Esben Finance Ltd and others v Wong Hou-Lianq Neil

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 10 January 2022
• Neutral Citation: [2022] SGCA(I) 1
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 3 of 2021
• Year: 2022
• Published date: 13 January 2022
• Hearing Date: 05 July 2021
• Plaintiff Counsel: Davinder Singh s/o Amar Singh SC, Pardeep Singh Khosa, Rajvinder Singh Chahal and Sumedha Madhusudhanan (Davinder Singh Chambers LLC)
• Defendant Counsel: Francis Xavier SC, Jainil Bhandari, Disa Sim, Chia Xin Ran Alina, Kristin Ng Wei Ting, Tay Bok Chong Alvin and Veltrice Tan Yin Rong (Rajah and Tann Singapore LLP)
• Subject Matter: Trusts,Constructive trusts,Restitution,Unjust enrichment,Limitation of Actions,When time begins to run,Contract,Illegality and public policy
• Citation: [2022] SGCA(I) 1

Andrew Phang Boon Leong JCA (delivering the judgment of the court): Introduction

This is an appeal against the decision of the International Judge (“the Judge”) in Esben Finance Ltd and others v Wong Hou-Lianq Neil [2021] 3 SLR 82 (“the Judgment”). As we shall see, although the present appeal concerns claims made in respect of payments made in the distant past, it nevertheless engages issues of law that remain open for resolution in the present. Thus, what appears at first blush to be a withered claim may yet bear fresh leaves in the context of the present case.

The parties to the dispute

The appellants are two companies incorporated in the British Virgin Islands (“BVI”), viz, Esben Finance Limited (“Esben”) and Incredible Power Limited (“Incredible Power”), and two companies incorporated in the Republic of Liberia, viz, Rayley Co Limited (“Rayley”) and Lismore Trading Company Ltd (“Lismore”) (collectively, the “appellants”). The appellants were related to the WTK Group of companies (“WTK Group”) founded by a Malaysian businessman, the late Datuk Wong Tuong Kwang (“WTK”). The appellants were administered by Double Ace Trading Co (Pte) Ltd (“Double Ace”) in Singapore. One of Double Ace’s employees, Richard Tiang (“Tiang”), was responsible for the appellants’ book-keeping.

The respondent, Neil Wong Hou-Lianq, was WTK’s grandson, being the son of WTK’s son, Wong Kie Nai (“WKN”). WTK had two other sons, Wong Kie Yik (“WKY”) and Wong Kie Chie (“WKC”).

Background to the dispute

From 1993, WTK handed over responsibility for the overall management and control of the WTK Group and the appellants to his sons, WKN, WKY and WKC, although the precise role played by each of them in the WTK Group is disputed. They were also directors and shareholders of Double Ace. According to the appellants, WKN was the leading spirit among the three brothers. It was he who handled the day-to-day management of a number of the Malaysian companies in the WTK Group, including Elite Honour Sdn Bhd, Ocarina Development Sdn Bhd, Sunrise Megaway Sdn Bhd, Harvard Rank Sdn Bhd, Faedah Mulia Sdn Bhd and WTK Management Services Sdn Bhd (“WTK Management”) (which provided administrative services to the Malaysian companies in the WTK Group). WKN was also in charge of the day-to-day management, affairs and business of, and exercised complete control over, the appellants. Despite WKY being the eldest of the three brothers, WKN became, in effect, the patriarch of the Wong family and did not tolerate any interference in the appellants’ affairs.

On 11 March 2013, WKN passed away, survived by his widow, Kathryn Ma Wai Fong (“Mdm Ma”) and two children, one of whom is the respondent. Upon WKN’s death, effective control of the WTK Group and the appellants passed to WKY and WKC. According to the appellants, this was when WKY noticed that the balances of the appellants’ bank accounts were lower than expected. He then instructed Janice Ting Soon Eng (“Ms Ting”), a senior employee of WTK Management, to make inquiries with Tiang. These inquiries were eventually made with Tiang about a year later, in March 2014. Tiang revealed that over a period of some 11 years between January 2001 and November 2012, WKN had instructed that some 50 payments (“the 50 payments”) be made from the appellants’ bank accounts to the respondent without the knowledge of WKY and WKC. The payments shall be referred to hereafter as “payment No 1”, “payment No 2”, and so on. The 50 payments amounted, in total, to US$20,278,565.41 and S$4,473,100.52. Significantly, the telegraphic transfer (“TT”) forms for some of the 50 payments bore WKY’s own signature.

Tiang further claimed that in April 2012, he had been instructed by WKN to destroy the documents of all the offshore companies related to the WTK Group, including the appellants, but Tiang only carried out the destruction of the aforesaid documents in September 2014.

After some considerable delay, on 21 April 2016, the appellants (excluding Esben, which had by then been struck off the register) demanded that the respondent repay the monies that had been remitted to him from their bank accounts (in respect of the 50 payments). However, the respondent refused. After some further delay, the appellants then commenced legal action to recover the 50 payments from him by a writ of summons dated 20 November 2017.

It is noteworthy that Tiang had, in February 2019, pleaded guilty to and been convicted of some 15 criminal charges, with a further 54 charges taken into consideration for the purpose of sentencing, for dishonestly misappropriating some S$46.2m of the appellants’ monies over an extended period of time. Not all of the appellants’ documents were destroyed by Tiang. Some of them, relating to the appellants’ business of trading logs and documenting their transactions with Malaysian logging companies within the WTK Group and other logging companies for the sale of logs, were seized and preserved by the Commercial Affairs Department (“CAD”) in connection with the investigations into, prosecution and subsequent conviction of Tiang for dishonest appropriation (“the CAD Documents”). These were returned to Double Ace in June 2016.

Before the Judge, the respondent did not dispute that he had received all 50 payments. According to him, the 50 payments consisted of the following. 11 payments were “gifts” from WKN; Three payments were directors’ fees and shareholder dividends to which he was entitled and/or gifts from WKN; and The remaining 36 payments were made in connection with an alleged “practice” by which companies in the WTK Group, including the appellants, entered into “split fee” arrangements which permitted their taxable revenues to be split into “onshore” and “offshore” components, the latter of which would not be declared to the Malaysian tax authorities, thereby effectively evading Malaysian tax and which was illegal under Malaysian law.

Before the Judge, the respondent argued that there was no wrongdoing on his part or on WKN’s part with regard to the 50 payments. Further, both WKY and WKC had actual knowledge, or ought to have had actual knowledge, of most if not all of the payments when they were made. The appellants’ claims for the payments were therefore time-barred under s 6 of the Limitation Act (Cap 163, 1996 Rev Ed) (“Limitation Act”), or, alternatively, barred by the doctrine of laches and/or acquiescence.

Decision below The unsatisfactory state of the evidence

The Judge began with observations on the unsatisfactory state of the evidence at trial. He observed that the earliest of the 50 payments was made over 20 years ago, and that this made it “difficult, if not impossible” for the respondent to recollect the exact true purpose for the payments, which explained the shifts in his pleaded Defence (see the Judgment at [63]). The Judge also noted that the documentary record for the 50 payments was unsatisfactory because the appellants had no proper accounting system and did not prepare any trial balances, financial statements, monthly management accounts or year-end accounts (see the Judgment at [66]). The Judge found that the respondent was not to blame for these deficiencies in documentation (see the Judgment at [67]).

The Judge also found that Tiang’s assertion that WKN had instructed him to destroy a large number of the appellants’ documents was doubtful, given that Tiang had his own motives for doing so. Tiang was a “convicted fraudster on a massive scale” who was guilty of misappropriating the appellants’ funds (see the Judgment at [42]). In addition, Tiang only destroyed some of the appellants’ documents some 18 months after WKN’s death, which contradicted Tiang’s version of events, namely, that he had been instructed by WKN to destroy all of the appellants’ documents (see the Judgment at [70]–[71]).

The appellants did not originally disclose the CAD Documents and only did so subsequently pursuant to an order for specific disclosure. The Judge observed that this was a serious failure on the part of the appellants to comply with their disclosure obligations (see the Judgment at [71]). Although the appellants contested the admissibility of the CAD Documents on the grounds that they were hearsay, the Judge was satisfied that they were properly regarded as the appellants’ own documents and records (see the Judgment at [84]) and fell within the exception to hearsay under s 32(1)(b)(iv) of the Evidence Act (Cap 97, 1997 Rev Ed) (“Evidence Act”) as statements made by a person in the ordinary course of a trade, business, profession or other occupation (see the Judgment at [86]).

Apart from the destroyed documents and the CAD Documents, there was also the possibility that some of the appellants’ documents were stored in steel cabinets in WKN’s offices in WTK Management’s premises in Sibu, Malaysia. However, Mdm Ma had arranged for these steel cabinets to be removed and there was no trace of the documents (if any) therein or any indication of what they were. The Judge, however, doubted the relevance of such documents (if any) to the dispute since the appellants were administered by Double Ace in Singapore (see the Judgment at [73]).

The issue of time-bar and/or laches

The Judge next turned to consider whether and to what extent the appellants’ claims were time-barred, observing that while the defence of time-bar was raised only at a late stage in the course of the trial, it could be justified on a close reading of the Defence and thus had been sufficiently pleaded (see the Judgment at [107]). On the issue of when the applicable limitation period of six years, as provided for in s 6 of the Limitation Act, would start to run, the Judge proceeded on the assumption that ss 29(1)(a) and 29(1)(b) of the Limitation Act applied (see the Judgment at [108]). These provisions read as follows:

Postponement of limitation period in case of fraud or mistake

29.—(1) ...