Lao Huo Tang Restaurant Pte Ltd v Lim Cheng San
| Jurisdiction | Singapore |
| Judge | Vince Gui |
| Judgment Date | 05 September 2023 |
| Neutral Citation | [2023] SGDC 199 |
| Court | District Court (Singapore) |
| Docket Number | District Court Suit No. 142 of 2022 |
| Hearing Date | 28 August 2023,04 July 2023,06 July 2023,07 July 2023 |
| Citation | [2023] SGDC 199 |
| Year | 2023 |
| Plaintiff Counsel | Yeo Choon Hsien Leslie (Sterling Law Corporation) |
| Defendant Counsel | Eugene Quah Siew Ping and Lim Cheng Hock Lawrence (Matthew Chiong Partnership) |
| Subject Matter | Trust,Express Trust,Resulting Trust,Hire Purchase Agreement |
| Published date | 13 September 2023 |
The Defendant used to be the Chief Operating Officer (“COO”) of the Plaintiff’s parent company, Soup Empire Holdings Pte Ltd (“Soup Empire”). He co-founded the business with Mr Thomas Hong (“Thomas”), the Chief Executive Officer (“CEO”) of Soup Empire.1
Back in 2017, when the Defendant expressed interest in buying a new car, Thomas offered to help finance the purchase. Thomas used the Plaintiff to pay the bulk of the purchase price. The car was registered in the name of the Defendant.
Parties fell out in 2021. Shortly after Thomas terminated the Defendant’s employment, the Defendant sold the car without informing Thomas. Upon learning of the sale, Thomas instructed the Plaintiff to commence the present action for the net sale proceeds. Thomas alleged that the car belonged to the Plaintiff.
Having heard the evidence and submissions, I now deliver my judgment.
Background factsParties gave divergent accounts of the narrative surrounding the purchase of the car. Thomas claimed that parties explicitly agreed for the car to be a “company car”.2 The Defendant alleged that it was his “personal car”.3 Before I elaborate on each of these contentions, I first set out the undisputed or indisputable facts of the case.
The Defendant and Thomas are directors and beneficial shareholders of Soup Empire. They each held 39.6% and 60.4% of its shares.4 Soup Empire comprised various subsidiary companies which included the Plaintiff. I will refer to them collectively as the “Soup Empire companies”. The Soup Empire companies operated food establishments under the names of “Lao Huo Tang” and “Kenny Rogers”, amongst others.5 Thomas oversaw administrative and finance matters while the Defendant oversaw operational matters such as the renovation of new restaurants.6
Sometime in late 2017, the Defendant mentioned that his Mercedes Benz was due for scrapping in January 2018. Thomas and the Defendant agreed to finance the part of the purchase price using the trade-in value of the Mercedes Benz, with the balance funded by the Soup Empire companies.
In September 2017, a Toyota Harrier bearing the license plate SKK9119U (the “disputed car”) was purchased for $162,088 and registered in the Defendant’s name. The upfront payment of the disputed car comprised (a) the trade-in value of the Defendant’s Mercedes Benz in the sum of $45,828; and (b) a sum of $19,260 paid by Thomas which was subsequently reimbursed by the Plaintiff.7
The balance purchase price of $97,000 was financed by a 5-year bank loan taken up by the Defendant, pursuant to a hire purchase agreement dated 8 November 2017 (the “Hire Purchase Agreement”).8 The Plaintiff paid the first instalment of $1,827.65 and the subsequent monthly instalments of $1,818 under the Hire Purchase Agreement. The Plaintiff paid a total of $76,365.65 across 42 monthly instalments towards the disputed car.9
Disagreements emerged between the parties sometime in 2021 which culminated in the Defendant commencing a minority oppression action against Thomas in HC/S 465/2021 on 24 May 2021.10 Thomas terminated the Defendant’s employment on 21 June 2021.11
Shortly thereafter, the Defendant sold the disputed car on 3 July 2021 for $89,500.12 After paying off the outstanding balance under the Hire Purchase Agreement of $31,133.69, the Defendant used the remaining sum of $58,366.31 to offset the purchase price of another car.13
Upon learning of the sale, the Plaintiff demanded the Defendant to repay $95,625.65, being the total amount of monies that were paid towards the downpayment and the monthly instalments of the disputed car. The Plaintiff alleged that the monies were “loans” extended to the Defendant. The demand was issued through its solicitors on 9 December 2021.14
On 19 January 2022, the Plaintiff commenced the present action for either the full net sale proceeds of the disputed car, i.e., $58,366.31 or in the alternative, 67.6% of the net sale proceeds, being its
The Plaintiff’s case is that the Plaintiff bought the disputed car for the company. Even though the car was registered in the Defendant’s name, its beneficial ownership vests with the Plaintiff.
Thomas testified that it was the Defendant who requested the Plaintiff to fund the balance of the downpayment of the disputed car and pay the monthly instalments. Thomas said he agreed to the request. He further alleged that the Defendant and him agreed that the disputed car would be a company car and the Plaintiff’s asset. It would be held on trust for the Plaintiff.15
He further explained that the decision was made to register the disputed car in the Defendant’s name instead of the Plaintiff was because he wanted to save on the administrative fees required to attach the licence plate SKK9119U to the disputed car. Attaching the said licence plate number to a vehicle registered in the Plaintiff’s name would have entailed the Plaintiff buying a scrap car first before it could transfer the said licence plate to a new car.16
In support of the trust arrangement, Thomas pointed to what he considered to be a similar arrangement for another company car that was registered in the name of one Yen Mei Ling (“Ms Yen”) but driven by her husband, Cheong Chee Wai (“Mr Cheong”), who was an employee of Soup Empire. The said company car was a BMW bearing the licence plate SFE9119K which similarly contained the numerals “9119”. A resolution was passed by another subsidiary of Soup Empire called Lao Huo Tang Group Pte Ltd (“LHTG”) to document the purchase of the BMW and to resolve that Ms Yen would hold the BMW on trust for LHTG. To safeguard the company’s interest, Ms Yen was made to sign a letter confirming that she was holding the BMW on trust for LHTG. In February 2021, LHTG purchased a new car, a Toyota Camry, bearing the licence plate SMM9119K to replace the BMW.17
Thomas explained that he did not require the Defendant to sign a written agreement because he trusted the Defendant. He did not expect the Defendant to renege on the oral agreement.18
Thomas further explained that, apart from the cars registered in the Defendant’s name and Ms Yen’s name, the Soup Empire companies had three other cars registered in the company’s name, similarly bearing licence plates with the numerals “9119” in them. They were driven by the companies’ senior executives and/or management and were purchased between January 2018 to February 2021.19 All these cars were paid for by the companies.20 This included a car that was driven by Thomas himself.
The Defendant’s allegations The Defendant alleged that, after Thomas learned that he wanted to purchase a new car in late 2017, Thomas informed him that he would arrange for payments on an
He further alleged that he agreed to use the licence plate bearing the numerals “9119” because Thomas wanted him to have matching licence plate numbers to show “strength and unity”. Thomas had similarly requested another business associate, one Chin Jun Yuan (“Mr Chin”) to use a licence plate bearing “9119” for a car that was personally owned by Mr Chin.22
Parties’ submissionsI turn now to summarise parties’ arguments.
The Plaintiff’s submissionsThe Plaintiff submitted that the payments were not a gift to the Defendant. If it were so, the Defendant would have declared it in his income tax filings, in addition to his annual salary of $84,000.23
The Plaintiff further submitted that the Defendant did not say the payment was
The Plaintiff further pointed to a general ledger which recorded the monthly instalments. The disputed vehicle was also recorded as an asset of LHTG in its general ledger.25
The Plaintiff submitted that the Defendant’s position was anomalous. There was no policy within the Soup Empire companies to gift vehicles to its directors or senior employees.26
The Plaintiff sought the return of the net sale proceeds of the disputed car by way of an express trust, or in the alternative, a resulting trust over the net sale proceeds in respect of the Plaintiff’s contribution towards the purchase of the disputed car.27
The Defendant’s submissionsThe Defendant highlighted that the Plaintiff did not mention the trust arrangement in its letter of demand issued before the commencement of this action. Instead, it alleged that the monies advanced were loans made to the Defendant personally. It departed from its previous stance when it realised that the alleged loans would be void for illegality since the alleged director loan contravenes s 162 of the Companies Act 1967, which according to the Defendant, required director loans to be approved at a general meeting.28
The Defendant further alleged that the Plaintiff intended to confer a factual benefit on the Defendant, i.e., by allowing the Defendant to keep the disputed car for his personal use and he deemed fit. Equity therefore does not intervene to separate the legal title from the beneficial interest.29
The Defendant further highlighted the absence of a trust deed and the lack of contemporaneous documents supporting the Plaintiff’s position. Unlike the case of Ms Yen, the alleged trust arrangement was not recorded in writing.30 In any event, the Defendant submitted that he should not be treated like the other employees; he was a founding shareholder of Soup Empire.31
The Defendant also submitted that the savings of $2,550 for the administrative fees was too insignificant for the Plaintiff to risk...
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