Lew, Solomon v Kaikhushru Shiavax Nargolwala and others

• Jurisdiction: Singapore
• Judge: Simon Thorley IJ
• Judgment Date: 05 February 2020
• Neutral Citation: [2020] SGHC(I) 2
• Date: 05 February 2020
• Docket Number: Suit No 2 of 2019
• Published date: 11 February 2020
• Plaintiff Counsel: Philip Antony Jeyaretnam SC, Lee Chia Ming and Lee Jiemin Nicolette (Dentons Rodyk & Davidson LLP)
• Hearing Date: 10 January 2020,30 October 2019,07 November 2019,05 November 2019,06 November 2019,08 November 2019,08 January 2020,29 October 2019,01 November 2019,04 November 2019,31 October 2019
• Defendant Counsel: Ramesh Kumar s/o Ramasamy, Tan Shu-Ning Alyssa and Lim Min Li Amanda (Allen & Gledhill LLP),Chua Han Yuan, Kenneth, Benjamin Niroshan Bala, Hannah Alysha binte Mohamed Ashiq (TSMP Law Corporation),Christopher Anand s/o Daniel, Harjean Kaur, R Shriveena Naidu, T Varshini and Nigel Na (Advocatus Law LLP)
• Court: International Commercial Court (Singapore)
• Subject Matter: Remedies,Accessory liability,Trusts,Formation,Agency,Evidence of agency,Breach,Specific performance,Inducement of breach of contract,Contract,Recipient liability,Tort

Simon Thorley IJ: Introduction

This is an action about a dispute over the ownership of a luxury villa, Villa 29, at the Andara Resort in Phuket, Thailand.

At the outset, it is necessary to be clear that the word “ownership” is used as a shorthand. Under Thai property law, foreign nationals cannot own land. The most that they can be granted is a 30-year lease over land which can be extended for a further period of 30 years. They can however own a building which is erected on land provided the necessary construction permit is issued in respect of the building. Three documents are thus required to give a foreign national the right to occupy property such as the villa in question: the land lease, the house registration and the construction permit.¹ Assignment of the three documents is a cumbersome process which can be simplified by issuing all three documents in the name of an offshore company. Providing the only assets of that company are the three documents of title (and any other documents relating to the property in question), transfer of “ownership” of the property can be effected much more simply by transferring the shares in the offshore company to the new owners.

Some care therefore needs to be taken when the question of ownership of Villa 29 arises since, as a matter of law, it is ownership of the shares in the offshore company that is being referred to but, colloquially, it is often the case that reference is made to ownership of the villa. In particular, two of the issues that arise in this case, the proper law of the alleged oral agreement and enforcement of such an agreement under Singapore law, raise questions as to whether the corporate veil of an offshore company should be lifted so as to give effect to the fact that the corporate entity is a proxy for what is in substance the ownership of an interest in land.

The background to the dispute

The Andara Resort (also referred to as “the Resort”) is the culmination of a project founded by a Mr Allan Zeman which consists not only of villas such as Villa 29 but also of hotel suites, a leisure complex and other facilities so that the whole constitutes a leisure resort. Owners of the villas can either retain them for personal use or can use them for investment purposes by appointing the Resort as a letting agent. Equally the Resort provides facilities for assisting the buying and selling of villas and employs a sales manager for this purpose. Overall responsibility for running the estate lies in the hands of the General Manager of the Resort who, from 2011, has been Mr Daniel Meury. Mr Meury reports to Khun Natthakanya, the Chief Executive Officer (“CEO”) of the Paradise group of companies which is responsible for the Andara Resort. Khun Natthakanya is referred to by the nickname Khun Apple. Although her name appears as a recipient of a number of the e-mails in this case, she played no real part in the relevant events.

Villa 29 was being built in 2007 when Mr and Mrs Nargolwala, the 1st and 2nd Defendants, decided to buy it. They did this using a company incorporated in the British Virgins Island (“BVI”), Querencia Ltd (“Querencia”), the 5th Defendant, which was thus named in the three documents.² Additionally, it was registered as the owner of 26 shares in Andara Properties Investment Company (another BVI company) which in turn owned 49% of the shares in Andamandara Co Ltd (a Thai company) which owns the Andara Resort land.

The Andara Resort and the Nargolwalas agreed to use the Resort’s lawyer, Mr Anurag Ramanat (“Mr Anurag”), jointly for this purpose. The Nargolwalas occupied Villa 29 when it was completed in 2008. They did so until around November 2014 when they moved into a second villa they had purchased, Villa 8 on a further development by Andara, known as Andara Signature. Thereafter Villa 29 was put up for sale and was made available for rental.

On occasions Villa 29 was rented by Mr Solomon Lew, the Plaintiff. In September 2017, Mr Lew decided that he wished to buy Villa 29 and contends that on 11 October 2017 a binding oral contract of sale was reached between him and Mr Meury, acting as the authorised agent of the Nargolwalas. The Nargolwalas dispute both that Mr Meury was acting as their agent and that, even if he was, any such binding agreement was reached.

In late October 2017, Mr Christian Larpin, the 4th Defendant, approached a Mr Martin Phillips, a real estate agent in Phuket, as he was looking to buy one or more villas as an investment. In particular, Mr Larpin was interested in viewing Villa 11 at the Andara Resort for which Mr Phillips was the appointed agent. Although not the appointed agent for Villa 29, Mr Phillips was informed by his brother, Mr Lyndon Phillips, then on his last few days as the General Sales Manager at the Andara Resort, that Villa 29 was also available for sale.

I shall consider the history of the negotiations over Villa 29 between Mr Larpin and the Nargolwalas in more detail below but it is sufficient for present purposes to say that the negotiations were successful and that the appropriate Share Purchase Agreement (“SPA”) for the transfer of the shares in Querencia to Quo Vadis Investments Ltd (“Quo Vadis”) was executed on 14 November 2017. Quo Vadis, the 3rd Defendant, is a Hong Kong company controlled by Mr Larpin of which Mrs Dao Te Lagger is a director. Completion took place on 16 November 2017 and in consequence Mr and Mrs Nargolwala resigned as directors of Querencia on that day.

Mr Lew asserts that in entering the SPA and in completing the deal, the Nargolwalas acted in breach of the alleged oral agreement of 11 October 2017 and consequently acted in breach of their fiduciary duties to Mr Lew and in breach of trust in transferring the shares to Quo Vadis. He further contends that Mr Larpin (and hence Quo Vadis) had knowledge of the alleged oral agreement such that they were liable for inducing the breach and that Querencia acted dishonestly in assisting the Nargolwalas in their breach of fiduciary duty and breach of trust. All of this is denied by the Defendants.

Finally, the Plaintiff and the 1st and 2nd Defendants disagree as to what is the proper law of the alleged oral agreement: Singapore law or Thai law. Initially these was also a measure of disagreement as to what was the proper law of the alleged agency agreement between the Nargolwalas and Mr Meury but it is now common ground that all questions relating to agency fall to be answered by applying whichever law is held to be the proper law of the alleged oral contract.

The issues

The following issues thus arise for decision: Proper law: Is the question of whether or not a binding oral agreement was reached on 11 October 2017 to be decided under Singapore or Thai law? It is now accepted by all parties that the question of whether Mr Meury was authorised to act as an agent for the Nargolwalas is to be decided under the same law? Equally it is accepted that any question relating to ostensible authority is to be decided under the same law? The agency: Was Mr Meury authorised to act as an agent for the Nargolwalas and, if so, what was the extent of that agency? Under Singapore law? Under Thai law? Was his ostensible authority different from his actual authority (if any)? If so, what is the effect of this: Under Singapore law? Under Thai law? The alleged oral contract: What agreement, if any, was reached on 11 October 2017? In particular, if any agreement was reached, was it a binding oral contract of sale or was it an agreement subject to contract or what was it? Under Singapore law? Under Thai law? What is the effect of the 14 days’ settlement term? Under Singapore law? Under Thai law? If there was no binding oral agreement because of lack of an agency relationship, did the Nargolwalas nonetheless ratify the same by their conduct so as to make it enforceable? If there was no binding oral agreement because of lack of an agency relationship, are the Nargolwalas nonetheless estopped from denying the existence of the agency relationship? If a binding oral contract was reached on 11 October 2017, is it enforceable: Under Singapore law? Under Thai law? The position of the 3rd and 4th Defendants: What was the actual knowledge of Mr Larpin with regard to the alleged oral contract at any given time? Did Mr Larpin intend to induce the 1st and 2nd Defendants to act in breach of the alleged oral agreement? Should he have made further enquiries at any given time? Did Mr Larpin act in bad faith at any given time? Was Quo Vadis a bona fide purchaser for value without notice? The position of the 5th Defendant: Did Querencia assist the Nargolwalas in any breach of fiduciary duty or breach of trust by entering Quo Vadis’ name into its register of members? Did the Nargolwalas’ knowledge constitute the knowledge of Querencia at the time when Quo Vadis’ name was entered into the register? At the time Quo Vadis’ name was entered into the register, did Querencia have actual knowledge that the alleged oral agreement had been concluded between Mr Lew and the Nargolwalas and that the Nargolwalas were bound by the terms thereof? Did Querencia act dishonestly in entering Quo Vadis’ name into the register?

The factual witnesses

Of the people mentioned above, Mr Zeman, Mr Anurag, Khun Apple and Mr Lyndon Phillips did not give evidence. The remainder did.

Mr Lew, the Plaintiff, is an Australian citizen who has built up a successful business empire in the fields of retail, property, equities, finance, foreign exchange and total investments.³ He is not legally trained. He has a forceful personality and plainly over his business career has been involved, and it would appear, successfully involved, in many business negotiations. His personality is such that he will drive a hard bargain and will not hesitate to use as a tactic supplying his opposite number...