Lee Ker Min (by his litigation representative Lee Kai Teck Roland) v Lee Gin Hong (as executor and trustee of the estate of Ng Ang Chum, deceased) and another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu SJ
• Judgment Date: 30 July 2020
• Neutral Citation: [2020] SGHC 159
• Court: High Court (Singapore)
• Docket Number: Suit No 1301 of 2018
• Published date: 13 August 2020
• Year: 2020
• Hearing Date: 14 February 2020,11 February 2020,23 March 2020,13 February 2020,06 April 2020,10 February 2020,12 February 2020
• Plaintiff Counsel: Bachoo Mohan Singh (BMS LLC) (as counsel), Narayanan Vijay Kumar (Vijay & Co)
• Defendant Counsel: Toh Jun Hian Jonathan & Wong Shi Yun (Rajah & Tann Singapore LLP)
• Subject Matter: Partnership,Partners inter se,Sharing of profits and losses,Trusts,Constructive trusts
• Citation: [2020] SGHC 159

Lai Siu Chiu SJ: Introduction

This claim involves a partnership dispute. Lee Ker Min (“the Plaintiff”), by his eldest son and litigation representative Lee Kai Teck Roland (“Roland”), is suing his eldest sister Lee Gin Hong (“the first defendant”) as well as his youngest sister Lee Gim Moi (“the second defendant”) to recover half of the partnership’s debt owed to a bank.

The two Defendants are sued personally as well as in their capacities as the executors of the estate of their late mother Ng Ang Chum (“the Deceased”) who passed away on 19 December 2014.

The facts

The partnership in question is Lee Huat Company (“Lee Huat” or “the Partnership”), which started as a sole-proprietorship in 1958. It is a retailer of motorcycles and motor scooters, spare parts and accessories as well as a workshop. Lee Huat operates at a shophouse in Upper Bukit Timah Road located at Nos. 873 to 875 (“the shophouse”). Prior to 1975, Lee Huat was a sole-proprietorship of the late Lee Kim Eng (“the father”) who started the business in 1958 and was the father of the Plaintiff and the Defendants.

On 4 February 1975, the Plaintiff joined Lee Huat as a partner. After the father passed away on 4 October 1981, the Deceased was registered as a partner. As the Deceased was illiterate, the business of Lee Huat was conducted/managed by the Plaintiff. In July 2014, the Plaintiff suffered a severe stroke that incapacitated him. Thereafter Lee Huat’s business was managed by Lee Kai Leong Jeffrey (“Jeffrey”) the Plaintiff’s second son. On 22 February 2016, Roland obtained an order of court under the Mental Capacity Act (Cap 177A, 2010 Rev Ed), to be appointed the Plaintiff’s litigation representative.

According to the Defendants,¹ the Deceased did not have any say in the management or running of Lee Huat which was always a profitable and cash orientated business. Neither did the Deceased share in the profits made by Lee Huat. The Defendants claimed that the Plaintiff took all the profits and only gave to the Deceased a monthly allowance of about $1,000.

The Deceased had seven children and after they grew up and married, they moved out from the shophouse, save for the two Defendants who never married. The second and first Defendants commenced working for Lee Huat in 1984 and 1989 respectively, as administration clerks until they resigned in August 2016. During their employment with Lee Huat, the Defendants were responsible for such matters as renewing the road taxes and certificates of entitlement and hire-purchase instalments of the motorcycles of Lee Huat’s customers. These duties were described by the defendants as “inside” duties were opposed to “outside” duties, which comprised of the workshop and the selling/servicing of motorcycles/motor scooters and spare parts by the Plaintiff, who was assisted by Jeffrey. Lee Huat’s business was usually transacted in cash save for dealings with sub-dealers for new motorcycles, hire-purchase instalment payments, sales of motorcycles or trade-in transactions.

According to the Defendants, after the demise of the father, the Plaintiff had a free hand in how he conducted Lee Huat’s business. Apart from performing simple tasks such as sweeping the floor, cooking and making beverages as it was a family business, the Deceased took no part in the business of Lee Huat.

ln or around 1994, the Plaintiff decided to set up LH Motor Pte Ltd ("LHMPL") in which he would park new motorcycles for trading. The Plaintiff held 70% of LHMPL's shares while the Deceased and the two Defendants each held 10%. The Partnership's business in the sale and purchase of new motorcycles was then moved to LHMPL.

The Plaintiff used the Partnership’s monies for the initial capital investment in LHMPL. As and when LHMPL made sales, the money was either collected directly by the Partnership, or repaid by LHMPL to the Partnership.

The Defendants alleged that the Plaintiff also made use of the Partnership’s monies, profits it made as well its overdraft facility with United Overseas Bank (“UOB’s overdraft facility”) and funds from its other banks for his and his family’s expenses. The UOB overdraft facility for the sum of $1.5m was obtained on 22 Aug 2000. It is payable on demand with an interest of 1.5% over UOB’s prevailing prime rate. The facility and all monies owed by the Partnership was secured by a mortgage of a 3-storey semi-detached house at 59A Choa Chu Kang Road, Singapore 689482 (“59A CCK”), which is solely owned by the Plaintiff but acquired using Lee Huat’s monies. The Plaintiff also acquired the following assets and/or businesses with the Partnership’s funds:- In or about 1991, the Plaintiff and his wife Ng Lim Lee (“NLL”) acquired a property at Blk 223, Choa Chu Kang Centre #13-249, Singapore 2368 (“Blk 223 CCK") at the price of $106,700. The Plaintiff used at least $123,999.50 from the Partnership to pay for the purchase of Blk 223 CCK and its expenses by making withdrawals from the Partnership’s bank accounts with UMBC (which changed its name subsequently first to Sime Bank Bhd and then to RHB) and UOB. The construction of two semi-detached houses at Nos. 59 and 59A Choa Chu Kang (“59/59A CCK”) for which the Plaintiff took at least $890,253.82 from Lee Huat for the construction of 59A CCK. 59 CCK belonged to the Plaintiff’s younger brother Lee Ker Leng. In or around October 2003, the Plaintiff purchased No 615 Balestier Road ("615 Balestier Road") for which he took at least $605,131.50 from the Partnership. 615 Balestier Road was rented out, which rental was not/never paid to Lee Huat even though the mortgage instalments payable to Hong Leong Finance were serviced by the Partnership. His investment in Everfit Motor Pte Ltd (“Everfit”) for which he took $46,910 from Lee Huat. The Plaintiff took $88,000 from the Partnership to invest in Bikelink Pte Ltd (“Bikelink”) and another $50,000 to invest in Bikelink Agencies. With 6 other individuals, the Plaintiff invested in a partnership called Cycle Trade Enterprise" ("Cycle Trade") using at least $103,531.31 from the Partnership. Cycle Trade invested in two properties at No 1080 Serangoon Road, Singapore 328183 and No 21 Rowell Road in 2003 and 2004 respectively. A further sum of $2,856.75 from Lee Huat was also spent on renovations at No 21 Rowell Road. His investment in Arrow Speed Auto Services (“Arrow Speed”) with 2 other partners for which he took $5,000 from Lee Huat. His investment in No 34 Norris Road (“34 Norris Road”) for which he took $294,627.73 from the Partnership. The Plaintiff used $126,974.37 of the Partnership’s monies to pay for vehicles and/or their expenses for his personal or family’s use. In addition, at least $222,614.35 was used by the Plaintiff for his and his family’s expenses.

It was the Defendants’ case² that the Plaintiff, before he suffered a stroke, had discussed with them his intention to sell No 615 Balestier Road to pay off the UOB Overdraft Facility. ln or around mid-2014, the Plaintiff met with a housing agent at the shophouse. He told the Defendants that he had received an offer to sell 615 Balestier for $800,000.00 and asked the Defendants for details of the outstanding sum on the UOB Overdraft Facility as he intended to use the proceeds of sale to repay the loan. He mentioned that he was hoping to increase the sale price to $1,000,000. However, the sale did not materialise for reasons not known to the Defendants.

In her affidavit-of-evidence (“AEIC”),³ the second Defendant tabulated the monies the Plaintiff had withdrawn from Lee Huat as follows:-

Particulars	Amount the Plaintiff took	Profits/sums accounted for	Sums to be accounted for/ constructive trustee of
Blk 223 CCK	$123,999.50	$251,665.16	$0
59A CCK	$890,253.82	$0	$890,253.82
615 Balestier	$605,131 .50	$475,000.00	$130,131.50
Everfit	$46.910.00	$190,000.00	$0
Bikelink	$88,000.00	$0	$88,000.00
Cycle Trade	$103,531.31	$0	$103,531.31
Arrow Speed	$5,000.00	$0	$5,000.00
34 Norris Road	$294,627.73	$0	$294,627.73
Purchases of vehicles	$126,974.37	$0	$126,974.37
Family	$222,614.35	$140,000.00	$82,614.35
Others	$92,500.00	$0	$92,500.00
Total	$2,599,542.58		$1,813,632.78

Initially, the Deceased and the Defendants lived in the rooms above the shophouse. After the premises were compulsorily acquired by the Housing and Development Board (“the HDB”) in or around mid-1980s, all three moved to No 75 Chua Chu Kang Road (“75 CCK”) where the Defendants took care of the Deceased until she passed away. In recognition of their devotion to her for over 30 years, the Deceased bequeathed 75 CCK to the Defendants in her Will where they reside to this day.

The genesis of this litigation was a letter dated 29 January 2015 that the Defendants received from the Plaintiff’s solicitors, acting for the Plaintiff’s daughter Lee Ling Ling Jamie. The letter stated that the Partnership had a "substantial amount of overdraft", and requested that the Defendants make provision to set aside $1.3m to deal with this issue.

The solicitors acting for the estate of the Deceased replied to the Plaintiff’s solicitors’ letter at [14] on 13 February 2015 stating that the Deceased had passed away and that to the Defendants’ understanding, the Deceased held 50% shares in the Partnership. They requested for the value of the Deceased’s shares as at the date of her death on 19 December 2014. The Defendants were the executors of the Deceased’s estate under her Will dated 15 January 2013. The Defendants applied for and were granted probate of her estate in 2015. They distributed her assets in accordance with the Deceased’s Will in or about May and June 2016.

On 22 February 2015, the Defendants had a meeting with...