L Manimuthu and others v L Shanmuganathan

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Edmund Leow JC
• Judgment Date: 06 September 2016
• Neutral Citation: [2016] SGHC 186
• Citation: [2016] SGHC 186
• Defendant Counsel: A Rajandran (A Rajandran) and Mohan Das Naidu (Mohan Das Naidu & Partners)
• Docket Number: Suit No 141 of 2012
• Plaintiff Counsel: Palaniappan S and Ramesh Bharani Nagaratham (Straits Law Practice LLC)
• Subject Matter: Contract,Duress,Consideration,Illegality
• Published date: 08 September 2016
• Date: 06 September 2016
• Hearing Date: 08 October 2015,03 November 2015,23 October 2013,18 October 2013,18 November 2015,19 November 2015,09 October 2015,13 February 2015,16 October 2013,24 February 2015,17 October 2013,25 February 2015,11 February 2015,17 February 2015,05 October 2015,12 February 2015,22 October 2013,20 November 2015

Edmund Leow JC: Introduction

Suit 141 of 2012 (“S 141/2012”) arose out of a family dispute between siblings in relation to their late father’s assets in Singapore and India. The Defendant and the second Plaintiff were the siblings based in Singapore, while the first, third and fourth Plaintiffs were based overseas in India and Canada. The Plaintiffs commenced a claim for a total sum of S$1.05m owed by the Defendant to the Plaintiffs pursuant to a compromise agreement made in December 2010. The Plaintiffs also claimed that the Defendant was acting as trustee de son tort, and in the alternative, as a constructive trustee for their late father’s estate in Singapore, and had breached fiduciary duties. They thus sought an account of the profits obtained or received by the Defendant as a result of his breaches. The Defendant counterclaimed for his share as a beneficiary of both his late father and mother’s estates from the Plaintiffs, who he alleged were acting as constructive trustees of the estates, as well as for properties in the Plaintiffs’ names in India.¹ S 141/2012 had to be seen as part of a greater dispute involving the estates of the parties’ parents, who both died intestate.

I allowed the Plaintiffs’ claim and the Defendant’s counterclaim in part and issued an oral judgment on 26 May 2016. Dissatisfied with my decision, the Defendant has since filed a notice of appeal (in Civil Appeal No 80 of 2016) against my decision, and I thus set out my fuller grounds of decision.

Factual background

The late KR Lakshmanan Pillai (“KRLP”), the father of the Plaintiffs and the Defendant, allegedly owned a one-ninth share of the property at 58A Upper Weld Road, Singapore (“the Property”) and wholly owned a moneylending business that he had inherited from his late father in the 1980s² (“the Moneylending Business”) that had operated from the Property. These two interests were the key items in dispute. It was common ground that the Moneylending Business was owned by KRLP, but the Defendant disputed that KRLP owned the one-ninth share of the Property.

M Shanmugam, KRLP’s brother-in-law, managed the Moneylending Business from the 1980s till 1993; during this time the profits from the business were split 35-65 in KRLP’s favour. KRLP’s share of profits would mostly be ploughed back into the business, with some remitted back to India for purchase of properties.³ Thereafter the Defendant, being based in Singapore, took over the management of the Moneylending Business from M Shanmugam, with the same profit-sharing margin of 35-65 in KRLP’s favour, until 2000 when it increased to a 40% share for the Defendant. The Defendant would report to KRLP regarding the monthly accounts, just as M Shanmugam had done, and he was also paid an additional $1200 annually. KRLP died intestate on 7 February 2000 in India.⁴ The Defendant then continued reporting to his mother, L Vallimayil (“Valli”), regarding the Moneylending Business, until she died intestate on 17 January 2003.⁵

It was undisputed that Letters of Administration had not been extracted whether in Singapore or in India for either of KRLP’s or Valli’s estates. It was common ground that on 28 and 29 December 2010, the parties all met in their ancestral home in Southern India to agree on the valuation and distribution of their parents’ assets, in the presence of a relative, Muthuvadivu (“Muthu”), who took on the role of a mediator-type figure. The parties entered into a compromise agreement on 29 December 2010⁶ (“the Compromise Agreement”), the validity of which was disputed by the Defendant, where it was stated, inter alia, that: the Defendant would become the sole beneficial owner in the Moneylending Business in exchange for paying S$1.05m in total to the Plaintiffs, ie, $262,500 to each of the four Plaintiffs, in instalments commencing on 1 January 2011, to be completed latest by December 2011;⁷ the Property would be sold and the one-ninth share of proceeds less costs of sale would be divided equally among the parties.⁸

It was the Plaintiffs’ position that the Compromise Agreement was a comprehensive division of KRLP’s assets in both India and Singapore.⁹ There was a division of assets including the land, jewellery and utensils, and the Defendant had taken possession of his share.¹⁰ The Defendant admitted that he had gotten his share of the jewellery and utensils, but denied that an agreement was reached as to the other assets such as land, and thus counterclaimed for his remaining share of his parents’ respective estates derived from the other assets.¹¹ The Plaintiff alleged that the Defendant failed to make the payment of S$1.05m to them, and also failed to give them their share of the one-ninth of sale proceeds of the Property after selling it. This was the basis upon which they had commenced S 141/2012.

The Defendant attempted to argue belatedly in his closing submissions that the court should decline to exercise jurisdiction over S 141/2012. The basis for doing so was three-fold. First, Indian intestacy laws (specifically, Hindu succession laws) should apply to the entire dispute as the Compromise Agreement also involved the settlement of properties in India and matters of distribution of intestate assets. Second, based on the rule in British South Africa Company v Companhia de Moçambique [1893] AC 602 (“the Moçambique rule”), the Singapore court had no jurisdiction over issues of title to the foreign immovable properties.¹² Third, the Defendant also appeared to argue that the fact that there were on-going proceedings between the same parties in India regarding KRLP and Valli’s estates indicated that Singapore was not the more appropriate forum for ventilating the dispute and so the court should decline to exercise jurisdiction.

I was unconvinced by these arguments. The Plaintiffs’ claim in S 141/2012 did not relate to Indian properties, but rather, was specific to the late KRLP’s interests in Singapore. It was the Defendant’s counterclaim that brought in the issue of the distribution of both KRLP and Valli’s properties in India. If the Defendant chose to bring the Indian properties into the consideration of S 141/2012 from the beginning, then it did not lie in his mouth to argue at the end of the hearing that the court should decline to exercise jurisdiction over the matter simply because it involved the Indian properties. The Defendant mentioned the nationality and domicile of the late KRLP and Valli in the closing submissions as support for his argument that Indian intestacy laws should apply to S 141/2012, but I was not persuaded as to how they were relevant connecting factors to decide what relevant law was applicable. Even if it were true that Indian intestacy laws applied to the entire dispute, it would not be an immediate bar to this court exercising jurisdiction over the dispute, as this court could apply Indian law in the resolution of S 141/2012. On a proper characterisation of the issues in S 141/2012, it appeared that the main issues in S 141/2012 were contractual in nature (relating to the validity, formation and interpretation of the Compromise Agreement), so the applicable test in determining the governing law for the dispute would be the three-stage test set out in Overseas Union Insurance Ltd v Turegum Insurance Co [2001] 2 SLR(R) 285 at [82], and affirmed by the Court of Appeal in Pacific Recreation Pte Ltd v S Y Technology Inc and Another Appeal [2008] 2 SLR 491 at [36]. However, the analysis as to the right choice of law for dealing with the Compromise Agreement as well as S 141/2012 was rendered moot as the Defendant had failed to plead that Indian law applied to S 141/2012, and had also failed to prove the content of Indian law in that respect. Absent such proof, the law of the forum, ie, Singapore law, should be applied by default unless to do so would be unjust and inconvenient (see D’Oz International Pte Ltd v PSB Corp Pte Ltd and another appeal [2010] 3 SLR 267 at [25] and EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another [2014] 1 SLR 860 at [58]). In the present case, given that the Defendant only raised the applicability of Indian law belatedly in his closing submissions, I was of the view that Singapore law should apply to S 141/2012.

On the point regarding the Moçambique rule, I accepted that a Singapore court generally cannot make a judgment in rem against the Indian properties, ie, determining the rightful title to the Indian properties as against the whole world (see Pattni v Ali [2007] 2 AC 85 at [21] as cited in Murakami Takako (executrix of the estate of Takashi Murakami Suroso, deceased) v Wiryadi Louise Maria and others [2007] 4 SLR(R) 565 at [32]). However, this did not preclude the court from making judgment in personam, in declaring the relative interests of the parties to the properties under the Compromise Agreement. On the point regarding the appropriate forum for ventilating the dispute, the burden was on the Defendant not just to show that Singapore is not the natural or appropriate forum but to establish that there is another available forum which is clearly or distinctly more appropriate than the Singapore forum, ie, India in this case. I was not satisfied that the Defendant had discharged this burden, given that he is himself resident in Singapore and suffers no hardship in litigating the dispute here.

Issues in dispute

The main purpose of S 141/2012 was not to deal with KRLP’s estate. The main issues before me in the trial were narrow factual ones relating to KRLP’s assets in Singapore: Whether the Compromise Agreement was valid and enforceable, and if so, whether there was a breach of the said agreement; Whether the Property was part of KRLP’s estate and was rightly included in the Compromise Agreement; Whether the Defendant was acting as trustee de son tort or a constructive trustee of KRLP’s estate in Singapore; and Whether the Defendant’s...