Ho Yew Kong v ERC Holdings Pte Ltd and another

JudgeValerie Thean J
Judgment Date27 November 2018
Neutral Citation[2018] SGHC 258
CourtHigh Court (Singapore)
Hearing Date26 September 2018,31 October 2018
Docket NumberOriginating Summons No 876 of 2018
Plaintiff CounselSamuel Chacko, Lim Shack Keong, Anne-Marie John and Too Fang Yi (Legis Point LLC)
Defendant CounselVikram Nair and Foo Xian Fong (Rajah & Tann Singapore LLP),Koh Swee Yen, Ong Pei Chin, Margaret Huang and Nicholas Liu (WongPartnership LLP)
Subject MatterTrusts,Express Trusts,Certainties,Beneficiaries,Disclaimer of Trust,Quistclose Trusts,Constructive Trusts,Resulting Trusts
Published date18 October 2019
Valerie Thean J: Introduction

The present interpleader action concerns one million shares of Gryphon Real Estate Investment Corporation Pte Ltd (“GREIC”) held by the plaintiff, Ho Yew Kong. Both defendants, ERC Holdings Pte Ltd (“ERCH”) and KPM Holdings Pte Ltd (“KPMH”), claim ownership of the shares, each using the narrative advanced by the other in previous litigation.

ERCH and KPMH are private investment companies. It is not disputed that an individual by the name of Andy Ong is the controlling mind of ERCH; another individual by the name of Douglas Foo is the controlling mind of KPMH; and that $1,000,000 was paid by KPMH on 23 November 2009 arising out of an arrangement between the two men. GRIEC is an investment holding company whose shareholders included Mr Ong and Mr Ho. KPMH relies upon prior evidence given by Mr Ong that, pursuant to an oral agreement with Mr Foo and upon the receipt of $1,000,000, ERCH set up a trust of the GREIC shares for KPMH’s benefit. KPMH now asks for the transfer of the shares, on the premise that there is either an express trust, a Quistclose trust or a constructive trust.

ERCH, on the other hand, relies upon the previous testimony of Mr Foo that the sum of $1,000,000 was advanced merely as a loan, contending that Mr Foo, while advancing this former narrative, had disclaimed his interest in the trust. ERCH contends that because the attempt to constitute an express trust failed, a resulting trust arises over the shares in favour of ERCH.

The truth may be obscure but the known facts that are key to resolving the question of entitlement are largely not in dispute. It is common ground that interpleader relief should be granted and that I should summarily determine the issue between the two competing defendants.


The value of the one million GREIC shares (“the GREIC shares”) lies in their link to ownership in a commercial development named Bugis Cube, situated at 470 North Bridge Road, Singapore. GREIC and Sakae Holdings Ltd (“Sakae”), a public listed company of which Mr Foo is founder and chairman, set up Griffin Real Estate Investment Holdings (“GREIH”) as a joint venture company in late 2009 in order to acquire and develop Bugis Cube.1 Both GREIH and GREIC are being wound up as a result of decisions of the Court of Appeal in prior litigation between parties, in Ho Yew Kong v Sakae Holdings Ltd and other appeals and other matters [2018] 2 SLR 333 (“Ho Yew Kong v Sakae CA”) and Foo Peow Yong Douglas v ERC Prime II Pte Ltd and another appeal and other matters [2018] SGCA 67.

The documents relied upon by KPMH are not in dispute. A share transfer form for the transfer of the GREIC shares by ERCH to Mr Ho was signed on 19 September 2010.2 While the share transfer form stated that Mr Ho had paid $1,000,000 for the GREIC shares, ERCH did not receive the sum of $1,000,000 from Mr Ho.3 It is common ground that KPMH issued a cheque for the sum of $1,000,000 in favour of GREIH on 23 November 2009.4 During this period, the management of GREIH was left to Mr Ong (see Ho Yew Kong v Sakae CA at [12]). The GREIC board of directors passed a resolution approving transfer of the shares from ERCH to Mr Ho dated 19 September 2010.5 Subsequently, on 9 March 2012, an email sent from an employee of GREIC to its shareholders explained that ERCH had held shares on behalf of Mr Ho and the shares were to be transferred back to Mr Ho.6 The transfer was approved at an Extraordinary General Meeting (“EGM”) of GREIC held on 11 June 2012. A certificate of stamp duty payment was obtained on 9 July 2012.7 Based on ACRA records, Mr Ho was registered as a shareholder of GREIC as of 9 July 2012.8 Mr Ho signed an undated Trust Deed where he declared that he held all the shares on trust for KPMH. This Deed was not signed by any representative of KPMH.9 Mr Ho also signed an undated GREIC Director Resolution as a director of GREIC for a transfer of the GREIC shares from himself to KPMH.10

The evidence given in three of the multiple lawsuits between the parties that involved GREIH is of relevance in shedding light on these documents. In Originating Summons No 124 of 2013 (“OS 124/2013”), Mr Foo and Sakae Holdings Ltd sought leave to commence a derivative action on GREIH’s behalf against Mr Ho and Mr Ong. This was subsequently discontinued on 3 May 2013. Prior to the discontinuance of OS 124/2013, Mr Ong filed an affidavit on 19 February 2013 describing a trust arrangement where the GREIC shares were held on trust for KPMH by Mr Ho. Mr Foo filed several affidavits on 12 April 2013, where he disavowed knowledge of any such trust arrangement.11

Subsequently, Sakae commenced two suits which were tried together in 2016. Suit No 122 of 2013 was brought against Mr Ong as the sole defendant. Suit No 1098 of 2013 (“Suit 1098/2013”) was brought by Sakae as minority shareholder in GREIH, alleging minority oppression against GREIH, its majority directors and shareholders, and various other companies controlled by Mr Ong. Again, Mr Ong attested to the trust arrangement in an affidavit,12 and Mr Ho referenced the trust arrangement in his pleadings.13 In 2016, when the two suits were tried together, Mr Foo was cross-examined on this trust arrangement and denied it. His evidence was that the $1,000,000 was advanced as a personal loan.14 Mr Foo was told in the course of his cross-examination in Suit 1098/2013 that the $1,000,000 was not entered into the books of GREIH.15 After hearing both suits, the High Court ordered that GREIH be wound up in Sakae Holdings Ltd v Gryphon Real Estate Investment Corp Pte Ltd and others (Foo Peow Yong Douglas, third party) and another suit [2017] SGHC 73. The appeals were thereafter dealt with by the Court of Appeal on 29 June 2018 in Ho Yew Kong v Sakae CA.

The issue of the $1,000,000 paid by ERCH to GREIH remained at large. On 12 June 2017, KPMH filed a proof of debt for a $1,000,000 loan made on 23 November 2009 in GREIH’s winding up.16 But subsequently, on 3 July 2018, KPMH’s solicitors wrote to Mr Ho’s solicitors to request the transfer of the GREIC shares to KPMH. After receiving a competing claim from ERCH, Mr Ho filed this interpleader action on 17 July 2018.

On 13 September 2018, subsequent to the filing of the interpleader application, the GREIH liquidators wrote to inform KPMH’s solicitors that there was a cheque deposit of $1,000,000 on 24 November 2009, which was identified in the GREIH general ledger as a “[l]oan from ERC Holdings”. Mr Foo, in now seeking the transfer of shares, undertakes to withdraw KPMH’s proof of debt if he is successful in these proceedings.17

Parties’ positions and issues presented

Mr Foo’s version of events is that Sakae originally intended to invest $5,000,000 in Bugis Cube. Pursuant to Mr Ong’s advice to limit Sakae’s risk exposure however, Sakae invested $4,000,000 instead. This meant that Mr Ong was still short of $1,000,000 in funds. Because they were close friends at the time who had known each other for more than 20 years, Mr Foo promised Mr Ong a loan of $1,000,000, to be used for the purposes of acquiring Bugis Cube. Unknown to him, his wife who is also a director at KPMH, issued the cheque to GREIH, rather than to Mr Ong, at Mr Ong’s instruction.18 In reliance on Mr Ong’s past statements that the money was used to set up a trust for the benefit of KPMH in respect of the 1,000,000 GREIC shares and share documents stating that Mr Ho held the shares as trustee, KPMH’s contention is that an express trust was created over the GREIC shares, and KPMH is the beneficiary of the trust. In the alternative, a resulting trust had arisen over the $1,000,000 from the misuse and unauthorised use of money that was loaned for a specific purpose. This kind of trust, termed in law as a Quistclose trust, is explained more fully below. As a final alternative argument, KPMH argues that in the circumstances, even if Mr Foo’s expectation did not amount to a condition as required in a Quistclose trust, a constructive trust had arisen over the $1,000,000 shares because Mr Ong was aware of Mr Foo’s expectation.

Mr Ong’s explanation for the share documents, in contrast, is that sometime in late 2009 or 2010, he reached an oral agreement with Mr Foo under which KPMH would purchase shares from ERCH to be held on trust by Mr Ho.19 He also described how Mr Ho held the shares on trust for KPMH in an affidavit filed in Suit 1098/2013 on 23 November 2015.20 Nevertheless, as Mr Foo had no intention to set up a trust, none was created. Further, the effect of Mr Foo’s evidence is that the money was loaned for no specific purpose, and Mr Foo’s only recourse would be to pursue the debt, which he has done in filing a proof of debt with the liquidators of GREIH.

Initially, ERCH contended that KPMH sought double recovery, in that KPMH earlier sought the return of the $1,000,000 loan in GREIH’s liquidation. Mr Foo has since clarified that he would forego claims against the loan if the shares are returned to him. The issues, therefore, are the following: Whether KPMH may claim the shares under an express trust. The two sub-issues presented by ERCH’s arguments are whether such a trust was created; and if so, whether KPMH has disclaimed its interest. Alternatively, whether the $1,000,000 payment was for a specific purpose which was diverted, giving rise to a Quistclose trust such that KPMH’s interest may be traced to the shares. In any event, whether the circumstances were such that a constructive trust had arisen such that KPMH’s interest may be traced to the shares.

For the reasons that follow, I hold that no express trust, Quistclose trust or constructive trust is applicable on the facts.

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