District Judge Vince Gui:
Introduction
This is the Defendant’s application for leave to appeal against my decision in Lao Huo Tang Restaurant Pte Ltd v Lim Cheng San [2023] SGDC 199 (the “Application” and “Judgment”). In the Judgment, I ordered the Defendant to pay the Plaintiff the sum of $39,455.62. This order flowed from my finding that a resulting trust arose over 67.6% of the net sale proceeds of the disputed car. Dissatisfied with the outcome, the Defendant applied for leave to appeal against the Judgment. After hearing parties, I dismissed the application with oral grounds. As the Defendant has since then applied to the General Division of the High Court for leave to appeal against the Judgment, I now provide the written grounds of my decision.
In this written grounds, I will adopt the same terms and abbreviations used in the Judgment. I will also avoid repeating the background facts. I will however recap some of the findings and reasoning to provide context to the allegations and submissions made by the Defendant in this Application.
General principles governing applications for leave to appeal
The principles governing leave to appeal applications are set out in Lee Kuan Yew v Tang Liang Hong and another [1997] 2 SLR(R) 862. There must be: a prima facie case of error; a question of general principle decided for the first time; or a question of importance upon which further argument and a decision of a higher tribunal would be to the public advantage.
As to what “prima facie case of error” means, the Plaintiff submitted that this could only comprise errors of law and not errors of fact. For this proposition, he cited Zhou Wenjing v Shun Heng Credit Pte Ltd [2023] 4 SLR 1599 (“Zhou Wenjing”) at [31], where the High Court opined that the “binding position” is that the phrase “only comprise an error of law”.
The Defendant did not address the applicable legal principles in his submissions. But as several of his allegations pertained to factual findings, it was necessary for me to consider, as a preliminary issue, whether “prima facie case of error” was broad enough to encompass errors of fact.
Even though the Defendant did not challenge the narrow definition advanced by the Plaintiff, I was unable to adopt it as it stood at odds with the current state of the law. The reason why the High Court in Zhou Wenjing opined that the phrase comprises errors of law only was because the Appellate Division of the High Court (“Appellate Division”) had in an earlier decision of Engine Holdings Asia Pte Ltd v JTrust Asia Pte Ltd [2022] 1 SLR 370 (“Engine Holdings”) “left open” the question of whether, in exceptional circumstances, leave to appeal may be granted for errors of fact that are obvious from the record (Zhou Wenjing at [31]). But Engine Holdings had already been superseded in a later decision of the Appellate Division. In Rodeo Power Pte Ltd and others v Tong Seak Kan and another [2022] SGHC(A) 16 (“Rodeo”), the Appellate Division clarified that leave to appeal may be granted for errors of fact where such errors are clear beyond reasonable argument (at [10]). On the facts of that case, the court found that there was an error on the face of the record (at [20]) and on that basis granted leave to appeal (at [23]). To put it simply, the position that was left “open” in Engine Holdings had been “closed” in Rodeo. I should also add that the Appellate Division has only just recently affirmed Rodeo in Ramesh Vangal v Indian Overseas Bank and another matter [2023] 2 SLR 261 (“Ramesh Vangal”), a decision issued a few months ago in July 2023 (at [34]).
In these premises, I respectfully considered myself bound by the more expansive definition taken in Rodeo and Ramesh Vangal. Based on my survey of the case law, the current legal position can be summarised as follows. The general position is that a prima facie case of error refers an error of law. The applicant must show that (i) the appeal is likely to succeed, which is a standard that goes beyond merely an arguable case; and (ii) there is a likelihood of substantial injustice if permission is not granted (see Zhou Wenjing at [37]). Exceptionally, an error of fact may give rise to leave to appeal, but only if the applicant can show that the error is “obvious from the record”, such that the court “should not have to delve into the facts in detail”. It has also been said that the error must be “clear beyond reasonable argument” (Rodeo at [10]). Regardless of whether it is an error of law or fact, the applicant must show something more than just his disagreement with the court’s decision (Bellingham, Alex v Reed, Michael [2022] 4 SLR 513 at [100]–[101] and Hon G v Tan Pei Li [2023] SGHC 193 at [17(d)]).
With these principles in mind, I turn to summarise parties’ submissions.
Analysis
The Defendant advanced five main allegations in his affidavit and written submissions to support the Application. I will discuss each of them in turn.
First Allegation: Acute Holdings (HC) is binding on this court
The Defendant submitted that the Judgment was wrong not to apply the holding in Acute Result Holdings Ltd v CGS-CIMB Securities (Singapore) Pte Ltd (formerly known as CIMB Securities (Singapore) Pte Ltd) [2022] SGHC 45 (“Acute Result (HC)”), which the Defendant contended is binding on this court. It is apposite for me to first rehash the relevant holdings in Acute Result (HC). As I explained in the Judgment, the High Court in that decision refused to find resulting trust in shares that were transferred to brokerage accounts. The transfers were made pursuant to agreements that conferred an equitable charge on the transferee who was a customer of the brokerage firm with whom the brokerage accounts were opened. The court’s findings may be summarised as follows. An intention to create a security interest in favour of a transferee suffices to prevent a resulting trust from arising (at [95]). A resulting trust is definitionally incompatible with a charge. A resulting trust presupposes a transfer of ownership of the transferor’s property to the resulting trustee, whereas a charge does not transfer ownership of the security to the charge. A transfer of ownership being essential for a resulting trust to arise, a charge can never give rise to a resulting trust (at [88]). I will refer to this as the “Security Interest Holding”. The transferor intended to confer a benefit on the transferee when it transferred the shares to it. The transfer improved the transferee’s security interest in the shares from that of a charge to a mortgage or at the very least strengthened the transferee’s control of the shares (at [97]–[98]). The intention to confer such a “factual benefit” prevented a resulting trust from arising. Specifically, the court held that:
99 … So long as a transferor intends a transfer of property to confer a factual benefit on a transferee, the transferee’s conscience is unaffected by the transfer and equity does not intervene by separating legal title from beneficial interest by imposing a resulting trust.
I will refer to this as the “Factual Benefit Holding”.Test”.
Relying on Factual Benefit Holding, the Defendant argued in the main action that the Plaintiff had similarly intended to confer a “factual benefit” on the Defendant by allowing him to use the disputed car in his personal capacity. This “factual benefit”, he argued, precluded a resulting trust from arising, even if the Plaintiff did not intend to transfer the beneficial interest in the disputed car to the Defendant.
I found in the Judgment that the Defendant’s reliance on Acute Result (HC) was misplaced. The Factual Benefit Holding was qualified on appeal. As the Appellate Division held in Acute Result Holdings Ltd v CGS-CIMB Securities (Singapore) Pte Ltd (formerly known as CIMB Securities (Singapore) Pte Ltd) [2023] SGHC(A) 27 (“Acute Result (ADHC)”) at [35]:
… With respect, however, the Judge may have stated this proposition too broadly; it may not be entirely accurate to state that an intention to confer a purely factual benefit invariably prevents a resulting trust from arising. The more specific point for our purposes, was that an intention to create a security interest in a particular property in favour of the transferee of the property was incompatible with that transferee holding the property on trust for the transferor when there are otherwise no express words or circumstances to support the finding of a trust. …
On the facts, the appellate court rationalised the outcome by reference to the transferor’s intention to create a security interest which was fundamentally incompatible with a resulting trust (at [27]–[29]). The appellate court went on to observe that the transferor was trying to change the nature of the transactions from a pure security arrangement to one coupled with a trust (at [31]).
In this Application, the Defendant argued that Acute Result (ADHC) did not “expressly overrule” the Factual Benefit Holding in Acute Result (HC). He emphasised that the appellate court simply said its findings “obviated the need to consider” the Factual Benefit Holding. He argued that the holding at [35] of Acute Result (ADHC) was therefore obiter dicta and the Factual Benefit Holding remained binding on this court.
With respect, the Defendant’s argument misses the point. What the appellate court did in Acute Result (ADHC) was...
