JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 12 February 2020
• Neutral Citation: [2020] SGHC 29
• Court: High Court (Singapore)
• Docket Number: Suit No 1212 of 2017
• Published date: 19 February 2020
• Year: 2020
• Hearing Date: 29 October 2019,10 October 2019,15 October 2019,14 January 2020,30 October 2019,08 October 2019,25 October 2019,11 October 2019,22 October 2019,21 October 2019,16 October 2019,09 October 2019
• Plaintiff Counsel: Chan Leng Sun SC and Colin Liew (instructed counsel), Ang Hsueh Ling Celeste, Lee Zhe Xu, Shirleen Low and Yiu Kai Tai (Wong & Leow LLC)
• Defendant Counsel: Lawrence Teh Kee Wee, Edric Pan Xingzheng, Melvin See Hsien Huei, Melissa Thng Huilin, Chia Huai Yuan, Zheng Huaice, Elias Benyamin Arun and Sean Sim Zhi Quan (Dentons Rodyk & Davidson LLP),Daniel Tan Shi Min, Nigel Ignatius Teo Yi Hao and Chia Shi Mei (WongPartnership LLP),Deborah Barker SC, Hewage Ushan Saminda Premaratne and Kenneth Yap Meng (Withers KhattarWong LLP),Pillai Pradeep, Simren Kaur Sandhu and Caleb Tan Jia Chween (PRP Law LLC)
• Subject Matter: Tort,Misrepresentation,Fraud and deceit,Conspiracy,Abuse of Process,Striking out
• Citation: [2020] SGHC 29

Choo Han Teck J:

The plaintiff (“JTA”) is a Singapore subsidiary of J Trust Co Ltd (“J Trust”), a company listed in Japan and carrying on business as an investment company. Group Lease Holdings Pte Ltd (“GLH”), the first defendant, is a Singapore subsidiary of Group Lease Public Co (“GL”), a company listed in Thailand. Mitsuji Konoshita (“Konoshita”), the second defendant, was a director and the Chief Executive Officer of GL and GLH until the Thai Stock Exchange barred him from acting as a director in any Thai listed company in October 2017.

JTA injected at least US$210m into GL through the purchase of convertible debentures, warrants, and shares in GL over four distinct periods, namely, 20 March 2015 (“the First Investment”), 6 June 2016 (“the Second Investment”), 1 December 2016 (“the Third Investment”), and between 13 March 2017 and 11 September 2017 (“the Fourth Investment”). JTA paid all the money under various investment agreements between it and GL, save for the Fourth Investment, which consisted of purchases of GL’s shares and warrants on the open market. Under the First Investment, JTA was entitled to convert its convertible debentures into shares, which it did on 30 December 2015.

JTA now claims that it made its Second, Third and Fourth Investments and converted its First Investment as a result of the practised fraud and conspiracy of Konoshita and the other defendants, and that Konoshita was the mastermind behind the fraud because he controlled all the defendants and GL, and manipulated the accounts and the parties to entice JTA to invest in GL. It is claiming damages against all the defendants accordingly. Mr Chan Leng Sun SC represents JTA, and Mr Lawrence Teh represents GLH and Konoshita.

Cougar Pacific Pte Ltd (“Cougar”), the third defendant, is a Singapore company owned by Pacific Opportunities Holdings (“POH”) which was, in turn, wholly owned by Tep Rithivit (“Rithivit”). POH was acquired by a company called Saronic Holdings Ltd (“Saronic”) on 12 June 2018, after the present suit was filed but before the trial. One of GLH’s submissions is that Saronic is controlled by J Trust and JTA, and thus Cougar found itself stranded behind enemy lines. Yoichi Kuga (“Kuga”), who claimed to be the beneficial owner of the old, friendly Cougar, joined the action as the eighth defendant on 8 May 2019, and affiliates himself with the defendants, whereas Cougar itself now takes a neutral stance in the action. Kuga resigned as a director of Cougar on 5 August 2015, the same day Rithivit, who Kuga claims to be his nominee in POH, took over as the appointee of POH, the new owner of Cougar. The relationship between Rithivit, Kuga, and the defendants is a matter of some intrigue that has not surfaced in the present proceedings before me, and are not issues in the action in this court, although Kuga has sued Rithivit in Luxembourg for breach of trust in selling the POH shares to Saronic. Cougar is also known in these proceedings as one of “the Singapore Borrowers”, the others being its holding company, POH, and a Brazilian company known as Kuga Reflorestamento Ltd which is under the control of Kuga. Mr Daniel Tan represents Cougar and Mr Pradeep Pillay represents Kuga. Miss Deborah Barker SC represents the fourth to seventh defendants, known collectively as “the Cyprus Borrowers” at trial. The Singapore Borrowers and the Cyprus Borrowers are referred to as “the Borrowers”.

JTA’s case is founded on the basis that GLH and Konoshita made false representations, and it seeks to prove the deceit on the ground that GL’s profitability was only evident from its financial statements but those reports were manipulated by GLH’s false representations in its own financial data, which were incorporated into GL’s statements. JTA alleges that GL made various loans to GLH, who then made loans to the Singapore and Cyprus Borrowers (“the GLH Loans”) amounting to US$95m (US$9.8m of this was in Thai Baht amounting to THB$350m). JTA further alleges that a sum of US$25.1m was returned to GL by circuitous routes, described by Mr Chan as “round-tripping”, which is understood to mean that the money left GL, went through friendly parties, and ultimately returned to GL. The plaintiff’s case is that these loans made no commercial sense because the borrowers invested the loans in projects that yielded lower returns than the interest they had to pay to GLH. The GLH Loans should have been included in the financial accounts as interest-free loans, irrecoverable transfers of money or related-party transactions, and were deliberately concealed to give GLH and, consequentially, GL the appearance of profitability. In addition to its financial accounts, JTA points to repeated representations by Konoshita that GL’s retail financing business in Southeast Asia was highly profitable.

The narrative is more complicated because the GLH Loans were disbursed to various parties after first going into the accounts of the Singapore and Cyprus Borrowers, and several parties have been excluded from the action. The money, according to JTA, found their way back to GL through those parties, including Showa Holdings Co Ltd (“Showa”), Wedge Holdings Co Ltd (“Wedge”), Engine Holdings Pte Ltd (“Engine”) and APF Group Co Ltd (“APF BVI”), all of which are controlled by Konoshita. Loans were also made to Rithivit, who passed the money through APF Holdings Co Ltd (“APF Thailand”), which JTA alleges is also owned by Konoshita. Showa, Wedge, Engine, APF BVI, APF Thailand and Rithivit are not present in the action. Notably, neither is the recipient of the investments, GL itself.

Liability for the tort of conspiracy is joint and several, and a plaintiff is entitled to sue whomever he wishes but where a party omitted from the suit is a protagonist in the alleged conspiracy, then the plaintiff will find it difficult, as a matter of evidence, to prove his case (JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and others [2018] 2 SLR 159 at [48]). Similarly, although a false representation need not be made by the defendant directly to the plaintiff, a plaintiff proving the misrepresentation may find it difficult, as a matter of evidence, to show the necessary intention on the part of the defendant to communicate it to the plaintiff.

A claim in the tort of deceit requires that the representation has to be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which includes the plaintiff (Panatron Pte Ltd and another v Lee Cheow Lee and another [2001] 2 SLR(R) 435 at [14]). JTA’s allegation is that GLH manipulated its financial statements with the intention of inducing JTA into investing in GL. It submits that GL and GLH should be treated as the same because the composition of the board of directors of both companies was nearly identical, and three of GL’s directors were copied on emails involving JTA’s negotiations with GL.

It is quite clear...