dated 13 December 2002 and sent to the 2nd defendant, Sin Yuh requested that the 1st defendant provide the plaintiff with confirmation that the difference between the purchase price of the machines and the loan had been received from Sin Yuh (as part payment of the machines) and details of the 1st defendant’s bank account for the disbursement of the loan. By way of letter dated 16 December 2002 to the plaintiff (“the letter”), the 1st defendant confirmed that it had received the sum of $1.293m from Sin Yuh, being 40% down payment of the machines and provided its bank account details to Sin Yuh. This letter was prepared and signed by the 2nd defendant.

6 Eventually, the plaintiff disbursed the loan to the 1st defendant’s bank account on or about 10 March 2003. Sin Yuh subsequently defaulted on the repayments of the loan to the plaintiff and became insolvent.

7 For his involvement in the transaction, the 2nd defendant was later charged under s 420 read with s 109 of the Penal Code (Cap 224, 1985 Rev Ed) for allegedly conspiring with one Roger Cheong Sing Whee (“Roger”), the managing director of Sin Yuh, and Joyce to cheat the plaintiff into disbursing the loan to the 1st defendant and was convicted and sentenced to 20 months’ imprisonment by a District Judge. On appeal, Yong Pung How CJ (“Yong CJ”) amended the charge of conspiracy to one of abetment by intentional aiding the commission of the offence of cheating under s 107(c) of the Penal Code and reduced the sentence to 18 month’s imprisonment (see Hwa Lai Heng Ricky v Public Prosecutor [2005] SGHC 195 (“Hwa Lai Heng Ricky”)).

The plaintiff’s claim against the 2nd defendant

8 As submitted in its written skeletal submissions, the plaintiff’s claim against the 2nd defendant rested on the tort of deceit. Essentially, the plaintiff’s case was that the 2nd defendant had falsely represented in the letter that the 1st defendant had received 40% of the purchase price of the machines from Sin Yuh when he knew that this was untrue. His misrepresentation had induced the plaintiff into disbursing the loan to the 1st defendant, causing the plaintiff to suffer a loss when Sin Yuh subsequently defaulted on the repayments and became insolvent.

9 For the claim against the 2nd defendant and its summary judgment application, the plaintiff relied on the 2nd defendant’s conviction in the earlier criminal proceedings, where the prosecution’s case against the 2nd defendant was that he had induced and deceived the plaintiff into disbursing the loan by preparing and sending the letter, despite knowing that Sin Yuh had not paid the 40% of the purchase price for the machines stated in the letter (Hwa Lai Heng Ricky at [7]-[8]).

10 In the affidavit of Henry Tan Bee Heng dated 31 October 2007 filed in support of the plaintiff’s application for summary judgment (as well as in its written skeletal submissions), the plaintiff sought to highlight a few salient findings made by Yong CJ in arriving at his decision that the 2nd defendant was guilty of the offence. In particular, the plaintiff referred to Yong CJ’s finding that the plaintiff was “materially influenced by the false pretence effected through P64 [i.e., the letter]” and without it would not have disbursed the loan (Hwa Lai Heng Ricky at [18]). The plaintiff also pointed out that Yong CJ had rejected the 2nd defendant’s defence in the criminal proceedings that he had an honest belief that 40% of the purchase price had been paid by Sin Yuh, given that he had thought that the payments made by Sin Yuh via post-dated cheques for 15 other machines under hire purchase agreements with Tokyo Leasing (Singapore) Pte Ltd (“Tokyo Leasing”) and Arab-Malaysian Finance Bhd (“Arab-Malaysian”) were payment for 40% of the purchase price of the machines. Yong CJ had, in fact, found that the 2nd defendant was well aware that this was not the case and that he had a dishonest intention when he sent out the letter (Hwa Lai Heng Ricky at [20]-[21]):

20 As for the third ingredient of dishonesty under s 420, s 24 of the Penal Code provides that anyone who does anything with the intention of causing wrongful gain to one person or wrongful loss to another, is said to do that thing dishonestly. The appellant’s [i.e., the 2nd defendant] intention was dishonest within the meaning of s 24 read with s 23 Penal Code, as there was an intention on his part to cause wrongful gain to his company, Yamazaki, or alternatively to cause wrongful loss to DBS. On the facts of the case, I found that the representation in P64 was obviously false. At the material time, Yamazaki had only received $902,460 from Sin Yuh towards the payment for all the machines. Out of this, the appellant confirmed that $147,000 was supposed to have been considered as down payment for six machines under hire purchase arrangements with Tokyo Leasing; $291,000 was supposed to have been considered as the down payment for nine machines under hire purchase arrangements with Arab-Malaysian. This means that Yamazaki would have received from Sin Yuh only about $464,460 (and not $1.293m as represented in P64) for the 31 machines.

21 As the trial judge helpfully observed, the appellant had been hounding Cheong and Joyce for the payment of the machines for some time. He knew Sin Yuh must show that it had made a 40% deposit payment for the 31 DBS machines before the loan could be disbursed. The appellant must have known that DBS would not disburse the loan had it known that Sin Yuh only paid less than 40% of the purchase price. Thus, the appellant prepared P64 [i.e., the letter] to induce DBS to disburse the loan. At this juncture, I would also dismiss the appellant’s contention that he did not send P64. It did not matter whether Joyce or the appellant sent P64. What was important was that the letter was prepared by the appellant who harboured a dishonest intention, and the letter did in fact result in the deception and inducement of DBS into disbursing the moneys. Consequently, I agreed with the judge’s conclusion that the elements of s 420 Penal Code had been satisfied.

[emphasis added]

11 In his show cause affidavit, the 2nd defendant raised (again) the defence of an honest belief based on the post-dated cheques, as well as an alleged breach by the plaintiff of a condition imposed on it by the Economic Development Board of Singapore (“EDB”), which managed the RFS. Clause 3 of the terms and conditions set out in a letter from EDB to the plaintiff dated 25 February 2003 (“the EDB letter”) provided that the machines should not be financed under the RFS if deposit on the machines had been made prior to the submission of the application form for RFS to the plaintiff. The 2nd defendant averred that Sin Yuh’s application for RFS was dated 13 June 2002, yet partial payment of 40% of the purchase price had been made by Sin Yuh for the machines in January...