Esben Finance Ltd and others v Wong Hou-Lianq Neil

• Jurisdiction: Singapore
• Judge: Henry Bernard Eder IJ
• Judgment Date: 14 December 2020
• Neutral Citation: [2020] SGHC(I) 25
• Plaintiff Counsel: Davinder Singh s/o Amar Singh SC, Pardeep Singh Khosa, Rajvinder Singh Chahal, Avinash Iswar Selvarajah, Sumedha Madhusudhanan (Davinder Singh Chambers LLC)
• Date: 14 December 2020
• Docket Number: Suit No 6 of 2018
• Hearing Date: 20 July 2020,13 July 2020,14 July 2020,16 July 2020,21 July 2020,17 July 2020,15 July 2020,22 July 2020,20 August 2020
• Subject Matter: Trusts,Contract,When time begins to run,Unjust enrichment,Constructive trusts,Illegality and public policy,Limitation of Actions,Restitution
• Year: 2020
• Defendant Counsel: Francis Xavier s/o Subramaniam Xavier Augustine SC, Jainil Bhandari, Chia Xin Ran Alina, Chiang Yuan Bo, Kristin Ng Wei Ting and Riko Isaac (Rajah & Tann Singapore LLP)
• Citation: [2020] SGHC(I) 25
• Court: International Commercial Court (Singapore)
• Published date: 18 December 2020

Henry Bernard Eder IJ: Introduction

The trial of this action was conducted over some eight days using the Zoom platform followed by the exchange of the parties’ detailed written submissions on a number of important discrete points. With a very large volume of documents (perhaps 40,000 or more in some 80 bundles) provided by the parties in both electronic and hard-copy form and oral testimony from numerous factual witnesses as well as experts on accountancy and foreign law, the conduct of this trial presented considerable logistical difficulties. I am grateful for the cooperation and assistance of counsel as well as the support from the Singapore International Commercial Court (“SICC”) Registry which ensured the smooth running of the trial.

The present action concerns a family dispute on a grand scale. I was told that it forms only part of various proceedings in different jurisdictions including Malaysia and the British Virgin Islands (“BVI”). On the plaintiffs’ side, the main driver of the present action appears to be an individual called Wong Kie Yik (“WKY”). The defendant, Neil Wong Hou-Lianq, is his nephew.

The first two plaintiffs, Esben Finance Limited (“Esben”) and Incredible Power Limited (“Incredible Power”) are companies incorporated in the BVI. The third and fourth plaintiffs, Rayley Co Limited (“Rayley”) and Lismore Trading Company Ltd (“Lismore”) are companies incorporated in Liberia. All four companies are (at least in a loose sense) part of what has been referred to in this action as the WTK Group of companies (“WTK Group”) which was named after its founder, the late Datuk Wong Tuong Kwang (“WTK”).

WTK was a successful Malaysian businessman whose empire spanned many businesses, including timber logging and harvesting. The flagship company of the WTK Group is WTK Realty Sdn Bhd (“WTK Realty”) which was incorporated in Malaysia in the early 1980s. The WTK Group comprises over 50 companies, many of which were incorporated in Sarawak, Malaysia with the WTK Group’s head office situated in the capital, Sibu, Sarawak. Some of the companies in the WTK Group or originally established by WTK were incorporated in Singapore, Papua New Guinea, the BVI and Liberia (together, the companies incorporated in Liberia and the BVI are referred to as the “Offshore Companies”) including the plaintiffs.

An organogram submitted by the plaintiffs identifying in summary form the relevant parts of the corporate structure of these companies is attached as Annex A to this judgment although I should note that this organogram was disputed in part by the defendant, the main areas of contention being with regard to (a) the directorship of Incredible Power and Rayley; and (b) whether one of the named companies viz Elite Honour Sdn Bhd (“Elite Honour”) should be included as one of the “Logging Companies” (ie, the Malaysian companies that were in the logging business). So far as relevant, I deal with these points below.

Although the plaintiffs are, as I have said, part of the WTK Group at least in a loose sense, it is important to note that they were not included in the audited financial statements of WTK Realty. However, as appears from Annex A, there is no doubt that there were common shareholdings between the plaintiffs and other companies within the WTK Group strictly so-called. Further, the consolidated accounts of the WTK Group reflect the close interplay between the finances of the plaintiffs and that of the logging companies which were at the heart of the WTK Group. As submitted on behalf of the defendant, this is evident from the document titled “WTK Organisation – Consolidated Accounts”, which shows that the WTK Group’s intercompany account balances would not be complete without the inclusion of the plaintiffs’ account balances, which are required to balance the debits and credits of the various companies within the WTK Group. Thus, it is the defendant’s case that the Offshore Companies including the plaintiffs were, in effect, treated as a single economic entity.

Be all this as it may, it is common ground that the Offshore Companies including the plaintiffs were in the business of buying timber from the Malaysian companies in the WTK Group and selling the timber on to third parties including buyers in India, China, Japan and Taiwan. To that extent, the plaintiffs were, in effect, intermediaries. On any view, there was plainly a very close connection between the plaintiffs and the other companies within the WTK Group strictly so called.

WTK had three sons, WKY, Wong Kie Nai (“WKN”) and Wong Kie Chie (“WKC”), (together the “Wong Brothers”). They joined WTK in his business in the late 1960s and 1970s. According to WKY, the three brothers were “close” and had a “very good relationship”.

Following a stroke in 1993, WTK handed over responsibility for the overall management and control of the WTK Group as well as the plaintiffs to WKN, WKY and WKC, although I should emphasise that one of the important issues in this case concerns the precise part played by each of the individuals in that context.

For present purposes, it is sufficient to note that it is the plaintiffs’ case that following WTK’s stroke, it was WKN who handled the day-to-day management of a number of the Malaysian companies in the WTK Group, including Elite Honour, Ocarina Development Sdn Bhd (“Ocarina”), Sunrise Megaway Sdn Bhd (“Sunrise Megaway”), Harvard Rank Sdn Bhd (“Harvard Rank”), Faedah Mulia Sdn Bhd (“Faedah Mulia”) and WTK Management Services Sdn Bhd (“WTK Management”). It is common ground that at all material times, WTK Management provided administrative services, including marketing and accounting to the Malaysian companies in the WTK Group. Two of the plaintiffs’ witnesses, Ms Janice Ting Soon Eng (“Ms Ting”) and Ms Helen Loh Leh Fong (“Ms Loh”), were (and are) employees of WTK Management. Ms Ting joined WTK Management in 1982 as the head of the accounts department. Today, she is its Chief Financial Officer. Ms Loh joined WTK Management in 1989 as an accountant.Today, she is its Financial Controller. Ms Loh also handled the accounts of Elite Honour, Ocarina and Sunrise Megaway.

The evidence of Ms Ting and Ms Loh is that they reported to and worked closely with WKN from the time they joined WTK Management until his death in March 2013. According to Ms Ting, WKN was “authoritative and domineering” and expected his employees to do as they were told. To similar effect, the evidence of Ms Loh was that WKN was a “strong character” who was “very quick but firm with his instructions” and expected his instructions to be carried out immediately.

In summary, it is the plaintiffs’ case that WKN was also in charge of the day-to-day management, affairs and business of the Offshore Companies including the plaintiffs; that from 1993 until his own death in March 2013, it was WKN who directed the plaintiffs’ affairs, made all the decisions affecting the plaintiffs and exercised complete control over the plaintiffs; that although WKY was the eldest of the three brothers, WKN became, in effect, the patriarch of the family; and that he had absolute control over and could do what he liked with the plaintiffs and would brook no interference.

At the material times, the plaintiffs each had US$ and/or S$ bank accounts with the Singapore branch of the Hongkong and Shanghai Banking Corporation (“HSBC”). Lismore, Rayley, and Incredible Power each had bank accounts in US$ and S$, while Esben had one bank account in US$ (“plaintiffs’ accounts”). WKN, WKY and WKC were the authorised signatories of these accounts. Any one out of the three authorised signatories’ signatures could authorise payments from the plaintiffs’ accounts.

On 11 March 2013, WKN passed away after a period of illness leaving a widow, Kathryn Ma Wai Fong (“Mdm Ma”) and two children, Neil Wong Hou Lianq (the defendant) and Mimi Wong. On the death of WKN, effective control of the WTK Group and the plaintiffs passed to WKY and WKC.

Summary of the plaintiffs’ case

In summary, it is the plaintiffs’ case that following WKN’s death, WKY and WKC discovered that over a period of some 11 years between January 2001 and November 2012, some 50 separate payments had been made from the plaintiffs’ various bank accounts on the instructions of WKN to the defendant amounting in total to US$20,278,565.41 and S$4,473,100.52 (the “50 Payments”) in circumstances where (so say the plaintiffs) WKY and WKC were unaware of these payments to the defendant, the defendant did not provide any consideration to the plaintiffs for those payments, the plaintiffs did not receive any benefit from the defendant for those payments and those payments were made to the defendant even though they were not in the plaintiffs’ interests.

A table setting out the date of each payment together with other relevant information is attached as Annex B to this judgment.

It is the plaintiffs’ case that the 50 Payments to the defendant were discovered by WKY only after WKN’s death in circumstances which are described in paras 119 to 139 of WKY’s first affidavit of evidence in chief (“AEIC”). In summary: Shortly after WKN’s death in March 2013, WKY looked into the accounts and financial affairs of the companies that WKN had managed. As part of that exercise, WKY told Ms Ting to ask Mr Richard Tiang (“Mr Tiang”) (who was, according to WKY, the person responsible for carrying our administrative services for the plaintiffs including arranging payments to be made from the plaintiffs’ HSBC bank accounts) what the balances in the HSBC’s bank accounts were. Mr Tiang then sent the bank statements to Ms Ting who then showed them to WKY. The bank statements showed that there was less than US$2.2m and S$1.3m in the plaintiffs’ HSBC bank accounts. According to WKY, he was surprised at these balances because they were much lower than what he had thought they would be. WKY then asked Ms Ting to check with...