Lau Hwee Beng and Another v Ong Teck Ghee

• Jurisdiction: Singapore
• Judge: Paul Tan AR
• Judgment Date: 30 May 2007
• Neutral Citation: [2007] SGHC 90
• Court: High Court (Singapore)
• Year: 2007
• Published date: 04 June 2007
• Plaintiff Counsel: Ang Cheng Koon Benjamin (Engelin Teh)
• Defendant Counsel: Cheo Chai Beng Benny (Cheo Yeoh & Associates)
• Citation: [2007] SGHC 90

30 May 2007 Judgment Reserved

Assistant Registrar Mr Paul Tan:

1 At the end of a rather convoluted chain of events, which is not necessary to recount in detail, the plaintiffs settled on a relatively straightforward claim in respect of which they urged this court to grant summary judgment. That claim is this: having handed over some $350,000 to the defendant, who was their solicitor, with instructions (given orally) to pay these over to one Mr Lee Thiam Seng in order for the latter to invest the sum in Beijing Asean Union Consulting Co Ltd (“Beijing Asean”) and Abundant Performance Ltd (“Abundant”) in return for an issue of shares or rights in the respective companies, they now want the defendant to render an account of the sums paid to him, and in particular, to show whether the sum was, in fact, given to Mr Lee or that Mr Lee had received the same. The defendant acknowledged receiving these sums but insisted that he was not liable to account because he was acting as Mr Lee’s solicitor, not the plaintiffs’. The defendant also added that, in any case, the sum was received by Mr Lee and that the plaintiffs got what they paid for. Accordingly, the defendant submitted that the plaintiffs’ claim ought to be struck out as, inter alia, disclosing no reasonable cause of action. Although the facts relating to both the applications for summary judgment and striking out are not at all complex, the law relating to summary judgment (and incidentally, striking out) is, with respect, somewhat untidy and I have sought to unpack the fundamental principles governing the analysis of an application for summary judgment in the following pages.

The plaintiffs’ case

2 In the plaintiffs’ statement of claim (“SOC”), it is stated that on or about March 2004, the plaintiffs and the defendant agreed that the former would invest in Beijing Asean and Abundant; and to that end, the plaintiffs would pay the defendant a total of $350,000, which was to be paid to the companies on the plaintiffs’ behalf. These instructions were given orally. The plaintiffs allege that the defendant was acting as their solicitor in this transaction.

3 In order to carry out the plan, the defendant drafted co-investment agreements setting out the terms of the plaintiffs’ investments in the said companies. These agreements were executed by the first and second plaintiffs on 4 and 8 March 2004 respectively.

4 On 25 September 2006, the plaintiffs, through another set of solicitors, wrote to the defendant requesting an account of the moneys paid to him. The defendant did not reply. The plaintiffs followed up with a letter of demand dated 5 October 2006, seeking the repayment of the moneys given to the defendant. By a letter dated 10 October 2006, the defendant admitted to having received the moneys from the plaintiffs but refused to return the moneys or give an account. The plaintiffs then replied, insisting, again, that the plaintiff render an account of the moneys, and also furnish the plaintiffs copies of all papers in his possession relating, in particular, to whether the moneys had, as agreed, been paid to Beijing Asean and Abundant.

5 Accordingly, the plaintiffs, at para 12 of their SOC, contend that the defendant is liable to account on the grounds that:

(a) the defendant was plaintiffs’ solicitor at all material times;

(b) the defendant, as the plaintiffs’ solicitor, is under a duty to provide a true and full account to the plaintiffs upon receipt of the request of the plaintiffs dated 17 October 2006;

(c) the plaintiffs had, on 17 October 2006, terminated their relationship as clients of the defendant and that the defendant is under a duty to furnish the plaintiffs with copies of all the papers relating to the moneys; and

(d) the plaintiffs have reasonable cause to believe that the moneys were not paid to Beijing Asean and Abundant.

6 The plaintiffs’ position was elaborated by written submissions, which I had directed parties to file. It would appear that from 1999, the defendant had provided legal advice to the second plaintiff and that the latter had, in fact, been on the corporate retainer of a company known as Suncity Contracts Pte Ltd, which the second plaintiff is a shareholder in and director of.

7 Similarly, the defendant had, from 2001, provided legal advice to the first plaintiff, his family members (in particular, his brother and a transaction involving Kian Ann Engineering Ltd), as well as a company known as Bio-Green Agritech Pte Ltd, of which the first plaintiff was a director and shareholder in.

8 In March 2004, the defendant introduced an investment opportunity to the plaintiffs, namely, to invest in Beijing Asean and Abundant. Subsequently, the defendant informed the plaintiffs orally and by text message that he had prepared co-investment agreements for the plaintiffs to sign with Mr Lee. The defendant also sought to reassure the plaintiffs by representing that he had signed similar agreements with Mr Lee. I pause here to note that it was only in the plaintiffs’ written submission that there was a mention of Mr Lee. As set out above, the SOC gives the impression that the defendant was to have invested the moneys received directly with Beijing Asean and Abundant. Notwithstanding that, it became clear, especially through the defendant’s submissions and in the hearings before me, that the defendant was merely a stakeholder – either as Mr Lee’s or the plaintiffs’ solicitor – and that it was Mr Lee who was supposed to eventually invest the moneys in the said companies.

9 Reverting to the plaintiffs’ narrative, the first plaintiff had, sometime in December 2004, requested that Mr Lee return the moneys to the plaintiffs. It was then that the plaintiffs say they were informed by Mr Lee that he had not received any of the moneys.

10 It was also asserted that the defendant had on 6 October 2006 sent a text message to the first plaintiff stating:

Shd try to resolve amicably with him. His investments were v substantial in the 2 projects and I’m sure he wanted them to work out also and he’s working on UIB still. To him, we are his partners in the investments. The UIB investment has not matured. We shd be supporting him.

11 It was after this message that the plaintiffs insisted on an account of their moneys, which the defendant has refused to provide to date.

The defendant’s case

12 The defendant’s basic position, as outlined above, is that he received the investment moneys from the plaintiffs as Mr Lee’s solicitor for the latter to invest in Beijing Asean and Abundant. As such, there is no basis on which the plaintiffs can seek an account of the moneys; and that in fact, the release of any such information would be privileged.

13 Mr Lee, according to the defendant, is a major shareholder of a public listed company known as Ecowise Holdings Ltd (“Ecowise”), of which the defendant was an independent director since 3 March 2003. The defendant’s firm, M/s Ong & Lau, were solicitors for Mr Lee, EcoWise and its subsidiaries. Among other ventures, Mr Lee dabbles as an investor in initial public offers (commonly abbreviated as IPOs) in Chinese companies with potential to list in Singapore. At the material time, he had two investments in Beijing Asean and Abundant.

14 The plaintiffs expressed interest in investing in Beijing Asean and Abundant, and Mr Lee then instructed the defendant to prepare the co-investment agreements that were signed on 4 and 8 March 2004 (see [3] above). There were four agreements in all:

(a) The first plaintiff’s agreement dated 4 March 2004 to invest $406,500 in Beijing Asean in return for a 4.065% equity stake in the company. Mr Lee or his nominees would then issue a letter of indemnity in favour of the first plaintiff;

(b) The first plaintiff’s agreement dated 4 March 2004 to invest US$55,000 in Abundant in return for 25,000 rights shares, which Mr Lee would procure to be registered in the first plaintiff’s name. If that could not be done, a trust would be executed in favour of the first plaintiff;

(c) The second plaintiff’s agreement dated 8 March 2004 to invest $206,500 in Beijing Asean in return for a 2.065% equity stake in the company. Mr Lee or his nominees would then issue a letter of indemnity in favour of the second plaintiff; and

(d) The second plaintiff’s agreement dated 4 March 2004 to invest US$55,000 in Abundant in return for 25,000 rights shares, which Mr Lee would procure to be registered in the second plaintiff’s name. If that could not be done, a trust would be executed in favour of the second plaintiff.

15 It was stated in these agreements that Mr Lee acknowledged receipt of the amounts stated therein, which included the $350,000 paid by the plaintiffs to the defendant.

16 The defendant does not deny that he shared an interest in the investments in Beijing Asean and Abundant and therefore supported Mr Lee’s ventures. Nor does the defendant deny acting for the plaintiffs in the manner described at [6] and [7] above. However, the defendant argues that these did not mean that he acted for the plaintiffs in the particular transaction in question. In fact, in early March 2004, the first defendant had forwarded proposed amendments to the co-investment agreements relating to Beijing Asean that he (ie the first plaintiff) represented his own solicitor had drawn up.

17 In addition, the defendant alleges that the plaintiffs have already acquired their equity in Beijing Asean and Abundant but that they were trying to rescind the co-investment agreements because the investments had turned out poorly.

Assessment of SUM 5583 of 2006 – the application for summary judgment

Principles governing summary judgment

18 The specific command in O 14 r 3(2) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules”) is that unless there is an issue or question in respect of a claim or part of a claim that “ought to be tried” summary judgment should be granted in favour of the plaintiff on that claim or part...