Law Chau Loon v Alphire Group Pte Ltd

• Jurisdiction: Singapore
• Judge: Vincent Hoong JC
• Judgment Date: 27 November 2019
• Neutral Citation: [2019] SGHC 275
• Court: High Court (Singapore)
• Docket Number: Originating Summons 730 of 2019
• Published date: 29 November 2019
• Year: 2019
• Hearing Date: 11 September 2019
• Plaintiff Counsel: Lim Tahn Lin Alfred and Lee Tat Weng, Daniel (Fullerton Law Chambers LLC)
• Defendant Counsel: Reuben Tan Wei Jer and Daryl Tan Teck Hong (Quahe Woo & Palmer LLC)
• Subject Matter: Agency,Implied authority of agent,Settlement agreement,Contract,Formation,Identifiable agreement that is complete and certain
• Citation: [2019] SGHC 275

Vincent Hoong JC: Introduction

The present case revolved around a judgment debt that was indubitably owed by the applicant to the respondent. According to the applicant, the parties entered into a binding settlement agreement in relation to the debt. The respondent denied the binding nature of such a settlement, and argued in the main that the parties who had entered into the purported settlement agreement lacked the authority to do so on its behalf.

Having considered the parties’ submissions, I found that the parties had entered into a valid and binding settlement agreement. The respondent has appealed against my decision. These are my reasons.

Background The judgment debt

The respondent company, Alphire Group Pte Ltd (“Alphire”), was incorporated in or around May 2012 by the applicant and one Alicia Chua Buan Ling (“Alicia”). At the time of Alphire’s incorporation, Alicia and the applicant were its only directors and shareholders.¹ Of the 3,000 shares in Alphire, Alicia holds 2,000 shares, while the applicant holds 1,000 shares.²

In 2015, Alphire commenced a suit in the High Court against the applicant, to recover sums which the applicant had collected on Alphire’s behalf as a director, but which he failed to account for (“the Suit”). In the Suit, Alphire’s claims were broken down into five categories, namely Categories A, B, C, D, and E. While the applicant admitted collecting the sums in Categories A and B, he denied ever collecting the sums in Categories D and E. As for Category C, it overlapped with Category B, and the two categories were thus analysed together: Alphire Group Pte Ltd v Law Chau Loon [2017] SGHC 297 (the “Judgment”) at [8].

In his Judgment, Vinodh Coomaraswamy J held that the applicant was liable to Alphire for the Category A and B sums (the Judgment at [26] and [31]). However, as Alphire failed to make any submissions or tender any objective evidence to establish that the applicant had indeed collected the sums in Categories D and E (which he denied ever collecting), the learned judge held that the applicant was not liable for the sums claimed under Categories D and E (the Judgment at [32]–[33]).

As a result, the applicant was liable to pay the sums in Categories A (S$2,821,788.52) and B (S$3,083,429.22) to Alphire. To be deducted against these sums were payments that had been paid by the applicant to Alphire, which amounted to S$2,379,169.03. Hence, Alphire was entitled to S$3,526,048.71 and interest thereon (“the Judgment sum”) (the Judgment at [34]–[36]). However, Alphire’s claims under Categories D and E, which totalled S$1,298,478.77 (the Judgment at [9(c)]–[9(d)]),³ failed in their entirety.

The applicant’s appeal against Coomaraswamy J’s decision was subsequently dismissed by the Court of Appeal.⁴

The alleged settlement agreement

It was undisputed that the Judgment sum remained unsatisfied. However, according to the applicant, sometime on 2 February 2019, he met Han Seng Juan (“Han”), Dr Loh Kim Kang David (“David”) and Wong Kok Hoe (“Wong”) (collectively, “the Investors”). The Investors were directors of Centurion Corporation Limited (“Centurion”), an investment holding company listed on the Singapore Stock Exchange, and they were involved in Alphire as its investors.⁵

During a meeting on 2 February 2019, the Investors and the applicant allegedly agreed to a full and final settlement in relation to the Judgment sum. Under the purported agreement, Alphire was to withdraw or withhold enforcement proceedings against the applicant, provided that he furnished and/or agreed to the following, in addition to the payment of S$1m:⁶ payment of a further sum of S$400,000.00 in four (4) monthly instalments of S$100,000.00 each, the first instalment commencing on 1 June 2019, by way of four (4) post-dated cheques (the “Post-Dated Cheques”), to cover the legal fees incurred by Alphire in the Suit; to the best of his knowledge, contact particulars of and all necessary information concerning other debtors of Alphire. Alphire would rely on such information to recover any alleged debts due to it and the applicant would not be involved in the debt-recovery process; the transfer of his shareholding in Alphire to Alicia at no cost; and a confirmation that he would have no further claims against Alphire. (collectively, “the Original terms”)

Alphire however denied having entered into the settlement agreement on the above terms. Following extensive discussions between the parties’ solicitors on the precise terms of the settlement agreement,⁷ Alphire eventually took the view that the applicant had decided not to proceed with further settlement negotiations.⁸

Accordingly, Alphire regarded the S$1m that it had received from the applicant as partial satisfaction of the Judgment,⁹ and proceeded to commence enforcement proceedings against the applicant.¹⁰

Confronted with the enforcement proceedings and the impending risk of a bankruptcy application against him,¹¹ the applicant took out the present Originating Summons, in which he sought, amongst other prayers, a declaration that the settlement agreement made on 2 February 2019 was valid and binding on Alphire. The applicant also sought a stay of all enforcement proceedings taken out by Alphire against him.¹²

Parties’ submissions Applicant’s submissions

The applicant asserted that the Investors had actual or apparent authority to enter into the settlement agreement on the Original terms on Alphire’s behalf on 2 February 2019.¹³

As regards the Investors’ authority, the applicant submitted that the Investors had significant involvement in the management and operation of Alphire. For example, the Investors had agreed to invest about S$8m in Alphire around the time of its incorporation, and Alicia and the applicant would meet with the Investors at the premises of Centurion to discuss the management and operation of Alphire.¹⁴ Given the Investors’ involvement, the applicant submitted that both the applicant and Alicia, who were then the directors of Alphire, answered to the Investors on the management, operations and profitability of Alphire. Both Alicia and the applicant also dealt with the Investors as their superiors, and thereby acknowledged that the Investors had the ultimate decision-making power in Alphire.¹⁵ Accordingly, the Investors had actual authority to make decisions on Alphire’s behalf.¹⁶ Alternatively, the actions of the applicant and Alicia had clothed the Investors with apparent authority to make decisions on Alphire’s behalf.¹⁷

Turning to the alleged settlement agreement, the applicant’s case was that the settlement agreement was made and crystallised on 2 February 2019, at the 2 February 2019 meeting between the applicant and the Investors.¹⁸ The settlement agreement was based on the Original terms. While parties subsequently negotiated over the alleged terms in an attempt to vary the Original terms, the failed negotiations could not detract from the fact that the settlement agreement had been entered into on 2 February 2019.¹⁹

As such, the applicant sought an order recognising the valid and binding nature of the settlement agreement on the Original terms.²⁰

Alphire’s submissions

In response, Alphire submitted that the Investors lacked both actual and apparent authority to enter into the settlement agreement on Alphire’s behalf.²¹ According to Alphire, the Memorandum and Articles of Association of the company provided that its business “shall be managed by the directors”. As Alphire did not expressly or impliedly authorise any of the Investors to act and/or to make decisions on its behalf, actual authority does not arise on the present case.²²

As for the Investors’ apparent authority, Alphire submitted that even if the Investors had agreed to invest funds in Alphire (which it denied), they were beneficial shareholders at best; at law, shareholders in general are unable to bind a company to business decisions. Furthermore, even if any of the Investors had been privy to Alphire’s management or operation, such did not amount to any representation by Alphire and/or Alicia that they were authorised to act and/or make decisions on Alphire’s behalf.²³

In any case, Alphire’s case was that no binding settlement agreement had been entered into at the 2 February 2019 meeting. This could be seen by the applicant’s conduct subsequent to the 2 February 2019 meeting, which included: In an email on 8 February 2019, which represented the first mention of any alleged settlement in respect of the Judgment, the applicant’s lawyer expressly marked the email as “Without Prejudice” and “Subject to Contract”.²⁴ Further, in a letter dated 8 February 2019 from the applicant’s solicitors to Alphire’s solicitors, the applicant’s solicitors stated that they had “no instructions with regard” to any offer of repayment to Alphire, and did not make mention of the alleged settlement agreement that was purportedly concluded at the 2 February 2019 meeting.²⁵ In subsequent correspondence between the parties’ solicitors, the applicant’s solicitors wrote that time was required for parties to “finalise the terms of the in-principle settlement”, suggesting that any settlement between the parties had not been finalised.²⁶

Thus, Alphire submitted that the action had been brought by the applicant as an “afterthought[,] in an attempt to delay and/or avoid liability under the Judgment”.²⁷

Issues

From the submissions, the issues that arose for my consideration were: First, whether the Investors had the authority to bind Alphire; and Second, if the Investors had such authority, whether the parties had entered into a binding settlement agreement and, if so, what were the terms of the agreement.

Authority of the Investors Actual authority

I first considered whether the Investors had actual authority to bind Alphire to the settlement agreement.

While there was no document or...