Lai Kwee Lan and Another v Ng Yew Lay and Another

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 06 September 1989
• Neutral Citation: [1989] SGHC 79
• Date: 06 September 1989
• Subject Matter: Presumed,Whether evidentiary presumption of such arises between brothers,Undue influence,Presumption,Whether applicable between brothers,Burden of proof,Proof of evidence,s 113 Evidence Act (Cap 97),Evidence,Contract
• Docket Number: Suit No 6742 of 1984
• Published date: 19 September 2003
• Defendant Counsel: Goh Soon Hock (Goh Soon Hock & Co),M Karthigesu (Tan Rajah & Cheah) and PC Tock (PC Tok & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: G Murugaiyan (G Murugaiyan)

Cur Adv Vult

This is a claim by the plaintiffs as the personal representatives of the estate of Ng Yue Chee for the return of 50,000 shares (the shares) in the capital of Ng Yu Chee Pte Ltd (the company) which the first defendant (NYL) is alleged to have wrongfully acquired from Ng Yue Chee (NYC) a short time before NYC`s death.

The first plaintiff (LKL) is the widow of NYC and NYL is the elder brother of NYC. NYC had one younger brother, Ng Yew Leong, and two sisters, Ng Bee Keow (NBK) and Ng Ah Khiow (NAK). He also left two children, a son, Ng Hock Sun (then aged 16) and a daughter, Ng Seek Joo (then aged 14).

NYC was a plumbing and sanitary works contractor. He started the business in 1969 as a sole proprietor until 1975 when the company was set up with the assistance and also the advice of NYL and one Lee Soh Hab (Lee) who was a company secretary and NYL`s friend. It was NYL who introduced Lee to NYC. NYC was Chinese-educated and did not read or speak English whilst NYL was passably proficient in English. NYL also had some knowledge of book-keeping and in the evenings or at weekends he helped NYC in writing up the account books of the sole proprietorship. NYL was then working as a salesman in a tobacco company and remained as such at the time of NYC`s death.

The subscribers and first directors of the company were NYC and LKL. NYC was appointed the managing director of the company and remained as such until his death. Lee was appointed the secretary and remained as such until the company was wound up. In December 1976, the first allotments of shares in the company as paid-up shares were made as follows: NYC (7,999) LKL (3,999) NAK (4,000) NBK (2,000) NYL (2,000) and Ng Yew Leong (2,000). These were gift shares from NYC, as were subsequent allotments of shares in the company. In August 1977, NYL, NBK, NAK, and Ng Yew Leong were appointed as directors of the company by a directors` resolution which at the same time authorized payment of directors` fees to NYC and LKL and `transport allowances` to the brothers and sisters. NYC also received remuneration as the managing director.

According to the company`s records, annual directors` fees and remuneration of various amounts were approved by the general meeting for payment to each of the directors of the company, except for the year of 1978 when only directors` fees were approved. No directors` remuneration was approved in favour of NYL during the period when he was not a working director.

The company was in the absolute control of NYC. All shareholders` and directors`meetings during his tenure as managing director were paper meetings except the time when he was in hospital. All company and directors` decisions relating to the affairs of the company were made by NYC alone and they included all further allotments of shares to the shareholders, the payment annually of directors` fees and remuneration and the sort of jobs the company should tender for. Because he knew no English, he had to rely on NYL to convey his decisions and instructions on company matters to Lee in order that their implementation be recorded in English. It is not disputed by NYL that NYC relied on NYL entirely in these matters. After the documents have been prepared in English, NYL would translate the contents thereof to NYC.

I turn now to the financial condition of the company at the time of NYC`s death. The one set of audited accounts of the company for the year ending December 1982 that was produced in evidence showed that the company:

(1) made (a) in 1981, a loss of $27,419 on a turnover of $1,617,740 after charging $96,800 for directors` fees and remuneration; and (b) in 1982, a profit of $14,210 on a turnover of $2,449,708 after charging $88,000 for directors` fees and remuneration;

(2) had in 1981 and 1982 respectively, fixed assets at cost of $199,454 and $199,796;

(3) a paid-up share capital of 100,000 shares of $1 each, owned as follows: NYC - 50,000; LKL - 11,000; NAK - 11,000; NYL - 10,000; NBK - 9,000 and Ng Yew Leong - 9,000.

The shareholding of NYC as set out in the said accounts was admitted by Lee to be incorrect as NYC`s 50,000 shares had already been transferred to NYL by the end of April 1982. Lee was unable to offer an explanation for the mistake.

I should at this stage of the summary of the facts make a few observations as to the value of the shares at the date of the alleged sale. Both NYL and Lee have testified that in their opinions the accounts showed that the shares were worth about par value in March 1982 and also that the company was not profitable, and that he, NYL, was doing NYC a favour in buying NYC`s shares. In my view, these opinions were not substantiated by any evidence except that the company had made a profit of $1,450 which reduced the accumulated loss to $25,969 for 1981. My first observation is that the fixed assets alone had a total value of about $199,000 at cost. This means that the value of each share was worth about $1.99, without taking into account any other factors, eg that the shares represented a controlling block, or that the company was carrying on a viable business. Even if the accumulated loss of $25,969 were taken into account, the shares would still be worth $1.63. Secondly, the fixed assets included the company`s freehold property in Geylang which was carried in its books at cost at about $78,000 and which was mortgaged to a bank to secure banking facilities of $80,000. Although no evidence of the market value of this property was adduced before me, I think there can hardly be any doubt that, having regard to the margin generally imposed by banks in Singapore when taking immovable property as security, the property was worth much more than $78,000. Thirdly, the total value of jobs in progress at the time of NYC`s death was $4,777,997. Fourthly, the company had sufficient goodwill and manpower to carry on business as Ng Yew Leong was alive and in a position to keep the business going. In fact, the company was successful in obtaining jobs to the value of $2,675,379 after NYC`s death. These jobs eventually enabled the company to realize the total sum of about $1.4m from its assets when it went into liquidation. For these reasons, I have no doubt whatever that the fair value of the shares at t he date of the alleged transfer was more than $50,000 and that their potential value was many times that amount. In my view, NYL could not have been aware of these facts since he assisted in writing up the books of the company and had full access to them. I should add that the Commissioner of Estate Duty valued the shares at $1.88 each.

In early 1982, NYC`s health was failing. He was admitted to Gleneagles Hospital at the end of February 1982 for a few days. He was discharged on the morning of 4 March and was admitted to the Singapore General Hospital in the evening of the same day. He went for a liver angiogram on 8 March. A liver biopsy was done on 19 March which showed that he had inoperable cancer of the liver. He developed an infection of the right hand, septicaemia and liver failure. He was on drips after the exploratory operation. He requested to be and was discharged on 21 April so that he could live his last days at home. He died on 17 May 1982.

In regard to his personal affairs, NYC made a will on 15 March 1982, whilst he was in hospital. The will was drafted by a solicitor and its execution was witnessed by the said solicitor and the second plaintiff. During one of his visits to the hospital on 12 March, the latter was requested by NYC to act as an executor and trustee. The other executrix and trustee was LKL. By his will, NYC gave all his property to LKL and the two children. The will, which was a simple will, made no mention of the shares.

After the death of NYC, the company continued with its business. According to the documents produced by NYL, the bank renewed its banking facility on 5 August 1982 and three of the directors, viz NYL, NBK, and Ng Yew Leong, passed a resolution approving it. On 14 October 1982, the same three directors adopted the audited accounts of the company for 1981 and also resolved the payment of directors` fees and remuneration. The annual general meeting of the company was also held on 27 October 1982 to adopt the accounts and the directors` fees and remuneration. On 9 December 1983, the same three directors approved the audited accounts of the company for 1982, the payment of directors` fees and remuneration and also directors` bonuses to themselves. The annual general meeting held on 24 January 1984 adopted the audited accounts and the payment of the directors` fees, remuneration and bonuses. Then on 10 March 1984, a directors` meeting at which NYL and Ng Yew Leong were present disapproved the appointment of office-bearers but approved the winding up of the company after the completion of all its outstanding works. Neither LKL nor NAK appeared to have participated in any of the proceedings evidenced by these resolutions.

LKL testified she had no knowledge of where the certificates of the shares were kept before and after the death of NYC. On 11 November 1982, the second plaintiff wrote to the company inquiring as to the number of shares held by NYC at his death and the value of such shares for the purpose of filing an estate duty affidavit. A copy of the letter was sent to SH Chan & Associates (SHCA), a firm of tax consultants acting for the plaintiffs. The company did not reply to this letter. On 14 January 1983, SHCA wrote to the company to request the same information. On 7 March 1983, SHCA sent a reminder. On 18 March 1983, a reply came from the solicitors PC Tock & Co (PCT) acting for the company. The said reply was that NYC owned no shares in the company at the time of his death, and that he had on 25 March 1982 transferred the shares to NYL for the consideration of $50,000. The letter enclosed a copy of the transfer dated 25 March 1982 (the transfer). The transfer was in the...