Kwa Ban Cheong v Kuah Boon Sek and Others

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 24 June 2003
• Neutral Citation: [2003] SGHC 132
• Docket Number: Suit No 460 of 2002
• Date: 24 June 2003
• Year: 2003
• Published date: 02 October 2003
• Plaintiff Counsel: Winston Quek Seng Soon (B T Tan & Co)
• Citation: [2003] SGHC 132
• Defendant Counsel: Sim Bok Eng and Liew Yik Wee (Wong Partnership)
• Court: High Court (Singapore)
• Subject Matter: Res Judicata,Whether present action an abuse of process,Previous decision involving different plaintiff had decided legal and equitable rights of defendants,Whether previous decision of court capable of operating in rem and binding upon world at large including non-party to previous action

1 The Plaintiff, Kwa Ban Cheong, is the personal representative of the estate of Quah Koon Ann, deceased. The deceased was one of the sons of Quah Hiang Soo (“QHS”) who died intestate on 4 April 1980. QHS was the founder of Quah Hiang Soo Pte Ltd (“the Company”). The present action concerns 360 shares (“the Shares”) in the Company. It is the Plaintiff’s case that the Shares registered in the respective names of the Defendants are held on a resulting trust for the estate of QHS and are to be distributed to his beneficiaries according to the Intestate Succession Act (Cap. 146).

2 On 22 March 1976, QHS transferred the Shares in equal number to his sons, Kuah Boon Sek (1^st Defendant), Kuah Boon Liat (2^nd Defendant), Quah Boon Lui (3^rd Defendant) and Quah Boon Chee (“QBC”). QBC has since died. The 4^th and 5^th Defendants, Quah Siok Chuan and Quah Siok Bin are the administrators of the estate of QBC, deceased. The Plaintiff’s pleaded case is that by a 12 March 1976 handwritten note in Chinese (“the Note”), QHS appointed the 1^st to 3^rd Defendants and QBC as trustees to jointly manage the Shares for the purpose of using the dividend income to supplement the schooling expenses of the children of Kuah Khoon Loon and Wong Tuck Yoke. Furthermore, as there are uncertainties as regards the distribution in specie of the Shares, the 1^st to 3^rd Defendants and QBC hold the Shares on a resulting trust for the benefit of the estate of QHS now that the objective of the trust has been accomplished.

3 It is the Defendants’ case that the Shares were a gift to the 1^st to 3^rd Defendants and QBC absolutely. The Note simply contained QHS’s wishes as to how the dividend income from the Shares was to be utilised.

4 An important feature of this case is that the ownership of the same Shares was the subject matter of previous proceedings commenced in the High Court by another plaintiff against the same Defendants. Lin Ke, one of the children of Kuah Khoon Loon claimed in Suit no. 1277 of 1997 that the Defendants held the Shares on trust for the benefit of the children of Kuah Khoon Loon and Wong Tuck Yoke. Alternatively, if the trust failed for uncertainty, the Defendants would then hold the Shares on resulting trust for the benefit of the estate of QHS. Amarjeet Singh JC dismissed the action. He held that the transfer of the Shares on 10 March 1976 was an absolute gift to the four sons of QHS. In 1999, the Court of Appeal upheld the decision of the trial Judge in Civil Appeal no. 235 of 1998.

5 The Plaintiff in his Reply acknowledged that the Note was adjudicated upon in previous proceedings but as he was not a party to the action, he is not bound by its outcome. It is further alleged that the Directors’ Resolution is invalid for lack of quorum thereby rendering the transfer of the Shares to the 1^st to 3^rd Defendants and QBC ineffective. This is not a point taken in the previous action.

6 The principal issue before me is whether the 1^st to 3^rd Defendants and the estate of QBC are the legal and beneficial owners of the Shares. There are no factual issues in dispute. The parties have agreed to the authenticity and contents of the documents in the Agreed Bundle. At the same time, the validity of the Directors’ Resolution and its effect on the ownership issue, if any, are legal questions that can be dealt together with the principal issue. Hence, by consent, Counsel agreed that the two questions below be determined as a preliminary issue. A determination of the questions as a preliminary issue will save costs and time. They are:

(i) Whether the present proceedings amount to a collateral attack on the earlier decision of Amarjeet Singh JC in Suit No. 1227 of 1997 and the Court of Appeal in Civil Appeal No. 235 of 1998 and is hence an abuse of process; and

(ii) Whether the earlier decision is a judgment in rem which is good against the whole world including the Plaintiff.

7 After hearing Counsel, I dismissed the Plaintiff’s action with costs. The Plaintiff has appealed against my decision and I now publish my reasons in full.

The Background Facts

8 I begin with a narration of the facts which are not disputed. It is also beneficial to repeat in some details the Grounds of Decision of Singh JC in the previous action.

9 In 1976, QHS transferred a total of 360 shares in his Company, Quah Hiang Soo Co Pte Ltd, to four of his sons in equal share. By a Board Resolution dated 10 March 1976 (“Directors’ Resolution”), it was resolved that the Shares be transferred and new share certificates be issued to the 1^st to 3^rd Defendants and QBC. In the same Directors’ Resolution, Quah Koon Ann (the Plaintiff’s father) and Tan Hee (QHS’s wife) also transferred their respective shareholdings in the Company to their own children.

10 QHS duly executed share transfers forms on 22 March 1976 and stamp duty was paid on the transfers. The Company accordingly issued new share certificates to the 1^st to 3^rd Defendants and QBC. The new share certificates were signed by QHS.

11 The existence of the Note came to light after the death of QHS. The English translation reads:

“I am entitled to 360 of the [Company’s] shares at $100 per share. I entrust the said shares to the joint management of Kuah Boon Liat, Quah Boon Chee, Kuah Boon Sek, Quah Boon Lui and 2/3 of all future dividends shall be distributed to the children of Kuah Khoon Loon and 1/3 to the children of Wong Tuck Yoke as supplement for the schooling expenses of the children. Lest word of mouth bears no evidence, this document is hereby made as proof.”

Suit No 1277 of 1997 and the Decision of Amarjeet Singh JC

12 On 25 June 1997, Lin Ke, one of the children of Kuah Khoon Loon brought an action in the High Court of Singapore against the Defendants. He claimed a declaration that by reason of the Note, the Defendants held the Shares on trust for the benefit of the children of Kuah Khoon Loon and Wong Tuck Yoke. Lin Ke also prayed for an Inquiry as to all dealings of the Defendants concerning the Shares and as to what has become of the Shares, an account of the dividends in respect of the Shares and accrued interest. Although not pleaded, Counsel for Lin Ke submitted that if it is adjudged that the trust should fail for uncertainty, a resulting trust would arise in which case the Shares should revert to the estate of QHS to be distributed according to intestacy laws.

13 The Defendants denied that they held the Shares as trustees pursuant to the Note. It is said that QHS divested himself of all rights and interests in the Shares and the Shares were absolutely and unconditionally transferred to the Defendants. They became the legal and beneficial owners of the Shares as of 10 March 1976.

14 The Note and Directors’ Resolution were adjudicated upon by Singh JC. At the beginning of his Grounds of Decision, Singh JC identified the case before him. He said it raised issues of whether the divestment of the Shares constituted a gift or an entrustment. On the evidence, he found that QHS had absolutely and validly divested himself of the Shares by making a gift of them to the 1^st to 3^rd Defendants and QBC on 10 March 1976. The intention to transfer the Shares identified by their certificate numbers was recorded in the Resolution which QHS signed in his personal capacity and as Director. This is evident from the use of the words “as well” in the Grounds of Decision. Singh JC said: “QHS’s intention to transfer the shares to the Defendant[s] is unequivocally expressed in the said Company’s formal resolution which he signed as its Director as well.” The Resolution is evidence of QHS’s intention to give the Shares to his sons and also his approval as director to the transfer of Shares from QHS to the 1^st to 3^rd Defendants and QBC. The intention to give was followed by the execution of transfer forms by QHS.

15 On the Note, Singh JC held:

“ I construed the note of 12 March 1976 made very soon after the resolution which was passed i.e. on 10 March 1976…. I am satisfied on reading the note..that the note nowhere states that the children of Kuah Khoon Loon (including the Plaintiff) and Wong Tuck Yoke have been given the beneficial interest in the shares. The reasonable interpretation is that the note entrusts the shares to the joint management of the Defendants in respect of payment of the future dividends received in respect of the said shares and to use and pay the dividends as a supplement for the schooling expenses of the aforesaid children. In my opinion, if QHS had wanted to revoke the gift of shares to the Defendants and instead bequeath or make a gift of the same shares to the children of Kuah Khoon Loon (including the Plaintiff) and Wong Tuck Yoke just two days later he could have simply said that in the note. ….QHS’s intention therefore showed that the children should only be paid the dividends as long as they pursued their studies. The restriction would have been totally unnecessary if the children (including the Plaintiff) were the intended beneficiaries of the 360 shares. If they were, the dividends would be theirs to receive at all times i.e. even after they had finished their schooling or education…”

16 He found it strange that QHS had proceeded with the transfer and registration of the shares in the names of the 1^st to 3^rd Defendants and QBC if the note was intended to revoke the gift of shares to them. He also noted that QHS lived for some five years (i.e. till 1981 (sic)) after making the Note on 12 March 1976. QHS was on the board of the then Industrial & Commercial Bank and was also one of its shareholders. The Judge inferred from that appointment that he was no doubt as such a good and intelligent businessman. The Judge concluded:

“Therefore, as far as I can perceive there would have been no uncertainty in QHS’s intention as expressed in the note of 12 March 1976 as submitted by the Plaintiff’s Counsel. I accordingly rejected Counsel’s submission that a resulting trust arose vesting the 360 shares of...