Gan Cheng Chan v Gan Meng Hui

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 18 March 2005
• Neutral Citation: [2005] SGHC 55
• Court: High Court (Singapore)
• Published date: 18 March 2005
• Year: 2005
• Plaintiff Counsel: Jason Lim (Michael Khoo and Partners)
• Defendant Counsel: Irving Choh and Janice Sim (Rajah and Tann)
• Subject Matter: Contract,Intention to enter into legal relations,Whether daughter's contention that agreement disadvantageous to her constituted acceptance that there was an agreement in force,Whether there was intention to enter into legal relations,Undue influence,Daughter signing agreement providing for loan to father,Whether agreement manifestly disadvantageous to daughter,Whether presumed undue influence exercised by father over daughter
• Citation: [2005] SGHC 55

18 March 2005

Lai Siu Chiu J:

The background

1 Gan Cheng Chan (the plaintiff) is the father of Gan Meng Hui (the defendant). The plaintiff sued the defendant for specific performance of an agreement dated 7 November 2003 (“the Agreement”), alternatively, for damages.

2 The defendant filed a Defence and Counterclaim to the Statement of Claim. After he had filed a Reply and Defence to the Counterclaim, the plaintiff applied for summary judgment (“the application”) against the defendant. The application was heard by the assistant registrar, who ordered that the defendant be granted unconditional leave to defend the action.

3 The plaintiff appealed against the decision of the assistant registrar in Registrar’s Appeal No 302 of 2004 (“the appeal”). I heard the appeal and varied the order of the assistant registrar by granting conditional leave to the defendant to defend the plaintiff’s claim, provided she furnished security in the sum of $187,500 for the claim by 3 December 2004, failing which the Defence and Counterclaim she filed would be set aside and the plaintiff would be at liberty to enter final judgment against her with costs.

4 Being dissatisfied with the orders I made, the defendant has filed a Notice of Appeal (in Civil Appeal No 121 of 2004) against my decision.

The facts

5 The facts leading to the filing of this suit are to be found in the affidavits filed for the application. It would be necessary for me to first set out the history behind the Agreement, before I deal with the affidavits of the parties.

6 Ang Suan Hong (“Ang”), the defendant’s mother, was divorced from the plaintiff in June 2002. The couple has five children of whom the defendant is the eldest daughter, being 25 years of age at the material time. The couple were the co-founders of a family business in textiles and apparel manufacturing known as Ghim Li Holdings Co Pte Ltd (“the Company”). It is reputed to be the largest garment manufacturer in Singapore.

7 Prior to the execution of the Agreement and two other deeds, the plaintiff was the executive chairman and a director of the Company. He was also a director of the following affiliated or subsidiary companies:

(a) Ghim Li Global Pte Ltd;

(b) Ghim Land Property Investments Pte Ltd;

(c) Maxim Textile Technology (Pte) Ltd;

(d) Jopatch Apparel Pte Ltd;

(e) Jati Freedom Textile Sdn Bhd.

The Company, together with the above companies, shall hereinafter be referred to collectively as “the Ghim Li group of companies”.

8 Despite their divorce, the couple continued their working relationship of managing the company until an incident in 2002 where the plaintiff borrowed money from the Company to buy its shares. As a result, the plaintiff was obliged to apply to court under s 391 of the Companies Act (Cap 50, 1994 Rev Ed) to rectify his breach. As the Company was then intending to apply for a public listing, the plaintiff knew he would have to resign from the management of the Company so as not to jeopardise its floatation.

9 However (according to the defendant), the plaintiff refused to vacate his office at the Company and demanded huge sums of money by way of compensation. This led to quarrels between the couple and Ang sought to remove the plaintiff as a director, by calling for an extraordinary general meeting of the Company to be held on 30 September 2003, after he refused to step down as chairman and director at her request, by his letter dated 4 September 2003. Further arguments ensued between the couple. Eventually, as a compromise, the plaintiff and Ang signed a deed of settlement (“the Settlement Deed”). Separately, the defendant and the plaintiff signed the Agreement while Ang and the defendant signed a deed of undertaking (“the Undertaking”). Like the Agreement, the Settlement Deed and the Undertaking were signed contemporaneously and were also dated 7 November 2003. Recital C in the Agreement stated that the Agreement and the Undertaking were supplemental to the Settlement Deed.

10 Although the defendant admitted she signed the Agreement, she claimed she was not legally advised whereas the Company and Ang had separate legal representation. The defendant claimed the plaintiff approached her and coaxed her to sign the Agreement after he had executed the Settlement Deed with Ang; it was to ensure he would receive some money after the Company was listed. The defendant was in a dilemma. She had just joined the Company in 2002 (at 22 years of age) after graduating from her studies in the United States. She did not want to make her father unhappy by refusing his request. At the same time, she knew (and so did the plaintiff) that she did not have the means to perform the Agreement, one of which terms included lending the plaintiff $750,000. Despite her misgivings, however, the defendant signed the Agreement on the plaintiff’s persuasion. On hindsight, the defendant realised the Agreement was actually a ploy on the part of the plaintiff to procure Ang to pay him $750,000.

11 The Settlement Deed was a global settlement between the couple covering the plaintiff’s interests, shareholdings, office and remuneration in the Ghim Li group of companies as well as the matrimonial home at 5 Oak Avenue (“the property”). The Agreement also covered the same subject matters as the Settlement Deed and certain trust shares beneficially owned by the plaintiff. The Undertaking was in respect of shares in the Company that the defendant held on trust for Ang. In the three agreements, Ang was referred to as “Estina”, the plaintiff was referred to as “Jefre” while the defendant was referred to as “Surina”.

12 As all three agreements have a bearing on the appeal, I shall consider them in turn. I turn first to the Settlement Deed. The clauses relevant to this suit and the appeal are the following:

(a) Clause 2.2.1: Ang would take steps to sell the property and upon completion of its sale, she would cease to have any interest in the same.

(b) Clause 2.2.2: The plaintiff would pay Ang $322,554.87 upon the execution of the Settlement Deed which payment would release the plaintiff’s siblings from any liability to repay her the sum.

(c) Clause 2.2.3: Upon execution of the Settlement Deed, Ang would have no further claims of any nature whatsoever and howsoever against the plaintiff in respect of all the subject matters covered by the document.

(d) Clause 2.3.1: The plaintiff would vacate the property either by 31 January 2004 or within seven days prior to the date of completion in the event Ang procured a sale, whichever was the earlier.

(e) Clause 2.3.3: The plaintiff would pay, by 31 March 2006, a total sum of $370,662.16 to the couple’s five children, including the defendant, in varying proportions.

(f) Clause 2.3.4: The plaintiff would pay another sum of $332,554.87 to the couple’s two youngest children.

(g) Clause 2.3.6: The plaintiff would not have any authority with effect from 1 September 2003 to transact any business in any capacity on behalf of the Ghim Li group of companies.

(h) Clause 2.3.7: The plaintiff would not have any ownership and/or management interest in any entity or assets of the Ghim Li group of companies other than his 10% shareholding in the Company or in the Company after it has listed.

13 Clause 3 of the Settlement Deed contained Ang’s representations, warranties and undertakings to the plaintiff whilst cl 4 contained the plaintiff’s similar representations, warranties and undertakings to Ang.

14 I turn next to the Agreement. The following are the relevant clauses:

(a) Clause 2.1: The plaintiff would sell to the defendant all his shares (“the settlement shares”) in the following companies:

Name Shares

(i) Ghim Li Apparel (Fiji) Limited 800,000

(ii) Ghim Li Global Corporation Limited 500,000

(iii) JES Fashion Co Pte Ltd 958,226

(iv) Jopath Apparel Pte Ltd 1

(v) Ghim Land Property Investments Pte Ltd 1

(b) Clause 2.2: The legal and/or beneficial interests over the settlement shares would be deemed to be transferred to the defendant as from the date of the Agreement.

(c) Clause 3.1: Completion of transfer of the settlement shares would take place seven days from the date of the Agreement.

(d) Clause 3.2.2: The plaintiff would tender his resignation as director from six entities in the Ghim Li group of companies from the date of the Agreement.

(e) Clause 4.2.6: The plaintiff would not, from the date of his resignation, have any authority to transact any business on behalf of the Company or any entity in the Ghim Li group of companies in any capacity whatsoever.

(f) Clause 4.2.7: The plaintiff would not, upon entering into the Agreement, have any ownership and/or management interest howsoever arising, in any entity in the Ghim Li group of companies other than his shareholdings in the Company.

15 As the plaintiff’s Statement of Claim specifically alleged that the defendant had breached cl 6.1.3 of the Agreement in relation to his claim for the sum of $187,500, I shall now set out the full text of cl 6 of the Agreement, which was headed “Consideration”:

6.1 In consideration of Clause 2.2 and the representations, warranties and undertakings given by [the plaintiff] herein, [the defendant] represents, warrants and undertakes to [the plaintiff] as follows:

6.1.1 she shall, on and from the [date of the Agreement], assume the liability to repay the JG Debts [JG Debts was defined in cl 1 as a sum up to $5.75m allegedly owing by the plaintiff to the Ghim Li group of companies of which the plaintiff made no admission];

6.1.2 she shall, as soon as practicable after the [date of the Agreement], procure the release of all personal guarantees given by [the plaintiff] in respect of loans and other financing given by financial institutions to entities in the Ghim Li [group of companies] and shall otherwise indemnify and hold him harmless against any claims, actions or other liabilities arising from those guarantees;

6.1.3 she shall make an interest-free loan to [the plaintiff] of a sum of...