Jiang Haiying v Tan Lim Hui and Another Suit

JurisdictionSingapore
JudgeAndrew Ang J
Judgment Date19 February 2009
Neutral Citation[2009] SGHC 42
Docket NumberSuit No 531 of 2007 (Registrar's Appeal No 74 of 2008) and Suit No 530 of 2007
Date19 February 2009
Published date01 April 2009
Year2009
Plaintiff CounselN Sreenivasan and Collin Choo (Straits Law Practice LLC)
Citation[2009] SGHC 42
Defendant CounselWendell Wong and Sophine Chin (Drew & Napier LLC)
CourtHigh Court (Singapore)
Subject MatterWhether non-parties could do so,Non-parties to arbitration clause seeking stay of court proceedings in favour of arbitration conducted pursuant thereto,Arbitration,Stay of court proceedings

19 February 2009

Andrew Ang J:

1 These were two appeals in Registrar’s Appeal No 74 of 2008 (arising from Suit No 531 of 2007) and Registrar’s Appeal No 75 of 2008 (arising from Suit No 530 of 2007) brought by the appellants/defendants against the decision of the Assistant Registrar (“AR”) in each case refusing to order a stay of proceedings in the High Court in favour of arbitration.

2 Curiously, although the AR had, in each of the two suits, allowed an application by one Sim Poh Heok (“SPH”) to be joined as a defendant in the proceedings, SPH joined in the respective defendants’ appeals against the decision of the AR. (The reason for this will become clearer when we go into the background of the two suits.)

Background facts

3 The plaintiff (Jiang Haiying) is a Chinese national and a permanent resident in Singapore. He had set up a shipping company in Singapore known as Dehai Marine Shipping (Singapore) Pte Ltd (“Dehai Singapore”) with the assistance of Tan Lim Hui (“Tan”), the defendant in Suit No 531 of 2007. Through the introduction of Tan, the plaintiff got to know Sim Poh Ping (“SPP”), the defendant in Suit No 530 of 2007. SPP ran a company called Vita Holdings Pte Ltd (“Vita”).

4 Sometime in August 2001, the plaintiff transferred 50,000 and 490,000 shares in Dehai Singapore to Tan and SPP respectively (“the Transfer”). This transfer was at the core of the dispute. The plaintiff asserted that he was informed by Tan that the transfer was necessary in preparation for the listing of Dehai Singapore and that, at all material times, Tan and SPP (“the defendants”) were to hold the shares in trust for him. However, the defendants denied that there was any trust and that the Transfer was made to reward them for their help and continuing role in the prospective listing of Dehai Singapore then. These denials were maintained even in the face of the following written acknowledgments made by Tan and SPP, respectively, on 19 November 2001, as follows:

This letter is to confirm that Mr Jiang Haiying as at 19th November 2001 has a total of 50,000 shares of DEHAI MARINE SHIPPING (SINGAPORE) PTE LTD OF S$1/- PAR VALUE EACH under the name of Tan Lim Hui.

This letter is to confirm that Mr Jiang Haiying as at 19th November 2001 has a total of 490,000 shares of DEHAI MARINE SHIPPING (SINGAPORE) PTE LTD OF S$1/- PAR VALUE EACH under the name of Sim Poh Ping.

(Strangely, even though the written acknowledgment by Tan stated that he held 50,000 Dehai Singapore shares under the name of the plaintiff, the written submissions by counsel for Tan argued that 54,000 shares of the same was transferred to Tan by the plaintiff.)

5 On or about 1 March 2003, SPP sold the 490,000 shares in Dehai Singapore that he had received from the plaintiff to his sister, SPH, for $2m. The plaintiff claimed that he was unaware of this sale. In any case, after the sale of SPP’s shares to SPH, the shareholding of Dehai Singapore stood as follows:

Shareholder

Singapore Shares

Singapore Shares

The plaintiff
(Jiang Haiying)

426,000

43.9%

Tan

54,000

5.6%

SPH

490,000

50.5%

6 Subsequently, on 30 June 2004, the plaintiff, Tan and SPH transferred all their Dehai Singapore shares to Vita, as part of the listing process for Vita. In consideration thereof, 2,775,941 shares in Vita were issued to a company known as Kingley Agents Ltd (“Kingley”) whose shares were, in turn, held by the plaintiff, Tan and SPH in the following proportions:

Shareholder

Shares

Kingley Shares

The plaintiff
(Jiang Haiying)

312

31.2%

Tan

216

21.6%

SPH

472

47.2%

(It will be noted that the percentage shareholdings of the plaintiff, Tan and SPH in Dehai Singapore were different from their respective shareholdings in Kingley. More will be said about this later.) Thus, the plaintiff, Tan and SPH effectively exchanged their Dehai Singapore shares for Kingley shares. In this way, Tan no longer owned the 50,000 Dehai Singapore shares which the plaintiff had transferred to him in August 2001. Subsequently, on 30 November 2004, the aforementioned 2,775,941 Vita shares held by Kingley were subdivided into approximately 46,265,683 Vita shares. Of these, Tan’s share, as held through Kingley, was 2,384,829 Vita shares.

7 The plaintiff claimed that he did not understand the terms under which his Dehai Singapore shares were to be transferred to Vita even though he had signed the relevant agreement. This was because he was unable to read the agreement in the English language without translation. Instead, the plaintiff proceeded with the transfer based on his trust in Tan. Subsequently, having discovered the number of Kingley shares he ought to be entitled to, the plaintiff became unhappy with what he perceived to be “a completely inequitable and one-sided” distribution in favour of the defendants and SPH: see the plaintiff’s affidavit filed on 19 November 2007 at para 5. It was also at this time that the plaintiff claimed he discovered that the Dehai Singapore shares he had reposed in SPP had been transferred to SPH.

8 According to the plaintiff, in order to assuage his dissatisfaction with the number of Kingley shares received, he entered into a sale and purchase agreement (“the SPA”) on 31 March 2006 to sell his 312 shares in Kingley to SPH and two other individuals. The consideration for this sale was $7m to be paid in three instalments. It is cl 16 of this SPA that the defendants are relying on in their application for a stay of proceedings in favour of arbitration. Clause 16, reproduced as follows, states:

Any dispute, whether contractual or not, arising out of or in connection with this Agreement (including any question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC Rules”) for the time being in force, which rules are deemed to be incorporated by reference into this clause, save that Rule 32 of the SIAC Rules and the provisions of the International Arbitration Act (Cap. 143A) shall not apply.

9 After the SPA was concluded, the plaintiff commenced three actions. In Suit No 530 of 2007, the plaintiff claimed against SPP for conversion of the 490,000 Dehai Singapore shares transferred to SPP in August 2001 on the basis that SPP had sold the shares without the plaintiff’s consent (see [5] above). In Suit No 531 of 2007, the plaintiff prayed for a declaration that Tan was holding 2,384,829 Vita shares, through Kingley, in trust for the plaintiff. (No conversion is claimed since the plaintiff knew that Tan had sold the 54,000 Dehai Singapore shares that the plaintiff gave Tan: see [6] above). The third action was Suit No 553 of 2007 where the plaintiff claimed against SPH for the return of Vita warrants that he contended was held in trust for his benefit. In that action, SPH applied, successfully, for a stay of proceedings pursuant to cl 16 of the SPA.

10 At the hearing before the AR below, SPH applied to be made a defendant in both Suit Nos 530 and 531 of 2007. At the same time, SPH and the defendants together applied to have both suits stayed in favour of the said arbitration in [9] above.

11 After considering the arguments made by both parties, the AR made the following orders:

(a) The application by SPH and the defendants to have the proceedings in Suit Nos 530 and 531 of 2007 stayed be dismissed.

(b) The application by SPH to be added as a defendant to both suits be allowed.

(c) The defendants to pay costs of $3,500 to the plaintiff.

Parties’ submissions

The defendants’ submissions

12 The defendants appealed against the AR’s decision not to stay the proceedings. In support of this appeal, counsel for the defendants, Mr Wendall Wong (“Mr Wong”) made the following arguments:

(a) The claims alleged by the plaintiff against the defendants in Suit Nos 530 and 531 of 2007 are intimately intertwined with the SPA such that the doctrine of equitable estoppel applied;

(b) The defendants were the intended beneficiaries of the SPA;

(c) There was a collateral contract between the plaintiff and SPP such that SPP could rely on the SPA; and

(d) Allowing the proceedings in Suit Nos 530 and 531 of 2007 to continue would risk inconsistent results with Suit No 553 of 2007 (mentioned above at [9]).

13 Furthermore, if I were not minded to stay the actions, SPH also applied to withdraw her initial application to be added as a defendant to the suits, which was granted by the AR. The reason for this was not far to find. The only reason why SPH applied to be added as a defendant in the first place was to strengthen the defendants’ case for a stay of proceedings since SPH was a party to the SPA while the defendants were not. However, if I was not minded to allow the stay, SPH’s continued participation in these proceedings would not only have served no purpose but might even have been detrimental to SPH’s interests.

The plaintiff’s submissions

14 In the circumstances, counsel for the plaintiff, Mr N Sreenivasan (“Mr Sreenivasan”) confirmed that the plaintiff had no objections to SPH’s application to withdraw as a defendant.

15 With regard to the defendants’ application for a stay of proceedings, Mr Sreenivasan refuted the defendants’ argument that there was a relationship between these proceedings and the SPA. He argued that the plaintiff was not seeking shares in Kingley nor disputing SPH’s title in Kingley shares. As the defendants were not parties to the SPA, the SPA was wholly irrelevant to the present proceedings. In this respect, Mr Sreenivasan relied on the decision of Lai Sui Chiu J in Go Go Delicacy Pte Ltd v Carona Holdings Pte Ltd [2008] 1 SLR 161 (“Go Go Delicacy”), where it was held that a court cannot compel non-parties to an agreement (containing an arbitration clause) to arbitrate their dispute.

16 Furthermore, Mr Sreenivasan also submitted that under the SPA...

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